Copper miner Hillgrove Resources has entered into a binding tailings processing agreement with Heavy Minerals to extract and sell garnet from the Kanmantoo mine’s process tailings and tailings storage facility (TSF) in South Australia.

Under the agreement, ASX-listed Heavy Minerals will construct and operate a garnet processing plant at Kanmantoo to recover garnet from the existing process stream, with potential future recovery from the TSF after Hillgrove’s mining operations conclude.

Hillgrove will receive 15% gross revenue payments from the sale of in-specification garnet during mine operations, reducing to 5% after mine closure, as well as A$25/t for out-of-specification garnet used by Heavy Minerals.

Heavy Minerals has also guaranteed minimum gross revenue payments of A$500 000 a year once production begins, increasing to A$1-million a year once output reaches 100 000 t/y.

In addition, Hillgrove will receive an initial A$50 000 payment on execution of the agreement, followed by a A$150 000 payment at final investment decision.

The agreement is also expected to extend the operating life of the Kanmantoo TSF and could ultimately reduce Hillgrove’s rehabilitation liabilities.

Following completion of Hillgrove’s mining operations, Heavy Minerals may elect to continue extracting garnet from the facility and assume the remaining site rehabilitation obligations, subject to the terms of the agreement.

Hillgrove CEO and MD Bob Fulker said the agreement would create value beyond copper production.

“This agreement delivers multiple benefits to Hillgrove shareholders. It provides a new income stream, extends the life of our TSF, and importantly, has the potential to transfer rehabilitation obligations to Heavy Minerals Limited post Kanmantoo closure. It is a strong example of value creation at Kanmantoo beyond copper production,” Fulker said.

Garnet is used primarily in waterjet cutting and abrasive applications, with global waterjet cutting consumption estimated at about 500 000 t/y.

Hillgrove expects Heavy Minerals to initially produce up to 50 000 t/y of garnet for the first three years, increasing to about 100 000 t/y from the fourth year of operations.