Hillgrove Resources Limited · ASX:HGO
Hillgrove Resources — Q2 FY2014 Earnings Presentation
34 slides from Hillgrove Resources's earnings presentation, Sep 2, 2013
Slide 1: Q2 and Company Update
For personal use only Q2 AND COMPANY UPDATE GREG HALL IIIII CEO & MANAGING DIRECTOR RUSSELL MIDDLETON IIIII CHIEF FINANCIAL OFFICER 2 SEPTEMBER 2013
Slide 2: Assets, Board and Management Team
ASSETS, BOARD AND MANAGEMENT TEAM Bird’s Head project Production and cash flow in Australia For personal use only Sumba project Kanmantoo Copper Mine (100% owned), South Australia Rim-of-Fire exploration in Indonesia Sumba gold project (80% owned) Kanmantoo Bird’s Head copper/gold project (80%
Slide 3: Corporate Snapshot
CORPORATE SNAPSHOT For personal use only ASX listed: HGO SHAREHOLDER DISTRIBUTION Shares on issue: 1,023.8 million Share price: AUD0.085* Market capitalisation: AUD87.0 million* Cash and cash equivalents: AUD17.1 million @ 31 July Debt AUD48.3 million 47% Institutional shareholders T
Slide 4: Peer Comparison as at August 2013
PEER COMPARISON AS AT 21 AUGUST 2013 For personal use only Source: Lincoln Crowne and Co 4
Slide 5: Kanmantoo Copper Mine and Exploration Area
KANMANTOO COPPER MINE AND EXPLORATION AREA 100%-owned by Hillgrove For personal use only 55km from Adelaide, South Australia Mining Lease is within 500km2 Exploration Exploration Area EL4401 License, and relatively unexplored Exploration potential considered high The project enjoys commens
Slide 6: 2Q and Company Highlights – Mining Services
2Q AND COMPANY HIGHLIGHTS – MINING SERVICES A mutual termination of the Mining Services contract with Exact Mining For personal use only Services was executed toward the end of July, which is subject to approval by Hillgrove’s finance partners Temporary contract services were immediately mobilis
Slide 7: 2Q and Company Highlights – Mining Operations and Production
2Q AND COMPANY HIGHLIGHTS – MINING OPERATIONS AND PRODUCTION Areas of high grade ore were reached in the main Kavanagh Pit at base of old For personal use only Kanmantoo mine pit Run of Mine (ROM) mill feed was impacted by weather and the mining services changeover, resulting in a ROM grade of 0
Slide 8: 2Q and Company Highlights – Revenue and Costs
2Q AND COMPANY HIGHLIGHTS – REVENUE AND COSTS Revenue for the quarter was AUD27.6 million at an average realised price for For personal use only copper of USD3.56/lb C1 costs for the quarter were USD2.40 per pound A revision of C1 costs for the 12 months to July 31 2013 was undertaken, resulti
Slide 9: Q2 FY14 Production Output
Q2 FY14 PRODUCTION OUTPUT Oct‐12 Jan‐13 Apr‐13 Jul‐13 Period FY 2012 FY 2013 QTR QTR QTR QTR For personal use only Ore to ROM from Pit kt 495 552 639 2,221 689 555 Ore to/(from) long term stockpiles kt 1,267 205 98 849 (137) (84) Rates generally Mined Waste kt 7,446 2,805 3,650 11,777 2,728 2,158
Slide 10: Total Tonnes of Ore Mined
TOTAL TONNES OF ORE MINED For personal use only Total Ore Mined KT 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 The mining rate was impacted by weather and the mining services changeover New mining fleet on site and operational by 7 August
Slide 11: Mine Grade and Ore to ROM
MINE GRADE AND ORE TO ROM For personal use only Mining Grade and Ore to ROM % KT 0.9 800 0.8 700 0.7 600 0.6 500 0.5 400 0.4 300 0.3 0.2 200 0.1 100 0 0 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Ore to ROM from Pit kt Mining Grade to ROM % ROM mill feed was impacted by weather and the mining servi
Slide 12: Ore Milled and Grade
ORE MILLED AND GRADE For personal use only Ore Milled and Grade % KT 0.8 800 0.7 700 0.6 600 0.5 500 0.4 400 0.3 300 0.2 200 0.1 100 0 0 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Ore Milled kt Milled Grade ‐ Cu % Mill and wet plant continued to perform well during quarter, with a mill reline compl
Slide 13: Contained Copper Rates Maintained
CONTAINED COPPER RATES MAINTAINED For personal use only Contained Copper Metal in Concentrate tonnes 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Apr‐12 Jul‐12 Oct‐12 Jan‐13 Apr‐13 Jul‐13 Kanmantoo produced 3,450 tonnes of copper in concentrate, in line with previous quarters as impacted
Slide 14: Mining Status – Kavanagh and Giant Cross Section
MINING STATUS – KAVANAGH AND GIANT Cross Section (6115000N Looking North) For personal use only Reserve 2013 Model Blocks Shown > 0.2% Cu EOM Survey July13 KAVANAGH GIANT 14
Slide 15: Mining Status – Kavanagh and Giant Cross Section
MINING STATUS – KAVANAGH AND GIANT Cross Section (318200E Looking West) For personal use only NORTH EOM Survey July13 KAVANAGH KAVANAGH GIANT Reserve 2013 Model Blocks Shown > 0.2% Cu 15
Slide 16: Kavanagh Pit – Bench Tonnes and Grade Profile
KAVANAGH PIT – BENCH TONNES AND GRADE PROFILE For personal use only Total Volume Primary High Primary High Total Primary Total Primary Total Primary Strip Ratio Bench (bcm) Grade Ore Grade Ore Cu Ore Tonnes (t) Ore Grade (%) Ore Metal (t) (Wbcm:Obcm) 1123 121,739 37,812 0.74 70,885 0.53 372 4.3 1114
Slide 17: Processing Costs Reduced
PROCESSING COSTS REDUCED For personal use only C1 cash costs of production were down to USD2.40/lb (using an average AUD/USD exchange rate of 0.95) Due to removal of additional equipment from ROM, a reduction in operating costs, in particular processing, and adjustment due to mining services con
Slide 18: Q2 FY14 Production Costs
Q2 FY14 PRODUCTION COSTS For personal use only Period Oct‐12 Jan‐13 Apr‐13 Jul‐13 FY 2014 US cents per lb QTR QTR FY 2013 QTR QTR To Date Revision of C1 costs for 12 months to 31 July 2013 Mining Costs 26 115 92 117 102 109 undertaken, reflecting actual Processing Costs 97 94 97 97 84 90 mining co
Slide 19: Strong Hedge Book
STRONG HEDGE BOOK For personal use only Hillgrove AUD Copper Position Strong hedge book A$10,000 provides certainty for cashflows and revenue A$9,000 in future periods Approximately 38,000 A$8,000 tonnes of copper swaps remain A$7,000 65-70% of forecast copper production A$6,000 hedged to Marc
Slide 20: Mining Operations Arrangements Going Forward
MINING OPERATIONS ARRANGEMENTS GOING FORWARD Towards the end of the quarter Hillgrove instigated new mining operations, with For personal use only arrangements combining specialist contractors and Hillgrove personnel Interim arrangements using experienced pit supervisory personnel were put in pl
Slide 21: Significant Increase in Regional Recruitment
SIGNIFICANT INCREASE IN REGIONAL RECRUITMENT Sixty two new Hillgrove employees recruited in first half of August 2013, For personal use only representing: 80% employee increase from the local region (Callington/Kanmantoo) 95% employee increase from the Adelaide Hills region 35% employee incr
Slide 22: Safety – Kanmantoo Copper Mine TRIFR
SAFETY – KANMANTOO COPPER MINE TRIFR For personal use only TRIFR ‐ Total Recordable Injury Frequency Rate Aug 2012 ‐ Jul 2013 60.0 120.0 52.8 Monthly TRIFR YTD ‐ TRIFR 50.0 100.0 51.0 49.3 46.6 40.0 80.0 42.9 41.2 39.8 38.1 37.2 38.2 36.2 35.6 30.0 60.0 102.5 20.0 40.0 39.7 10.0 35.4 20.0 34.0 18.4
Slide 23: New Contract Arrangements
NEW CONTRACT ARRANGEMENTS A Supply, Maintenance and Repair Contract (SMARC) for the provision of For personal use only major and minor mobile mining equipment being developed with established operator Andy’s Earthmovers (Asia Pacific) Pty Ltd Mobilised an initial mining fleet and maintenance sup
Slide 24: Life of Mine
LIFE OF MINE LOM plan to encompass Note: For personal use only Rodda will include Emily immediate resource areas – Star; and Giant will include Giles, Lean and Valentine targeting 10 year life of operations Mining performance currently focussed on Kavanagh pit, with the pit now positioned at the
Slide 25: Global Mineral Resource Estimate at End February 2013
GLOBAL MINERAL RESOURCE ESTIMATE AT END FEBRUARY 2013 JORC 2012 Tonnage Cu Au Ag For personal use only Classification (Mt) (%) (g/t) (g/t) Measured 2.63 0.88 0.10 1.95 In Situ Indicated 21.77 0.82 0.23 2.21 Resource Inferred 5.0 0.67 0.13 1.79 29.46 0.80 0.20 2.11 Long Term Measured 1.39 0.46 N/A N/
Slide 26: New 2012 JORC Mineral Resource
NEW 2012 JORC MINERAL RESOURCE For personal use only 26
Slide 27: New 2012 JORC Mineral Resource
NEW 2012 JORC MINERAL RESOURCE For personal use only 27
Slide 28: 2013 Resource and Previous Life of Mine Release
2013 RESOURCE AND PREVIOUS LIFE OF MINE RELEASE The increase due to exploration drilling of 4.1Mt relates to the first of the previous For personal use only exploration targets announced in the February 2013 release (refer ASX release dated 20 Feb 2013: “Significant Increase in Kanmantoo Mine Life
Slide 29: Sensitivities and Guidance
SENSITIVITIES AND GUIDANCE SENSITIVITIES TO REVENUE For personal use only AUD/USD +/- 5% AUD 2.8 million Copper Price +/- 10% AUD 4.5 million Gold Price +/- 10% AUD 0.8 million GUIDANCE FOR FY2014 Production – Copper 16,500 – 18,000 tonnes Costs – C1 Costs USD 2.25 – 2.50 per pound (at AUD/USD
Slide 30: Indonesia Project Areas – Bird's Head, West Papua and Sumba Island
INDONESIA PROJECT AREAS – BIRDS HEAD, WEST PAPUA AND SUMBA ISLAND Rim-of-Fire exploration in Indonesia For personal use only Sumba gold project (80% owned) Bird’s Head copper/gold project (80% owned) Hillgrove now has 80% direct interest in both Bird’s Head (PT Akram) and Sumba (PT Fathi) pr
Slide 31: Summary
SUMMARY Revenue for the quarter was AUD27.6 For personal use only million at an average realised price for copper of USD3.56/lb Kanmantoo guidance for FY14 revised following mining services changeover 16,500 to 18,000t Cu Positive cash generation in FY14, with copper price certainty as a resul
Slide 32: Key Contacts
KEY CONTACTS For personal use only For further information please contact: Greg Hall, CEO and Managing Director Russell Middleton, Chief Financial Officer Suite 1709 Australia Square Level 17, 264 George Street Sydney NSW 2000 E: info@hillgroveresources.com.au T: 61 2 8247 9300 32
Slide 33: Disclaimer - Important Notice
DISCLAIMER - IMPORTANT NOTICE No representation or warranty is or will be made by any person (including Hillgrove Resources Limited ACN 004 297 116 (“Hillgrove”, “HGO”, or the “Company”) and its officers, directors, employees, advisers and agents) in relation to the accuracy or completeness of all o
Slide 34: Competent Person Statements
COMPETENT PERSON STATEMENTS The information in this release that relates to Mineral Resources is based upon For personal use only information compiled by Mrs Michaela Wright, who is a Member of The Australasian Institute of Mining and Metallurgy. Mrs Wright is a fulltime employee of Hillgrove Resour
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