Wednesday, 1 March 2023 $39 MILLION INSTITUTIONAL PLACEMENT AND SHARE PURCHASE PLAN TO FULLY EQUITY FUND THE KANMANTOO COPPER GOLD PROJECT RESTART SUMMARY • Combined equity raising to raise up to circa $39.0 million at a price of $0.053 per share, comprising of: o $36 million Placement strongly supported by institutional and sophisticated investors, in particular: ▪ $19.0 million from several new institutions along with strong ongoing support from existing shareholders; and ▪ a further circa $17.0 million from Freepoint Metals & Concentrates LLC (Freepoint); and o Existing shareholders will be offered the opportunity to participate in a Share Purchase Plan (SPP) to raise approximately $3.0 million. • Hillgrove has entered into a binding, conditional term sheet with Freepoint, providing Hillgrove with a price protection program for at least 16,000t of copper in concentrate, approximating to 50% of the first 2 years production. • Proceeds from the capital raising will be used to fund: o Development for the Kanmantoo Underground, along with sufficient contingency; o Exploration to continue to expand the Resource and extend the mine plan; and o General working capital purposes. • Recently announced Economic Assessment outlines first copper sales 7 months after mobilisation, with over $200 million in after tax free cash flow to be generated over an initial 4 year mine life, with significant additional upside leverage to increases in the copper price and further Resource expansion. Hillgrove Resources Limited (ABN 73 004 297 116) (ASX:HGO) ("Hillgrove", "the Company") is pleased to announce that it has: • successfully completed a bookbuild process to raise $19.0 million (before costs) through a two tranche placement of new fully paid ordinary shares in Hillgrove ("New Shares"), to institutional and sophisticated investors ("Placement"); and • received a commitment from Freepoint Metals & Concentrates LLC ("Freepoint") for the raising of a further up to $17.2 million (before costs) through an additional two tranche placement of New Shares to Freepoint ("Freepoint Placement")
Hillgrove agrees to pay to Freepoint an equity structuring fee equivalent to 1.5% of the proceeds received under the Freepoint Placement. Share Purchase Plan In addition to the Placement, Hillgrove proposes to offer eligible shareholders with registered addresses in Australia and New Zealand up to A$30,000 worth of shares under a non-underwritten Share Purchase Plan (“SPP”). The Record Date for the SPP is 7:00pm AEST Tuesday, 28 February 2023. The issue price under the SPP will be at the same price as the Placement. The offer price of $0.053 per share represents a discount of 17.2% to Hillgrove’s last closing price of $0.064 per share on 24 February 2023 and a 15.3% discount to the 5-day VWAP. Participation in the SPP is entirely optional and is open to all shareholders, other than shareholders who have registered addresses in countries outside Australia and New Zealand where regulatory requirements make participation by the shareholder unlawful or impracticable. Full details of the SPP will be sent to eligible shareholders shortly. New Shares issued under the Placement, Freepoint Placement and SPP will rank equally with existing Hillgrove ordinary shares on issue with effect from their date of issue. Canaccord Genuity (Australia) Limited are acting as the Sole Lead Managers for the Placement and SPP. HEDGING TERMS Concurrent to the capital raising, the Company and Hillgrove Copper Pty Ltd (a wholly owned subsidiary of the Company) have entered into a binding term sheet ("Hedging Term Sheet") for a mutually agreeable hedging program for AUD copper with Freepoint, covering at least 16,000 tonnes of copper (the “Hedging Program”) in concentrate on the following schedule: • 6,000 tonnes at, or as close as practical, to completion of the Tranche 2 Freepoint Placement or such other alternate funding for the Tranche 2 Freepoint Placement and the copper price is above A$12,500/t plus hedging margin (“Tranche 1 Hedging”); and • an additional 10,000 tonnes when certain operating performance hurdles are met and the copper price is within the pricing window of A$12,000/t - A$21,650/t plus hedging margin (“Tranche 2 Hedging”). Hillgrove has the right to (subject to the right of first refusal of Freepoint) to pursue third party offers for the Tranche 2 Hedging if the copper price increases above A$21,650/t prior to achieving the performance hurdles required to effect the Tranche 2 Hedging. The Hedging Program will assist the Company achieve pricing stability for its copper product and underpin the financials of the mine plan. The Hedging Program is subject to the satisfaction of standard conditions for transactions of this nature, including: • completion of technical, legal and financial due diligence by Freepoint to its satisfaction; • approval by Freepoint's board of directors to the hedging; • the copper price being greater than the aggregate of A$12,500/t plus hedging margin;
Keith
HGO Price at posting:
6.7¢ Sentiment: Buy Disclosure: Held
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