Hillgrove Resources Limited · ASX:HGO
Hillgrove Resources — Corporate Update (October 2011)
52 slides from Hillgrove Resources's corporate update, Oct 10, 2011
Slide 1: Company Update
For personal use only COMPANY UPDATE DREW SIMONSEN IIIII MANAGING DIRECTOR OCTOBER 2011
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 Mining Company with Australian-Indonesian Growth Pipeline
AUSTRALIAN MINING COMPANY WITH AUSTRALIAN-INDONESIAN GROWTH PIPELINE For personal use only KEY ASSETS: Principal asset is the Kanmantoo Bird’s Head project Copper Mine project (100% owned), in South Australia Sumba project Highly prospective, exploration assets in Indonesia Sumba gold project
Slide 4: Investment Opportunity
HILLGROVE RESOURCES LIMITED INVESTMENT OPPORTUNITY For personal use only Kanmantoo plant 90% complete Robust economics, supported by some hedging Producing asset in Oct/Nov 2011 (few weeks) High optionality through: Kanmantoo mine-life extension (target 10 year reserve life) Kanmantoo ca
Slide 5: Strategic Objectives
AUSTRALIAN MINING COMPANY WITH AUSTRALIAN-INDONESIAN GROWTH PIPELINE For personal use only STRATEGIC OBJECTIVES Kanmantoo – copper producer in October: Kanmantoo constructed on time and budget – on track Extend Kanmantoo mine life – on track Expand plant – subject to resources/reserves Ide
Slide 6: Aerial View of Site April 2011
KANMANTOO COPPER MINE AERIAL VIEW OF SITE 20 APRIL 2011 For personal use only
Slide 7: South Australia: Close to Adelaide, All Major Services Nearby
KANMANTOO COPPER MINE SOUTH AUSTRALIA CLOSE TO ADELAIDE ALL MAJOR SERVICES NEAR BY Kanmantoo 100%-owned by Hillgrove For personal use only Capital cost advantages due to location Exploration Area EL4401 Local workforce Grid power Recycled water pipeline Kanmantoo Copper Mine 3km from mai
Slide 8: Production Imminent: Next Australian Copper Producer
KANMANTOO COPPER MINE PRODUCTION IMMINENT NEXT AUSTRALIAN COPPER PRODUCER KEY TARGETS For personal use only Commission crushing circuit Now First concentrate Late October 2011 Practical Completion of Plant 1 November 2011 First revenue November 2011 Ramp up to full production over 4-6 mont
Slide 9: Construction & Mining
For personal use only CONSTRUCTION & MINING
Slide 10: Construction Capital and Development Costs
CONSTRUCTION CAPITAL AND DEVELOPMENT COSTS TO BRING KANMANTOO TO PRODUCTION – AS AT 31 JUL 2011 Project Total FID Capital Costs Construction Period Costs For personal use only Total Capital costs Capital costs Spend Remaining Estimated capital costs spent to for FID Period Budget Cost at 31/8/10 to
Slide 11: Processing Plant Overview
KANMANTOO COPPER MINE PROCESSING PLANT OVERVIEW Capital cost savings with Lime For personal use only ROM BIN FEED PRODUCT second-hand plant from WA VIBRATING GRIZZLY BIN SCREEN NEUTRAL- FEEDER ISATION JAW TANK Abesque Engineering – CRUSHER SECONDARY STOCK PILE HYDRO PROCESS WATER TANK CYCLONE pr
Slide 12: Current Activity: Crusher and Stockpile Area
KANMANTOO COPPER MINE CURRENT ACTIVITY CRUSHER AND STOCKPILE AREA WITH PLANT IN BACKGROUND 22 SEPTEMBER 2011 Crusher Area Crushed Ore Crushed Ore Dust Crushed For personal use only and Ore Feed Stockpile Feed Stockpile Reclaim Containment Ore Processing Conveyor Conveyor Conveyor Tunnel Cone Stockpi
Slide 13: Current Activity: Processing Plant
KANMANTOO COPPER MINE CURRENT ACTIVITY PROCESSING PLANT 1 SEPTEMBER 2011 Crushed Ore Regrind Flotation Cyclone SAG For personal use only Feed Conveyor Mill Tanks Tower Mill 13
Slide 14: Current Activity: Concentrate Storage Shed
KANMANTOO COPPER MINE CURRENT ACTIVITY CONCENTRATE STORAGE SHED & CONCENTRATE AREA 30 AUGUST 2011 Concentrate Concentrate Concentrate Concentrator For personal use only Storage Shed Filter Shed Thickener Shed 14
Slide 15: Mining and Production Milestones
KANMANTOO COPPER MINE MINING AND PRODUCTION MILESTONES For personal use only Ore stockpiling underway - approximately 500,000t Oxide and Transition ore Stockpiling sulphide ore – expect circa 100,000t for plant start-up Production Targets Copper concentrate grade ~ 27% Copper recovery ~ 94
Slide 16: Revenue & Hedging
KANMANTOO COPPER MINE REVENUE & HEDGING REVENUE SOURCES For personal use only Payable metals production at steady state: 20k tonnes p.a. copper 10k ounces p.a. gold 180k ounces p.a. silver HEDGING Hedging of 50-55% of projected Cu output for 40 months from July 2012 (debt repayment period)
Slide 17: Revenue – AUD Copper Price
KANMANTOO COPPER MINE REVENUE – AUD COPPER PRICE For personal use only A$12,000 A$11,000 A$10,000 A$9,000 A$8,000 A$7,000 Average Hedging (Varies Between A$7,500 and A$8,500) A$6,000 A$5,000 Approximate Operating Cost Before By-Product Credits A$4,000 Approximate Operating Cost After By-Product Cred
Slide 18: Operating Costs and Forward Sales
KANMANTOO COPPER MINE OPERATING COSTS AND FORWARD SALES OPERATING COSTS For personal use only Average LOM cash cost of USD 1.61/lb including smelter charges and after by-product credits, excluding royalties Au @ AUD 900/oz and Ag @ AUD 13/oz 0.85 FX rate Average LOM cash cost of USD 1.61/l
Slide 19: Resources & Exploration
RESOURCES & EXPLORATION For personal use only
Slide 20: Resources & Reserves
KANMANTOO COPPER MINE RESOURCES & RESERVES CURRENT RESOURCES CURRENT RESERVES For personal use only Inferred Indicated Meas ured Mt Mt 20.0 Probable Proved 40.0 18.0 35.0 31.8 32.2 16.0 14.8 30.0 28.0 14.0 25.0 12.0 11.1 20.0 18.4 10.0 15.0 8.0 10.0 8.5 6.0 5.0 4.0 0.0 2.0 Dec-03 Dec-04 Oct-06 Dec-0
Slide 21: Near Mine Exploration
KANMANTOO COPPER MINE NEAR MINE EXPLORATION NW Zone For personal use only Priority objective is to add to open pit reserves to extend Waste Rock mine life Stockpile Two phase drilling program NE Zone Main Convert inferred resources Zone to indicated (thus into Green Plant Zone SE Zone reserves
Slide 22: Exploration Strategy – First Stage
KANMANTOO COPPER MINE EXPLORATION STRATEGY – FIRST STAGE IP Chargeability Image IP Chargeability Image Priority 1: Extend Kanmantoo mine life For personal use only 32Mt resource, with 14.8 reserves NE Zone/Slot Extension Initially plan to convert resources to reserves by closer spaced drilling
Slide 23: O'Neil/Nugent Zone Cross Section 20260N
KANMANTOO COPPER MINE O’NEIL/NUGENT ZONE CROSS SECTION 20260N (LOOKING NORTH) For personal use only Indicated Pit Shell O’Neil/Nugent Zone Inferred Pit Shell Open: No Drilling Open: No Drilling 100m below surface KTRCD284 – 21m @ 1.27% Cu KTRCD122 – 24m @ 1.00% Cu Open: No Drilling 23
Slide 24: O'Neil/Nugent Zone Pierce Point Long Section
KANMANTOO COPPER MINES O’NEIL/NUGENT ZONE PIERCE POINT LONG SECTION (LOOKING WEST) (FOLLOWING 1ST PHASE 2011 RC DRILLING) North For personal use only 0m 100m 2011 Drilling Pierce Points O’Neil/Nugent Zone 2011 Drilling Planned Untested Pit Outline Target Pierce Points Open: No Drilling Infill Drilli
Slide 25: Conversion Success!
KANMANTOO COPPER MINE CONVERSION SUCCESS! RTP Aeromagnetics Image Emily Star Wide, shallow, high-grade intercepts For personal use only Nugent/O’Neil Critchley 18m @ 1.29% Cu from 135m (23m%) 14m @ 1.54% Cu from 75m (22m%) KTRC784 & KTRC785 31m @ 0.77% Cu from 99m (24m%) Emily Star KTRC7
Slide 26: Resource Conversion Drilling Outcomes
KANMANTOO COPPER MINE RESOURCE CONVERSION DRILLING OUTCOMES Resource conversion drilling has been highly successful at both For personal use only O’Neil/Nugent and Emily Star 48 RC holes completed for 7,691m to 31 July Nominal 30 x 30m drill spacing for Indicated classification ~ 3,000m Reso
Slide 27: Looking Forward – Second Stage
KANMANTOO COPPER MINE LOOKING FORWARD – SECOND STAGE IP Chargeability Image Priority 2: provide copper “pipeline” for For personal use only the project Cooper’s Find Longer term and wider exploration focus (but initially still within Mining Lease) Falcon Further geophysics (IP) underway, geochem
Slide 28: Mine Life vs Reserve Additions
KANMANTOO COPPER MINE MINE LIFE VS RESERVE ADDITIONS For personal use only Current mine life 28
Slide 29: Summary
KANMANTOO COPPER MINE SUMMARY For personal use only Construction on time and budget First production October/November 2011 (few weeks) Robust project with near term cash flows Near-mine drilling indicates Life of Mine extension probable Capacity expansion is cheap 29
Slide 30: Indonesia
For personal use only INDONESIA
Slide 31: Exploration Assets: Indonesia – Why Porphyries?
EXPLORATION ASSETS: INDONESIA TARGET RATIONALE: WHY PORPHYRIES? Global Copper Deposit Discovery Period and Depth For personal use only -200 0 200 Declining size Global Cu demand Approximate depth to top of deposit of surface 400 increasing discoveries Global Resource & 600 Reserve grades falling
Slide 32: Exploration Assets: Indonesia – Target Rationale
EXPLORATION ASSETS: INDONESIA TARGET RATIONALE “Giant” Porphyry Copper – Gold Deposits WHERE ARE THE OPPORTUNITIES TO Principal High Sulphidation Epithermal Gold Deposits For personal use only DISCOVER GIANT PORPHYRIES? Principal Low Sulphidation Epithermal Gold Deposits Only ~5% of Global Cu Reserv
Slide 33: Specific Asset Selection by Hillgrove
EXPLORATION ASSETS: INDONESIA SPECIFIC ASSET SELECTION BY HILLGROVE Focussed 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 New laws allow for direc
Slide 34: Tenements – Security of Tenure
EXPLORATION ASSETS: INDONESIA TENEMENTS – SECURITY OF TENURE SUMBA For personal use only Hillgrove is an 80% shareholder in PT Fathi Resources Pte. Ltd Corporatised ownership via intermediate Singapore holding companies BIRD’S HEAD Hillgrove has an 80% beneficial interest in PT Akram Resources
Slide 35: Indonesia Bird's Head Project Regional Setting
INDONESIA BIRD’S HEAD PROJECT REGIONAL SETTING For personal use only WEST PAPUA P.N.G. Bird’s Head covers part of the interpreted westward continuation of the New Guinea Magmatic Arc 35
Slide 36: Bird's Head in West Papua
EXPLORATION ASSETS: INDONESIA BIRD’S HEAD IN WEST PAPUA West Delta For personal use only Hillgrove has an 80% beneficial interest in PT Akram through JV Agreement Moving to a corporatised ownership structure – awaiting election of Governor of West Papua to finalise establishment of PMA company
Slide 37: Bird's Head Project Attributes
BIRD’S HEAD PROJECT PROJECT ATTRIBUTES Close to the coast – significant advantage for future development For personal use only Known porphyry – related copper mineralisation Significant previous exploration database ex Normandy West Delta 37
Slide 38: Magnetic Signatures and Copper Geochemistry Point to Our Targets
BIRD’S HEAD PROJECT MAGNETIC SIGNATURES AND COPPER GEOCHEMISTRY POINT TO OUR TARGETS For personal use only West Delta Arc –normal transfer structure Rock Chip Cu ppm Analytical Signal Magnetics Stream Sediment - Cu 1st VD TMI Magnetics 38
Slide 39: Bird's Head Project: West Delta Prospect
BIRD’S HEAD PROJECT WEST DELTA PROSPECT Geological interpretation is of: For personal use only A young (Tertiary) intrusive complex Overlapping hydrothermal alteration systems in a 6.5 x 1.5 km corridor Intrusive unit does not outcrop Copper mineralisation in quartz vein/breccia float Tren
Slide 40: Copper Porphyry Signatures at West Delta
BIRD’S HEAD PROJECT COPPER PORPHYRY SIGNATURES AT WEST DELTA For personal use only Classic porphyry signature Drill ready status Green Cliffs Awaiting forestry Target permit to drill Depth of Erosion Source: Sillitoe Porphyry Cu Systems EconGeol 105/1 40
Slide 41: West Delta Target Model
BIRD’S HEAD PROJECT WEST DELTA TARGET MODEL For personal use only Lithocap Depth of Erosion NEXT STEPS: Secure Pinjam Primary Cu Pakai mineralisation Drill test to ~600m Continue surface Green Cliffs exploration along Breccia Complex? target corridor Source: Sillitoe Porphyry Cu Systems EconGe
Slide 42: Sumba Island: Hillgrove 80%
SUMBA ISLAND HILLGROVE 80% For personal use only Tanah Daro Masu Lewitu Hillgrove has an 80% direct shareholding in PT Fathi Resources IUP rights cover almost 1,000km2, granted to March 2017 Hillgrove responsible for exploration and development activities and sole funding up to Decision to Min
Slide 43: Sumba Island: Masu
SUMBA ISLAND MASU Initial mapping, soil sampling, trenching and For personal use only scout drilling completed to date 17 high grade gold anomalies identified Karipi Aeromagnetic/radiometric survey just completed Trenching at Karipi has intersected significant gold mineralisation IP survey
Slide 44: Sumba Island Karipi Prospect: Air Magnetic and Radiometric Survey
SUMBA ISLAND KARIPI PROSPECT AIR MAGNETIC AND RADIOMETRIC SURVEY RESULTS OVERLAYING SOIL GEOCHEMICAL Thin sediment masks prospective lithology but gold observed in exposed For personal use only basement rock over large areas Highly Targets! prospective gold targets Karipi Soil gold Shallow sedim
Slide 45: Sumba Island Karipi Prospect
SUMBA ISLAND KARIPI PROSPECT Karipi-Kanjilu trenching Sedimentary For personal use only indicates broad gold Cover anomaly over 800m 22m @ 2.66 g/t Au 1120 g/t Au 80m @ 3.18 g/t Au 73m @ 4.72 g/t Au 28m @ 3.21 g/t Au 12m @ 32.96 g/t Au 32m @ 1.42 g/t Au 32m @ 3.16 g/t Au 30m @ 3.46
Slide 46: Sumba Island Masu Exploration: Next Steps
SUMBA ISLAND MASU EXPLORATION NEXT STEPS Aerial view of Karipi, looking SE KARIPI For personal use only Mapping continues Trenching continues 3D IP survey Drilling LEWITU Potential porphyry target Land access agreements under negotiation Mapping and surface geochemistry sampling planne
Slide 47: Sumba Island: Tanah Daro: Pelitalira
SUMBA ISLAND TANAH DARO: PELITALIRA Remnant lithocap / High For personal use only Sulphidation system? Porphyry Soils show Au / Mo zonation round Cu target Shallow scout drilling intersected sporadic Au, with anomalous Cu at the bottom of two holes IP survey planned ahead of deeper drilling
Slide 48: Corporate Overview
For personal use only CORPORATE OVERVIEW
Slide 49: Corporate Snapshot: 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 0.235 (29 Sep 2011) Institutions Market capitalisation: AUD 186.5 million 38.0% (29 Sep 2011) Cash and cash equivalents: AU
Slide 50: Corporate Snapshot: Executive Alignment Through Equity Incentives
CORPORATE SNAPSHOT EXECUTIVE ALIGNMENT THROUGH CONDITIONS ON EQUITY INCENTIVES Criteria 2010 2011 For personal use only Type Performance Rights (ZEPO) Performance Rights (ZEPO) Number 4,720,000 4,595,000 Fully diluted ownership by management ~0.6% ~ 1.1% Service Condition 3 yrs from award 3 yrs from
Slide 51: Hillgrove Resources vs Broker Valuations
CORPORATE SNAPSHOT HILLGROVE RESOURCES vs BROKER VALUATIONS $1.00 Intersuisse For personal use only $0.43 ‐ $0.90 $0.80 Broker valuations Wilson Austock are significantly $0.60 OM Evans Ptns $0.53 $0.55 higher than the $0.41 $0.45 existing share price $0.40 Little or no value $0.20 attributed to
Slide 52: Compelling Investment Opportunity
HILLGROVE RESOURCES LIMITED COMPELLING INVESTMENT OPPORTUNITY For personal use only Kanmantoo plant 90% complete Robust economics support by some hedging Producing asset in Oct/Nov 2011 (few weeks) High optionality through: Kanmantoo mine-life extension (target 10 year reserve life) Kanm
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