Key Assets Australian Mining Company with Asian Growth Pipeline

Transcription

1 Australian Junior Resources Blue Chip EMERGING STARS IN RESOURCES 2010 Proactive Investors Australia Conference 10 February 2010

2 Disclaimer This presentation should not be relied upon as a representation of any matter that a potential investor or their adviser should consider in evaluating the Company. Potential investors must make their own independent assessment and investigation of the matters contained herein and should not rely on any statement or the adequacy or accuracy of the information provided. The Company and its related bodies corporate or any of its directors, agents, officers or employees do not make any representation ese or warranty, a express essor implied, as to the accuracy acy or completeness ess of any information, o statements or representations contained in the presentation, and they do not accept any liability whatsoever (including in negligence) for any information, representation or statement made in or omitted from this presentation. This presentation may contain forward looking statements that are subject to risk factors associated with copper, gold, other minerals and gas businesses. Based on currently available information, the Company believes that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, interest and foreign exchange rates, availability of capital, political risks, project delay or advancement, approvals and cost estimates. Comments in relation to exploration targets, exploration potential and resource potential referenced in this document have been made based on both historical and company technical data at hand of the time of writing. It is important to note that these targets are conceptual in nature as there has been insufficient exploration to date to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource. Interested parties should form their own view on these exploration targets. Investors should undertake their own analysis and obtain independent advice before investing in HGO shares. All references to dollars, cents or $ in this presentation refer to Australian currency unless otherwise stated.

3 Key Assets Australian Mining Company with Asian Growth Pipeline Mining Kanmantoo : oxide copper heap leach 100% Development Kanmantoo a Copper/Gold Mine: 2.0MTPA -> 3.0MTPA 100% Exploration Bird s Head, Indonesia: gold and copper/gold 80% Sumba, Indonesia: gold 80% Kanmantoo: copper/gold, silver/lead/zinc 100% Wheal Ellen: silver/lead/zinc/gold 100% Cocata and Coulta: uranium 100% Watson: uranium 50% Munderra: base metals 100% Mt. Lucy: magnetite 100% initially 2

4 Metals Outlook Copper on the Move Right Commodities at the Right Time Macquarie Bank Commodities, 9 June 2009 Looking further out, in our view, copper has the best fundamentals of any of the base metals, and should go into an economic upturn with low stocks, limited idle capacity and a lack of committed new projects. Over the 2011/12 period, copper could easily be as tight as it was at the height of the recent bull market. Fraser Institute 2009 Commodity shortages could hinder recovery, the world may face a shortage of raw materials and skyrocketing commodity prices as the world economy moves past the recession and into renewed growth. 3

5 Metals Outlook World Industrial Production & Commodity Prices Core of argument for secular reversal of the long term decline of real commodity prices 4

6 Kanmantoo Project South Australian Region South Australia is one of the most prospective terrains in the world Home of the Big One; Olympic Dam Historically neglected and vastly under explored Initial project at Kanmantoo will produce cash flow to fund Hillgrove s exploration and development Strategy to commence new developments once mine underway Upside from additional regional satellite reserves Underground high grade targets e.g. Bremer Mine Hillgrove s Near Term Focus

7 Kanmantoo Project Kanmantoo Copper/Gold Mine

8 Kanmantoo Project Ore Body 7

9 Kanmantoo Project Snapshot Kanmantoo was operated by NBH/ SBH/EZ as their first open cut mine from , mining around 4.1Mt of copper ore Hillgrove commenced work at Kanmantoo in 2003, with production planned in 2011 Low cost access to critical water, power and transport infrastructure Attractive employment costs compared dto remote fly-in fly-out mine operations Total (0.25% Cu Cut Off Grade Model) Tonnes Cu Au Ag Cu Metal Au Ag Type Kt % g/t g/t Tonnes Ounces Ounces Oxide 1, ,600 6, ,000 Transitional 1, , , ,000 Fresh 29, , ,600 3,040,700 Total 32, , ,100 3,313,600 8

10 Kanmantoo Project Summary Resources: 292,700 tonnes 0.9% 194,700 ounces 0.2g/t 3,326,300 ounces 3.2g/t Mining Stage 1: Mining Stage 2: Mining method: Mine life: Capex: Oxide heap leach operation 450tpa contained copper 2.0Mtpa sulphide float operation to produce ~20,000tpa 000tpa copper in concentrate Open cut with underground potential 6.5 year mine life with potential to extend AUD$98 million Production: ~20,000tpa copper in concentrate Q1-Q Cash operating cost: Cu price USD$2.60 AUD/USD = 0.80 Concentrate: 24% copper, 3.5g/t gold, 66g/t silver 9

11 Kanmantoo Project Low Risk Features Operational history significantly de-risks the project Known, simple metallurgy with excellent recoveries Large database of exploration, mining and processing information Capital cost per tonne of annual copper in concentrate produced <50% of global average Head grade > the weighted average global head grade Low cost power, water, transport and labour Geotechnically sound ground conditions Low political risk environment 10

12 Kanmantoo Project Pillara Plant/Heap Leach Operation Pillara Mine s process plant and associated equipment and buildings Kanmantoo Project s oxide ore heap leach processing operation 11

13 Exploration Focus Kanmantoo Near Mine Prospects 12

14 Kanmantoo Project Uniquely Positioned Only Australian mid-cap copper developer with production planned to start in 2011: $98 million capex Mining Lease 6345 granted MARP conditionally approved All feasibility studies, metalurgical testing completed Freehold land of 835ha (2,063 acres) acquired Pillara process plant acquired Long lead time equipment acquired Progressing project financing FID Short latency project ideally positioned to come on stream at the start of a global synchronised global economic recovery 13

15 Regional Pipeline Indonesia Highly Prospective Advanced Gold Exploration 14

16 Bird s Head Project Regional Setting Bird s Head covers part of the interpreted westward continuation of the New Guinea Orogenic Belt 15

17 Bird s Head Project Indonesia/New Guinea Gold-Rich Porphyry yycu Deposits Five of Top 20 Know Gold-Rich Porphyry Copper Deposits 1 Rank Deposit Province Tonnage Au Au Cu Cu (Mt) (g/t) (t) (Wt %) (Mt) 1. Grasberg East Papua 2, , Panguna Bougainville 1, Bt Batu Hijau Sumbawa 1, Ok Tedi PNG Frieda River PNG 1, Source: Economic Geology, Volume 100, p Ranked on contained gold. 16

18 Bird s Head Project Historical Drainage Anomalies Stream Sediment Anomalies by Gold Work by Normandy and past explorers highlighted 16 high order anomalies, with Bird s Head containing 10 of these 17

19 Delta Prospect West Delta Area Over 5m silica-pyrite-albite altered monzonite with malachite after fine grained chalcocite in hanging wall Close up of above hanging wall rock with quartz-sulphide veining/stockwork Clay altered & brecciated monzonite 18

20 Bird s Head Delta Prospect Copper Rock Geochemistry High of 17.9% Copper Multiple results in 1-20% range High grade mineralisation of epithermal style plus broad low grade copper with intrusives suggests porphyry style mineralisation

21 Bird s Head Delta Prospect Gold Rock Geochemistry Confirms large corridor of mineralisation Peak value of 205g/t gold Peak values 205g/t gold, 471g/t silver, 17.9% copper, 6.3% lead, 7.5% zinc (not same sample)

22 Bird s Head Delta Prospect Significant Trench Intercepts Trenching results confirmed presence of high grade epithermal mineralisation Follow up drilling intersected: 1.71g/t gold and 2.55g/t silver from 13m in KSD1, incl. 2.97g/t gold and 3.56g/t silver 1.25g/t gold and 2.96g/t silver from 19.1m and 5.96g/t gold and 3.18g/t silver from 54.9m KSD6 Drilling has been sparse and erratic to date; shoot geometry in an epithermal deposit usually necessitates a high density of drilling 2 Kilometres

23 Bird s Head Project Central Prospects Gold (g/t) Geochemistry Significant untested geochemical anomalies, i.e. stream anomaly at Quebec similar to that originally defined by Alpha/Bravo anomalies 22

24 Bird s Head Project Alpha Prospect Gold (g/t) Soil Geochemistry 1 Kilometre Batu Hijau Extensive gold mineralisation, which appears to be strongly structurally controlled 23

25 Bird s Head Project Alpha Prospect Drilling, Trenching Locations on Gold Soil Geochemistry Bonanza trenching grades, gold associated with epithermal quartz veins Very limited it drilling completed to date with only 5 drill holes Significant ifi scout drilling results including 2.16g/t gold, 18.36g/t silver, 0.29% copper, 2.08% lead and 5.31% zinc in AD g/t gold and 16g/t silver in AD4 B15 Anomaly A17/19 Anomaly A18 Anomaly 24

26 Bird s Head Project 2009 / 2010 Program 2009: Historical data review and compilation Socialisation Logistics established Established coastal base camp and Delta fly camp Geological mapping, rock chip sampling and trenching 2010: Geophysics Drilling 25

27 Bird s Head Project Key Attributes Bird s Head is an exciting exploration project: Favourable tectonic setting in tertiary volcanics Outstanding surface geochemistry Strong indications of a multi-phased mineralising system, epithermal over printing porphyry Two advanced exploration prospects (Delta and Alpha), could be drill ready in six months Numerous high order stream anomalies still require follow up Limited drill testing has occurred but not at sufficient density to either advance or downgrade potential prospect areas 26

28 Bird s Head Project Summary The Bird s Head Project represents an excellent opportunity to explore for large scale epithermal and porphyry style mineralisation within a geological setting that has been proven to host world class deposits The Project covers a large area of what is interpreted to be the westward continuation of the New Guinea Orogenic Belt which contains the giant Ertsberg/Grasberg, Porgera and Ok Tedi deposits Project has key ingredients to potentially host a deposit of significant size Two advanced prospects which could be drill ready in six months Indonesian mining law has recently seen many favourable changes Highly energised Indonesian partners Excellent potential ti to discover a company making world class ore body 27

29 Indonesia Sumba Island Prospect (80%) IUP Explorasi No 322/kep/HK/2009 granted on 2 November for six years on Sumba covering an area of 1,000km 2 Hillgrove s Indonesian partner PT Fathi Resources free carried to decision to mine with 20% interest Sumba offers a leg up into previously identified gold mineralisation zone (BHP) not followed up due to economic conditions of late 1990 s Better results from BHP trenching include: 49.38g/t gold 4m at 16.73g/t gold 4m at 6.7g/t gold 9m at 5.87g/t gold 9m at 6.1g/t gold 13m at 2.05g/t gold 16m at 1.56g/t gold Note: Trenching was largely l conducted d perpendicular to quartz veins and continuous sampling conducted at 1m intervals. Hillgrove still searching for reports that contain specific information on drill hole locations, assays and any other exploration data. 28

30 Sumba Project Pahandanjal Region 29

31 Sumba Project Significant rock chip/float assays from Pelitilira Prospect 30

32 Sumba Project Masu Current Focus 31

33 Sumba Project Pelitilira Prospect Strongly siliceous float sample with malachite staining and abundant disseminated pyrite and galena 32

34 Sumba Project Pahandanjal Prospect - Western Vein Outcropping vein zone (identified by Hillgrove in rock chip sampling in May-June) was trenched in October-December 2009 revealing multiple high grade lodes which are enveloped by low grade alteration Significant trench results include: Trench FT1: 9m at 6.51g/t gold, 9.4g/t silver, within 18m zone at 3.93g/t gold, 8.02g/t silver Trench FT2: 5m at 7.5g/t gold, 18g/t silver and 1m at 6.73g/t gold, 72.2g/t silver Trench FT3: 7m at 8.34g/t gold, 6.17g/t silver Trench FT4: 4m at 10.04g/t gold, 17.18g/t silver,2m at 3.34g/t gold, 4.25g/t silver and 1m at 3.68g/t gold, 1.8g/t silver Trench FT5: 2m at 6.25g/t gold, 21.35g/t silver, 2m at 12.5g/t gold, 11.6g/t silver, 1m at 10.2g/t gold, 17.5g/t silver and 2m at 1.03g/t gold, 1.2g/t silver Trench FT100: 15m at 1.51g/t gold, 6.18g/t silver Trench FT101: 1m at 11.5g/t gold, 20.8g/t silver, and 2m at 1.13g/t gold, 3.7g/t silver, and 1m at 4.71g/t gold, 3.7g/t silver Trench FT102: 4m at 5.34g/t gold, 10.40g/t silver Trench FT103: 3m at 2.35g/t gold, 8.57g/t silver. Results highlight the Masu Project s potential to host multiple, high-grade, fracturecontrolled vein systems, of comparable grades and dimensions to high grade epithermal low sulphidation systems mined elsewhere in Indonesian archipelago Results pinpointed high quality drill targets for testing at start of the dry season 33

35 Sumba Project Pahandanjal Prospect Western Lode 34

36 Sumba Project Pahandanjal Prospect Western Lode 35

37 Sumba Project Pahandanjal Prospect Eastern Vein Trenching at southern end confirmed presence of high grade zone at an interpreted structural t intersection. ti Results include: FT18: 14m at 6.97g/t Gold and 10.74g/t Silver including 4m at 10.18g/t gold and 15.05g/t Silver and 2m at 9.29g/t gold and 10g/t silver. Eastern Vein system strikes approximately NNW and outcrops over at least 600m, but exhibits multiple intersecting lodes which vary from ENE to ESE. Trench results also indicate a low grade alteration halo to many of the lodes. The ENE and WNW trending lodes generally occur as brecciated and disseminated low grade zones, with higher grades at structural intersections. Previously reported results from Hillgrove s 2008 field program included the identification of a 200m x 200m gold in soil anomaly peaking at 0.67g/t gold. Follow-up trenching have proven that a broad zone of low grade gold mineralisation exists in this area. Results include: FT12: 46m at 1.01g/t Gold,5.21g/t Silver incl. 20m at 1.35g/t Gold, 7.89g/t Silver FT21A: 46m at 1.02g/t Gold and 2.63g/t Silver (not all results received) FT13: 74m at 0.5g/t Gold and 3.19g/t Silver. 36

38 Sumba Project Pahandanjal Prospect Eastern Lode 37

39 Sumba Project Pahandanjal Prospect Far South Western Vein Strong silica-kaolin breccia float 38

40 Sumba Project Masu Project 39

41 Sumba Project 2009 / 2010 Program 2009: Historical data review and compilation Socialisation Logistics established Base camp built Geological mapping, rock chip sampling and trenching 2010: Further mapping, sampling and trenching Drilling in early

42 Introduction to Hillgrove Board of Directors Legend Non-Executive Director Executive Director Management Team John Quirke Director Ron Belz Director David Archer Managing Director Dean Brown AO Chairman John Gooding Director Jim Kerr New Project Evaluation Manager Geoff Stewart General Manager Business Development Russell Middleton Chief Financial Officer & Company Secretary Dale Ferguson General Manager Exploration & Operations Cam Schubert General Manager Kanmantoo Project Good Governance, Project Development and Extensive Mining Expertise 41

43 Key Investors Hillgrove s Top 10 Shareholders RBS Sempra Metals & Concentrates Corporation 10.0% Copulos Family 4.4% Ras Al Khaimah Minerals & Metals Investments 4.1% Scott Family 3.6% Mr David S Archer 3.3% Escor 1.5% Dr Kohlhase Vermogensverwaltungs 1.4% Dimensional Fund Advisors 1.2% Maple Leaf Capital 1.0% Arcadian Asset Management 10% 1.0% 42

44 Eastern Star Gas Limited Investment Hillgrove identified Narrabri CSG opportunity in 2003 and took a 32.5% direct JV interest JV interest swapped for 172 million ESG shares in 2006 Sold 19.9% share/option holding in ESG for $172 million cash to Santos in July 2009 Up to 31 December 2010 Santos top-up p payment to Hillgrove of: 100% of price above $1-00 if ESG taken over by Santos 50% of price above $1-00 if ESG taken over by a third party Debt (convertible bonds) and interest all redeemed totaling $49.8 million 43

45 Hillgrove Resources Limited Half Year Financial Highlights g 31 July 2009 Profit/earnings driven by ESG shareholding: NPAT ($m) EPS (cents) FY FY2008 (4.9) (2.0) FY Half Dividends paid: 6 October cent per share 30 November cent per share Hillgrove is in an income tax payable position as at 31 Jan 2010 and potentially may declare fully franked dividends of ~$10 million 1 Cash of $130.0 million or 27 cents per share (nil debt) 2 Net assets of $146.7 million or 35 cents per share 1. Following a profit on the sale of the ESG investment and after settlement of Hillgrove s existing income tax liability of approximately $23 million. 2. Cash balance as at 21/1/10. 44

46 Hillgrove Resources Limited ASX Code: HGO - Key Investment Metrics Hillgrove Resources 9/02/10 Share Price 1 $ 0.37 Ordinary shares # 477.8M Fully diluted shares M Trading History Fully diluted market cap. $183.8M Price (A$) Hillgrove Resources Cash 3 $129.4M Cash from options $ 5.1M 0.4 Tax liability 4 $ 23.4M Enterprise value $ 72.7M 10 Asset book value 31 July 2009: Kanmantoo $ 31.6M P, P & E $ 20.0M Other exploration $ 6.4M Total $ 58.0M Volume Close As at 9 February Including in the money options, noting there are a further million options exercisable at between 37.5c and 65c. 3. As at 9 February Tax on sale of ESG shares. 44

47 Hillgrove Resources Limited Copper Peer Valuations Hillgrove is currently trading at US$452/t of contained copper equivalent reserve US$/t 1,600 1,400 Aditya Birla and Panaust trade on 1,200 superior multiples 1,000 due to their producing projects 800 EV Reserves EV Resources EV (US$) / Copper Equivalent Contained Metal (t) Development and Exploration Producing Hillgrove is likely to experience a material uplift in valuation as Kanmantoo progresses towards commissioning URL DML EXS HGO FND CGG CDU AVM ABY PNA Source: Company announcements and share price information as at 12 November A$/US$ exchange rate at

48 Hillgrove Resources Limited Investment Summary Strong Balance Sheet: $ million cash or 27 cents per share 2009 Targeting discovery of world class gold and copper/gold ore bodies: 2,815 km² West Papua and Sumba Kanmantoo Copper/Gold Mine: Oxide heap leach moving to 2.0MTPA mine with production targeted for 2011 plus significant resource extension potential >10 years mine life Eastern Star Upside: Santos top-up on takeover >$1-00 per share People: Leading team of corporate, exploration and mining professionals Growth: Linked to expected medium term synchronised global growth 47

49 Exploration Results Competent Persons The information in this report that relates to Exploration Results announced by Hillgrove Resources Limited and InterMet Resources Limited is based on information compiled by Mr Dale Ferguson, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Ferguson is the Executive Director Exploration and Operations of Hillgrove Resources and has sufficient relevant experience to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Ferguson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Exploration Results announced by Hillgrove Resources Limited and InterMet Resources Limited is based on information compiled by Mr Adam Freeman, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Freeman is the Exploration Manager of Hillgrove Resources and has sufficient relevant experience to qualify as a Competent t Person as defined d in the 2004 Edition of the Australasian Cd Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Freeman consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Mineral Resource estimates is based on information compiled by Mr Paul Payne, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Runge Limited and has sufficient relevant experience to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Payne consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. The information in this report that relates to Ore Reserve estimates is based on information compiled by Mr Geoff Davidson, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Davidson is a principal consultant with Snowdens Mining Consultants and has sufficient relevant experience to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Davidson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears. 48