Slide 1: Operations & Exploration Company Update
For personal use only OPERATIONS & EXPLORATION COMPANY UPDATE DREW SIMONSEN IIIII MANAGING DIRECTOR COMPANY PRESENTATION IIIII 18 JUNE 2012
Slide 2: Disclaimer: Expectations & Forward Looking Statements
DISCLAIMER EXPECTATIONS & FORWARD LOOKING STATEMENTS This presentation contains information that is based on projected and/or estimated figures that reflect For personal use only expectations, assumptions and outcomes that may or may not eventuate. Any forward-looking statements are subject to a ran
Slide 3: Australian Cash Flow with Rim of Fire Upside
AUSTRALIAN MINING COMPANY AUSTRALIAN CASH FLOW WITH RIM OF FIRE UPSIDE For personal use only CASH FLOW, WITH EXPLORATION UPSIDE: Bird’s Head project Cash flow - Kanmantoo Copper Mine (100% owned), in South Australia Sumba project Rim-of-Fire exploration upside in Indonesia Sumba gold project (
Slide 4: Kanmantoo Update
For personal use only KANMANTOO UPDATE 4
Slide 5: Kanmantoo Copper Mines Close to Adelaide
KANMANTOO COPPER MINES CLOSE TO ADELAIDE ALL MAJOR SERVICES CLOSE BY 100%-owned by Hillgrove For personal use only Just 55km from Adelaide, South Australia Exploration Area EL4401 Mining Lease is within 500km2 Exploration License, both relatively unexplored Exploration potential considered h
Slide 6: Kanmantoo Copper Mine Aerial – April 2012
KANMANTOO COPPER MINE AERIAL – 13 APRIL 2012 For personal use only
Slide 7: Panorama from 1970's Waste Dump – April 2012
KANMANTOO COPPER MINE PANORAMA FROM 1970’S WASTE DUMP – APRIL 2012 For personal use only 7
Slide 8: Kanmantoo Economics
HILLGROVE RESOURCES LIMITED KANMANTOO ECONOMICS Robust economics supported by attractive hedging position For personal use only 50-55% production hedged at AUD8,320/t for 40 months from July 2012; Put options for 7,000t of copper @ AUD7,500/t (expiry June 2012 - March 2013) Next 8 months of
Slide 9: May 2012 Operations
KANMANTOO COPPER MINE MAY 2012 OPERATIONS Steady production improvement achieved over last quarter and design throughput For personal use only achieved in May Process plant operating at 300+ tph (design of 300 tph) Cu recovery at 91.9% (design of 90.5%) 4,854 tonnes concentrate, @ 27.1% Cu
Slide 10: Production Performance – To May 2012
KANMANTOO COPPER MINE PRODUCTION PERFORMANCE – TO MAY 2012 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 For personal use only Total Tonnes Mined Tonnes (kt) 1,053 991 1,112 1,221 1,165 1,095 837 Long Term Stockpile Ore Tonnes (kt) 160 147 75 108 86 104 42 Ore to ROM Tonnes (kt) 49 95 144 154 129
Slide 11: Crusher Replacement
KANMANTOO COPPER MINE CRUSHER REPLACEMENT Interim solution using Mobile For personal use only crusher 600tph capacity Flexible use Future use in crushing oxide stockpiles for heap leach Feasibility Study for permanent crusher upgrade Options analysis completed Initial cost estimate D
Slide 12: New Resource Statement
KANMANTOO COPPER MINE NEW RESOURCE STATEMENT New Resource For personal use only Undertaken by independent consultant – AMC Consultants Pty Ltd (AMC) Complete review of geological data set, incorporating 2011 RC drilling Completely new interpretation, not an update Conservative approach to
Slide 13: Updated Resource
KANMANTOO COPPER MINE UPDATED RESOURCE 35 For personal use only 30 25 20 Stockpiles 15 Measured 10 Indicated 5 Inferred 0 Dec‐03 Dec‐04 Oct‐06 Dec‐07 Nov‐08 May‐12 upgrade upgrade upgrade upgrade (NEW)* * The May 2012 Resource has been depleted relative to the November 2008 Resource due to recent tr
Slide 14: First Half 2012 Exploration Strategy
KANMANTOO COPPER MINE FIRST HALF 2012 EXPLORATION STRATEGY January 2012 Aerial Photo EXTENSION OF RESOURCES For personal use only 2012 program - focus on shallow COOPER’S FIND Resource extension within the Kanmantoo Mining Lease Wider spaced RC drilling to extend and Kavanagh potentially link kn
Slide 15: 2012 Exploration Success in Several Zones
KANMANTOO COPPER MINE 2012 EXPLORATION SUCCESS IN SEVERAL ZONES Aeromagnetics Image 2012 EXPLORATION SUCCESS For personal use only Early RC drilling at Emily Star South was Emily Star highly successful, returning: Critchley KTRC861 – 36m @ 0.81% Cu from 75m including: 21m @ 1.22% Cu from 79m KTR
Slide 16: Continuing Exploration Success in Several Zones in 2012
KANMANTOO COPPER MINE CONTINUING EXPLORATION SUCCESS IN SEVERAL ZONES IN 2012 Aeromagnetics Image Cooper’s Find RECENT EXPLORATION SUCCESS For personal use only A 2011 hole in North Kavanagh was deepened: Untested KTRC827 Matthew 12m @ 1.47% Cu KTRC827 4m @ 1.13% Cu from 142m and: 12m @ 1.47% Cu
Slide 17: Potential Accelerated Exploration Program
KANMANTOO COPPER MINE POTENTIAL ACCELERATED EXPLORATION PROGRAM ACCELERATED EXPLORATION PROGRAM For personal use only Number one priority is to extend the Kanmantoo mine life: conversion of Resources to Reserves extension of known Resources delineation of new, near-mine Resources Potential
Slide 18: Operational Improvements & Initiatives
HILLGROVE RESOURCES LIMITED OPERATIONAL IMPROVEMENTS & INITIATIVES Optimise mine productivity and operating costs For personal use only Feasibility study into replacement of the primary crusher to increase reliability, reduce costs and provide for capacity expansion Potential to accelerate exp
Slide 19: Indonesia Exploration
For personal use only INDONESIA EXPLORATION 19
Slide 20: Exploration Assets: Indonesia
EXPLORATION ASSETS: INDONESIA SPECIFIC ASSET SELECTION BY HILLGROVE Focused approach: only targeting large porphyry copper/gold deposits, For personal use only and associated epithermal gold deposits Partnership established first with professional in-country partners Only two assets selected b
Slide 21: Indonesia Sumba Island Epithermal Gold
INDONESIA SUMBA ISLAND EPITHERMAL GOLD For personal use only Masu Hillgrove has an 80% direct shareholding in PT Fathi Resources IUP rights cover almost 1,000km2 – valid to March 2017 Ex BHP project, with all BHP data available to PT Fathi Targeting Epithermal Gold Karipi prospect discover
Slide 22: Sumba Island Karipi Prospect
INDONESIA SUMBA ISLAND KARIPI PROSPECT Thin sediment masks prospective lithology but gold observed in exposed basement For personal use only rock over large areas Bonanza grades to 1,250g/t Au in outcrop rock chips Magnetic Karipi signatures Soil gold indicate strike geochemistry: continuation
Slide 23: Sumba Island Karipi Prospect Drilling
INDONESIA SUMBA ISLAND KARIPI PROSPECT Early stage exploration hits confirm the widespread presence of gold mineralisation For personal use only delineated by a 1.5km strike length gold corridor Better recent drilling results include: KP014: 3.75m @ 4.29g/t Au KP015: 2.85m @ 22.37g/t Au, 19.
Slide 24: Indonesian Exploration Future Exploration Plans
INDONESIAN EXPLORATION FUTURE EXPLORATION PLANS SUMBA For personal use only Initial diamond drill programme of 4,000m continues at Karipi Continue surface geochemistry and geological mapping Karipi – Masu area Assess additional target areas, particularly south coast potential porphyry copper-g
Slide 25: Bird's Head in West Papua: Porphyry Copper-Gold
INDONESIA BIRD’S HEAD PROJECT BIRD’S HEAD IN WEST PAPUA: PORPHYRY COPPER-GOLD West Delta For personal use only Hillgrove has an 80% beneficial interest in PT Akram through JV Agreement IUP rights cover almost 1,000km2, valid to March 2017 Ex-Normandy project: HGO acquired drilling, geophysics
Slide 26: Magnetic Signatures and Copper Geochemistry Point to Our Targets
INDONESIA BIRD’S HEAD PROJECT MAGNETIC SIGNATURES AND COPPER GEOCHEMISTRY POINT TO OUR TARGETS For personal use only West Delta Arc –normal transfer structure 1st VD TMI Magnetics 26
Slide 27: Copper Porphyry Signatures at West Delta
INDONESIA BIRD’S HEAD PROJECT COPPER PORPHYRY SIGNATURES AT WEST DELTA First (WD-014) of four completed For personal use only holes to date targets Green Cliffs structural corridor zone Better intersections include: Green Cliff 11m @ 0.23% Cu, 444ppm Mo WD-014 Structural Corridor 5m @ 0.38% Cu
Slide 28: Bird's Head Future Exploration Plans
HILLGROVE RESOURCES LIMITED FUTURE EXPLORATION PLANS BIRD’S HEAD For personal use only Drilling underway Rock chip sampling and surface geochem indicates significant anomalous copper Initial core observations confirm potassic alteration with disseminated copper sulphides Continue initial dri
Slide 29: Corporate Summary
For personal use only CORPORATE SUMMARY 29
Slide 30: Management Team
MANAGEMENT TEAM EXPERIENCED TEAM WITH PROVEN TRACK RECORD Drew Simonsen Cam Schubert Managing Director & Chief Executive Officer General Manager – Kanmantoo Project For personal use only Appointed MD & CEO in August 2010 Appointed late 2009 35 years in resources, investment and commercial bank
Slide 31: Executive Alignment Through Conditions on Equity Incentives
CORPORATE SNAPSHOT EXECUTIVE ALIGNMENT THROUGH CONDITIONS ON EQUITY INCENTIVES Criteria 2010 2011 2012 (PROPOSED) For personal use only Type Performance Rights (ZEPO) Performance Rights (ZEPO) Performance Rights (ZEPO) Number 4,720,000 4,595,000 TBD Fully diluted ownership ~0.6% ~ 1.1% ~ 1.9% by man
Slide 32: Details and Shareholder Distribution
CORPORATE SNAPSHOT DETAILS AND SHAREHOLDER DISTRIBUTION ASX listed: HGO For personal use only Shares on issue: 793.7 million SHAREHOLDER DISTRIBUTION Share price: AUD 0.14 (15 Jun 2012) Institutions 40.4% Market capitalisation: AUD 111.12 million (15 Jun 2012) Cash and cash equivalents: AU
Slide 33: Top Shareholders
CORPORATE SNAPSHOT TOP 20 SHAREHOLDERS Investors as at 31 May 2012 Share Holding % of isc For personal use only 1 JP Morgan Metals & Concentrates 55,886,772 7.0% 2 Renaissance Smaller Companies 36,255,289 4.6% 3 Dimensional Fund Advisors 33,951,051 4.3% 4 AMP Capital Investors 31,659,904 4.0% 5 Dr D
Slide 34: Compelling Investment Opportunity
HILLGROVE RESOURCES LIMITED COMPELLING INVESTMENT OPPORTUNITY For personal use only Kanmantoo – operating cash flows Hedging position provides for robust economics High optionality through: Operational improvement initiatives Resource/reserve extension Capacity expansion Indonesian exp
Slide 35: Disclaimer: Competent Persons
DISCLAIMER COMPETENT PERSONS The information in this report that relates to Kanmantoo Exploration Results, Exploration Targets and For personal use only Stockpiles is based on information compiled by Mr Pat Manouge, who is a Member of The Australian Institute of Geoscientists. Mr Manouge is the Kanm