Annual General Meeting Annual General Meeting 23 May 2007 23 May - - PowerPoint PPT Presentation

BUILDING A MID BUILDING A MID-

• TIER RESOURCES GROUP

TIER RESOURCES GROUP

Annual General Meeting Annual General Meeting

23 May 2007 23 May 2007

2.

HILLGROVE

Structure

3.

HILLGROVE

In South Australia

4.

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 Goldfields of WA
• Supportive State Government
• Sixth most desirable region in the world to explore (Fraser Institute)
• Projects located close to infrastructure

Result → SA will host Australia’s major mineral discoveries

5.

KANMANTOO

Project Location

• Low operating

cost setting

• Existing

infrastructure

6.

KANMANTOO

Kanmantoo Copper Gold Mine 2007

7.

KANMANTOO

Resource Zones

8.

KANMANTOO

Drilling Results Highlights

Main Zone: 81m @ 1.35% cu North East: 16m @ 4.34% cu and 0.65 g/t au O’Neil Zone: 11m @ 2.05% cu and 6.47 g/t au South East Zone: 22m @ 1.51% cu and 0.78 g/t au East Zone: 20m @ 1.13% cu and 0.1 g/t au

9.

KANMANTOO

May 2007 Resource

Type Tonnes Cu Au Ag Tonnes Cu Au Ag Tonnes Cu Au Ag Cu Metal Au Cut Ag T % g/t g/t T % g/t g/t T % g/t g/t Tonnes Ounces Ounces Oxide 950,200 0.8 0.2 3.3 195,200 0.6 0.2 1.4 1,145,400 0.8 0.2 2.9 8,800 7,100 108,500 Transitional 1,093,000 0.8 0.2 3.1 523,000 0.7 0.2 1.7 1,616,000 0.8 0.2 2.7 12,300 9,800 138,000 Fresh 20,920,000 0.9 0.2 3.1 9,759,000 0.8 0.2 2.3 30,679,000 0.9 0.2 2.8 268,900 200,100 2,802,400 Total 22,963,000 0.9 0.2 3.1 10,477,000 0.8 0.2 2.3 33,440,000 0.9 0.2 2.8 290,000 216,900 3,048,800 Indicated Inferred Total

Kanmantoo Deposit Resource Estimate - April 2007 (0.25%Cu Cutoff)

10.

KANMANTOO

Potential Open Pit Development

11. 10 20 30 40 50 Original Resource 12/04 Upgrade 10/06 Upgrade 4/07 Upgrade Target

28Mt at .94% cu & 0.2 g/t gold

Resource Million Tonnes Inferred Tonnes Indicated Tonnes

33.44Mt at .9% cu & 0.2g/t gold 18.4Mt at 1.1% cu & 0.2 g/t gold 8.5Mt at 1.2% cu & 0.2 g/t gold

KANMANTOO

Resource Growth

12.

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 → US$1.63
• Exchange rate (A$/US$) A$0.70 flat

Open pit:

• 1.2km long X 600m wide X 270m deep
• Ore mined 2MT PA with potential to expand to 2.5MT PA
• Initial minimum mine life 6.5 years

Processing:

• Conventional crushing, grinding and flotation
• Mill throughput 2MT PA with potential to expand to 2.5MT PA

Average head grade:

• 0.95% Copper, 0.23g/t Gold, 3.55g/t Silver

Average recovery:

• Copper 80% - 96% depending on ore type
• Gold 15% - 53% depending on ore type

Concentrate:

• 61,000 - 82,000 dry TPA
• High quality, medium copper content, low impurities

Concentrate grade:

• >25% Copper, 2.0 - 3.7g/t Gold, 39.3 – 61.4g/t Silver

Average metal in cons:

• 19,000T PA Copper
• 6,000oz PA Gold
• 113,000oz PA Silver

Initial Capex:

• A$98.3 Million

13.

KANMANTOO

Process Flow

14.

KANMANTOO

Proposed Site Layout

15.

KANMANTOO

Communities and Stakeholders

We act with integrity, transparency and honesty. We recognise, respect and support the right of Kanmantoo’s local communities to be consulted:

– Committee/Focus group meetings – Community meetings – Site tours, newsletters and community webpage.

We aim to consult with major local stakeholders

– Business/ community/ landowners – Adelaide Hills Regional Development Board – Mount Barker Council.

We aim to meet or exceed the highest environmental standards. We aim to engage and contribute to the life of the Kanmantoo communities

– Sport – Education – Employment.

Result to build community’s understanding, mutual respect and support for Hillgrove’s work.

16.

KANMANTOO

Key DFS Consultants

17.

KANMANTOO

Conceptual Flow Chart

2006 2007 2008 2009 Pre-feasibility Metallurgy Permitting Drilling Definitive Feasibility Study Construction & Development Mining

18.

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 zones not incorporated in the latest resource or the PFS economic model The programme confirmed the prospectivity of the area and potential for a mineralised system of considerable size Both the resource tonnage and the confidence level have increased Given the substantial gaps and possible strike extensions targeted for drilling, there is excellent potential for further significant copper resource growth in and around the old open cut

19.

KANMANTOO

Mine Corridor IP with Drilling and Ore Blocks

20.

KANMANTOO

Regional Magnetics

Regional exploration has recommenced, reconnaissance of all new magnetic targets underway 12 major magnetic targets outside Mine Corridor

21.

KANMANTOO

Wheal Ellen Area – Magnetics

Angas 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 Rock chips up to 24g/t gold, 147g/t silver, 18% lead and 21% zinc

22.

ALFORD PROJECT

Summary – Similarities to Tennant Creek and Rum Jungle

• 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, Prominent Hill and Carrapateena – similar granites/age, copper/uranium mineralisation present, on same linement/rim fault system, presence of basement highs

• Copper mineralisation associated with a number of discrete gravity

features, a key association for IOCG deposits

• Uranium potential with past drilling returning excellent first pass with

assay results up to 290ppm Uranium

• Past exploration has defined a series of copper anomalies along the

Alford Shear Zone for over 7km in strike

• 2007 exploration program underway which will include calcrete sampling,

aircore drilling, diamond drilling and assaying of past work for uranium

23.

ALFORD PROJECT

Interpreted Geology

Highlights 75m @ 0.95% copper and 4m @ 290ppm uranium

ALFORD PROJECT

May Drilling

Pyrite with lesser Chalcopyrite Pyrite with lesser Chalcopyrite

Brecciated and haematite altered siltstones with common pyrite and lesser chalcopyrite ALDDH008 138.6 – 143m Strongly brecciated and haematite altered siltstones ALDDH008 27.9 – 32.5m

25.

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 over 8,500km² under title
• World class team of exploration professionals – Managing Director,

Gary Ferris, and Director, Dr Neville Alley

• Very active 2007 programme targeting company makers

26.

• Detailed understanding of the tectonic history and mineral systems
• n the Gawler Craton
• Technical expertise – Exploration team has extensive experience
• n the Gawler Craton and gold systems
• Uranium expertise – strategic JV’s with proven uranium explorers

– UEQ, Mega Uranium

• Association with Hillgrove Resources – keeps costs down and

provides access to drill rigs

• Concurrent multiple exploration programmes – constant stream of

results due in 2007

• JV’s and cash leverage ITT’s probability of success

INTERMET RESOURCES

Competitive Advantage

27.

INTERMET RESOURCES

ITT Project Matrix

Project Tenement No. Participants JV Commitment ($) Exploration Model EL3466 ITT 100%

• IOCG
• Base metals related to Hiltaba Suite magmatic event
• Orogenic gold

EL3467 ITT and Hindmarsh Resources $600,00 over 4 years to get 80% interest in Unconformity-related uranium only

• Unconformity-related uranium
• Epithermal gold and base metals

Lake Gilles ELA 537/06 ITT 100%

• Base metals related to Hiltaba Suite magmatic even
• Orogenic gold

EL3314, ELA 230/06 ITT and WCP Uranium $1.5M over 4 years to get 80% interest in uranium

• Palaeochannel hosted uranium

EL3314 ITT 100%

• Archaean greenstone hosted base metals, nickel and

gold mineralisation Coulta ELA 230/06 ITT 100%

• Proterozoic “Broken Hill” style base metals

EL3462, EL3463 ITT and Uranium Equities Ltd $2M over 5 years to earn 80% interest in Palaeochannel and unconformity related uranium

• Palaeochannel hosted and unconformity related

uranium EL3462, EL3463 ITT and Silver Swan Group $500,000 over 4 years to get 80% interest in all minerals excluding palaeochannel hosted and unconformity related uranium

• IOCG
• Orogenic gold
• Archaean greenstone hosted base metals and gold

Cocata ELA 690/06 ITT 100%

• Unconformity related uranium
• Archaean greenstone hosted base metals and gold

EL3313, EL3323, ELA 379/06 ITT and Uranium Equities Ltd $1M over 5 years to earn 80% interest in uranium

• Palaeochannel hosted uranium

Watson EL3313, EL3323 ITT and Silver Swan Group $500,000 over 4 years to get 80% interest in all minerals excluding uranium

• Archaean hosted gold and base metals
• Proterozoic intrusive hosted nickel

Southern Gawler Ranges EL3461, EL3598, EL3612 ITT 100%

• IOCG
• Orogenic gold

Garford North ELA 683/06 ITT 100%

• Archaean gold (similar to Challenger Gold Mine)
• Archaean nickel and base metals
• ?IOCG

28.

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 mineralisation – Lake Gilles
• A high crustal level of Fe-oxide and Cu-Au-U formation – Lake Gilles,

S GRV Projects

• A strong brittle structural control on the location of breccias and ore –

LG, Cocata, SGRV

• Importance of hematite accompanying higher grade Cu-Au-U

mineralisation – LG, SGRV

• The roles of two fluids of contrasting physico-chemical properties,
• ne of which is meteroic in origin – LG, S GRV

29.

EASTERN STAR GAS LTD

Company Overview

Principal Activities Eastern Star Gas Ltd (ESG) is focused on gas exploration and production from both coal seam gas (CSG) and conventional natural reservoirs in eastern Australia. ESG also owns and operates a gas fired power station. The Company holds interests in several licences in Victoria and New South Wales and will utilise farm-outs to conduct exploration drilling. Share price: Market cap: Shares on issue: Major Shareholders: $0.31-47 $240 million 416m ordinary shares 118m restricted shares Hillgrove Resources 19.9% Directors 18% Ingalls and Snyder 8% Financial Snapshot PEL 238 CSG (65%): PEL 238 Conventional (100%): Wilga Power Station: Exploration Upside: Victoria: Key Assets 17 TCF gas resource 1.4 TCF unrisked gas in place 11 MW expandable to 40MW PELs 6, 8, 422, 424 (Oil & Gas) Coal Seam Gas (Brown Coal) Key Milestone Summary An integrated natural gas and electricity company with very large gas resource potential An integrated natural gas and electricity company with very large gas resource potential Q1 - 2007: Q3 - 2007: Q4 - 2007: 2009: MacGen MOU to supply 500PJ 50-100 PJ of 2P reserves certification Expand to 200 PJ of 2P gas reserves Expand to 600 PJ of 2Pgas reserves

30.

EASTERN STAR GAS LTD

Key Assets

ESG Permit Locations – NSW and Victoria ESG Permit Locations – NSW and Victoria NSW is a net importer of gas ESG has a large resource of both coal

seam (CSG) and conventionally reservoired gas in Eastern Australia

Growing demand for gas-fired

electricity due to greenhouse concerns

Very well positioned to capture a

significant portion of this new gas market opportunity

Key Assets Key Assets

PEL 238 CSG (65%) 17 TCF gas resource PEL 238 Conventional (100%) 1.4 TCF* unrisked gas in place Wilga Power Station 11 MW expandable to 40MW Exploration Upside PELs 6, 8, 422, 424 (Oil & Conventional Gas) Victoria (brown coal) Coal Seam Gas

* Internal Estimate.

31.

EASTERN STAR GAS LTD

Market Opportunities

A phased approach has provided ESG with the enviable position of being able to match field development with market growth, and market development initiatives are in parallel with reserves certification

Immediate Opportunity Short – Medium Term Electricity Generation Regional Opportunities Ultimate Objective Existing infrastructure facilitates progressive market development with the ultimate aim of gas to Newcastle and Sydney Ability to supply 11MW Wilga Park Power Station

Baysw ater Pow er Station

MOU signed with MacGen for 500PJ to Bayswater Power Station Local base and peak period electricity generation Regional power generation at Gunnedah, Tamworth, Dubbo etc. Narrabri, Gunnedah, Tamworth & Dubbo industrial sales and gas distribution 125km connect to existing pipelines 250km to connect to MacGen Gas requirement is 2.75 Tj/d Expansion of Wilga Park power station to 40 MW Production test gas used to avoid flaring 100+ MW peak load potential

32.

EASTERN STAR GAS LTD

Macquarie Generation MOU

• Macquarie Generation is Australia’s largest electricity

generator producing the equivalent of 40% of NSW’s electricity requirements

• MOU agreement provides ESG with a potential

supply deal for:

• 500PJ gas for Bayswater Power Station

(2,640MW capacity)

• Potential for an additional supply to Liddell

Power Station (2,000MW capacity)

• Initial gas sales target 2009/2010
• 250km high pressure gas transmission pipeline

linking Narrabri to the Bayswater power station

• NSW’s first major indigenous supply of natural gas

providing a 25% increase in NSW’s gas consumption

• 120km from Newcastle providing opportunity for

further gas sales (Newcastle/Sydney/Wollongong)

• Environmental benefits will also be significant

MOU implies significant confidence in ESG achieving 2P reserves certification MOU implies significant confidence in ESG achieving 2P reserves certification

33.

EASTERN STAR GAS LTD

Gas Reserves Program

• Focus on PEL 238 CSG drilling

program to achieve commercial gas flow rates and reserves certification targets:

–

Q3 2007: 50-100PJ

–

Q4 2007: 200PJ

–

2009: 600PJ

• Gas pipeline from Bohena project

to the Wilga Park power station

• Farm out exploration drilling in

conventional oil and gas licenses

Bohena Seam – Gas Reserves Certification Program Bohena Seam – Gas Reserves Certification Program Work Program in Plan Work Program in Plan Achievement of initial 2P gas reserve certification will de-risk the PEL 238 project Achievement of initial 2P gas reserve certification will de-risk the PEL 238 project

Bibblewindi Production Pilot

• 9 well pilot
• Well interference - strong
• Gas flow rates increasing
• Continue dewatering
• 3rd Quarter, 2007 2P gas

reserve certification target Bohena Production Pilot

• 3 wells in production
• Aggregate gas flow rate –

237 mcfd and increasing

• Continued dewatering

Bohena Project area covers 265kms2 within PEL 238 (9,100kms2) and contains up to 3,700PJ GIP

Core Hole Drilling Program 4 core holes drilled to increase 2P gas reserve to 200 PJ by confirming:

• Coal thickness
• Coal permeability
• Gas content
• Gas composition

34.

EASTERN STAR GAS LTD

Growth Potential Aligned to Development Strategy

2006 2007 2008 2009 2010 PEL 238 Coal Seam Gas Program PEL 238 Coal Seam Gas Program

Confined production pilot Confined production pilot Unconfined production pilot Unconfined production pilot Gas for power stations in Tamworth, Dubbo and Gunnedah Gas for power stations in Tamworth, Dubbo and Gunnedah Sales to Newcastle / Sydney / Wollongong Core hole drilling program Core hole drilling program

Drilling Drilling Certification Certification Infrastructure Infrastructure Marketing Marketing Reserves Certification (2P) Reserves Certification (2P)

100PJ 200PJ 600PJ 1200PJ

Gas pipeline to Wilga Park power station Gas pipeline to Wilga Park power station Gas supply to Narrabri Region Gas supply to Narrabri Region MOU with MacGen for potential Gas Supply MOU with MacGen for potential Gas Supply Regional Opportunities for further gas sales Regional Opportunities for further gas sales 250km gas pipeline to MacGen power station 250km gas pipeline to MacGen power station Pipeline to Newcastle / Sydney / Wollongong Production Pilots & Core Holes Production Pilots & Core Holes

Commence Gas sales to MacGen Commence Gas sales to MacGen

Gas pipeline to MacGen Gas pipeline to MacGen Expand Wilga Park power station to 40MW capacity Expand Wilga Park power station to 40MW capacity

35.

• HGO holds a 25% 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 of PNG gas pipeline
• Majors seeking to secure Australian onshore gas resources
• ESG has 65% of Gunnedah Gas Project and unassailable operatorship
• Clear value adding route: gas production → reserves → contracts →

cashflows

• Value to Hillgrove of ESG shares/ notes/ options

– @ 45cps = $68 million – @ 50cps = $76 million – @ 70cps = $108 million

EASTERN STAR GAS LTD

Summary

36.

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 practicing Accountant

Senior Staff Ian Kirkham, Company Secretary and CFO

– Previously CFO of a number of Australian mining companies

Dale Ferguson, General Manager – Exploration & Operations

– Involved in discovery of a number of Australian deposits

Marty Adams, Project Manager – Kanmantoo

– Mining Engineer with 20 years’ experience including Newmont (Woodcutters) and as General Manager at Tennant Creek for Normandy

Richard Bradey, Mine Geologist – Kanmantoo

– 20 years base metal mine experience – Mt. Isa, Mt. Gordon, Benambra and Woodcutters

HILLGROVE

Key People

37.

ASX : HGO Ordinary Shares HGO 242.1 million Options – 30 cents 2009 Unlisted 12.5 million Options – other expiry - ESOP Unlisted 7.9 million Options – other expiry - Sempra Unlisted 18.0 million Market Cap (@ 38 cents per share) $91.0 million Cash (March 2007) plus Sempra cash ~$10.0 million NPAT year ended 31 January 2007 $10.8 million Liquidity $3.7 million per month

HILLGROVE

Investment Metrics

38.

SHAREHOLDERS

Top 35%

SegaInterSettle 8.5% Swiss Nominee Archer Group 7.6% Managing Director Sempra Metals 7.0% Fortune 500, American energy & Concentrates and metals trading group Anglo Pacific 3.5% London based investment fund Colonial Global 3.5% Large Australian pensions institution Macquarie Bank 3.1% Australia’s largest investment bank Merrill Lynch 2.2% London based investment fund

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 underlying assumptions which could cause actual results

• r 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, political risks, project delay or advancement, approvals and cost estimates. 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.