BUILDING A MID- -TIER RESOURCES GROUP TIER RESOURCES GROUP BUILDING A MID PDAC - - TORONTO TORONTO PDAC 5 March 2007 5 March 2007
HILLGROVE Structure HILLGROVE RESOURCES ASX:HGO 26.4% 31% S.A. DEVELOPMENT EASTERN STAR GAS INTERMET RESOURCES & EXPLORATION ASX:ESG ASX:ITT KANMANTOO MINE GUNNEDAH GAWLER 100%/ 90% 65% COPPER/GOLD/GARNET GAS PROJECT IOCG EXPLORATION WHEAL ELLEN WILGA PARK GAWLER 100% 100% LEAD/ZINC POWER STATION URANIUM REGIONAL EXPLORATION GAWLER GOLD, Au, Cu, Ag, Zn, Pb BASE METALS ALFORD 20% ->70% GAWLER IOCG
HILLGROVE In South Australia
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
KANMANTOO Project Location � Low operating cost setting � Existing infrastructure
KANMANTOO Kanmantoo Copper Gold Mine 2005
KANMANTOO Potential Open Pit Operation
KANMANTOO Current Resource Kanmantoo Deposit Resource Estimate – October 2006 (0.25% Cutoff) INDICATED INFERRED TOTAL Au Au Au Cu Tonnes Cu Cut Tonnes Cu Cut Tonnes Cu Cut Metal Au Cut Type T % g/t T % g/t T % g/t Tonnes Ounces 722,995 0.82 0.23 146,510 0.70 0.23 869,505 0.80 0.23 6,972 6,353 Oxide Transitional 1,194,256 0.86 0.20 432,427 0.78 0.21 1,626,683 0.84 0.20 13,600 10,445 15,469,414 0.96 0.22 10,032,123 0.92 0.16 25,501,537 0.95 0.20 242,041 160,420 Fresh Total 17,386,665 0.95 0.22 10,611,060 0.92 0.16 27,997,725 0.94 0.20 262,613 177,218 Resource Evaluations
KANMANTOO Updated Resource by Area Zone Tonnes Cu Au Cut Cu Metal Au Cut T % g/t Tonnes Ounces Main 9,421,335 1.05 0.10 98,484 30,941 South East 3,890,311 0.88 0.37 34,277 46,391 North East 1,242,539 1.14 0.28 14,139 11,329 North West 1,209,302 0.73 0.11 8,808 4,235 Eastern 977,878 1.25 0.31 12,223 9,857 O'Neil 4,832,697 0.81 0.34 39,240 53,137 Emily Star 3,645,337 0.92 0.09 33,537 10,141
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 - Copper price US$2.65 → US$1.63 Base case assumptions: - Exchange rate (A$/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% - 93% depending on ore type - Gold 15% - 53% depending on ore type - 61,000 - 82,000 dry TPA Concentrate: - 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$98.3 Million
KANMANTOO Key Pre-Feasibility Study Consultants
KANMANTOO Potential Open Pit Development
KANMANTOO Process Flow
KANMANTOO Financials Cu Fx Discount NPV IRR NPAT (US$/lb) (A$/US$) % $’m % $’m 2.65 → 1.63 Base Case 0.70 8.5 75 32 141 Case 1 2.50 0.70 8.5 134 42 239 Case 2 3.00 0.70 8.5 216 60 358 � Breakeven cash cost US$1.20 per lb including gold and silver revenue � $5,137 capital cost per annual tonne of copper production – in the mid-range for its peers � <2 year initial Capex payback
KANMANTOO Upside Cost per lb � Resource increase by 40% to target 40MT, throughput 2.5MT/pa NPV@8.5% $102M Improves 6c � Increase head grade >1.1% NPV@8.5% $122M Improves 11c � Concurrent/ subsequent underground mining $ ? � Revenues from garnet by-product $8-20M � Treat Wheal Ellen lead/ zinc, satellite copper ore bodies $ ?
KANMANTOO Key DFS Consultants
KANMANTOO Conceptual Flow Chart 2006 2007 2008 2009 Pre-feasibility Metallurgy Permitting Drilling Definitive Feasibility Study Construction & Development Mining
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
KANMANTOO Mine Corridor IP with Drilling and Ore Blocks
KANMANTOO Regional Magnetics � Regional exploration has recommenced, reconnaissance of all new magnetic targets underway � 12 major magnetic targets outside Mine Corridor
KANMANTOO Wheal Ellen Area – Magnetics � Angus 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
KANMANTOO Junior Australian Emerging Copper Producers Company Universal Copper Co Ex Co Discovery Matrix Hillgrove Resources Nickel Metals Resources Code URL CUO EXS DNL MRX HGO Mkt Cap @ 23 Jan 07 A$m 59.2 170.7 51.2 20.4 66.2 10.3 ** Cloncurry & White & Roseby Lady Annie White Dam Maun Cuthbert Key Project Kanmantoo First Production Q1 2008 Q3 2007 Q3 2008 2010 ? 2008 4Q 2008 Copper Production tpa 34,000 10,000 10,000 ? 15,000 20,000 Resources mt 127.2 36.1 27.5 20.0 14.8 28.0 Grade % 0.73 0.92 1.25 1.20 1.10 0.94 Copper in Ground kt 933 331 344 240 163 263 Copper Equivalent kt 961 331 392 240 163 283 Notes: SX/EW Sulphide SX-EW 0.2 g/t Au PFS U308 U308 & CBM Mkt. Cap/Tonne Cu $62 $516 $131 $85 $405 $36 ** Hillgrove excl. $48m of ESG & ITT Shares Projects Roseby Lady Annie Cloncurry Mt Cuthbert Kanmantoo Contained Metal 312,749 t 126,900 t 344,000t 20,465 t 262,600 t Production per annum 34,000tpa 15,000tpa 5,500tpa 19,000tpa Cost per lb @US$1.14 @US$0.75 @US$1.59 @US$1.20 NPV at 8% or 8.5% NPV $156m NPV $86m NPV $41m NPV $75m Hillgrove is significantly undervalued relative to its peers
ALFORD PROJECT Highlights � 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 � 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
ALFORD PROJECT Interpreted Geology
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
INTERMET RESOURCES Competitive Advantage � Detailed understanding of the tectonic history and mineral systems on the Gawler Craton � Technical expertise – Exploration team has extensive experience on 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
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