Hillgrove Resources operates the Kanmantoo copper mine in South Australia, which produced over 13,000 tonnes of copper and 6,500 ounces of gold in financial year 2013 to generate revenue of $115m. The mine produced earnings before interest, tax, depreciation and amortisation (EBITDA) of $17.1m. That cashflow must pay for new expenditure at the mine – an extension of the tailings dam is needed and a new crusher was recently added – as well as fund the hunt for bigger, richer deposits in Indonesia where the company is drilling for large orebodies.
These are big hopes for a small miner; perhaps too big in an environment of sharply lower gold and copper prices. Last year, for example, the company spent over $38m on capital expenditure. Far more will be needed in future.