Hillgrove's Copper Story: Record Production, New Growth Levers

March quarter delivers record copper, cost discipline, and a path to 2Mtpa

HGO.AX · Earnings Call · 2026-04-21

A Strong Quarter on All Fronts

Hillgrove Resources (HGO.AX) has delivered a March quarter that, on the surface, is about record copper production and balance sheet strength. But under the hood, the real story is the company's careful orchestration of growth—Emily Star, Kavanagh North, and the unexpected garnet tailings deal—all against a backdrop of rising copper prices and global supply anxiety. CEO Bob Fulker opened the call with a nod to the macro environment: “living in interesting and changing times, with global uncertainty and pressure on both commodity price, exchange rate, and our cost base.” — Robert Fulker, Chief Executive Officer and Managing Director · 2026-04-21 Yet the numbers tell a different—more positive—tale. Copper production hit a record 3,120 tonnes, a fourth consecutive quarter-on-quarter increase, and cash balance rose 22% to A$25.2 million. The all-in sustaining cost of A$6.20/lb sits within guidance, and on a produced basis it drops to A$5.65/lb, reflecting ongoing cost reduction initiatives.

The Copper Price Tailwind

Copper prices have strengthened materially, closing at USD 12,160/t at quarter end. Luke Anderson attributed this to “supply disruptions at several major mines and a buildup of U.S. copper inventories due to tariff uncertainty” — Luke Anderson, Chief Financial Officer · 2026-04-21—themes that resonate with the global High oil and IEPA tariff discourse. Hillgrove is a pure-play copper beneficiary, and the company's copper market outlook is confident. But the hedging book tempered the upside: the company closed out 1,650 tonnes of hedges at A$14,390/t, below spot, and still has 2,200 tonnes hedged at A$14,559/t through September. That's a drag on future revenue, but management insists it's prudent risk management.

Fuel, Costs, and the Middle East

Analysts probed the diesel supply risk given the Iran conflict. Bob's response was reassuring: “Fuel is around about 3%, Luke, of our total costs... It's not a big percentage, but it is a percentage that we keep an eye on.” — Robert Fulker, Chief Executive Officer and Managing Director · 2026-04-21 The company benefits from grid power and proximity to Adelaide. However, transport costs are rising with transport costs increasing, as CFO noted: “Operating costs increased by 2% quarter-on-quarter... reflecting higher fuel and transport costs.” — Luke Anderson, Chief Financial Officer · 2026-04-21 Still, the impact is manageable.

The Expansion Pathway: Emily Star and Beyond

The real forward-looking driver is the growth pipeline. Emily Star is advancing with exploration drives and diamond drilling, and management sees it as a third ore source. Bob explained:

The idea, Paul, is that we use Emily Star to supplement the feed from Kavanagh and Nugent. That's how we go above that 2 million tonne per annum rate.
Robert Fulker, Chief Executive Officer and Managing Director · 2026-04-21

The Kavanagh North exploration drive is also progressing, and underground drilling at Nugent returned high-grade intercepts (8.5m at 3.28% Cu). The company is committed to a 1.7–1.8 Mtpa run rate by end of June, with a pathway beyond 2 Mtpa. Capital for Emily Star FID is estimated at A$23–25 million, pending the third production drill rig arriving imminently. This is a clear strategic shift from a single mine to a multi-front operation.

An Unexpected Bonus: Garnet Tailings

One unique development is the binding tailings processing agreement with Heavy Minerals. Hillgrove will receive a royalty stream and, crucially, hand over standing rehabilitation liabilities upon mine closure. Bob noted: “It's demonstrating that a mine can have a life after what was originally thought the primary reason for it to be there.” — Robert Fulker, Chief Executive Officer and Managing Director · 2026-04-21 While immaterial near-term, it's a smart ESG play and de-risks the balance sheet.

What Changed, and Why It Matters

Compared to the December quarter call (prior Q&A on 2025-10-27), the key shifts are: record production, a clear cost-savings trajectory, hedging closures, and a solidified expansion blueprint. In that prior call, Bob noted: “We're intending to ramp up to that rate over the next 6 to 7 months” — Robert Fulker, CEO and Managing Director · 2025-10-27—and they are on track. The new garnet deal is a genuine differentiator for a small-cap miner. Hillgrove is not a household name, but with copper in a structurally tight market, a low-cost position, and a clear growth path, it's a name to watch. The stock remains small (A$143m market cap), but the operational momentum is building. The March quarter confirms that Hillgrove is executing on its plan, and the market should take notice.