COPPER PRODUCER IN 2009 COPPER PRODUCER IN 2009 COPPER PRODUCER IN 2009 COPPER PRODUCER IN 2009 DIGGERS & DEALERS DIGGERS & DEALERS DIGGERS & DEALERS DIGGERS & DEALERS 3 August 3 August 2008 2008
Introduction to Hillgrove Diversified Natural Resources Company Diversified Natural Resources Company www.hillgroveresources.com.au www.hillgroveresources.com.au 100% Kanmantoo Copper / Gold Mine 100% Wheal Ellen Lead / Zinc / Gold 100% Kanmantoo Regional Base Metals 100% Kanmantoo Regional Gold 20% 70% Alf 20% 70% Alford IOCG d IOCG 22.6% www.easternstar.com.au 65% Gunnedah Coal Seam Gas Project 65% Gunnedah Coal Seam Gas Project 65% Gunnedah Coal Seam Gas Project 65% Gunnedah Coal Seam Gas Project 100% Coonarah Gas Field 100% Wilga Park Power Station 25% Orion Petroleum Oil and Gas Exploration Portfolio 46.6% www.intermetresources.com.au 100% North Queensland Magnetite 100% Union Gold Mine 100% Union Gold Mine 100% Percy West Gold Mine 100% Percy West Gold Mine 100% Percy West Gold Mine 100% Percy West Gold Mine 100% Lake Gilles IOCG 100% Lake Gilles IOCG 49% SA Paleochannel Uranium 49% SA Paleochannel Uranium 100% Southern Gawler Ranges IOCG 100% Garford North Gold 4.0% Mongolia Coal, Uranium, Copper / Gold ____________________ 1 ESG investment of 153.7m ordinary shares and 24.3m $0.15 options. InterMet investment of 12.5m ordinary shares and 9.0m $0.20 options. Xanadu is an unlisted investment.
Introduction to Hillgrove Board and Management Board and Management Dean Brown AO Ron Belz David Archer John Quirke John Gooding Chairman Director Managing Director Director Director Colour Code Geoff Stewart Russell Middleton Dale Ferguson Non-Executive Business Development Chief Financial Officer Executive Director Director Executive Ros Worthington Ros Worthington Kanmantoo Kanmantoo Di Director t HR Manager Senior Staff Management Team Adam Wheatley C Consultant lt t The Hillgrove team has extensive exploration, project development and mining expertise 2
SHAREHOLDERS Top 50% Top 50% � RBS Sempra � RBS Sempra Subsidiary of Subsidiary of Commodities 15.0% Royal Bank of Scotland � ANZ Nominees 11.6% European shareholders � RMMI RMMI 6.4% 6.4% RAK Minerals - UAE investor RAK Minerals UAE investor � Archer Group 5.6% Managing Director and associates � Merrill Lynch 5.4% Global investment fund � Argonaut Res. 3.2% Joint venture partner � Macquarie Bank 1.6% % Australia’s largest investment bank 3
Introduction to Hillgrove Company Highlights Company Highlights ASX listed natural resources company focused on development of p y p its near term Kanmantoo copper/gold project • Initial mine inventory of 12Mt supports a minimum 6.5 year mine life producing 15 19ktpa of copper in concentrate with gold and silver credits producing 15 – 19ktpa of copper in concentrate with gold and silver credits • Potential to extend mine life to over ten years and identify further base metal reserves in the Kanmantoo Trough g Strategic 23% diluted investments in NSW coal seam gas developer Eastern Star Gas (ESG) valued at approximately A$100 million • 185PJ of 2P and 1,300 3P (PEL 238) with long term gas supply MOUs Extensive highly prospective exploration pipeline g y p p p p p • 56.6% direct interest in ASX listed InterMet Resources – iron ore, base metals, gold • Gawler Craton – copper/gold ____________________ Source: ESG Company announcements and Iress share price information. ESG valuation based on share price of $0.77 as at 30 May 2008 and Hillgrove holdings of 153.7m ordinary shares and 24.3m 4 $0.15 options.
Introduction to Hillgrove ASX Trading Summary ASX Trading Summary Hillgrove Resources Price (A$) Volume (m) 0.70 6.0 Sh Share Price P i 25/7/08 25/7/08 $0 280 $0.280 52 Week - high $0.550 0.60 - low $0.180 5.0 Diluted Shares 373.6m 0.50 Market Capitalisation $88.7m 4.0 Net Debt $ 12.0m 0 40 0.40 Enterprise Value $100.7m 3.0 ESG Investment ($91.2m) 0.30 Enterprise Value excl. ESG p $ 9.5m 2.0 Copper Equivalent 0.20 Reserves 114,000t 1 0 1.0 R Resources 318 000t 318,000t 0.10 Valuation Metrics 0.00 0.0 EV excl. ESG/Reserves EV excl ESG/Reserves US$ 83/t US$ 83/t May 07 May-07 Jul-07 Jul 07 Sep 07 Sep-07 Nov-07 Nov 07 Jan-08 Jan 08 Mar-08 Mar 08 May 08 May-08 EV excl. ESG/Resource US$ 30/t Volume Hillgrove Resources Index Copper Price ____________________ Source: Company announcements and Iress share price as at 25 July 2008. Copper equivalent contained metal based on US$8,176/t copper, US$900/oz gold and US$17.39/oz silver. A$/US$ exchange rate at 5 0.9605.
Introduction to Hillgrove Unique Investment Opportunity Unique Investment Opportunity First Production Estimates for • Only Australian mid-cap copper Australian Junior Copper Companies (1) Australian Junior Copper Companies developer with production planned pre 2010 CopperCo Producing (June 2007) � DFS complete � DFS complete Matrix Metals Producing (August 2007) � Detailed design underway Hillgrove Targeted Production � Progressing project financing � Progressing project financing ( (June 2009) ) ( (Half 2 2009) ) Exco • Product sales underpinned by life of PFS Due Mid 2008 (February 2010) mine off-take agreement with RBS g CuDeco Sempra Commodities DFS Due End 2008 (March 2010) • Potential to produce industrial garnet Copper Strike PFS Due Mid 2008 (2012) by-product of approximately 100- 150kt at low incremental cost and be Indophil PFS Complete (December 2012) a producer of global scale 0 0 2007 2008 2009 2010 2011 2012 2013 PFS = Preliminary Feasibility Study DFS = Definitive Feasibility Study ____________________ (1) Source: Company announcements 6
Introduction to Hillgrove Peer Valuation Metrics Peer Valuation Metrics • Hillgrove is currently trading at US$/t EV (US$) / Copper Equivalent Contained Metal (t) 3,000 US$119/t of contained copper Producing Development and Exploration equivalent reserve 2,500 2,406 • CopperCo and Matrix Metals CopperCo and Matrix Metals trade on superior multiples due to their producing projects 2,000 • Hillgrove is likely to experience 1,500 a material uplift in valuation as Kanmantoo progresses Kanmantoo progresses 1,098 towards commissioning 1,000 907 665 500 135 119 62 42 11 CopperCo Matrix Metals Hillgrove CuDeco Exco Copper Strike Indophil EV / Reserves EV / Resources ____________________ Source: Company announcements and Iress share price information as at 1 May 2008. Copper equivalent contained metal based on US$8,686/t copper, US$852/oz gold and US$16.23/oz silver. Hillgrove 7 enterprise value excludes market value of investment in ESG. A$/US$ exchange rate at 0.9333.
8 Kanmantoo Copper Gold Mine Kanmantoo Copper Gold Mine Kanmantoo Project
Kanmantoo Project South Australian Region South Australian Region • South Australia is one of the most prospective terrains in the world i i i h ld � Home of the Big One, Olympic Dam • Historically neglected and vastly under Hi t i ll l t d d tl d explored • Initial project at Kanmantoo will produce • Initial project at Kanmantoo will produce cash flow to fund further Hillgrove’s exploration and development • Strategy to commence new developments once a project has defined a minimum reserve to support a positive NPV reserve to support a positive NPV Upside from additional regional � satellite reserves Underground high grade target � Hillgrove’s Near Term Focus 9
Kanmantoo Project Dedicated High Quality Project Team Dedicated High Quality Project Team David Archer Managing Director Dale Ferguson Dale Ferguson Exploration/Ops Director Marty Adams y Project Manager Richard Bradey Richard Bradey Andrew Reeves Andrew Reeves David Schmitz David Schmitz To be Appointed To be Appointed Site Manager Engineering Manager Mining Manager Mine Manager David Walker Catherine Davis To be Appointed Team of 11 Project Engineer Environment Manager Administration Manager The Kanmantoo project has a highly credentialed and experienced team 10
Kanmantoo Project Snapshot Snapshot • Kanmantoo was operated by NBH/SBH/ EZ EZ as their first open cut mine from 1971- th i fi t t i f 1971 1976, mining around 4.1Mt of copper ore • Hillgrove commenced work in 2003, and g , plans to recommence mining 2009 • JORC Category Mt Cu (%) Au (g/t) Ag (g/t) R Resources 31 8 31.8 0.91 0 91 0 2 0.2 3 1 3.1 Reserves 11.1 0.93 0.2 3.3 kt koz koz Resource Contained Metal Resource Contained Metal 291 291 189 189 3,218 3,218 • Low risk access to critical water, power and transport infrastructure • Attractive employer/costs compared to fly-in fly-out regional mine operations • RBS Sempra Commodities contracted to • RBS Sempra Commodities contracted to life of mine concentrate off-take 11
Kanmantoo Project Low Risk Features Low Risk Features • Operational history significantly de-risks the project • Known, simple metallurgy K i l t ll • Large database of exploration, mining and processing information • Previous mine management still in region and industry • Geotechnically sound conditions • Low political risk environment Low political risk environment 12
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