Drilling And Development To Be Undertaken At South Australian Copper Project
Hillgrove Resources Limited (ASX:HGO) has received strong support for a share placement to new and existing institutional and sophisticated investors.
Key terms of the Placement are as follows:
• Issue of 192,307,693 new fully paid ordinary shares at an issue price of $0.052 per share raising gross proceeds of $10.0 million before costs.
In addition to the Placement, Hillgrove proposes to offer eligible shareholders with registered addresses in Australia and New Zealand up to A$30,000 worth of shares under a non-underwritten Share Purchase Plan (SPP).
Taylor Collison and Canaccord Genuity are acting as Joint Lead Managers for the equity raise.
Managing Director, Lachlan Wallace, said that with the existing cash reserves along with the proceeds received from the Placement and SPP, the company will emerge with circa A$15 million to accelerate the exploration and development activities.
These intended activities in the near term include:
• 16km drill programme beginning in October 2021, targeting Resource extensions at the Kavanagh, North Kavanagh, South West Kavanagh, Nugent, and Spitfire lodes in South Australia. The programme will also undertake infill drilling, which will improve the geological confidence to support a maiden Reserve, prior to a FID to recommence mining;
• Complete a study in the December 2021 quarter, which will examine the preliminary capital expenditure and operating expense forecasts for mine recommencement;
• Complete the Kanmantoo Mineral Resource Estimate upgrade within the next two months as well as upon the conclusion of the upcoming 16km drilling program (subject to drilling results); and
• The establishment of a portal, underground drill platforms, as well as the commencement of the exploration decline beginning in October 2021 – which subject to a positive FID, will be used as the future mine access.
“Drilling to date has demonstrated that the ore lodes mined in the Kanmantoo open pits continue below the base of the pits with grade, width and continuity to support underground development,” Mr Wallace said.
“I expect that recent drilling will increase the existing Resource and with this raising, we will continue drilling and accelerate development plans ahead of a planned mine recommencement next year I am confident that the planned works will create value for our Shareholders through the potential recommencement of copper and gold production at Kanmantoo, which enables us to unlock the value of the region through further advancement of the near mine and regional exploration projects.”
In conjunction with the Capital Raising, Hillgrove has entered a binding contract with Joy Global Australia (a subsidiary of Komatsu Australia) to establish a portal, exploration decline and underground drill platforms using the Komatsu MC51 continuous miner.
Under the agreement, all contract fees incurred by Hillgrove during the trial are accrued and become payable only following the receipt of project financing and commencement of the capital development of the Kanmantoo Underground which is expected in 2022.
“Commencing the decline is a significant milestone in the Kanmantoo Underground development,” Mr Wallace said.
“Komatsu’s DynaCut continuous mining technology has the potential to transform underground mine development design and processes and the team is excited to have the opportunity to apply it at Kanmantoo.
“Although the application of any new technology in a production setting can be sometimes viewed as higher risk, this trial commences the decline a year ahead of schedule, and the deferred and contingent nature of the Komatsu agreement, coupled with the $2m State government grant allows Hillgrove to facilitate the trial and create the underground access and drill platforms for minimal cash outflow.
“This enables the existing cash to be deployed towards continued Resource infill and expansion drilling.”
With drilling demonstrating the mineralisation extends up to 500m below the base of the pit and continues to be open at depth, the benefit of bringing forward the establishment of the underground drilling platforms in the Kanmantoo Underground development schedule is hard to overstate but includes:
• accelerating and reducing the cost of the upcoming drilling programme,
• reducing geological risk which is expected to translate into a lower cost of future project financing, and
• enabling stope definition drilling and initial decline development to be removed from the critical path to first copper, which ultimately brings forward the potential restart of copper production and further reduces what is already a relatively low-cost mine development.
“To advance the development of the Kanmantoo Underground in such a way that reduces costs and risks whilst preserving cash to continue expanding the Resource is an excellent outcome,” Mr Wallace said.
For further information please visit: https://www.hillgroveresources.com.au/
