Kristie Batten: As copper market tightens, Hillgrove is looking to grow

Hillgrove Resources is one of the few copper stocks on the ASX increasing production of the critical metal as demand surges.

The copper market is getting tighter by the day, and Hillgrove is well placed to grow production. Pic: Getty Images

One of Australia’s top mining journalists, Kristie Batten writes for Stockhead every week in her regular column placing a watchful eye on the movers and shakers of the small cap resources scene.

Australia only has a handful of listed copper producers, despite increasing demand and a looming shortage.

While only modest in size now, Adelaide Hills copper miner Hillgrove Resources (ASX:HGO) has big ambitions.

“Our vision is to be a mid-tier copper producer in Australia,” Hillgrove managing director Bob Fulker told the Resources Rising Stars Gather Round Conference in Adelaide earlier this month.

Hillgrove operates the Kanmantoo copper project in the Adelaide Hills, close to power, water, roads and a residential workforce.

“It’s a great location and it’s actually why we can make money and be economic at a 1% head grade,” Fulker said.

Kanmantoo started underground production in February 2024 and achieved commercial production in July.

The operation generated $21 million of operating cashflow in 2024.

Since Fulker, a former chief operating officer of OZ Minerals and Evolution Mining (ASX:EVN), took over as managing director of Hillgrove 10 months ago, the focus has been on stabilising production and shoring up the balance sheet.

Two weeks ago, Hillgrove reported that Kanmantoo had hit its stride and achieved record quarterly production of 2952 tonnes of copper, up 12% on the December quarter.

Mining activity will continue to build over the coming quarters and despite the mining of a low-grade stoping zone this month, copper production for the current quarter is expected to increase again.

It puts Hillgrove on track to achieve 2025 production guidance of 12,000-14,000t of copper.

While cost data for the March quarter won’t be released until next week, Hillgrove’s all-in cost guidance for the year is US$3.40-3.90 per pound of copper.

Copper has been volatile of late but has traded in a range of US$4.50-5/lb.

Fulker said the operation was designed to be profitable at a price of US$3.85/lb.

“We plan for the downs and reap the benefits in the ups,” he said.

“When you see the current copper price, you can pretty quickly work out the free cash generation we can make and we are making today.”

Next leg of growth

“Kanmantoo is our first priority and it’s critical to our short-term success,” Fulker said.

Last month, Hillgrove announced a $13 million placement and $3 million share purchase plan to accelerate the Nugent development to increase copper production and lower unit costs.

The company is looking to expand the mining and processing rate by roughly 25% from 1.4 million tonnes per annum to up to 1.8Mtpa, which Fulker said should result in a 15-20% drop in mining costs.

Hillgrove was swamped with demand for the SPP, receiving applications for $8.2 million worth of shares.

As a result, the company scaled back the applications but lifted the size of the offer to $5 million.

Hillgrove has 20,000m of resource extension drilling and 40,000m of resource definition drilling planned with the aim of growing the resource of 19.3Mt at 0.77% copper and 0.14 grams per tonne gold.

The extra funds raised under the SPP will be used to accelerate greenfields exploration at the Kanappa prospect and tenements in the southeast of the company’s ground.

Ultimately, Hillgrove is aiming to become a multi-mine operator and will also consider inorganic growth.

“The market actually does reward multi-operation companies and the market does deliver size,” Fulker said.

“As a company, we’ve got a pretty big year ahead of us but we’ve got a lot of momentum. We are primed to grow and deliver our strategy.”

Copper demand growing

Demand for copper is tipped to soar as electrification of the world gathers pace.

“Copper demand is actually outstripping supply at the moment,” Fulker said

“Humanity has mined copper for the past 5000-6000 years – it brought us out of the Stone Age into the Bronze Age and I believe it’s imperative to make the next transition of humanity into the electrical age.

“What we need in the next 30 years is to mine everything we’ve mined in the last 5000 years.”

A recent statistic from S&P Global Intelligence suggests the average time to bring a new copper mine into production is 17 years.

“We need to start between five and six operations per year to actually get what we need to get for 2050,” Fulker said.

"It’s quite extraordinary numbers when you consider it takes 10-20 years to discover a copper mine, permit it and then to actually build it and grow it – 10-20 years is taking us pretty close to 2050.”

The copper price briefly touched an all-time high of US$5.24/lb late last month, but pulled back since due to uncertainty over US tariffs. But there could be bigger forces at play.

“Supply is not meeting demand and the price is reflecting that shortfall,” Fulker said.

“It’s a great time to build a copper miner.”

At Stockhead, we tell it like it is. While Hillgrove Resources is a Stockhead advertiser, it did not sponsor this article.

Originally published as Kristie Batten: As copper market tightens, Hillgrove is looking to grow