The companies said in a joint statement to the ASX on Thursday morning that they had signed an agreement under which Hillgrove could earn an 80% interest in the Mutooroo Copper Project.

Hillgrove currently operates the Kanmantoo underground copper mine in the Adelaide Hills.

Hillgrove to earn in

Under the deal, Hillgrove can complete a prefeasibility study looking at the viability of processing Mutooroo ore through the Kanmantoo processing facility.

The companies said:

Hillgrove's Kanmantoo processing facility provides a potential lower capital intensity and lower execution risk pathway to develop Mutooroo's 192 thousand tonne of copper from the JORC Sulphide Mineral Resource Estimate. Subject to further test work and the outcomes of the PFS, Hillgrove believes Mutooroo has the potential to lift Hillgrove's Cu production beyond 20kt per annum.

Hillgrove said the prefeasibility expenditure would be phased to mitigate risk and would be fully funded from cash flow.

Under the agreement, Hillgrove will initially issue $5 million in shares to Havilah and then invest up to $10 million in new drilling over a period of up to 24 months.

Hillgrove will earn its full 80% interest on a final investment decision to go ahead with the project, at which time it will pay Havilah a further $35 million, of which between 30% and 70% will be cash.

Project ticks the boxes

Hillgrove Chief Executive Officer Bob Fulker said:

Mutooroo's high‑grade sulphide mineralisation, proximity to rail, and favourable logistics align strongly with Hillgrove's centralised processing hub model. Importantly, the capital intensity could be potentially lower compared to a standalone development, and execution risk could potentially be materially reduced by leveraging infrastructure, approvals and operational capability we already have in place. This transaction provides Hillgrove shareholders with a lower risk, capital efficient growth option at a time when new copper discoveries are scarce, and development costs globally continue to rise. The staged PFS approach to be funded out of Hillgrove cashflow ensures disciplined capital deployment with limited cash drain, with expenditure ramping up only as key technical assumptions are validated.

Havilah Technical Director Chris Giles said the deal had the potential to substantially reduce execution risk for Havilah shareholders.

The Mutooroo project is in South Australia, about 60km southwest of Broken Hill.

It is about 16km from the Transcontinental railway line and Barrier Highway, providing direct access to established freight routes across South Australia, the companies said.

In early trade, Havilah shares were 7.4% higher at 65 cents, while Hillgrove shares were 4.7% higher at 4.4 cents.

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The metal has now climbed by more than 30% since early January, helping to drive strong gains for some of the leading ASX copper stocks.

For example, shares in the world's biggest copper miner BHP Group Ltd (ASX: BHP) are currently flirting with 52-week highs.

Overall, BHP shares have risen by about 13.6% since the start of the year to $45.39 per share at the time of writing.

Pure-play ASX 200 copper stocks have performed even better.

Shares in Capstone Copper Corp (ASX: CSC) have soared by 43% in the same period, with Sandfire Resources Ltd (ASX: SFR) shares also rocketing by 81%.

But one lesser-known copper exploration stock has stolen the spotlight in recent weeks.

That company is Havilah Resources Ltd (ASX: HAV), and a major development in November sent its share price soaring.

Let's take a closer look at what unfolded.

Diversified ASX exploration stock

Havilah operates a portfolio of five exploration projects scattered across the Curnamona Province in northeastern South Australia.

Collectively, these assets are prospective for various commodities such as copper, gold, uranium, and iron ore.

However, the group's flagship asset is the Kalkaroo copper, gold, and cobalt project.

Management believes Kalkaroo represents one of the larger undeveloped open-pit copper deposits in Australia.

It contains 1.1 million tonnes of copper, 3.1 million ounces of gold, and 23,200 tonnes of cobalt.

And last month, Havilah signed a transformative agreement with Sandfire that could move Kalkaroo closer to production.

What happened?

In essence, the two ASX copper stocks agreed to jointly advance Kalkaroo and form a strategic exploration alliance across the Curnamona Province.

Under the agreement, Sandfire can earn an 80% interest in Kalkaroo through a two-stage earn-in structure.

Firstly, the deal involves a $105 million upfront consideration to Havilah, comprising 70% Sandfire shares and 30% cash.

Secondly, Sandfire committed to spending another $105 million after completing a new pre-feasibility study (PFS) assessing the merits of building a mine at Kalkaroo.

Separately, Sandfire will also spend $30 million in regional exploration as it looks to unearth new copper mineralisation across the Curnamona Province.

Havilah Resources Technical Director, Dr Chris Giles, commented:

We are very pleased to have reached a binding agreement with Sandfire that provides for completion of a new Kalkaroo PFS, including a substantial drilling program targeting resource upgrade and expansion…

Immediate value for Havilah shareholders will be realised via an upfront payment, which also gives Havilah a direct stake in Sandfire's successful global mining operations via the share component.

Havliah share price in focus

The market appeared to back the agreement.

Since the deal was revealed, shares in Havilah have moved from $0.27 a month ago to $0.57 per share at the time of writing.

This equates to a 111% return for shareholders in this ASX copper stock.

For comparison, the All Ordinaries Index (ASX: XAO) is down by around 1.8% across the same timeframe.

The post This little-known ASX copper stock has bolted 111% in just one month. Here's why appeared first on The Motley Fool Australia.

The companies announced on Thursday that Sandfire would earn up to 80% of Havilah's Kalkaroo copper and gold project in South Australia by investing an initial $105 million immediately, followed by a further $105 million upon completion of a new prefeasibility study.

The initial $105 million investment would be made up of 30% cash and 70% Sandfire shares.

Sandfire has also committed to spend $30 million on regional exploration across a two-year period.

Mine has a clear path to development

The companies said in a joint statement to the ASX that the investment from Sandfire would establish a "rapid pathway" to the development of the Kalkaroo project in the east of South Australia, which Havilah has been working on for more than two decades.

The deal, which also involves a minimum of 20,000 of infill and resource extension drilling at Kalkaroo, would enable the companies to "potentially expand" the existing ore reserve of 100 million tonnes of ore, with a grade of 0.47% copper and 0.44 grams per tonne of gold.

It is envisaged that the updated prefeasibility study will be completed in the next 18 to 24 months.

Sandfire Managing Director Brendan Harris said the project was a good fit for his company.

He went on to say:

We are thrilled to have the opportunity to work with the Havilah team to de-risk the Kalkaroo copper-gold project, which is in a preferred jurisdiction with ready access to key road, rail and energy infrastructure and ground water supply, and skilled labour from Adelaide, Broken Hill and the broader regional community. The decision to move into the Curnamona Province in South Australia is fully aligned with our strategy and has the potential to replicate our successful entry into the Kalahari Copper Belt.

Havilah Managing Director Dr Chris Giles said the binding agreement made good sense for Havilah shareholders, enabling the company to progress Kalkaroo while also gaining exposure to Sandfire through the share issue.

Dr Giles said:

Exposure to longer-term value is also achieved via Havilah's retained 20% interest in Kalkaroo. The funding under the exploration strategic alliance will allow us to accelerate regional exploration in South Australia with the objective of transforming the highly prospective Curnamona Province into Australia's next major copper province, centred on the Kalkaroo project development.

Havilah shares were trading 31.5% higher in early trade on Thursday at 35.5 cents, while Sandfire shares were 0.9% higher at $16.59.

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At the time of writing, the ASX mining share is trading 28.57% higher at 36 cents following a company announcement this morning.

The gains bring its total return to more than 100% over the past three months.

While the announcement itself isn't price sensitive, its contents in some ways are, seeing as it relates to the potential disposal of a key asset.

In broad market moves, S&P/ASX 300 Metals and Mining Index (ASX: XMM) is currently down 0.25%.

What's up with this ASX mining share?

Pending the final transaction of its deal with OZ Minerals Limited (ASX: OZL), Havilah advised today that it will hold a general meeting for shareholders on 31 August.

Recall that Havilah and OZ announced back in May the pair had signed a term sheet granting the latter an option to buy the Kalkaroo copper-gold-cobalt project.

The duo then signed definitive agreements on 26 July. However, there's one final step left in the process and that's to seek approval from the company's shareholders.

Havilah's board supports the proposed transaction as it believes the $205 million offer "produces a significantly better financial outcome and lower risk alternative" than if it were to mine the Kalkaroo deposit itself.

In today's release, it said:

The contingent consideration, of up to $200 million, [also] provides Havilah with exposure to future Kalkaroo Project upside in the event of mineral resource upgrades and/or copper prices above US$10,000 per tonne.

The Strategic Alliance is a potential catalyst for development of a major new copper mining region in the northeast of South Australia on Havilah's extensive tenement holdings in the Curnamona Province.

The market has certainly voted in favour of the announcement today and shares have spiked on a volume approximately seven times that of the four-week average.

In the past 12 months, the Havilah share price has gained around 69%.

The post Obscure ASX mining share surges 29% following OZ Minerals copper deal update appeared first on The Motley Fool Australia.

At the time of writing, the Havilah Resources share price is 33.5 cents, 97% higher than its previous close. However, it hit a multi-year high of 45 cents earlier today, representing a 164.7% surge.

Let's take a closer look at today's news from the copper, gold, cobalt, rare earth elements, and uranium explorer.

Why is the Havilah Resources share price flying?

The Havilah Resources share price is rocketing after the company announced its plan to allow OZ Minerals Limited (ASX: OZL) to acquire the Kalkaroo copper-gold project in South Australia for $205 million.

Oz Minerals has 18 months to decide if it will fork out the cash for what is potentially one of Australia's largest undeveloped open-pit copper deposits. In that time, it will be conducting a study program on Kalkaroo.

The project currently boasts a mineral resource of 1.1 million tonnes of copper, 3.1 million ounces of gold, and 23,200 tonnes of cobalt.

Oz Minerals can back out of the agreement as long as it's drilled at least 5,000 metres at the project. Otherwise, it will be forced to pay a shortfall of $400 for each metre not drilled.

The agreement also includes a potential $65 million consideration payable if the project's resource estimate increases by 30%.

Another annual contingent payment is linked to the price of copper. It is valued up to a cumulative $135 million, subject to inflation metrics.

Additionally, a strategic alliance between the pair will help Havilah Resources fund a major copper exploration campaign.

The alliance will run for the duration of the 18-month option agreement.

It will see Oz Minerals paying Havilah Resources $1 million each month, with 50% of that going towards exploration at the Curnamona Copper Belt.

The acquisition plan will be subject to Havilah Resources shareholder approval. The company expects it will be put to a vote in August.

Its directors have recommended the transaction, subject to an independent expert ruling it's in shareholders' best interests.

What did management say?

Havilah Resources technical director Dr Chris Giles commented on the news driving the company's share price sky high, saying:

[The] strategic alliance with OZ Minerals … aims to harness the respective skills of both companies to explore and develop Australia's next great copper region in the Curnamona Province.

Exercise of the Kalkaroo option by OZ Minerals would result in monetisation of Kalkaroo and provide what we believe is a fair return for our shareholders without Havilah taking on the longer-term development and financing risks inherent in a large new mining project at this time.

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Management announced it had signed a binding term sheet with explorer Havilah Resources Ltd (ASX: HAV).

The term sheet gives OZ Minerals the option to acquire 100% of the Kalkaroo project. It also sets the basis for a strategic partnership between the miners in the prospective Curnamona Province in South Australia.

The OZ Mineral share price isn't the biggest winner

The OZ Minerals share price rallied to a high of $21.85 before settling down to trade 0.75% higher at $21.62 at the time of writing.

But it's the Havilah share price that saw most of the action. It surged 164% to 45 cents this morning. At the time of writing, it's settled at 32 cents a share, 88% higher. The term sheet is material to the mining junior as OZ Minerals will pay $1 million a month to Havilah for the period of the term sheet.

Half of the payment will be used by the explorer to identify and advance nearby exploration opportunities in the Curnamona Province.

Details of the term sheet

Further, OZ Minerals is committed to spending another $76 million on exploration at the Kalkaroo project and on partnership activities.

In return, the S&P/ASX 200 Index (ASX: XJO) miner has up to 18 months to decide if it wants to buy the Kalkaroo project for $205 million.

Earnout component pushes acquisition cost to a max of $135m

It will have to pay Havilah another $65 million upon a 30% uplift in Kalkaroo's Measured and Indicated Resource estimate. This is as well as a copper price-linked contingent payment in each year of production up to a maximum cumulative amount of $135 million.

Kalkaroo's Mineral Resource estimate of 245Mt @ 0.45% Cu and 0.39g/t Au was announced by Havilah in 2018.

OZ Minerals chief executive Andrew Cole said:

The agreement provides a low-cost option and flexibility to study the Kalkaroo project, while retaining the optionality to acquire 100% of the project for a fixed acquisition price together with any deferred contingent consideration.

We believe our approach of taking projects from an early study phase through development and into operation can unlock significant value for our stakeholders, something we have demonstrated with Carrapateena, now in its third year of operation, and continue to show with West Musgrave as we approach a final investment decision on the project later this year.

OZ Minerals share price still in the red

Shareholders will be hoping that the deal will help turn sentiment towards the OZ Minerals share price. Its shares have fallen more than 12% over the past 12 months while the ASX 200 has gained around 1%.

Meanwhile, the Havilah share price has been saved by today's jump. Its shares were wallowing around a more than one-year low but are now around 17% ahead over a 12-month period.

The post Oz Minerals share price rallies on potential $200m acquisition appeared first on The Motley Fool Australia.

For example, back in mid-2016, Goldman Sachs infamously slashed its coal price forecast and warned investors off coal right before its price went absolutely gangbusters for the next two years. 

However, cobalt investors have some good news today if the analysts at UBS are on the money about the cobalt price direction over the next year.

According to a Reuters news report, UBS is forecasting a 60% climb for cobalt prices over the next 18 months to US$20/lb, due partly to the closure of a Glencore cobalt mine in the Democratic Republic of Congo. The article also reports that cobalt prices could move even higher by 2024–25 due to a supply deficit. 

The ASX has dozens of micro- and small-cap cobalt miners and prospectors looking for a cobalt cash-in, with some of the more popular ones including Clean Teq Ltd (ASX: CLQ), Havilah Resources Limited (ASX: HAV), Cobalt Blue Holdings Ltd (ASX: COB), Jervois Mining Limited (ASX: JRV) and Australian Mines (ASX: AUZ).

Both cobalt and lithium are key ingredients in the batteries required to power electric vehicles, while cobalt is also commonly used in the batteries to power increasingly popular everyday electronic items such as laptops and iPhones.

The story is attractive on first blush, but whether any of these companies can turn rising demand into free cash flow and returns for shareholders is another story. 

Still, if UBS is on the money, these stocks could enjoy a strong 2019 and 2020.

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