Hillgrove Resources has entered into a royalty agreement with US-based Freepoint Metals & Concentrates involving its fully-owned Kanmantoo copper-gold project located in South Australia.
The Freepoint Commodities group is a merchant of physical commodities and a financer of upper- and mid-stream commodity-producing assets.
Freepoint financed the Kanmantoo technical studies in the initial stages. Since the completion of the open pit operations in 2020, the Hillgrove team has grown the underground mineral resource estimate, with operations poised for mine restart.
Hillgrove managing director Lachlan Wallace said Freepoint was a long-standing partner and supporter, both as a significant shareholder and offtake partner.
“We are very pleased to continue this partnership with Freepoint through the royalty agreement, which, given that it is based on future production from Kanmantoo, demonstrates their strong commitment to the development of the project and appreciation of the on-lease exploration upside,” he said.
“The consideration for the royalty immediately boosts our cash position without shareholder dilution, enabling the company to consider a range of restart and resource expansion options, particularly in light of recent changes in the global copper market.”
Freepoint senior managing director Philip Bacon said the close relationship between both companies had been fostered over a long period of time.
The key terms of the agreement include:
- Hillgrove to receive consideration of $6 million at completion of the arrangement, which is subject to satisfaction or waiver of conditions precedent by August 31, 2022
- Consideration to be used exclusively for capital expenditures and to fund working capital for completing underground development, plant refurbishment and restarting and commissioning of Kanmantoo
- Freepoint to receive 2.5 per cent of net smelter returns for the first 85,000 tonnes of payable copper at the, reducing to 0.5 per cent thereafter
- Royalty will not be payable on garnet as well as any processing or reprocessing of historical tailings.
