THE BOURSE WHISPERER: Hillgrove Resources has commenced trucking concentrate from its Kanmantoo copper mine to Port Adelaide, where it is to be stored awaiting ship-loading in early 2012.
Hillgrove has approximately 1,000 tonnes of copper concentrate in the concentrate storage shed at Kanmantoo.
This stash is currently being added to by production of between 150 tonnes and 200 tonnes per day.
The company expects full production rates to average more than 200tpd.
Source: Company announcement
A local Adelaide Hills trucking company has been contracted to haul the full containers to Port Adelaide at approximately 300 tonnes each day, five days a week.
When Kanmantoo is in full production Hillgrove said it anticipates it will be using three truck-trailer rigs, running a total of about 10 trips per day to the port.
For every 2,500 tonnes delivered to Port Adelaide (about 80-90 containers), Hillgrove will receive an ’early payment’.
This will be 75 per cent of the value of the copper in the concentrate.
The ‘early payment’ is part of the terms of the company’s offtake agreement with JP Morgan Metals & Concentrates.
Hillgrove expects the first early payment will be paid before the end of the 2011 year, which will represent the first sale of copper concentrate and first revenue for the project.
The company sadi it expects to have accumulated 10,000 tonnes of concentrate at Port Adelaide by early February 2012.
Once this milestone has been reached, the containers will be emptied into a bulk ship and Hillgrove will receive payment for a further 15 per cent of the copper in the concentrate.
The final 10 per cent is payable based on final assays at the discharge port.
“While we are in ramp-up mode at the moment, we are approaching design capacity and expect to be consistently achieving design throughput within the next few months,” Hillgrove Resources managing director Drew Simonsen said in the company’s announcement to the Australian Securities Exchange.
“The early payment mechanism means that we will be generating cash for our shareholders in the near term, which is a very significant milestone in the life of the company.
“We expect the project to be generating positive cash flow by the end of the first quarter, 2012.”