· Revenue for the quarter from concentrate sales was AUD38.5 million at an average realised price for copper of AUD3.46/lb (USD3.08/lb). For the 11 month financial year to 31 December 2014 (CY14) sales revenue was AUD167.0 million at an average realised price of AUD3.62/lb (USD3.31/lb).
· Hillgrove's copper hedging continues to significantly support the revenue stream, with 2,887t of copper hedges added at a price of AUD7,749/t (AUD3.51/lb) during the quarter. The Company has 78% of payable copper production hedged through to March 2016 at AUD7,723/Mt (AUD3.50/lb - compared to current copper spot price of AUD3.17/lb).
· Production of 4,826t contained copper in concentrates for the quarter, giving 20,693t Cu for CY14, which was within annual guidance provided and a 20.4% increase over the previous 12 month fiscal year.
· Quarter 4 continued to establish new records, with the highest plant throughput and total tonnes mined to date. This has been a result of increased efficiencies and has led to reducing unit costs for mining and processing.
· As flagged in the Quarter 3 report, copper grades mined were lower than the previous quarter due to the transition from the Kavanagh pit into Nugent and Emily Star pits, requiring increased ore for processing from low grade stockpiles. While Kavanagh and Emily ore mining reconciled well to resource models overall, the Nugent pit performed below the estimated resource.
· Copper recovery was lower at 86.9% during the quarter due to higher than anticipated quantities of transitional ore from the Emily pit, combined with lower recovery from older low grade stockpiles. By mid- December both Nugent and Emily pits were fully in primary ore and recovery had returned to target.
· The cut-back in the Giant pit over the main orebody is well advanced, with first ore from satellite deposits being processed and AUD5.4 million of pre-strip undertaken in the quarter.
· C1 cost for the quarter was USD1.97/lb (AUD2.30/lb), with C1 for the CY14 year also at USD1.97/lb (AUD2.18/lb) which has come in better than guidance for the year.
· During the last seventeen months, mining unit costs have reduced by 48%, mining production has increased 81%, mill throughput has increased 22%, and processing unit costs have reduced by 34%. Life of Mine (LOM) Plan and Guidance
· An updated LOM plan was completed through the quarter, encompassing from January 2015 the processing of 20.2Mt of ore at 0.69% Cu for 124.8kt of copper contained in concentrate through to March 2021.
· As with previous long term plans, the Giant pit cutback currently underway opens up the main ore zones by early 2016 and requires approximately AUD31 million in total capital development, with AUD16-17 million slated for FY15. 2015 copper production guidance is 18,500 to 20,500t of contained copper in concentrate.
Corporate
· Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the CY14 were AUD42.1 million (Unaudited).
· Cash on hand as at 31 December 2014 was AUD8.8 million, with total debt reducing from AUD23 million to AUD18 million at the end of the quarter. Net debt stands at AUD9.2 million as at 31 December 2014.
· The Company has continued to advance capital management initiatives, including debt re-structure, throughout the quarter to align capital structure with the LOM plan.
· The Company sought a reduction in the January 2015 debt repayment to $3.0 million, reduced from $8.0 million. The banks have provided the necessary waivers for the reduced payment.
HILLGROVE RESOURCES LIMITED
Executive Summary
Hillgrove Resources (ASX: HGO) is pleased to report copper production is within annual guidance for its Calendar Year 14 (1 February 2014 to 31 December 2014, CY14), and continued lower costs from its Kanmantoo Copper Mine in South Australia during the quarter.
After a record copper production in the September 2014 quarter, the fourth quarter had a predicted lower copper production due to lower grades with the mining transition from the Kavanagh pit (main orebody) to the Nugent and Emily Star pits. While some extended transitional ore adversely impacted copper recovery, both these satellite pits are now providing higher grade primary ore. Processing plant throughput was a quarterly record, and an additional large flotation cell added as part of the future oxide processing plant (Controlled Potential Sulphidisation - CPS) was incorporated into the primary circuit during December and has improved ore recovery.
First exploration around Kanmantoo was completed, with results reported below. Gravity surveys around the mining lease have indicated possible mineralised extensions to the north of the main orebody.
The Company continued discussions with potential investors on the Indonesian projects at Sumba and Birds
Head.
KANMANTOO COPPER MINE, SOUTH AUSTRALIA
Mining Lease 6345 (Hillgrove 100%) Overview
Mining operations continued in the Kavanagh, Nugent, Emily Star and Giant open pits. The Kavanagh pit bulk mining was completed and is now in a ramp stripping operation providing small amounts of high grade ore. The Nugent pit is well progressed and will commence backfilling in the first half of 2015. The Emily Star pit is now into primary ore and further cutbacks are being assessed. The Giant pit cutback has commenced and is producing ore mostly of a transitional or oxide state.
The processing plant performed very well, with a new large scale rougher flotation cell being commissioned towards the end of the quarter. Mill throughput was above plan, with recovery below plan as a result of treating older lower grade stockpiles and some transitional ore. Costs were below plan.