Hillgrove Resources has secured a A$10m ($6.6m) standby debt facility with Freepoint Metals and Concentrates to enhance operations at the Kanmantoo copper mine in South Australia.

The debt facility, split into two A$5m tranches, will be repaid in six instalments, beginning seven months after the initial drawdown, with full repayment due 12 months post drawdown.

The agreement bolsters Hillgrove's balance sheet as it scales up operations.

The decision to secure this facility was made after the Hillgrove Board, with advice from external advisers, undertook a competitive market process to evaluate financing options.

Freepoint's proposal was deemed the most favourable due to its arm's length terms and the company's existing security position.

Although Hillgrove does not currently plan to draw on the funds, the facility offers a prudent financial backup.

The Kanmantoo underground mine, situated near Adelaide, operated as a series of open pits from 2010 to 2020, yielding approximately 137,000t of copper and more than 55,000oz of gold.

The project is fully permitted, boasting an operational 3.6-million-tonnes-per-annum processing plant, and a tailings storage facility with sufficient capacity.

As of the September quarter, the Kanmantoo Copper Mine has produced 2,923t of copper and remains aligned with its production ramp-up objectives.

Hillgrove managing director and CEO Bob Fulker said: “We are pleased to have secured this stand-by debt facility, which provides the company with ongoing financial flexibility and demonstrates we are taking a prudent approach to managing our balance sheet.

“As highlighted by the recent ASX [Australian Securities Exchange] release on 18 October 2024 entitled 'Maiden Kanmantoo Underground Ore Reserve and 96% Increase in Copper Mineral Resource Endowment', we have the opportunity to significantly grow ore reserves and extend the mine life at Kanmantoo.

“This improved balance sheet flexibility will enable us to pursue this opportunity while we continue to focus on safe and reliable copper production. Hillgrove is well-positioned to finish the year strongly and the production ramp up at the Kanmantoo Copper Mine remains on track.”

In February this year, Hillgrove announced that it produced first copper concentrate at its Kanmantoo mine.