Thank you very much, Pete. Good morning, everyone. Thanks very much for joining us today. I'm Chris Drew, one of the Metals and Mining Analysts with MST Access, and delighted to be working with Pete and the team at NWR Communications to bring you our Emerging Copper Rock Stars Webinar today, over today and tomorrow. The first thing I'd probably like to say is we ran a similar event in March, and I think if you'd bought all the stocks back then, you'd have probably doubled or tripled your money in some cases. I guess the key message from the next day or two is to buy the stocks that are presenting. It's a good outcome, I think. You are going to hear from a range of companies. We've got pretty much the full spectrum covered from early-stage explorers with some great assets like Sunstone and Blackstone .
We've got some slightly more advanced developers, names like Coda , American West Metals, and then we've got guys ready to transition into construction and production with Orion , KGL Resources, Supreme , and out first, we're going to have our producer at Hillgrove . We've also got a bit of gold thrown in the mix, which is obviously topical right now with a few of the companies presenting having copper-gold assets. Hopefully something for everyone joining us over the next couple of days. I'd like to thank all of the speakers for taking the time to join us today. I know they've got plenty on. They're all busy. Really looking forward to getting an update on the names and where everyone is headed.
Before we get into the presentations, I'd just like to take the opportunity to have a quick intro to MST Financial for those that are a little bit less familiar with where we are, and I'll set the scene with thoughts on why we think copper is a great space to be looking for mining investments. MST Financial, hopefully you can see the slides there. We're a research-driven full services, financial services, sort of stockbroking platform. The research we do comes in two key platforms: our institutional research through MST Marquee and MST Emerging. We're around 13 analysts covering 120 stocks in that part of the business. Of those analysts, there's around eight top-rated in the sector, and that's a leading amount across the street. A pretty impressive position there for MST, I think. Then secondly, we've got our small-cap company-sponsored research. That's MST Access. We've got around nine analysts.
Most of us have sort of 20-odd years in the market covering around 85 stocks in that part of the business. It often surprises people to learn that we cover more stocks than any other investment bank in Australia, and we've also got the most top-rated analysts. I think we'd argue we've got a leading team of analysts across the street, and that's a function of, and reflects, the research-focused nature of what we do. For a bit more info on MST and the stocks we're covering, just take a look at our website. It's all up there. Secondly, now we'll turn onto the commodity theme for today, copper. It remains one of our preferred exposures across the commodities spectrum. We see a number of themes playing out to support this.
I'm just going to hit a few of those at a very high level in a couple of minutes before we get into our speakers today. Firstly, I'll just touch on the supply side of the equation. You can see here a couple of fairly established trends that people are probably a bit familiar with. You've probably heard about these. The first chart just shows we're simply not discovering as much copper as we used to. That could change with exploration, but the trend over the last 10 - 15 years there is very clear. Since around 1990, of the 239 discoveries of deposits that contain more than 500,000 tons of copper, only four of them have come in the last five years. Of those 239 deposits, only 15 have actually moved into construction or production.
That means we're increasingly reliant on existing mining operations to deliver more and more copper. The chart on the right shows that growing production out of an existing asset base is going to be challenging given the grade decline that we're seeing. From a supply perspective, clearly the pressure remains firmly on copper. The next couple of slides are on the demand side of the equation. We probably all know how closely copper is linked to GDP growth. There are a couple of themes coming through that are starting to change that, I think, a little bit. We've got emerging megatrends of decarbonization and electrification. What's important here is that we're not just talking renewables in terms of copper demand. Whether you're building gas or nuclear or coal, you're still going to need plenty of copper. Grids themselves are going to need plenty of copper to handle the electrification.
There are also demographic drivers underlying some of this as well. It's not just Western renewables. You've got 7 billion people in essentially the rest of the world outside the slightly more fortunate 1 billion of us in the West that are all seeking better access to energy and electricity as well. That's copper intensive. These are longer-term drivers that are going to continue to support demand. The second area on the demand side that I think is changing things that I want to touch on, you've probably heard plenty about this with data centers and AI. At the moment, this is something like less than 1% of copper consumption, but at reasonable levels of copper intensity, growth, and data center capacity, we're going to see that lifting to 2.5% - 3% of copper demand by the end of the decade.
The way things are shaping up with the huge and ongoing build-out announcements we're hearing, that's probably looking conservative. That's just the copper in the data centers. It's not what we're going to need for power supply or associated power supply or infrastructure for these assets. That's an incremental source of new demand that's just adding to that medium-term pressure we see coming in copper. That's just a super quick look at a couple of key themes here. Definitely not an exhaustive list of drivers. We could talk about EV penetration. We could talk about what we're seeing in India, talk about the need for grid upgrades and maintenance, all further supportive medium and longer-term dynamics. In the shorter term, we've got supportive inventory dynamics. We've got negative treatment charges and refined charges. That's really supportive for our emerging producers.
We've got an unusually large amount of supply disruption right now. Some of the bigger names in the world are struggling. We've got trade disruptions that are certainly a risk, but I think more broadly, the short-term backdrop continues to be very supportive for copper. To wrap that up, what I want to leave you with today is that for a very long time, most of the 20+ years I've been looking at the space, we've been talking about the supply side constraints as drivers of improving copper price. Those issues around grade decline and supply aren't necessarily new, but what we've got now, and we're seeing it come through in the last few years and will continue to increase in terms of its impact, is the demand side drivers: decarbonization, electrification, and more recently, data centers, AI.
That's a key change which we think is going to see copper demand decouple from those historic plus or minus GDP growth type rates, going to result in medium to longer-term tightness in the copper space. What you ideally want to see for commodities is to perform supply side constraints running into strengthening demand, and that continues to be the setup we see in copper. I'll leave it there. Thanks very much for that, and I will hand it back to Pete to introduce our first speaker today. Thank you, Pete.
Thanks, Chris. I'll break that down: high demand, low supply, price increase. That's pretty simple.
That's it.
All right. Thank you very much. We are going to be looking forward to having our first speaker today to join us. We are being joined here by the Managing Director and CEO of Hillgrove Resources, Mr. Bob Fulker, who's been up pretty early with the dynamite this morning. We're looking forward to hearing from him to tell us the strategy for Hillgrove, where they are today, where they're going, and why Hillgrove Resources is one of the emerging copper rock stars. Good morning, Bob. Thanks for joining us.
Thanks, Pete. How are you?
Good, thank you. If you'll just get your screen shared up, we can move straight along.
Yep, it's trying to share at the moment. For some reason, it's still going around in circles.
Takes a second or two.
I'll try again.
There it is. It's coming up now, Bob.
Okay, thank you. Good morning, everybody. Do you want me to start, Peter?
Yes, please. Let it rip.
Perfect. Good morning, everyone. My name is Bob Fulker. I'm the MD and the CEO at Hillgrove Resources. Thanks for joining today. Once again, thanks to Chris and the team. It's a great session and lots of good people to listen to. Hillgrove's offer is actually full exposure to a fully permitted Australian copper producer with a clear pathway to scalable growth. We're operating, expanding, and unlocking value. I'm excited to walk you through our story today. Hillgrove is in a strong position. As I just said, we are fully permitted. We have zero debt. We're fully funded to expand our growth and our production to an operation of 1.8 million tons or greater this coming next year. We have a 3.6 million-ton plant running at 1.5 million tons per annum currently. The operation is generating cash. This year, we've invested heavily in our growth agenda.
Our strategy is based on two clear, simple approaches: deliver Kanmantoo's operational performance and grow the Hillgrove copper business. 2025 has been a turning point. We started the year at a 1.4 million ton per annum run rate. We've exceeded this and are currently running at 1.5 million tons per year. We've accelerated the Nugent development ahead of our plan and within our costs and forecasts. As of this morning, as Peter said, we fired the first stoke in Nugent and it's on the ground. Over the next six months, we'll be progressively increasing the mining rate up to the 1.8 million tons per annum. On top of all this, we've been getting some great exploration results that have demonstrated we need to commence the development of the Emily Star to further improve the utilization of the installed capacity of the processing plant and to increase our copper production.
Just as important as the production side is the cost side. Costs are under control. Our AISC is expected to decline, driving stronger profits and margins and free cash flow generation. In the first six months of this year, we delivered AUD 15 million of operating cash flow whilst heavily investing in the future of our operation with AUD 26 million of capital expended. On growth, organic growth is best. Capital efficiency and pathway for Hillgrove. The large installed capacity of the plant is our competitive advantage. This is why Emily Star is so exciting. It's the extension of the known resource that was mined via the open pit that extends to depth. All this is within our mining lease. I'll speak more about Emily Star in the future. Once we get our operations sorted at Kanmantoo, then we can move on to inorganic growth. Kanmantoo is not just a concept.
Kanmantoo is a producing mine with spare processing capacity located within the Adelaide Hills. We've got all the infrastructure. We've got the transport corridor just next door to us to actually produce cost effectively. We're generating operating cash flow and are growing our production as we lower our unit costs. We expect this to improve our margins as we scale the operation. Kanmantoo mineral system is large and is growing as we continue to drill the extents. Over the past year, we've been predominantly drilling Nugent and the Kavanagh regions, with some long exploration holes into the proximal mineral systems. The next minerals resource and/or reserve estimate will include an additional 49 km of drilling and will be out in the coming months. To date, the most exciting intercept has been Emily Star.
This hole has shown the stacked mineralization mined during the open pit continues at depth, and this will be our next growth focus. Our first hole into Emily Star hit the inferred resource exceeding our expectation. Grades of 19 m at nearly 2% with gold credits are very nice when considering the multiple mineralized zones and the depth extension potential. This is the opportunity to increase the mining rate beyond the 1.8 million tons that we're currently aiming for. Whilst this is still an inferred resource, it has got me excited. We have a virgin underground area we can approach both from the surface and from the underground. We need to remain disciplined in our approach. Thus, we will commence development of an exploration drive over the coming months to establish an effective drilling platform to improve the resource confidence prior to committing to major capital development.
We're taking a three-staged approach, which will progressively develop Emily Star production center, allowing future production expansion. This guided approach is the first one to develop the exploration drive to within a couple hundred meters of the mineral zone, then to drill the top three to four sub-levels to improve our confidence level. Once this is done, we can start the major capital infrastructure. This will include some grade control drilling and some infill drilling, with the third being production level development and a third production center within Kanmantoo. This approach will stage the development of Emily Star as our knowledge of the resource improves and allows permanent infrastructure to be installed. As I mentioned earlier, this is the best use of capital that we have, taking Kanmantoo processing to greater than 1.8 million tons per year through organic growth, and we've only just started.
We have multiple opportunities within the Kanmantoo lease to continue to expand, and the opportunity to bring regional material to the plant is economically viable due to the proximity of the rail corridor, which is only 300 m from the plant. This is our untapped strategic advantage. In wrapping up, we have a new team. We are producing copper with a growing world demand. We have stabilized operation and now growing production to take advantage of the large installed milling capacity. We are fully permitted and have a pipeline of unleashed growth opportunities within the footprint of the processing plant. We have costs under control. We are highly leveraged to the copper price, and we now have a balance sheet which will give us the ability to complete the Nugent development and advance the exploitation of the Emily Star opportunity. We're focused on execution, delivery, and growth.
Thanks for your time, and I hope you enjoy the rest of the presentations. I'll hand it back to Peter.