Hillgrove Resources Limited · ASX:HGO
Hillgrove Resources — Investor Presentation (September 2011)
46 slides from Hillgrove Resources's investor presentation, Sep 21, 2011
Slide 1: Company Update
For personal use only COMPANY UPDATE DREW SIMONSEN IIIII MANAGING DIRECTOR SEPTEMBER 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 31/8/11 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 30 AUGUST 2011 Crusher Area Crushed Ore Crushed Ore Dust Containment and Ore Feed Stockpile Feed Stockpile Reclaim Crushed Ore Cone Almost For personal use only Conveyor Conveyor Conveyor Tunnel Stockpile Comp
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 For personal use only REVENUE SOURCES 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 AUD Copper Price (Historical and Forwards Curve) A$12,000 A$11,000 A$10,000 A$9,000 A$8,000 Average Hedging (Varies A$7,000 Between A$7,500 and A$8,500) A$6,000 A$5,000 Approximate Operating Cost A$4,000 A$3,000 AUD Copper Spot A
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
EXPLORATION ASSETS: INDONESIA TENEMENTS – SECURITY OF TENURE For personal use only SUMBA 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 32: Sumba Island: Hillgrove 80%
SUMBA ISLAND Tanah Daro HILLGROVE 80% Project Area PT Fathi holds an IUP over For personal use only Pelitalira ~1,000km2 to December 2016 Masu Project Hillgrove responsible for expl Area and dev up to Decision to Mine Two main project areas Masu (Southern) Project area Tanah Daro (Northern) Pr
Slide 33: Sumba Island: Masu (Southern) Project Area
SUMBA ISLAND MASU (SOUTHERN) PROJECT AREA Karipi-Kanjilu Prospect RECENT EXPLORATION For personal use only Soil sampling over project >10km² Karipi-Kanjilu trenching indicates broad gold anomaly over 800m 22m @ 2.66ppm Au 80m @ 3.18ppm Au 73m @ 4.72ppm Au Separate to Karipi surface sampl
Slide 34: Sumba Island: Tanah Daro (Northern) Project
SUMBA ISLAND TANAH DARO (NORTHERN) PROJECT PELITALIRA PROSPECT For personal use only Located in north central Waterfall Vein Sumba Accessible by road Tanah Daro RECENT EXPLORATION Project Area Soil sampling delineated two distinct gold anomalies with gold values up to 19.95g/t Au Scout drill
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 ‘Orogenic Belt’ 35
Slide 36: Bird's Head Project: Hillgrove 80%
BIRD’S HEAD PROJECT HILLGROVE 80% PT Akram holds IUP covering almost 1,000km2, granted to March 2017 For personal use only Hillgrove responsible for exploration and development activities and sole funding up to Decision to Mine Ex-Normandy project: HGO acquired drilling, geophysics and other k
Slide 37: Bird's Head Project: Green Cliffs Prospect
BIRD’S HEAD PROJECT GREEN CLIFFS PROSPECT 3D magnetic inversion modelling Green Cliffs For personal use only Breccia Target of West Delta area showing magnetic targets (Normandy data) Strong magnetic anomalies associated with intense hydro- thermal alteration, Diorite intrusives Magnetic High In
Slide 38: Bird's Head Project: Recent Geochem from Southern Porphyries and Rak Rak
BIRD’S HEAD PROJECT RECENT GEOCHEM FROM SOUTHERN PORPHYRIES AND RAK RAK ROCK CHIP COPPER VALUES Sample No Prospect Type Cu % For personal use only 2501 Rak-Rak RCH 1.83 2603 Suben RO 2.93 2604 Suben RO 3.86 3D magnetic inversion modelling Green Cliffs 2606 Suben RO 3.80 of West Delta area showing
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 Trenching highlights: 32m @ 0.73% Cu including 20m @ 0.95% Copper mineralisation in qua
Slide 40: Bird's Head Project: Copper Porphyry Signatures at West Delta
BIRD’S HEAD PROJECT COPPER PORPHYRY SIGNATURES AT WEST DELTA WIDESPREAD For personal use only SURFACE CU MINERALISATION ADVANCED ARGILLIC ALTERATION Green Cliffs Breccia Target PROPYLITIC ALTERATION PHYLLIC ALTERATION POTASSIC ALTERATION MAGNETIC ANOMALIES 40
Slide 41: Bird's Head Project: Targeting Tier One Discovery
BIRD’S HEAD PROJECT TARGETING TIER ONE DISCOVERY For personal use only Ideal location close to coast Multiple porphyry targets present in area NEXT STEPS Porphyry Targets Porphys Obtain necessary drilling permit Drill-test porphyry Porphyry PoTargets targets (to 600m) 41
Slide 42: Corporate Overview
For personal use only CORPORATE OVERVIEW
Slide 43: 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 0.265 (13 Sep 2011) Institutions Market capitalisation: AUD 210 million 38.0% (13 Sep 2011) Cash and cash equivalents: AUD
Slide 44: 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 45: Corporate Snapshot: 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 46: 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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