COPPER PRODUCER IN 2009 COPPER PRODUCER IN 2009 COPPER PRODUCER IN - - PowerPoint PPT Presentation

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

100% Kanmantoo Copper / Gold Mine 100% Wheal Ellen Lead / Zinc / Gold 100% Kanmantoo Regional Base Metals 100% Kanmantoo Regional Gold 20% 70% Alf d IOCG

www.hillgroveresources.com.au 65% Gunnedah Coal Seam Gas Project

22.6% 20% 70% Alford IOCG 65% Gunnedah Coal Seam Gas Project

www.easternstar.com.au 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 100% Union Gold Mine 100% Percy West Gold Mine 46.6% 100% North Queensland Magnetite 100% Union Gold Mine 100% Percy West Gold Mine

www.intermetresources.com.au

100% Percy West Gold Mine 100% Lake Gilles IOCG 49% SA Paleochannel Uranium 100% Percy West Gold Mine 100% Lake Gilles IOCG 49% SA Paleochannel Uranium 100% Southern Gawler Ranges IOCG 100% Garford North Gold 4.0% Mongolia Coal, Uranium, Copper / Gold

____________________ 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.

1

Introduction to Hillgrove

Board and Management Board and Management

Dean Brown AO Chairman David Archer Managing Director Ron Belz Director John Quirke Director John Gooding Director

Colour Code

Dale Ferguson Executive Director Kanmantoo Geoff Stewart Business Development Russell Middleton Chief Financial Officer Ros Worthington Non-Executive Director Executive Di t Kanmantoo Senior Staff Ros Worthington HR Manager Adam Wheatley C lt t Director Management Team Consultant

2

The Hillgrove team has extensive exploration, project development and mining expertise

SHAREHOLDERS

Top 50% Top 50%

RBS Sempra Subsidiary of RBS Sempra Subsidiary of Commodities 15.0% Royal Bank of Scotland ANZ Nominees 11.6% European shareholders RMMI 6.4% RAK Minerals - UAE investor RMMI 6.4% 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

ASX listed natural resources company focused on development of

Company Highlights

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 $0.15 options.

4

Introduction to Hillgrove

ASX Trading Summary ASX Trading Summary

0.70 Price (A$) 6.0 Volume (m)

Hillgrove Resources Sh P i 25/7/08 $0 280

0.60 5.0

Share Price 25/7/08 $0.280 52 Week - high $0.550

• low

$0.180

0 40 0.50 4.0

Diluted Shares 373.6m Market Capitalisation $88.7m Net Debt $ 12.0m

0.30 0.40 3.0

Enterprise Value $100.7m ESG Investment ($91.2m) Enterprise Value excl. ESG $ 9.5m

0.20 1 0 2.0

p Copper Equivalent Reserves 114,000t R 318 000t

0.00 0.10 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 0.0 1.0 May 08

Resources 318,000t Valuation Metrics EV excl ESG/Reserves US$ 83/t

May 07 Jul 07 Sep 07 Nov 07 Jan 08 Mar 08

Volume Hillgrove Resources Index Copper Price

May-08

5

EV excl. ESG/Reserves US$ 83/t EV excl. ESG/Resource US$ 30/t

____________________ 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 0.9605.

Introduction to Hillgrove

Unique Investment Opportunity

• Only Australian mid-cap copper

Unique Investment Opportunity

First Production Estimates for Australian Junior Copper Companies(1)

developer with production planned pre 2010 DFS complete

Australian Junior Copper Companies

CopperCo (June 2007)

Producing

DFS complete Detailed design underway Progressing project financing

Hillgrove (June 2009) Matrix Metals (August 2007)

Producing Targeted Production

(Half 2 2009)

Progressing project financing

• Product sales underpinned by life of

mine off-take agreement with RBS

Exco (February 2010) ( )

PFS Due Mid 2008

( )

g Sempra Commodities

• Potential to produce industrial garnet

Copper Strike (2012) CuDeco (March 2010)

DFS Due End 2008 PFS Due Mid 2008

by-product of approximately 100- 150kt at low incremental cost and be a producer of global scale

Indophil (December 2012)

PFS Complete

0 2007 2008 2009 2010 2011 2012 2013

____________________ (1) Source: Company announcements

PFS = Preliminary Feasibility Study DFS = Definitive Feasibility Study

6

Introduction to Hillgrove

Peer Valuation Metrics Peer Valuation Metrics

• Hillgrove is currently trading at

3,000 US$/t

EV (US$) / Copper Equivalent Contained Metal (t)

US$119/t of contained copper equivalent reserve CopperCo and Matrix Metals

2,406 2,500

Producing Development and Exploration

• CopperCo and Matrix Metals

trade on superior multiples due to their producing projects

2,000

• Hillgrove is likely to experience

a material uplift in valuation as Kanmantoo progresses

1,500

Kanmantoo progresses towards commissioning

1,098 665 907 1,000 119 42 135 62 11 500 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$16.23/oz silver. Hillgrove enterprise value excludes market value of investment in ESG. A$/US$ exchange rate at 0.9333.

7

Kanmantoo Project

Kanmantoo Copper Gold Mine Kanmantoo Copper Gold Mine

8

Kanmantoo Project

South Australian Region South Australian Region

• South Australia is one of the most

i i i h ld prospective terrains in the world Home of the Big One, Olympic Dam Hi t i ll l t d d tl d

• Historically neglected and vastly under

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
• nce 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 Andrew Reeves Richard Bradey David Schmitz To be Appointed Andrew Reeves Engineering Manager Richard Bradey Site Manager David Schmitz Mining Manager To be Appointed Mine Manager David Walker Project Engineer Team of 11 Catherine Davis Environment Manager To be Appointed Administration Manager 10

The Kanmantoo project has a highly credentialed and experienced team

Kanmantoo Project

Snapshot Snapshot

• Kanmantoo was operated by NBH/SBH/

EZ th i fi t t i f 1971 EZ as their first open cut mine from 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 31 8 0 91 0 2 3 1 Resources 31.8 0.91 0.2 3.1 Reserves 11.1 0.93 0.2 3.3 kt koz koz Resource Contained Metal 291 189 3,218

• Low risk access to critical water, power

and transport infrastructure

Resource Contained Metal 291 189 3,218

• 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

K i l t ll

• Known, simple metallurgy
• 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

Kanmantoo Project

Financials Financials

Summary of Definitive Financial Study

Model Copper Price Foreign Exchange Discount NPV IRR NCFAT Base Case Forward Curve 30/11/07 Forward Curve 03/12/07 8.5% $72 million 21% $167 million $3 50 Model $3 50 Flat Forward Curve 03/12/07 8 5% $152 million 34% $287 million $3.50 Model $3.50 Flat Forward Curve 03/12/07 8.5% $152 million 34% $287 million $4.00 Model $4.00 Flat Forward Curve 03/12/07 8.5% $216 million 43% $382 million

• Note. Copper Prices all quoted in US$ and all other figures quoted are A$

Other Credits Price Assumptions: Gold US$780/oz and Silver A$16.70 Summary of Copper Price/Foreign Exchange Rates used in Financial Model

Date Currency Copper Price Copper Price Project Yr (US$:A$) (US$/lb) Price (A$/lb) Year Jul-09 0.829 3.100 3.740 2 Jul 10 0 800 3 000 3 740 3 Jul-10 0.800 3.000 3.740 3 Jul-11 0.777 2.900 3.730 4 Jul-12 0.758 2.810 3.710 5 Jan-13 0.751 2.770 3.690 6 Jan-14 0.738 2.700 3.660 7 Jan-15 0.729 2.650 3.640 8

13

Kanmantoo Project

Mine Plan - Summary Mine Plan - Summary

• Forecast production based on initial 11.1Mt

probable reserve: probable reserve:

58 74 71 69 64 56 60 80 kt 20 25 kt 2 16 20 19 17 17 15 20 40 60 5 10 15

• Potential to expand resource to 50Mt and

1 2009 2010 2011 2012 2013 2014 2015

Cu eq. (RHS) Concentrate (LHS)

extend mine life past 10 years -see slide 30

• Initial reserve based on open pit resource
• f 19 7Mt with additional resources to be

Indicator resource Inferred resource Indicated Resource Inferred Resource

• f 19.7Mt, with additional resources to be

subject of subsequent feasibility studies

• High grade garnet mined incidentally with

copper ore potential to produce around copper ore - potential to produce around 100-150kt at very low cost

Garnet by-product, Kanmantoo

____________________ Source: Kanmantoo financial model

14

Kanmantoo Project

Resource Growth Resource Growth

40 Mt

Increasing Certainty

40

28.0 Mt at 0.9% Cu 31.8 Mt at 0.9% Cu and 0.2 g/t Au 32.1 Mt at 0.9% Cu and 0.2 g/t Au

30

18.4 Mt at 1.1% Cu 28.0 Mt at 0.9% Cu and 0.2 g/t Au

20

8.5 Mt at 1.2% Cu 18.4 Mt at 1.1% Cu and 0.2 g/t Au

10

8.5 Mt at 1.2% Cu and 0.2 g/t Au

Original Resource December 2004 Upgrade October 2006 Upgrade December 2007 Upgrade February 2008 Upgrade M d I di t d I f d Measured Indicated Inferred

15 Inferred Indicated

Kanmantoo Project

Mining Inventory Mining Inventory

Mining Copper Gold Silver Classification Inventory % g/t g/t Classification Inventory % g/t g/t Measured 0.0 0.00 0.00 0.00 Indicated 11.1 0.93 0.20 3.33 Inferred 0 9 0 68 0 24 3 53 Inferred 0.9 0.68 0.24 3.53 Total 12.0 0.91 0.20 3.35

16

____________________ 0.9Mt of Inferred Resource (non-reserves) material at 0.68% copper,0.24g/t gold and 3.53g/t silver has been included in the production and cash flow calculations primarily in

• rder to obtain the best representation of the ore body for equipment selection and costing purposes. It is important to note that the Probable Ore Reserves are not reliant on the

inclusion of the Inferred Resource for pit economics. With further work, Hillgrove has confidence that a good portion of the inferred material is likely to convert into the mining inventory based on existing data and from previous mining and grade control drilling.

Kanmantoo Project

Proposed Kanmantoo Site Layout Proposed Kanmantoo Site Layout

17

Kanmantoo Project

Resource

Around 650RC and diamond holes for

• ver 90 000m are included in the resource

Resource

Main Pit

• ver 90,000m are included in the resource

Emily Star O’Neil N

Resource Categories

February 2008 block model constrained to blocks ≥ 0.25% Cu

Measured = Yellow Indicated = Dark Blue Inferred = Light Blue 18

Kanmantoo Project

Derivation of Mining Inventory Derivation of Mining Inventory

Grey shaded zone showing the

The grey shaded zone highlights the extent of the total in-situ resource used to derive the mining inventory

Emily Star

Grey shaded zone showing the extent of the in‐situ resource used to derive the open cut mining inventory. Emily Star

in-situ resource used to derive the mining inventory

Emily Star Main Pit

Emily Star Main Pit

O’Neil

O’Neil

O e

N N

February 2008 block model constrained

Total In-Situ Resource 31.8 Mt at 0.9% Copper, 0.2 g/t Gold Sub set of resource used to * Excludes potential underground resource and resource to the north and south of the proposed

February 2008 block model constrained to blocks ≥ 0.25% Cu

Sub-set of resource used to derive mining inventory * 19.7 Mt at 0.9% Copper, 0.2 g/t Gold Probable Mining Reserve 11.1 Mt at 0.93% Copper, 0.2 g/t Gold resource to the north and south of the proposed

• pen cut mine. These will be the subject of

subsequent mining feasibility assessment. 19

Kanmantoo Project

Derivation of Mining Inventory – Cross Section

Proposed Main Existing Pit

Derivation of Mining Inventory – Cross Section

Proposed Main Pit Outline Existing Pit Outline

South North South North

Section looking west through proposed mine showing the block model (blue blocks). The grey shaded zone highlights the limit of the total in-situ resource used to d i th i i i t Areas outside of the grey zone will be subject to subsequent i f ibilit t derive the mining inventory mine feasibility assessment

February 2008 block model constrained to blocks ≥ 0.25% Cu 20

Kanmantoo Project

High Level Development Timetable

2006 2007 2008 2009

High Level Development Timetable

Pre-feasibility Metallurgy Metallurgy Permitting D illi Drilling Definitive Feasibility Study Detailed Engineering Construction & Co st uct o & Development Mining Production

21

Kanmantoo Project

Metallurgical Work Completed

Testing work as part of the DFS and further design has included:

Metallurgical Work Completed

• Float test work on Main, South East, O’Neil and Emily Star on all ore

types fresh, transitional and oxide (Ammtec) Mi l i l I ti ti (T d d A )

• Mineralogical Investigations (Townsend and Ass.)
• Bond Rod and Ball Wi determinations (Ammtec)

SMC testwork (JKMRK)

• SMC testwork (JKMRK)
• Comminution Test work – UCS, bond impact crushing, autogenous

grinding competency, JK drop weight SMC and bond Wi (Ammtec) grinding competency, JK drop weight SMC and bond Wi (Ammtec)

• Tails Thickening (Outotec)
• Filter Testing (IPM – Lasta)

Filter Testing (IPM Lasta)

• Shipping Characteristics (ATSIS)
• Ageing test work (Ammtec)

g g ( )

• Re-grind test work (Ammtec)

22

Kanmantoo Project

Key Metallurgical Outcomes Key Metallurgical Outcomes

Comminution

• Target flotation feed of 250tph at p80 212µm
• Hardness Testing Combined with Circuit Modelling estimates

3.2MW grinding power requirement g g p q

• Single stage 7.3 x 3.8m SAG MILL specified to draw 3.6MW power
• Outotec selected as SAG Mill supplier
• Cyclones selected to classify flotation feed

y y

23

Kanmantoo Project

Kanmantoo Process Flow Kanmantoo Process Flow

24

Kanmantoo Project

Basis of Cost Estimates Basis of Cost Estimates

• Preliminary Feasibility Study

Preliminary Feasibility Study Completed October 2006

• Definitive Feasibility Study prepared by Lycopodium

Definitive Feasibility Study prepared by Lycopodium Completed December 2007 Specialised input from Snowden on mine design Other reputable parties involved include Coffey, ResEval, Montesuma and Enesar

• Currently undertaking a process to optimising project development

Working with Abesque on project definition and Target Cost Estimates Ammerman & Johnson appointed to assist with project management Ammerman & Johnson appointed to assist with project management and process

25

Hillgrove has under undertaken extensive work and engaged independent experts to assist estimation of project development and ongoing operating costs

Exploration Focus

Hillgrove Strategy Hillgrove Strategy

Near Mine O

• Optimising existing resource base
• Extending existing resource both along strike and down dip
• Exploring the potential for an underground development

Exploring the potential for an underground development

• High priority near mine exploration targets
• Building mine life

High priority regional exploration targets

• Wheal Ellen (Silver-Lead-Zinc)

( )

• Mt Torrens (Silver-Lead-Zinc)
• Aclare (Silver-Lead-Zinc)

K (C G ld)

• Kanappa (Copper-Gold)
• Kannapa South (Copper-Gold)
• Wheal Harmony (Copper-Gold)

Wheal Harmony (Copper Gold)

• Mt Rhine (Gold)

26

Exploration Focus

Kanmantoo Regional Prospects Kanmantoo Regional Prospects

• Kanmantoo first operated in 1846
• Approx 500km2 of tenure 100%
• wned by Hillgrove
• Multiple copper, gold and base

metal occurrences

• Region vastly under explored with

little modern exploration Hill i d ti th fi t

• Hillgrove is conducting the first

integrated exploration program in almost 30 years y

• High probability of further

exploration success

27

Resource Inventory Focus

Kanmantoo Mine Corridor Kanmantoo Mine Corridor

• Work to date has defined a large mineralised

system at least 3.5km long x over 1km wide

• Strong relationship between mineralisation

and IP response and IP response

• Less than 50% of existing anomaly has been

tested to define 31.8Mt of mineralisation

• Within the Kanmantoo mine corridor Hillgrove

has an exploration target of 50-60Mt of copper gold mineralisation of similar tenor to copper-gold mineralisation of similar tenor to the current resource (0.9-1% copper and 0.2- 0.3g/t gold) including known resources

• Underground potential

____________________ * The potential exploration target of 50-60Mt of copper gold mineralisation described within the Kanmantoo mine corridor has

been based on a vast exploration database including an IP geophysical anomaly which is over 3.5km in length. This anomaly

28

been based on a vast exploration database including an IP geophysical anomaly which is over 3.5km in length. This anomaly to date has demonstrated a good relationship to the known copper mineralisation which remains open along strike to the north and south. Drilling to date has tested less than 50% of this anomaly and yielded a resource of 31.8Mt at 0.9% copper and 0.2g/t. The remaining 20-30Mt of copper-gold mineralisation referenced as part of the exploration target is conceptual in

• nature. It is important to note the potential quantity and grade of this part of the exploration target is conceptual in nature and

that there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a mineral resource.".

Exploration Focus

Wheal Ellen and Further Exploration Potential Wheal Ellen and Further Exploration Potential

• Regional magnetics identified 12 high

priority exploration targets outside Kanmantoo Mine Corridor

• Initial high grade lead and zinc resource at
• Initial high grade lead and zinc resource at

Wheal Ellen expected by year end 5m at 8.7% zinc, 5.9% lead, 2.3g/t gold in WHDD003 including 2m at 18.4% zinc, 11.4% lead and 4.3g/t gold

• Wheal Ellen located on same stratigraphic
• Wheal Ellen located on same stratigraphic

contact as Terramin’s Angas zinc project, expected to start production in June 2008

• Within the Kanmantoo region Hillgrove has

a series of copper-gold, silver-lead-zinc and gold prospects with potential to significantly g p p p g y add to the regional resource base

29

Lead/Zinc

Wheal Ellen Drill Intercepts and Cross Section Wheal Ellen Drill Intercepts and Cross Section

30

Exploration Focus

Alford Project Interpreted Geology Alford Project Interpreted Geology

• Iron Oxide Copper Gold target on the

i f h G l C eastern margin of the Gawler Craton Similar to Olympic Dam P t ti l l l l d

• Potential large scale low grade copper

heap leach operation

• Extensive initial investigation demonstrates

Extensive initial investigation demonstrates abundant mineralisation for further testing

• Excellent first pass results including:

p g

ALDDH001: 75m at 0.95% copper and 4m at 290ppm uranium ALMR012 : 39m at 0 63% copper and ALMR012 : 39m at 0.63% copper and 40m @ 150.1g/t cobalt ALDDH005 : 30m at 0.46% copper, 11m at 208 43g/t molybdenum and 3m at at 208.43g/t molybdenum and 3m at 230g/t uranium

31

Exploration Focus

56 6% Interest in InterMet Resources 56.6% Interest in InterMet Resources

I t M t R (ITT) i f d

Principal Activities Key Projects

InterMet Resources (ITT) is focused on exploration for gold, nickel, uranium and base metals in the highly prospective areas of North Queensland and the Gawler Craton in South

Lake Gillies, South Australia (up to 95%) IP survey defined numerous targets Drilling targeting copper, lead, zinc and uranium being analysed C lt P j t High quality magnetic data being received

Australia where it holds over 10,000km

Market Valuation and Hillgrove Interest Coulta Project, South Australia (Up to 100%) High quality magnetic data being received to identify potential gold and base metal targets Paddy Iron, Rock chip sampling assayed high-grade

Sh P i 25/07/08 $0 185

y , Queensland (100%) magnetite iron ranging from 60 - 68% Fe Magnetic survey identified drill targets to be tested during March and April 2008 Mt R b Qld Rock chip sampling confirms high grade

Share Price 25/07/08 $0.185 52 Week

• high

$0.370

• low

$0.105 Diluted Shares 73 5m

Mt Ruby, Qld (100%) Rock chip sampling confirms high-grade iron ranging from 63 – 69% Fe Mt Lucy, Queensland Scoping study and drilling on ironstone hill Lead, zinc, copper and silver rich samples

Diluted Shares 73.5m Market Capitalisation $9.3m Net Debt ($ 1.0m) Enterprise Value $8.3m

(100%) Lead, zinc, copper and silver rich samples

• btained nearby (27% Pb, 14% Zn, 7kg/t Ag)

Percyvale, Queensland High-grade gold and copper sulphides, with historical mining in oxide zone

Value of Interest at $0.185 per ITT share Hillgrove

• No. of Securities

Intrinsic Value

Ordinary Shares 28.5m $5.3m

Forsayth, Queensland Rock sampling collected gold values up to 736g/t, drilling to commence 2008

____________________ Source: Iress share price information as at 25 July 2008

32

y Options ($0.20 strike) 9.0m NIL $5.3m

Eastern Star Gas

Company Overview Company Overview

Principal Activities

Eastern Star Gas (ESG) is poised to become a

Key Assets

Eastern Star Gas (ESG) is poised to become a key player in gas exploration and production from coal seam gas (CSG) and conventional natural reservoirs in eastern Australia. ESG also d t fi d t ti

PEL 238 CSG (65%) 17 TCF gas resource PEL 238 Conventional (100%) 1.4 TCF* unrisked gas in place Wilga Power Station Expandable to 40MW

• wns and operates a gas fired power station.

Key Milestone Summary

Exploration Upside Orion Petroleum (25%)

ESG Permit Locations – NSW and Victoria

* Internal estimate

Mar 2007: Sep 2007: MacGen MOU to supply 500PJ Certified reserves: 21 PJ (1P) & 59PJ (2P) Nov 2007: Jan 2008: Babcock & Brown MOU to supply 40PJ p.a. Certified reserves: 185PJ (2P) & 1,300PJ (3P) Feb 2008: 2009: 25% Arckaringa Basin >27,000km2 Target 600 PJ of 2P gas reserves 2010: Commence supply to major contracts

An integrated natural gas and electricity company with very large gas resource potential

33

Eastern Star Gas

ASX Trading Summary ASX Trading Summary

0 80 Price (A$) 25 0 Volume (m)

Eastern Star Gas Sh P i 25/7/08 $0 560

0.70 0.80 20.0 25.0

Share Price 25/7/08 $0.560 52 Week - high $0.930

• low

$0.250

0.50 0.60 15.0 20.0

Diluted Shares 780.7m Market Capitalisation $437.2m Net Debt ($ 43.0m)

0 30 0.40 10.0

Enterprise Value $394.2m ESG 65% Interest 1P Reserves 14PJ

0.20 0.30 5.0

1P Reserves 14PJ 2P Reserves 120PJ 3P Reserves 845PJ

0.00 0.10 May 07 Jul 07 Sep 07 Nov 07 Jan 08 Mar 08 0.0 May 08

Valuation Metrics EV / IP Reserves A$28.2 / GJ EV / 2P Reserves A$3 3 / GJ

May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08

Volume Eastern Star Gas Energy Index

May-08

34

EV / 2P Reserves A$3.3 / GJ EV / 3P Reserves A$0.47 / GJ

____________________ Source: Company announcements and Iress share price information as at 25 July 2008

Eastern Star Gas

Peer Analysis – Enterprise Value / Reserves Peer Analysis – Enterprise Value / Reserves

• ESG is currently

trading at

5.00 A$/GJ

trading at A$4.12 per GJ

• f 2P reserves

T ti 600PJ

4.29 4.12 4.06 4.00 4.50 EV / 2P Reserves EV / 3P Reserves

• Targeting 600PJ
• f 2P reserves

in 2009 and 1 200PJ of 2P

2.67 3.09 3.00 3.50

1,200PJ of 2P in 2010/11

• BG Group paid

A$1 58/GJ to

1.81 1.50 2.00 2.50

A$1.58/GJ to acquire its Queensland Gas interest

1.16 0.93 0.64 0.59 0.76 0.50 0.36 0 12 0.50 1.00

Gas interest during February 2008

Market Capitalisation A$4,703m A$539m A$181m A$2,141m A$639m A$235m A$150m 1P Reserves (PJ) 382 14 30 171 44 17

0.12 0.00 Queensland Gas Eastern Star Sydney Gas Arrow Energy Sunshine Gas Molopo Metgasco

35

ese ves ( J) 38 30 2P Reserves (PJ) 1,054 120 41 791 469 216 213 3P Reserves (PJ) 2,493 845 54 2,790 1,097 560 1,181 ____________________ Source: Company announcements and Iress share price information as at 28 May 2008. BG Group acquired 20% interest in QGC’s Surat Basin coal seam gas acreage for A$415m, with 263PJ of 2P reserves – QGC 80% interest shown above. ESG 65% interest shown above.

Summary

• Imminent Copper Production: Kanmantoo production targeted for Q4
• Imminent Copper Production: Kanmantoo production targeted for Q4

2009 production, DFS complete, approvals imminent, further extension and garnet potential.

• Investments: Approx. $100 million of listed strategic resources

investments.

• People: Leading team of corporate, exploration, development and mining

professionals. professionals.

• Prospective Exploration Targets: Deep inventory of projects and options.
• East Coast Gas Exposure: Strategic stake in emerging Australian coal

seam gas independent.

• Growth: Linked to long term growth of China.

36

Hillgrove Exploration Results

Competent Persons Competent Persons

f f 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 the Principal of Resource Evaluations Pty Ltd 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 R ’ M P t t th i l i i th t f th tt b d hi i f ti i th f The information in this report that relates to Ore Reserve estimates is based on information compiled by Mr Geoff 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 The information in this report that relates to Exploration Results announced by Hillgrove Resources Limited is based on information compiled by Mr Dale Ferguson who is a Member of The Australasian Institute of Mining and p information in the form and context in which it appears. 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 inclusion in the report of the matters based on his information in the form and context in which it appears.

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 q y y p p y p y directors, agents, officers or employees do not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, 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 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 g , g g , y p , p , p j y 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. , $ p y