PERTH (miningweekly.com) – Junior Hillgrove Resources has struck a A$6-million royalty agreement with Freepoint Metals & Concentrates over its 100% owned Kanmantoo copper/gold project, in South Australia.

The consideration would be used exclusively for capital expenditure and to fund the completion of the underground development, plant refurbishment and restarting and commissioning of the Kanmantoo underground project.

In return, Freepoint would receive 2.5% of net smelter returns for the first 85 000 t of payable copper produced at the project, reducing to 0.5% thereafter.

The royalty would not be payable on garnet, or the processing or reprocessing of historical tailings.

Hillgrove CEO and MD Lachlan Wallace said on Wednesday that Freepoint is a long-standing partner and supporter of Hillgrove, both as a significant shareholder, and as its offtake partner.

“We are very pleased to continue this partnership with Freepoint through the royalty agreement, which, given the royalty is based on future production from Kanmantoo, demonstrates their strong commitment to the development of the Kanmantoo underground project and appreciation of the on-lease exploration upside.

“The agreement highlights the robustness of the Kanmantoo underground project, as demonstrated in the economic assessment, with subsequent updates to the Kavanagh and Nugent mineral resource estimates expected to increase mine life. Moreover, both Nugent and Kavanagh remain open at depth and along strike, and are only two of nine mineral systems that have either been drilled or partially mined within the permitted lease, representing an excellent opportunity to expand the mine life with further drilling.”

Wallace said that the consideration for the royalty immediately boosted Hillgrove’s 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.