Heavy Minerals advances Port Gregory as funding becomes the key hurdle

Port Gregory gains a reserve and a project valuation

Heavy Minerals Limited (ASX:HVY) has moved its Port Gregory garnet project from resource story to development proposition, reporting a maiden Probable Ore Reserve of 85.5 million tonnes at 4.43% total heavy minerals for 3.3 million tonnes of contained garnet. The accompanying Pre-Feasibility Study outlines a 24-year mine life, post-tax NPV of A$322.8 million and post-tax IRR of 47.6%.

The study estimates development capital, including owner’s costs, at A$122.1 million, with a peak funding requirement of approximately A$89.5 million. Those figures give the project a much clearer economic frame than the company had previously, following the Port Gregory PFS release, which reported the same headline economics in July.

There is, however, an important qualification. The production target and forecast financial information are based mainly on the Ore Reserve but also include Inferred Mineral Resources representing about 5.7% of mill feed. Heavy Minerals cautioned that the lower geological confidence attached to that material means there is no certainty the production target or related financial forecasts will be realised.

Kanmantoo engineering approaches an investment decision

At Kanmantoo in South Australia, Front End Loading Stage 3 engineering continued across a 50,000-tonne-per-year case and a 100,000-tonne-per-year two-train configuration priced by IHC Mining. The final plant selection remains subject to a Final Investment Decision.

The project is being developed under a binding tailings processing agreement with Kantra Copper Limited (ASX:KAN), formerly Hillgrove Resources Limited, to recover hard-rock almandine waterjet garnet from live tailings and the Kanmantoo Tailings Storage Facility. The proposed initial production rate is 50,000 tonnes per year, with potential to scale to 100,000 tonnes per year subject to permitting and the investment decision. That work builds on the Kanmantoo tailings agreement, which established the binding arrangement for garnet extraction.

Cash is thin while construction funding remains unsigned

Heavy’s technical progress is running ahead of its financing certainty. The company said it closed the quarter with A$39,000 in cash after using A$342,000 in operating activities and A$167,000 in investing activities. Financing activities contributed A$511,000, including A$369,000 from option exercises, A$80,000 of equity issuance and A$80,000 in royalty funding, partly offset by repayments and transaction costs.

The report contains inconsistent figures for the Acuity Capital ATM facility. Its narrative and summary table state a A$2.0 million limit, A$272,000 drawn and A$1.728 million unused at quarter end. The embedded Appendix 5B instead records a A$1.053 million facility, A$80,000 drawn during the quarter and A$1.053 million unused, alongside A$38,000 of quarter-end cash and an estimated 2.2 quarters of funding. The discrepancy should be reconciled before the company’s effective liquidity position can be assessed with confidence.

Funding discussions for both projects remain preliminary and non-binding. Heavy is considering bonds, debt, royalties, prepay and offtake-linked structures, government grants and potentially equity, but has disclosed no selected counterparty, binding terms, funding quantum or closing date. Product qualification with prospective distributors is also continuing, although no binding offtake quantities or pricing have been agreed. The company’s earlier funding test warning highlighted the balance-sheet pressure surrounding these project milestones.

December quarter sets several execution checkpoints

Heavy expects to progress Kanmantoo toward a Final Investment Decision after completing FEL-3, advance project-build funding against the completed Port Gregory study, continue Red Hill’s Mineral Resource estimation work and pursue distributor qualification. A potential industrial minerals acquisition is also under due diligence, with no certainty that a transaction will proceed.

The 30 November annual general meeting adds a near-term corporate checkpoint, including a proposed issue of up to 6.75 million unquoted performance rights subject to shareholder approval. But the more consequential milestones sit elsewhere: whether technical studies convert into an investment decision, whether funding discussions become binding commitments, and whether the reported ATM figures are clarified before the cash runway narrows further.