Hillgrove Resources Q4 Earnings Call Highlights

Hillgrove Resources (ASX:HGO) used its December 2025 quarterly update to recap a “year of discipline delivery,” reporting full-year copper production within guidance, a return to stronger quarterly operating cash flow, and increased underground development as the company prepares for a higher mining and production run rate in 2026.

2025 operational performance and December quarter highlights

CEO and Managing Director Bob Fulker said 2025 copper production totaled 11,315 tonnes, landing within the company’s guidance range of 11,000–11,500 tonnes. He said full-year all-in costs were US$4.29 per pound, at the lower end of guidance. Operating mine cash flow was AUD 12.7 million in the December quarter and AUD 35.8 million for the full year.

For the December quarter, Fulker highlighted:

• Nearly 3,000 tonnes of copper produced (CFO Luke Anderson later specified 2,962 tonnes)
• Over 700 meters of development advance per jumbo
• Ore inventory progress, with 402,000 tonnes mined since underground start and 410,000 tonnes processed

Fulker noted the operation has been working through the “Kavanagh pinch zone” and expects improved grades in coming quarters. He also said the company is beginning to reference “copper equivalent” more frequently as Nugent stoping commences and as gold and silver contributions increase. For 2025, he said adding gold and silver to copper production would equate to approximately 12,500–13,000 tonnes of copper equivalent.

Capital investment and ramp-up plans

Management emphasized investment during 2025 to expand Kanmantoo’s underground mining footprint and lift mining rates. Fulker said Hillgrove invested AUD 21 million in major capital and AUD 20.5 million in sustaining capital during 2025, including early development of the Nugent decline and increased decline advance rates. He described these as foundational steps toward increasing the mining rate to 1.8 million tonnes per year during 2026, with copper production growth supported by Nugent’s contribution.

Comparing 2025 with 2024, Fulker said Hillgrove delivered a:

• 38% improvement in development meters
• 57% improvement in mine tonnes
• 26% improvement in copper tonnes

While noting the company does not need the same magnitude of improvements to meet 2026 guidance, Fulker said 2026 will still be a growth year, with production back-end weighted as the mine builds to a higher run rate. He added that the company is seeing daily instantaneous mining rates consistent with the 1.8 million tonne target, while remaining mindful not to “outmine” development.

Nugent milestones and implications for costs

Two key milestones at Nugent were delivered during the December quarter, according to Fulker. He said:

• Nugent stope ore production commenced on 15 October, ahead of schedule
• The Nugent decline broke through on 19 December, connecting Nugent and Kavanagh mining areas as planned

Fulker said Nugent provides a second ore source and positions Hillgrove to deliver a mining rate of 1.7–1.8 million tonnes per annum during the first half of 2026. He also said the uplift in mining rate is expected to reduce all-in sustaining cost unit rates during the second half of 2026.

Resources, reserves, and exploration updates

During the quarter, Hillgrove released its second annual underground resource and reserve estimate update. Fulker said the 2025 update delivered a 43% increase in ore reserve tonnes and a 14% increase in resource tonnes compared with 2024.

Management reported the updated ore reserve at 4 million tonnes, containing 34,000 tonnes of copper and 29,000 ounces of gold. The mineral resource increased to 22 million tonnes, containing 160,000 tonnes of copper and 120,000 ounces of gold. Fulker added that the updated mineral resource included a maiden underground mineral resource estimate for the Valentine area.

Fulker also pointed to the scale of drilling completed during 2025. Of 69,000 meters of underground diamond drilling completed during the year, he said only 29,000 meters were incorporated in the 2025 resource and reserve update, with the remaining 40,000 meters expected to be included in the planned December 2026 update.

On exploration results, Fulker cited Kavanagh drilling intercepts including 25 meters at 1.82% copper and 14 meters at 2.44% copper, noting the company was still awaiting gold assays for those results. He said the intercepts demonstrate a “material expansion” of the East Kavanagh zone. Subsequent to quarter end, Hillgrove received assay results for the final two drill holes at Emily Star, including 7.25 meters at 1.6% copper and 0.07 g/t gold and 6.3 meters at 1.34% copper and 0.08 g/t gold. Fulker said the results confirmed high-grade mineralization at Emily Star and supported the decision to commence the Emily Star exploration drilling drive.

The Emily Star incline progressed 23 meters in the December quarter. Fulker said it would progress through the first quarter of 2026, with diamond drilling at Emily Star expected to start in the first half of the year.

Financial metrics, hedging, and 2026 outlook

CFO Luke Anderson said the December quarter delivered the company’s highest quarterly copper production of 2,962 tonnes at an all-in sustaining cost of US$4.03 per pound (or AUD 6.30). He said Hillgrove sold 3,121 tonnes of payable copper at an average realized price of AUD 14,754 per tonne, which included deliveries into lower-priced hedges.

Anderson said quarter-on-quarter increases in all-in sustaining costs on an absolute basis were driven by higher mining rates, a stockpile drawdown that reduced inventory credits versus the September quarter, and one-off costs including stock write-offs and unplanned plant maintenance. He added that all-in costs excluding Nugent acceleration were US$4.44 per pound for the quarter, and that full-year 2025 all-in costs of US$4.29 per pound (excluding Nugent acceleration) were within guidance.

Liquidity at 31 December was AUD 30.8 million, comprised mainly of cash, receivables, and unsold concentrate. Cash at quarter end was AUD 20.6 million, and Anderson noted an additional AUD 4.1 million was received in the first week of January from a concentrate sale on the last day of the quarter.

On funding, Anderson said Hillgrove completed an equity capital raise for AUD 28 million on 30 September 2025, with AUD 26.2 million received during the December quarter net of costs. Capital expenditure during the quarter was AUD 10.5 million, including AUD 4.3 million in major growth capital. He said that included AUD 4 million on Nugent development and AUD 200,000 on early-stage Emily Star work, and that total Nugent project expenditure was AUD 21 million, in line with budget.

Hillgrove reiterated its hedging approach, with Anderson describing a policy covering roughly one-third of forecast production. The company had 3,560 tonnes of copper hedges outstanding at a weighted average price of AUD 14,459 per tonne, scheduled for delivery from January through September 2026. No new hedges were entered into during the quarter.

For 2026, management guided to copper production of 12,750–14,000 tonnes, reflecting Nugent’s contribution. Fulker said the top-end copper guidance was stated with “zero gold credits” applied as copper equivalent, and indicated copper equivalent production would be higher once gold is included. Costs are expected to ease in the second half as mining rates rise. All-in sustaining costs were guided to AUD 5.75–AUD 6.25 per pound of copper sold, with management noting the cost range is quoted in Australian dollars.

In Q&A, management said gold production increased during 2025, with 2,249 ounces produced for the year and 753 ounces in the December quarter. Fulker told analysts he expects gold grade in the first half of 2026 to be similar to 2025, with increased tonnes, and said the second half should see “nearly doubling” of gold grade as Nugent tonnes increase. He said the company is planning for 55% gold recovery and is working on plant initiatives to lift recovery, though no improvements were included in forecasts.

Addressing the pinch zone and grade expectations, Fulker said the geological model has been “plus or minus 5% overall” and that Hillgrove has adjusted its approach by removing modifying factors in tight orebody zones and using the straight model. For 2026, he said copper grade is expected to range around 0.8–0.85% in the first half, lifting to around 0.85% in the second half, alongside higher gold grade, with the year’s tonnes significantly weighted to the second half as the operation reaches the targeted run rate.

Looking ahead, Fulker said the focus for 2026 includes strengthening safety performance, maintaining cost discipline, ramping production, advancing Emily Star as a potential third ore source, and investing capital prudently. He said a stage-two development investment decision for Emily Star would be made after drilling analysis and an economic assessment, which he expects in the second half of 2026.

About Hillgrove Resources (ASX:HGO)

Hillgrove Resources Limited operates as a mining company in Australia. It explores for copper, gold, and silver deposits. The company’s flagship project is Kanmantoo Copper mine located approximately 55 kilometres from Adelaide, South Australia. Hillgrove Resources Limited was incorporated in 1952 and is headquartered in Unley, Australia.