Freeport-McMoRan stock tumbles after Trump imposes copper tariffs
Hillgrove Resources reported a strong financial performance in Q1 2025, marked by substantial operating cash flow and increased liquidity. According to InvestingPro analysis, the company maintains a FAIR overall financial health score of 1.97, with particular strength in growth potential. Despite a slight drop in stock price, the company maintained a positive outlook, driven by strategic expansions and operational efficiencies.
Key Takeaways
- Hillgrove Resources generated $12.7 million in operating cash flow.
- Liquidity increased to $20.5 million by the end of March.
- The company is focusing on expanding its Kenan Two copper mine.
- Record copper recovery rate achieved at 94.2%.
- Stock price decreased by 5.56% following the earnings call.
Company Performance
Hillgrove Resources demonstrated significant operational improvements in Q1 2025, with a focus on enhancing production capabilities and expanding its resource base. The company reported a 9% increase in ore tonnes and a 12% rise in development meters, showcasing its commitment to growth. The strategic emphasis on the Kenan Two copper mine expansion and the development of the Nugent decline are pivotal to its long-term growth strategy.
Financial Highlights
- Operating cash flow: $12.7 million
- Liquidity: $20.5 million at the end of March
- Realized copper price: $14,637 per tonne
- All-in cost: reduced to $3.79 per pound
Market Reaction
Following the earnings call, Hillgrove Resources’ stock price fell by 5.56%, closing at $0.036. This decrease comes despite the company’s strong financial performance, possibly reflecting broader market trends or investor concerns over commodity market volatility. InvestingPro data shows the stock has experienced a significant decline of -60.87% over the past six months, though it has shown remarkable YTD returns of 800%. The stock remains within its 52-week range, with a high of $0.089 and a low of $0.029. Unlock deeper insights into Hillgrove’s valuation and growth potential with InvestingPro’s comprehensive research report, available along with 7 additional ProTips.
Outlook & Guidance
Hillgrove Resources maintained its all-in cost guidance between $3.40 and $3.90 per pound and projected higher production for the June quarter compared to March. The company is also planning an extensive drilling program of 60,000 meters in 2025, targeting potential expansions at Ballantyne and Emily Star.
Executive Commentary
CEO Bob Fulker emphasized the company’s dual focus: "We have two strategic imperatives: consistently deliver strong operating cash flows and grow the business." CFO Joe Sotano highlighted the low incremental cost of increased production, stating, "The fixed cost nature of our business means the incremental cost of higher production is very low."
Risks and Challenges
- Commodity market volatility could affect copper prices and revenue.
- Operational risks associated with mine expansion and development.
- Potential fluctuations in production grades impacting output consistency.
- Macroeconomic factors influencing investor sentiment and market conditions.
Hillgrove Resources remains focused on its strategic initiatives to enhance production and maintain cost efficiency, positioning itself for future growth despite current market challenges.
Full transcript - Hillgrove Resources Ltd (HGO) Q1 2025:
Conference Operator: Would now like to hand the conference over to Mr. Bob Chief Executive Officer and Managing Director.
Please go ahead.
Bob Fulker, Managing Director and CEO, Hillgrove Resources: Thanks, Darcy. Good morning, everyone, and welcome to the Hillgrove Resources March twenty twenty five quarterly report. My name is Bob Fulker, Managing Director and CEO, and I’m joined today on the call by Joe Sotano, the CFO and Company Secretary. We appreciate you taking the time to listen in today. It’s certainly been an eventful quarter, both within the company and externally.
The external issues are having their effects well across the sector. With the uncertainty, we have seen gold reach the heights. But despite the intraday volatility of the share market and the commodity price cycle, copper has remained relatively elevated at AUD 9,400 a tonne, approximately AUD 4.25 per pound. But more importantly for us, an Australian dollar of AUD 14,600 a tonne or AUD 6.65 per pound. Internally, we’ve also had a busy quarter with continued operational improvements with numerous metrics at record levels.
On the diamond drilling front, several great results at Nugent and the Valentine’s program. And finally, significant support from our shareholders and the market within the capital raise and SVP being oversubscribed. With all this in the background, our strategy remains constant. Continue to improve the financial and operating metrics at Kenan two, increase the mining tonnes further with the Nugent decline in breakthrough to the nine twenty in later this year and further increase our resources and reserves in the twenty twenty five for aggressive drilling in the within the mining lease and beginning exploration work on several of the numerous greenfield targets that we have within our business. As I have mentioned on previous occasions, we have two strategic imperatives, and these are driving everything we do.
Firstly, is to consistently deliver strong operating cash flows, which we did this quarter of $12,700,000 and then grow the business. During the March, we invested $6,500,000 in mine development, with $2,600,000 of this in a new joint growth capital to increase mine production by 25%, leveraging a high level of fixed cost inherent in our cost structure. Just to remind everybody, the additional $8,000,000 for the accelerated new joint decline will come into next quarter’s reporting and will separate it so everyone can see it. Once the NewGen development decline breaks through on the ninethirty during the December, development expenditure will normalize to lower levels. Our strategic priority number one is to deliver the business.
Over the last three quarters, the site team have demonstrated a theme of continuous improvement, which is coming through in their improved operating metrics, copper tonnes, milled recovery and mine development. These are the visible metrics, but the team is also improving the site systems and processes in anticipation for when we become a 1,800,000 tonne operation in the not too distant future. Remembering that the underground team has only been stoping for just over twelve months, and we are still working with the constraints of limited work areas whilst we build developed stocks over the coming quarters. But despite this, they achieved a 9% increase in ore tonnes and a 12% increase in development meters. What this tells me is as we increase the space between the mining processes, more improvements will occur, and the systems we are developing will pay additional dividend into the future.
This continuous improvement mentality is also evident with our processing team, where we gained another record improvement to 94.2% recovery. This is outstanding considering our grind size of plus 200 microns and the mine head grade that we are processing. Despite this, they are now looking for the next step of the next set of improvements, and I’m confident that over time, they will achieve it. We heard the feedback from the last quarter, and we will continue to update the market on our operations regularly. As I mentioned in our announcement on April 8, we are again mining through a lower grade zone in April, but the grade is expected to improve for the remaining quarter, with production for the June higher than the March.
As we open up more work areas and as we complete the accelerated Nugent decline development, we’ll experience lower month to month grade and production volatility as we’ll have greater flexibility in our mining schedule. The second strategic imperative is to grow the business. We are investing to grow Cayman two’s production with the acceleration of the new gen decline breakthrough, but we also have on lease exploration targets of 25 to 40,000,000 tonnes announced in February and zero point four grams per tonne gold and 21 meters at 1.8% copper and point six grams per tonne gold. These holes were outside the previously envisaged mine plan, where we were actually attempting to identify the extremities of the mineralization. However, these hits were in were intersected with some visible gold.
We need to follow these up with additional holes to further identify the extent of the mineralization. It’s not a bad problem to have. Additionally, during the quarter, we commenced testing of the Valentine’s zone. This was a technical success where we not only found the authorization zone but intercepted some interesting grades. This will be followed up with additional holes later in the year.
This region is independent to the current operating mine and it has a potential exploration target of 1,900,000 to 2,800,000 tonnes at 0.7 to 1.1% copper. And with this intersect of 0.99% copper, it sits within the upper range of this exploration target. This could be great incremental plant feed, especially when considering its location is on the way to Emily Star, an existing resource with a further exploration target of 3,300,000 to 5,000,000 tonnes. Other exploration targets we’ll be testing this year include Critchley’s, Keringa and Emlestar. We have three drills progressively progressing to drill the 60,000 meters this year, and the team is working on the next update for the MRR in the December.
Lastly, before I hand out to Joe, just want to thank everyone for their support in the recent raise. Your support is appreciated and will enable us to fast track the KMN2’s growth to a larger copper producer in the coming years. And with that, I’d like to hand over to Joe, our CFO, and he’ll update you on the financials.
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: Thanks, Bob, and good morning, everyone. As Bob mentioned, we have a clear vision of where we want our business to be. And for us to achieve this, the first step is for us to deliver what we said we would do from our foundation asset CanMentTo. This comes from consistent production that is sold in all in cost within our guidance, which then enables us to generate positive free cash flows and thereby strengthen our balance sheet. Delivering this will create value for our shareholders.
From a financial perspective, we are heading in the right direction and we are indeed delivering what we said we would do. Firstly, our all in cost of US3.79 dollars a pound is within our guidance despite our production forecast being back ended for 2025. Secondly, the limited impact of the volatility in the commodity markets due to our prudent risk management. Thirdly, we generated operating cash flow to $12,700,000 for the quarter. We saw us increasing our liquidity balance despite the significant CapEx we are spending currently.
And lastly, our strengthened balance sheet, not just from the capital raising we conducted in March, but from internal free cash flow generation. This enables us to embark on our organic growth opportunities that Bob talked about. Starting with our all in costs, I would like to commend those that have contributed to KMAN two’s outstanding performance this quarter. Bob has already talked about the achievements on the physical side, but I want to outline that this is all done with a focus on costs also. The combination of the cost control along the record copper production led to the reduction in unit costs from US3007 dollars a pound to US379 dollars a pound, which is all the more impressive when you compare on a like for like basis with previous quarters.
We have brought in corporate G and A this quarter in those figures, and our denominator is now using copper sold rather than produce. Without these changes, it would have led to an even more significant reduction in unit costs from US3.97 dollars a pound to US3.59 dollars a pound. What this hopefully shows to those reading the quarterly as well as those listening today is a fixed cost nature of our business, where the incremental cost of our higher production for us is very low. And it is this that I’m excited with. I am interested to see where we will be this time next year when we complete the accelerated engine projects that will cease increasing mining output from 1,400,000 tonnes per annum to 1,800,000 tonnes per annum.
And in addition to this, how much lower unit costs can go to potentially new mining from areas like Ballantyne and Emily Star not far beyond that in the horizon, which could see us further increasing our mining output. Overlying all of this is our spend on major capital items such as the accelerated development projects, which will significantly drop in 2026. All this is expected to lead to increased free cash flow generation. Secondly, and despite the volatility in commodity markets and deliveries into some of our lower price hedges, we still averaged a healthy realized price of 14,000 hundred and $37 a tonne during the quarter. Looking forward into the next quarter, subject to copper prices maintaining where it currently sits, we expect a further improvement to this.
Firstly, due to the low price hedges nearly all being delivered into already. And more importantly, secondly, we will deliver it to 1,000 tonnes at a price of circa $15,400 a tonne. This was from the hedge that we placed in March just before the turmoil that was recently seen in the markets. We will continue to prudently manage our risks and exposures. With our cost being well below the average realized price, we generated a healthy $12,700,000 in positive operating cash flows for the business last quarter.
From this, we invested $6,500,000 into our future with mine development, of which, as I mentioned earlier, included $2,600,000 into Nugent growth capital spend, which was significantly reduced in this year. Despite these chunky investments, our liquidity continued to increase this quarter, which has strengthened our balance sheet. This strengthened balance sheet, which was both as a result of our strong operational performance I just outlined, as well as a successful capital raising that was announced in early March, paid us with available liquidity of $20,500,000 at the March. A further $5,000,000 was received under the share purchase plan in the April, as well as a further $2,600,000 in proceeds from the transfer placement, which is expected next week. This, along with any further free cash flow generation from our operations, sees us on a strong financial footing and gives us the right platform to execute the numerous organic growth opportunities that Bob mentioned earlier on our call.
Thanks for listening. I will now hand back to Darcy to open the lines for questions.
Conference Operator: Your first question comes from Ben Wood from Wilson’s Advisory. Please go ahead.
Ben Wood, Analyst, Wilson’s Advisory: Congrats on the strong production in this quarter, guys. It’s good to see the operational controllables flowing through. I just have two questions today, if that’s all right. Initial production and AIC guidance was issued in the December quarterly report, which was prior to the announcement of the accelerated Nugent development. You guys have reiterated guidance in the March report now, but I’m now thinking with the CapEx being brought forward for this development and production not to be influenced until CY twenty six, how much further do you sort of anticipate the AIC remaining within the three forty to three ninety AIC guidance band sort of for the remaining quarters this calendar year?
Do you sort of see it sustainably staying, you know, at at current levels? Or do you do you still see that declining promisingly over the course of this year?
Joe, CFO, Hillgrove Resources: I think it depends. That’s the question, Ben. It’s Joe here. I think it depends what you’re you’re classifying as major capital. So I mean if you’re you’re including the the major capital from from the new gen acceleration then they were probably going to be likely higher than the $3.79 that that we that we released this this quarter.
But but, yeah, I mean, if you exclude it with a higher production,
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: you would think with our sort
Joe, CFO, Hillgrove Resources: of fixed cost nature of our business, it’s expected to to drop. I guess, what I’m trying to say is on a like for like basis, we do not include that that additional NuGen particularly
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: in the next sort of quarter or two.
Joe, CFO, Hillgrove Resources: There will be sort of it it will be
Bob Fulker, Managing Director and CEO, Hillgrove Resources: reached lower than the current quarter. So then from our perspective, we’ve reiterated the three forty to three ninety AIC. We’re working towards delivering below the three ninety including the the new gen spend. And that includes using sold not produced, and that includes the inclusion of the g and a. I’m I’m still trying to push that down further.
Okay? But the guidance is is still sound, and and our aim is to actually deliver within that guidance, including the spend on on the region.
Ben Wood, Analyst, Wilson’s Advisory: Okay. Thanks, Bob. Thanks, Joe. And just just sort of the last last point for me is that, you know, 12,700,000.0 in mine operating cash flow, 7,700,000.0 in CapEx spend, that that that sort of 5,000,000 difference, there, am I right in thinking that, you know, 2 and a half has flown through to the, additional liquidity that you’ve reported? But the other sort of 2 and a half of that, am I right in thinking that’s just going to payment of sort of lease liabilities as well as sort of CapEx timing of cash flows?
Joe, CFO, Hillgrove Resources: Yeah. Yeah. You’re spot on just there. Yeah. You’ve got exactly
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: as you said there. So, yeah, we
Joe, CFO, Hillgrove Resources: we did generate, obviously, sort of 4.7, and we still have some CapEx. And then there was a couple of costs outside of the the AIC being group costs, as well as release payments and and so on. So, that should translate to our change in liquidity, you can see.
Ben Wood, Analyst, Wilson’s Advisory: Excellent. Thanks, guys. I’ll hand it
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: on. Thanks, Ben.
Conference Operator: Thank you. Your next question comes from Chris Drew from MST.
Chris Drew, Analyst, MST: Looks like another good quarter, plenty of records in there. Just one that was a little bit behind the process tonnes for the quarter fell a bit behind the mined tons. Is that just a function of the kind of batch processing that you run? Or was there anything else going on there? Should we sort of expect that to flip the other way around in the June?
More more processed tons over mined tons. How’s that sort of shaping up?
Bob Fulker, Managing Director and CEO, Hillgrove Resources: Chris, it’s just the batch style. It depends when the seven days falls in in the actual twenty eight, thirty day month. You know, anything from zero to to, you know, plus four or 5% movement into month is actually about normal. Cool.
Chris Drew, Analyst, MST: Okay. Thanks. And another quick one if I can. Just on the I guess, the liquidity, obviously, in pretty good shape post the cap raising. Is there are you still looking to refi that working cap facility that’s, I guess, expiring shortly if it hasn’t already, the 3.7?
Bob Fulker, Managing Director and CEO, Hillgrove Resources: Yeah. No. So the debt facility expired on the well, I think it was the April 23. So we’re in the process now of of what we’ve been there for a few months trying to replace that facility. We’re probably still four to six weeks away from having it into a shape we would would like it to be.
So I’m hoping that we can we can end up something coming through the next next quarter. And it is to replace the three point facility, but that’s a work in progress. Okay. Thanks,
Joe Sotano, CFO and Company Secretary, Hillgrove Resources: guys. Alright. Thanks, mate.
Conference Operator: Thank you. Once again, if you wish to ask a question, please press Thank you. There are no further questions at this time. I’ll now head back to Mr. Volker for closing remarks.
Bob Fulker, Managing Director and CEO, Hillgrove Resources: Thanks, Darcy. And I just wanted to stress, as I mentioned earlier, with KMN2 now in commercial production and the strong demand from Aussie investors for new copper stories, we’ll be increasing our engagement with our investors and analysts. I do think we have a great story here. I do think we have a great delivery, and we’ve got a great future. So thank you, everyone, for your time today.
Cheers.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.