Hillgrove inks earn-in agreement with Havilah for Mutooroo copper project
Australian copper-focused miners Hillgrove Resources and Havilah Resources have entered into a binding agreement that gives Hillgrove the right to earn an 80% interest in the Mutooroo copper project, in South Australia’s Curnamona province.
The farm-in agreement signed between the companies and Havilah’s subsidiary Copper Aura contemplates the formation of an unincorporated joint venture enabling Hillgrove to complete a prefeasibility study (PFS) to process Mutooroo ore through its existing Kanmantoo processing facility.
Hillgrove’s Kanmantoo processing facility provides a potential lower capital intensity and lower execution risk pathway to develop Mutooroo’s 192 000 t copper resource.
Subject to further testwork and outcomes of the PFS, Hillgrove believes Mutooroo has the potential to lift Hillgrove’s copper production to more than 20 000 t/y.
Hillgrove plans to fund the PFS expenditure fully from its cashflow in a phased manner to mitigate risks.
The companies agree the partnership provides the potential to bring Mutooroo into production and generate positive cashflow with minimal capital outlay on Havilah’s part.
The terms of the farm-in agreement include Hillgrove issuing $5-million worth of fully paid ordinary shares to Havilah, as well as Hillgrove investing up to $10-million on a 5 000 m drill programme over 24 months.
Hillgrove will earn an 80% interest in Mutooroo upon final investment decision and the company paying a Stage 2 consideration of $35-million comprising cash and shares.
Once the PFS is completed, the companies plan to sign a tolling and marketing agreement for the processing of Mutooroo ore at Hillgrove’s Kanmantoo processing facility.
“Mutooroo’s high‑grade sulphide mineralisation, proximity to rail, and favourable logistics align strongly with Hillgrove’s centralised processing hub model.
"Importantly, the capital intensity could be potentially lower compared to a standalone development, and execution risk could potentially be materially reduced by leveraging infrastructure, approvals and operational capability we already have in place,” says Hillgrove CEO and MD Bob Fulker.
He adds that this transaction provides Hillgrove shareholders with a lower risk, capital efficient growth option at a time when new copper discoveries are scarce, and development costs globally continue to rise.
The staged PFS approach to be funded out of Hillgrove cashflow will ensure disciplined capital deployment with limited cash drain, with expenditure ramping up only as key technical assumptions are validated.
Havilah technical director Chris Giles comments Hillgrove is an experienced operator which has the capacity to process the sulphide ore of Mutooroo.
“Consistent with Havilah’s advanced project monetisation strategy, we will return substantial upside through a shareholding in Hillgrove and our ongoing 20% interest in Mutooroo. We will continue to explore our 100%-owned surrounding exploration licences and will offer Hillgrove the first right to partner on any future developments,” he concludes.
