Now we move on to our penultimate presentation of this afternoon. We've got Hillgrove Resources CEO and Managing Director Bob Fulker. Bob's got a background in mining engineering, and he was previously the COO of both OZ Minerals and Evolution Mining. Bob is hoping to emulate the success that he helped contribute to at OZ Minerals and Evolution Mining, and together with his CFO, Luke Anderson, looking to grow Hillgrove into a larger copper and gold producer. It's Bob's first time presenting at Diggers & Dealers, so please give him a warm welcome. Thank you.
Thanks, Bob. Obviously, no pressure with trying to re-emulate OZ Minerals. Good afternoon, everybody. My name is Bob Fulker, and I'm the MD at Hillgrove Resources. It's always difficult, I think, being the second last presenter of the day, but it's on the first day, and everybody's waiting to get out into the auditorium, have a beer, or more, I hope, is having great conversations, which is what the conference is about. I do hope you stay tuned in because I do believe that we have a compelling story at Hillgrove. We are a copper producer based in South Australia, operating in a Tier 1 jurisdiction, and our vision is simple – to build an Australian copper mid-tier multi-asset operation. One that generates cash today, has multiple organic pathways, and multiple catalysts in the near term for a shareholder re-rating.
Copper is the cornerstone of the world decarbonization, electrification, and the build of the infrastructure that we require. Hillgrove is one of the few ASX-listed companies producing into that thematic today. Not just a drill hole, not just a promise of something in three to five years' time, but we're producing copper and putting it into today's market. I'll start with a quick snapshot of Hillgrove. We own 100% of the KEMIN II copper gold mine, invariably located 55 km outside of Adelaide. Previously operated as an open pit, in 2024, we recommenced mining underground. We are now producing copper concentrate and shipping it to the world. We do have an $18 million Australian franking credit. We also have $280 million of income tax losses, which we can use into the future.
A market capitalization that we believe does not reflect our true value or potential of the business today or the growth opportunities that we have in front of us. An EV to EBITDA ratio of only three to four times our 2024 earnings when we're still in the ramp-up phase. This ratio deteriorates further when you actually compare us to the 2025 earnings that we're forecasting. Thus, we have a compelling investment message that I think everyone should actually have a listen to. This slide is a good summary of how we're going to achieve our vision to become Australia's next mid-tier multi-asset copper producer. The first building block is well known to everybody, and that's the global copper thematic. I'll touch on that slightly in the next slide. Secondly, we're an operating producing copper. We're in operation producing copper and generating cash. We're not just pitching an idea here.
We're not three years from production. We actually have revenues concentrated in trucks and a $3.6 million-ton plant running at 1.4 million tonnes. We have capacity to expand. Thirdly, on the basis of us delivering our plan, we do expect the market will recognize the value proposition that we represent. With this, our comparative metrics should adjust accordingly, especially considering we are producing copper and we have exploration and resource upside. Finally, leveraging the existing asset that we have and using the platform at KEMIN II's copper production to grow the company through both organic and inorganic means. While the world copper thematic is well known, I do believe it's worth spending a couple of minutes on the main topics. Copper is central to the global push for decarbonization. We demand accelerated cross-renewable energies, EVs, power, and data infrastructure.
When you temper this with the average global mining head grade declining over the last few years, and when you put that in context of the recent U.S. tariffs that have depleted the LME stockpiles, this will actually improve the short-term view outside of the U.S. Mines are getting older. 51% of the mines in the world today are over 50 years old. We need an enormous investment over the coming decades to meet this energy transition. $250 billion, according to BHP, over the next 10 years alone. Copper has a new floor. Overlay copper production companies who have departed from the ASX. We've got OZ , we've got Rex, MAX, sorry, Xanadu, New World. The investor who wants to have exposure to the Australian copper producers has a reducing pool of options. There is a fundamental shift approaching the Australian copper market.
At Hillgrove , we are producing, growing, and ready to deliver into the world demand for copper. At KEMIN II, we have laid the foundation. We produce copper and generate cash flows. We're not going to stop there. We're constantly looking at ways of how we can improve. First off the rank was the Nugent acceleration initiative, which brings another deposit online and will see us increasing production by 25%. More importantly, it will see us reducing our unit costs in both mining and milling between 15% and 20% over the next 6- 12 months. We have 315 meters of decline to break through the Nugent deep going. Strike drives have already started, and we'll be stoking this year. Now we are looking forward to our next deposit.
With this year's 20,000 meters of exploration drilling, we're not just expanding Kavanagh and Nugent, but we're also targeting four new mineralization zones. The most exciting of these is the Emily Star one, which has 2.6 million tonnes of existing resource, which we're waiting to exploit. All this can be fed into the existing infrastructure and improves the utilization of the 3.6 million-tonne processing plant with zero major capital. 2025 was always going to be a year of two halves. We're still growing the footprint at KEMIN II. As this increases, our operational consistency and financial metrics will improve. As of the 1st of June, we had 11.5 km underground of development and 470,000 tonnes of developed stocks. Impressive when you consider that we only started 18 months ago. This will result in increased tonnes in the second half of the year.
The Nugent breakthrough represents a significant milestone for KEMIN II. It brings on the third ore source in the mining sequence. It also will deconstrain the mine, allowing more improved efficiencies and also to increase our productivity. In the coming months, costs will reduce as we demobilize the Nugent contractor, renegotiate and extend major contracts, and continue our operational improvement journey as our business matures. In the first half of this year, the operation has delivered an operating cash flow of $19.1 million. We've also spent $17.7 million in capital growing the development footprint. Now onto the fourth building block, which is growth, both organic and beyond. Unlike many others that rely solely on inorganic growth or large major capital spends, we are fortunate to have a number of opportunities on the mining list, as well as within 10 kilometers of the plant.
We believe we're on the cusp of KEMIN II to get it humming. We are about to complete the execution of the step one of our organic growth, which is the increase in mining rates. This will improve the utilization of the KEMIN II's installed processing capacity, which is actually at 3.6 million tonnes, and we still won't reach it. Bringing additional feed into the KEMIN II plant provides significant, low-risk economic growth path for us. We're fortunate to have the geology to actually allow it. We know our geology. We have a sound mineral resource and ore reserve, which will be updated in our quarterly update in Q4 this year. We think this is just the beginning. We have an exploration target, which is on the right-hand side of the screen, of 25 million- 40 million tonnes of 0.7%- 1.4% copper. We are drilling these targets this year.
The organic growth story is simple. We have drill targets within the mine footprint. We have a plant that is currently underutilized. We have a rail corridor to transport material from further afield and a platform to grow without the greenfield financial or operational risk. In conclusion, Hillgrove Resources offers a rare near-term leveraged investment opportunity in the copper sector. With production underway, significant exploration upside, and high-quality infrastructure in place offering available processing capacity, Hillgrove is one of the few ASX-listed companies positioned to benefit immediately from the rising demand of copper driven by the electrification push. With a current EV to EBITDA ratio reflecting our 2024 cash flow, a year of low production due to mine commissioning, we are ripe for a re-rate, in line with our intrinsic value and the organic growth options that we have in front of us.
We are delivering key milestones, increasing our production footprint, and will deliver our second annual underground mineral resource and ore reserve in the December quarter. The company's strategic vision is grounded in operating excellence, disciplined growth, and capital efficiency. This will underpin our transition to a multi-asset mid-tier copper producer. All this with an asset located in a Tier 1 jurisdiction and the world market entering a looming supply-demand deficit, which we're ready to deliver into. Thank you very much for your time, and I hope to see you outside.