Hillgrove to cancel mining contract at Kanmantoo

Hillgrove Resources is finalising an agreement with Exact Mining Services to terminate the work at its Kanmantoo copper mine.

As a result of discussions, Exact will be leaving the site immediately upon finalisation of the agreement, the miner said in a statement.

The two have been in negotiations regarding the contract for some time.

Hillgrove has put in place alternate contract arrangements to continue ore feed into the plant from ROM copper and low grade stockpiled material to maintain mill throughput, and produce copper at around 60 to 70% of nameplate capacity.

It has also commenced mobilisation of an alternate mining fleet that will allow for the restart of pit mining in a fortnight, in the meantime it is working towards longer term mining services arrangements.

Once it has reached a new mining agreement, it expects to return to normal operations within six weeks.

Greg Hall, Hillgrove's managing director, explained that as a result of current mining contract market conditions and the general state of the industry Hillgrove has secured quotes for replacement mining services at 'competitive prices'.

It will also use this as an opportunity to reduce mining costs at Kanmantoo and implement production improvements.

"Hillgrove views this as a short-term transition to a stronger, more competitive outcome for the company and shareholders. Through this changeover process the Kanmantoo copper mine is forecast to remain cash positive," Hall added.

To keep up to date with Australian Mining, subscribe to our free email newsletters delivered straight to your inbox. Click here.