Hillgrove Resources Limited · ASX:HGO
Hillgrove Resources — PDAC 2007
41 slides from Hillgrove Resources's conference presentation, Mar 5, 2007
Slide 1: Building a Mid-Tier Resources Group
BUILDING A MID-TIER RESOURCES GROUP PDAC - TORONTO 5 March 2007
Slide 2: Hillgrove Structure
HILLGROVE Structure HILLGROVE RESOURCES ASX:HGO 26.4% 31% S.A. DEVELOPMENT EASTERN STAR GAS INTERMET RESOURCES & EXPLORATION ASX:ESG ASX:ITT 100%/ 90% KANMANTOO MINE 65% GUNNEDAH GAWLER COPPER/GOLD/GARNET GAS PROJECT IOCG EXPLORATION 100% WHEAL ELLEN 100% WILGA PARK GAWLER LEAD/ZINC POWER STATION UR
Slide 3: Hillgrove In South Australia
HILLGROVE In South Australia
Slide 4: Why South Australia?
KANMANTOO Why South Australia? One of the most prospective terrains in the world – home of the Big One – Olympic Dam Ideal for application of latest exploration techniques Neglected historically Gawler is vastly under explored → major mines New greenstone domains akin to the Eastern Goldfi
Slide 5: Project Location
KANMANTOO Project Location Low operating cost setting Existing infrastructure
Slide 6: Kanmantoo Copper Gold Mine 2005
KANMANTOO Kanmantoo Copper Gold Mine 2005
Slide 7: Potential Open Pit Operation
KANMANTOO Potential Open Pit Operation
Slide 8: Current Resource
KANMANTOO Current Resource Kanmantoo Deposit Resource Estimate – October 2006 (0.25% Cutoff) INDICATED INFERRED TOTAL Au Au Au Cu Type Tonnes Cu Cut Tonnes Cu Cut Tonnes Cu Cut Metal Au Cut T % g/t T % g/t T % g/t Tonnes Ounces Oxide 722,995 0.82 0.23 146,510 0.70 0.23 869,505 0.80 0.23 6,972 6,353
Slide 9: Updated Resource by Area
KANMANTOO Updated Resource by Area Zone Tonnes Cu Au Cut Cu Metal Au Cut T % g/t Tonnes Ounces Main 9,421,335 1.05 0.10 98,484 30,941 South East 3,890,311 0.88 0.37 34,277 46,391 North East 1,242,539 1.14 0.28 14,139 11,329 North West 1,209,302 0.73 0.11 8,808 4,235 Eastern 977,878 1.25 0.31 12,223
Slide 10: Pre-Feasibility Study Highlights
KANMANTOO Pre-Feasibility Study Highlights Mineral resources: - Copper/Gold: 28MT at 0.94% Copper and 0.20g/t Gold Contained metal: - 262,600T Copper and 177,200oz Gold Initial planning inventory: - 12,727,554MT optimized at USD$1.80 per lb copper price Base case assumptions: - Copper price US$2.65
Slide 11: Key Pre-Feasibility Study Consultants
KANMANTOO Key Pre-Feasibility Study Consultants
Slide 12: Potential Open Pit Development
KANMANTOO Potential Open Pit Development
Slide 13: Process Flow
HILLGROVE Process Flow HILLGROVE RESOURCES LIMITED POM RY KANMANTOO COPPER PROJECT CYCLONES PRIMARY TREATMENT PLANT “ vi aY PROCESS FLOWSHEET | « TRASH SCREEN FLASH ‘ = ROUGHER #1 ROTATION i FLOTATION ROUGHER #2 FLOTATION CONDITIONING va - [aera bal FLOTATION SCAVENGER #2 FLOTATION a Ez REGRIND ———
Slide 14: Financials
KANMANTOO Financials Cu Fx Discount NPV IRR NPAT (US$/lb) (A$/US$) % $’m % $’m Base Case 2.65 →1.63 0.70 8.5 75 32 141 Case 1 2.50 0.70 8.5 134 42 239 Case 2 3.00 0.70 8.5 216 60 358 Breakeven cash cost US$1.20 per lb including gold and silver revenue $5,137 capital cost per annual tonne of copp
Slide 15: Upside
KANMANTOO Upside Cost per lb Resource increase by 40% to target 40MT, throughput 2.5MT/pa NPV@8.5% $102M Improves 6c Increase head grade >1.1% NPV@8.5% $122M Improves 11c Concurrent/ subsequent underground mining $? Revenues from garnet by-product $8-20M Treat Wheal Ellen lead/ zinc, satel
Slide 16: Key DFS Consultants
KANMANTOO Key DFS Consultants
Slide 17: Conceptual Flow Chart
KANMANTOO Conceptual Flow Chart 2006 2007 2008 2009 Pre-feasibility Metallurgy Permitting Drilling Definitive Feasibility Study Construction & Development Mining
Slide 18: Near-mine Exploration
KANMANTOO Near-mine Exploration Exploration and resource definition drilling is ongoing and will be particularly concentrated during the Definitive Feasibility Study (DFS) which commenced in December 2006 Recent drilling intersected high-grade zones of copper mineralisation and highlighted new z
Slide 19: Mine Corridor
KANMANTOO Mine Corridor IP with Drilling and Ore Blocks
Slide 20: Regional Magnetics
KANMANTOO Regional Magnetics Regional exploration has recommenced, reconnaissance of all new magnetic targets underway 12 major magnetic targets outside Mine Corridor
Slide 21: Wheal Ellen Area – Magnetics
KANMANTOO Wheal Ellen Area – Magnetics Angus Deposit on same stratigraphic contact about 10km to the south and is a discrete magnetic high Series of magnetic targets have been identified along these targets These targets are largely unexplored with a number of targets with historic workings
Slide 22: Junior Australian Emerging Copper Producers
KANMANTOO Junior Australian Emerging Copper Producers Company Universal Copper Co Ex Co Discovery Matrix Hillgrove Resources Nickel Metals Resources Code URL CUO EXS DNL MRX HGO Mkt Cap @ 23 Jan 07 A$m 59.2 170.7 51.2 20.4 66.2 10.3 ** Cloncurry & White & Key Project Roseby Lady Annie White Dam Maun
Slide 23: Alford Project Highlights
ALFORD PROJECT Highlights Past drilling has identified significant widths of copper mineralisation associated with haematite alteration including 76m at 0.95% Copper including 12m at 2.18% Copper in ALDDH001 Key similarities to Iron-Oxide-Copper-Gold (IOCG) deposits such as Olympic Dam, Prominen
Slide 24: Alford Project Interpreted Geology
ALFORD PROJECT Interpreted Geology
Slide 25: Intermet Resources Investment Summary
INTERMET RESOURCES Investment Summary Issued capital – 40m shares and 31m @ 20c (10m expiry 30/11/07, 21m expiry 24/5/10) Cash 31 December 2006 of $3 million Tightly held structure – major shareholders Hillgrove 31% and Sempra Metals & Concentrates 8% Specialist Gawler Craton explorer with o
Slide 26: Intermet Competitive Advantage
INTERMET RESOURCES Competitive Advantage Detailed understanding of the tectonic history and mineral systems on the Gawler Craton Technical expertise – Exploration team has extensive experience on the Gawler Craton and gold systems Uranium expertise – strategic JV’s with proven uranium explorer
Slide 27: ITT Project Matrix
INTERMET RESOURCES ITT Project Matrix Project Tenement No. Participants JV Commitment ($) Exploration Model Lake Gilles EL3466 ITT 100% • IOCG • Base metals related to Hiltaba Suite magmatic event • Orogenic gold EL3467 ITT and Hindmarsh $600,00 over 4 years to get 80% interest in • Unconformity-rel
Slide 28: Lake Gilles Project – IOCG Ingredients
INTERMET RESOURCES Lake Gilles Project – IOCG Ingredients Important “ingredients for IOCG style deposits” Temporal association of Cu-Au mineralisation with magmatism of the Hiltaba Suite and Gawler Range Volcanics – Lake Gilles, Southern GRV, Cocata Projects Importance of breccias in localising
Slide 29: Lake Gilles Project – IOCG Exploration
INTERMET RESOURCES Lake Gilles Project – IOCG Exploration Three prominent gravity features on Lake Gilles project area Coincident magnetic feature Modeling shows gravity features to be between 220- 650m depth Initial programme – 6 diamond holes planned Drilling commenced in November 2006 –
Slide 30: Eastern Star Gas: Major Position in Eastern Australia
EASTERN STAR GAS LTD Major Position in Eastern Australia
Slide 31: Eastern Star Gas Resource Parameters
EASTERN STAR GAS LTD Resource Parameters PEL238 (ESG 65%) covers 2.2 million acres Largest onshore gas resource in Australia. 17TCF P10 gas potential in Maules Creek coals alone (35TCF including Black Jack) 8.7TCF of gas resources (Netherland and Sewell 2000). Equivalent to more than 20 years
Slide 32: Market Opportunities – Immediate
EASTERN STAR GAS LTD Market Opportunities – Immediate Ability to Supply 11 MW Wilga Park Power Station 11 MW: Gas requirement is 2.75mmcf/d Possible expansion to 40 MW Use gas from Bibblewindi pilot
Slide 33: PEL 238: Development Strategy
EASTERN STAR GAS LTD PEL 238: Development Strategy January, 2005 July, 2005 March, 2006 December, 2006 December, 2007 CSG: Drill/Frac Confined Drill Unconfined Production Pilot Confined Production Pilot Production Pilots Reserves Frac Reserves Certification Certification Continue Decide Expansion Co
Slide 34: Peer Comparison
EASTERN STAR GAS LTD Peer Comparison CSG 2P, 3P & Resources Peer Comparison CSG 2P Reserves 7000 800 2P 6000 700 3P 600 5000 Reserves (PJ) Reserves (PJ) 500 4000 400 3000 300 2000 200 1000 100 0 0 Molopo Sydney Gas Arrow Queensland Eastern Star Molopo Sydney Gas Arrow Queensland ESG Debut Australia
Slide 35: Eastern Star Gas Summary
EASTERN STAR GAS LTD Summary HGO holds a 26.4% fully diluted strategic stake in ESG ESG poised to be the key player in NSW gas production Context of lowered green house gas emissions from gas generated electricity sets scene for use in electricity generation Improving gas prices with demise
Slide 36: Post-Hillgrove Energy Purchase Structure
EASTERN STAR GAS LTD Post-Hillgrove Energy Purchase Structure Shares on Issue – 514 million shares (Hillgrove 93 million) – 42 million shares in Converting Notes (100% Hillgrove) – 25 million - 3 year; 15 cent Eastern Star options (100% Hillgrove) Market Capitalisation – $135 million Finances
Slide 37: Key People
HILLGROVE Key People Directors Dean Brown, Chairman – Former Premier of South Australia David Archer, Managing Director – Founded Savage Resources and PowerTel Ltd John Quirke, Non-executive Director – Former Senator, SA Member of Parliament Ron Belz, Non-executive Director – Certified pract
Slide 38: Capital Structure
HILLGROVE Capital Structure Ordinary Shares HGO 242.1 million Options – 30 cents 2009 Unlisted 12.5 million Options – other expiry - ESOP Unlisted 7.5 million Options – other expiry - Sempra Unlisted 18.0 million Market Cap (@ 25 cents per share) $60.5 million Cash (incl. options $7.2m + placement)
Slide 39: Shareholders
SHAREHOLDERS Top 35% D & V Archer 8.2% Chairman and Managing Director Sempra Metals 7.0% Fortune 500, American energy & Concentrates and metals trading group SegaInterSettle 7.5% Swiss Nominee Anglo Pacific 3.5% London based investment fund Colonial Global 3.5% Large Australian pensions in
Slide 40: Value Proposition
HILLGROVE Value Proposition $ Kanmantoo Copper Gold Mine (NPV range) 75 - 215 million Eastern Star Gas shares/notes/options 20 - 60 million InterMet (12.35M shares, 9.0M options) @ 29cps 4.9 million Exploration ? million Investments 1.0 million
Slide 41: Disclaimer
DISCLAIMER This presentation may contain forward looking statements that are subject to risk factors associated with copper, gold and gas businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in un