Hillgrove Resources · DPS c Div Yld % Franking % 2009a 11 ... Management have set a target of 1-3moz by 2011. ... The current inventory is a JORC resource of 32mt containing 292.2kt

Hillgrove Resources Initiating Coverage

RN

Year to Jan

NPAT (Rep) $M

NPAT (PSig)$M

EPS (PSig) c

EPS Growth%

PER x

CFPS c

P/CF x

DPS c

Div Yld %

Franking %

2009a 11.3 -4.6 -1.2 -81.2 -10.5 -1.3 -9.8 0.0 0.0 02010e 55.6 -16.0 -3.7 -192.8 -7.7 -2.0 -14.4 2.0 7.1 02011e 7.5 -0.2 0.0 98.9 -700.0 -5.3 -5.3 0.0 0.0 02012e 27.5 27.5 5.4 13,525.0 5.2 9.6 2.9 0.0 0.0 0

Equities Research – Hillgrove Resources 1 Issued by Wilson HTM Ltd ABN 68 010 529 665 - Australian Financial Services Licence No 238375, a participant of ASX Group and should be read in conjunction with the disclosures and disclaimer in this report. Important disclosures regarding companies that are subject of this report and an explanation of recommendations can be found at the end of this document.

20 May 2010

$0.275

BUY

Keith Williams 03 9640 3802

[email protected]

Price Performance

May 10Jan 10Sep 09May 09

$0.45

$0.30

$0.15

Security/Capital Details ASX Code HGO Market Cap $143 M Issued Shares (dil) 512.1 M Avg Mth T’over 37.13 M 12 Mth High – Low $0.52 - $0.17

Key Data/Ratios – FY 2010

EBITDA / Sales -684.4% EBIT / Sales -710.5% Debt / Equity 1.5% Interest Cover -0.7 x ROE -12.9% EPS Growth -192.8% DCF $0.43 12 Mth Price Target $0.50

Recommendation We are initiating coverage on Hillgrove Resources (HGO) with a BUY recommendation and a 12 month price target of A$0.50/share. HGO is an emerging copper-gold producer with a large net cash position of ~A$107m or A$0.21/share. HGO holds 100% of the Kanmantoo project in South Australia and two highly prospective exploration assets in Indonesia. Exploration potential is the primary value driver and our upside case valuation is A$0.59/share.

Key Points Near term cash flow with exposure to the copper price

We expect the Kanmantoo Copper project to commence production in CY2011, and to produce 20kt of copper in concentrate with 10koz of gold and 150koz of silver per annum. The operation currently has a 6.5 year mine life. However, we see a high probability of the company being able to extend this beyond 10 years. Cash operating costs are below the market average at US$1.50/lb Cu and CAPEX is a modest A$98m. HGO has recently secured all permitting. However, the asset is located in the Murray-Darling catchment area and is therefore subject to more stringent monitoring and emissions targets.

HGO has yet to confirm debt financing arrangements for the development CAPEX. The company is in talks with advisors and we expect a decision on debt financing to coincide with a final investment decision from the HGO Board.

Large exploration potential in Indonesia HGO holds an 80% economic interest in two prospective exploration projects in

Indonesia, the Bird’s Head and the Sumba projects.

The Sumba project is the more advanced project in Indonesia with BHP previously identifying a large gold mineralised zone. Historical exploration activities outlined a corridor of gold mineralisation 2km wide by 10km long. HGO has commenced an 8,000m diamond-drilling program to test for near surface epithermal mineralisation below existing trench workings. Management have set a target of 1-3moz by 2011.

The Bird’s Head project is located within a world-class geological setting with the potential for large scale epithermal and porphyry style mineralisation. The regional geology is the western portion of the New Guinea “Orogenic Belt”, which holds the Grasberg deposit, the world’s largest copper/gold ore body.

Cash rich with little exploration potential priced into the current share price Our base case DCF valuation is a conservative A$0.43/share, which is significantly

above the current share price. Our valuation includes a minor A$19.3m for exploration potential at Bird’s Head and Sumba.

When using a probabilistic approach, we determine that the valuation of the Bird’s Head and Sumba project could reach A$39m by 2010 year end adding A$0.08/share.

As of 31 January 2010, HGO held A$130.4m cash and no debt. The cash will be used to partly fund the Kanmantoo development, pay a tax liability of A$23m and fund exploration programs in South Australia and Indonesia.

Our valuation incorporates the proposed Resource Super Profits Tax (RSPT). The impact of the tax is negligible as the company has large RSPT offsets.

We initiate with a BUY. We are drawn to HGO’s large cash position, and see the current share price as under valuing the Kanmantoo project and missing the exploration potential. HGO’s share price will be driven higher by 1) the development progress of the Kanmantoo copper-gold project, which is expected to commence production in 2011, and 2) drilling results from the exploration activity in Indonesia, which is already underway.

20 May 2010

Equities Research – 2

Investment Highlights

20kt pa Cu @ US$1.50/lb from 2011

Potential to significantly add to the LOM

Updated and expanded JORC reserve

World class exploration tenements

8,000m diamond drill program testing for epithermal

mineralisation

Cashed up

Kanmantoo

HGO is developing its 100% owned Kanmantoo copper-gold project located in South Australia. The project consists of an existing open pit which was last mined in the 1970’s.

HGO has purchased the decommissioned 2.4Mtpa Pillara base metals plant, which has the capacity to increase to 3mtpa. We expect the plant to be on site and completed by December half 2010, with commissioning in early 2011. The original DFS assumed a plant with a capacity of 2.0mta pa, with the purchase of the new and larger Pillara plant, we have adjusted our production estimates accordingly. We have not changed our production costs, reflecting no gains from economics of scale. The increase in capacity increases production from the original DFS plan of 17kt to 20kt Cu pa.

The Kanmantoo project is scheduled to begin commercial production by June Half 2011. The operation has a mine-life of 6.5 years and is targeting 20kt Cu, 10koz Au and 150koz of silver in concentrate per annum. The life of mine average cash operating cost is US$1.50/lb Cu.

The current inventory is a JORC resource of 32mt containing 292.2kt Cu, 191.1koz of Au and 3.3Moz of Ag and a reserve of 14.8mt containing 126kt Cu, 81koz Au and 1.47Moz Ag (see page 9).

Management has estimated total CAPEX for Kanmantoo to be A$98m. The CAPEX is expected to be financed through existing cash reserves and debt. HGO is in the process of negotiating a debt financing facility, which is expected to be concluded by May 2010.

The deposit remains open along strike and down dip, which could potentially result in expansion of the main pit. Management are searching for incremental sources of ore to extend mine life, with a target size of 4mt. There also remains scope for underground potential in the long term.

Exploration

HGO holds an 80% economic interest in the Bird’s Head and Sumba Island projects in Indonesia. Previous workings and the geological setting make the exploration cases for these projects very compelling. HGO will be leading and sole funding the exploration program. The Indonesian joint venture partners are PT Akram (Bird’s Head) and PT Fathi (Sumba).

The Sumba project was originally identified by BHP. Old workings outlined a large mineralised corridor approximately 2km wide by 10km long. Trenching results include: 4m @ 16.73g/t Au, 4m @ 6.7g/t Au, 9m @ 5.87g/t Au, 9m @ 6.1g/t Au, 13m @ 2.05g/t Au and 16m @ 1.56g/t Au. Management are targeting 1-3moz Au in resources by 2011.

The Bird’s Head project is located along the Orogenic Belt in far eastern Indonesia. The belt has already yielded multimillion-ounce deposits including Grasberg, Ok Tedi and Hidden Valley. Early indications suggest potential for similar porphyry mineralisation below shallow epithermal veining. The project consists of two advanced prospects, Delta and Alpha, both are scheduled to be drilled later in the year.

HGO are undertaking an 8,000m diamond-drilling program at the Sumba project. Drilling will target high-grade epithermal gold mineralisation within the Pahandanjal prospect. In addition, HGO will continue its exploration activities in the Kanmantoo area, including ore body and resource definition.

Financials

HGO has a strong balance sheet with net cash position of ~A$107m cash and no debt. The cash will be used to partly fund the Kanmantoo development, exploration programs in South Australia and Indonesia and repay a significant outstanding tax liability.

20 May 2010

Equities Research – Hillgrove Resources 3

Risks

Although cashed up, HGO is seeking additional financing

Extended oxide and transition ore could hurt recoveries

Commissioning and production could be delayed

On going monitoring: As part of the granting of the MARP (Mining and Rehabilitation Program), The Kanmantoo project will be subject to a higher level of monitoring from the local authorities as the mine is located within the Murray-Darling catchment area. Financing: HGO is in the process of securing development financing. We expect the company will seek between A$40-60m of debt financing. We expect financing details to emerge in the coming weeks following the recent approval of the Kanmantoo MARP. Recovery: Kanmantoo will be mining oxide, sulphide and transitional ore. Although the inventory is 90% sulphide, there remains a small risk that the quantity of oxide and transitionary ore has been understated. The oxide and transitionary ores have significantly lower recoveries. Political and Sovereign – Indonesia: We see Indonesia as having elevated political risk. The softening Indonesian economy and weak political system has the potential to impact adversely on the mining industry. Commissioning: HGO has purchased a decommissioned plant and is dismantling and transporting the plant from the Kimberley’s in Western Australia to South Australia. As the plant has not been specifically designed for the Kanmantoo project, we are of the view that commissioning risks are higher than would otherwise be the case.

Opportunities

No material RSPT impact

Resource Increments: Underground potential and pit extensions offer the potential to increase mine life. The Emily Star satellite pit and the underground below the existing Kanmantoo pit have yet to be fully tested. Discovery: The Bird’s Head and Sumba projects offer major gold/copper discovery potential. Throughput rate upside: HGO estimate that the Pillara SAG mill has capacity to increase to 3.0Mtpa throughput at a cost of A$1m. Copper exposure: We remain bullish on the long-term copper price as we expect that the commodity will be in deficit in coming years. RSPT The proposed RSPT in its current form does not impact the valuation of the Kanmantoo project. The historical capital and planned expenditure to 2012, allows the Kanmantoo project to be shielded from the impact of the RSPT. Despite this, investors have sold off HGO and the company’s share price has fallen with other resources companies post the RSPT announcement. We understand the RSPT to have no material impact on the valuation of Kanmantoo as currently scoped, and the value proposition remains unchanged.

20 May 2010


Valuation Valuation – Base Case DCF We have valued the Kanmantoo copper project by discounting forecast post tax

ungeared cash flows using a weighted average cost of capital (WACC) of 11.1%. WACC is based on the following parameters:

• Risk free rate Rf = 6.0%

• Equity risk premium (Rm) = 6.0%

• Beta (β)= 1.10

• Cost of debt (Rd) = 7.5%

• Long term gearing (Debt /Equity) = 25%.

• WACC = 11.1%

Our DCF valuation for HGO is A$219m or A$0.43/share dated 31 July 2010.

DCF Valuation – 31 July 2010 (Base Case) A$m A$/share

Kanmantoo - Open Cut 77.8 0.15 Corporate Items -15.7 -0.03 Interests In Other Entities 3.7 0.01 Exploration/Development 19.3 0.04 Franking Credits 26.6 0.05 Net (Debt)/Cash 97.9 0.19 Additional Capital - Dilution 9.5 0.02 Total Valuation 219.1 0.43

Source: Wilson HTM

Notes: 1) We have valued the Kanmantoo project based on the following production profile, which extends to 2018.

WHTM Modelling Assumptions for the Kanmantoo Copper-Gold Project Base case FY2012 FY2013 FY2014 FY2015 FY2016 FY2017Throughput Rate (Mt)

1.7 2.4 2.4 2.4 2.4 2.4

Copper Grade % 0.9 0.9 0.9 0.9 0.9 0.9 Gold Grade g/t 0.2 0.2 0.2 0.2 0.2 0.2 Silver Grade g/t 3.5 3.4 3.3 3.3 3.3 3.3 Copper Recovery 92% 92% 92% 92% 92% 92% Gold Recovery 60% 60% 60% 60% 60% 60% Silver Recovery 60% 60% 60% 60% 60% 60% Contained Copper (kt)

14.2 20.1 20.1 20.1 20.1 20.1

Contained Gold (koz)

6.6 9.3 9.3 9.3 9.3 9.3

Contained Silver (koz)

114.1 157.4 153.7 153.7 153.7 153.7

C1 Cash Cost (US$/lb)

1.51 1.56 1.57 1.53 1.53 1.53

Source: Wilson HTM

Note: HGO financial year ends in January

20 May 2010


2) The original DFS assumed a plant with a capacity of 2.0mta pa, with the purchase of the new and larger Pillara plant, we have adjusted our production estimates accordingly. We have not changed our productions costs, reflecting no gains from economics of scale. The increase in capacity increases production from the original DFS plan of 17kt to 20kt Cu pa.

3) The acquisition of the Pillara Plant includes spare equipment worth ~A$11m. We expect HGO will sell the equipment in FY2011 with after tax proceeds of A$7.7m.

4) An A$23.4m tax liability is associated with the capital gain on the sale of shares in Eastern Star Gas Limited during CY2009. We expect the tax liability will be fully paid in the July HY CY2010.

5) We expect the company will seek between A$40-60m of debt financing. We expect financing details to emerge in the coming weeks following the recent approval of the Kanmantoo MARP. 6) HGO owns 84.8% of Intermet Resources Limited (ASX code: ITT) and 4m shares in Silver Swan Group (ASX code: SWN).

7) The book value of exploration assets is A$6.4m, which includes the Bird’s Head and the Sumba projects but excludes the Kanmantoo area. We view HGO’s exploration assets as highly prospective, thus we have applied a prospectivity enhancement multiplier (PEM) of 3, the maximum PEM scalar in the range of 0 to 3, when valuing the exploration assets. By multiplying the book value of the exploration assets by the PEM factor, we determine the valuation of HGO’s Indonesian exploration assets to be A$19.3m. We consider this methodology conservative.

8) We have applied the proposed RSPT to our valuation of Kanmantoo.

Kanmantoo Base Case NPV RSPT Sensitivity

NPV 11.1% Conventional $75 RSPT $78 Change 4%

Source: Wilson HTM

The impact is slightly positive due to the substantial starting capital base and capital account, which provides for a large RSPT tax shelter. For more information on RSPT, including the mechanics of the tax, please see our report “RSPT – Resource Super Profits Tax (3 May 2010).

9) The Henry review has proposed that the corporate tax rate be reduced in two equal annual steps commencing in July 2013 to 28% from currently 30%. We have assumed in our valuation the benefit of this tax decrease.

20 May 2010


Copper multiples We have used a resource capitalisation methodology to provide a check to our DCF valuation of the Kanmantoo project. Based on data for ASX listed copper explorers, we have derived an EV/Copper Resource multiple of A$278/t and EV/Copper Reserve multiple of A$1478/t (see details from the table below). The Kanmantoo project contains copper equivalent resources of 332.7kt and a reserve of 118.2kt, implying valuations for the Kanmantoo project of A$92m and A$174m respectively, significantly greater than our DCF valuation of A$77.8m. This suggests that our DCF valuation for the Kanmantoo project may be conservative.

Derivation of EV/Copper Equiv. Resource and EV/Copper Equiv. Reserve EV/Resource EV/Reserve

Azure Minerals Limited 238 na Citadel Resource Group Limited 611 1478 Cudeco Limited* 1233 na Exco Resources Limited 138 na Finders Resources Limited 316 na Hillgrove Resources Limited 169 391 Indophil Resources Nl 89 na Sandfire Resources Nl* 985 na Average (excluding outliers)* 278 1478 Average (including outliers)* 516 1478

Source: Wilson HTM, Various Companies

*Note:

1) We have excluded Hillgrove Resources Limited when we derive the above EV multiples.

2) We have considered Cudeco Limited and Sandfire Resources NL as outliers.

Sensitivity We remain bullish on the copper price and have a view that the metal will move increasingly into supply deficit over the coming years. This will likely place increased upward pressure on the copper price.

If we assume a spot copper price of US$3.02/lb and an AUDUSD FX rate of 0.86 prevail indefinitely, our valuation of HGO increases by 9% to A$0.47/share.

Copper Price Senstivity Valuation (A$/share) % change

Base Case 0.43 0% Spot Price -15% (US$2.56/lb) 0.34 -21% Spot Price (US$3.02/lb) 0.47 9% Spot Price +15% (US$3.47/lb) 0.57 32%

20 May 2010


Valuation – Upside Case

Kanmantoo upside

We see scope to extend the mine life at Kanmantoo from 6.5 years to 10 years. We have assumed that HGO will be able to expand the current mine plan inventory by converting more of the current resource into reserves. Additionally, we see an extended mine life as supported by satellite mineralisation such as that at Emily Star.

We also see scope for an increase in plant throughput to 3mtpa with a minimal increase in capital. We have assumed no operating cost benefit, even though the increased economies of scale should result in a benefit.

The extension to the mine life and the higher plant throughput increase our DCF by a substantial 28% from A$78m to A$100m equivalent to A$0.04/share.

Similar to our base case scenario, we have incorporated the proposed RSPT into our modelling. The net effect of the RSPT is to reduce the NPV. Beyond 2018, the mine no longer enjoys the benefits of tax shielding from the starting capital base, this exposes the mine to more of the RSPT tax and thus lowers the project value.

Kanmantoo Upside Case NPV RSPT Sensitivity

NPV 11.1% Conventional $106 RSPT $100 Change -6%

Source: Wilson HTM

Exploration Upside – Sumba Project

Exploration potential is intangible and not readily confined to a discrete value. We have therefore employed two separate approaches when estimating the upside exploration potential.

Probabilistic Approach: Our value is the sum of the weighed probability of the Sumba project achieving three different resource targets and then valuing the endowment with our average gold resource multiple of A$74/oz.

Management are targeting 1-3moz Au at the Sumba project by 2011. We have taken a more conservative approach and conclude that a probability weighted value of A$65m for Sumba is appropriate.

Sumba Project Target Resource (100% Basis)

Probability Expected Resources (Moz) Value A$m 75% 1.0 74 25% 0.5 37 0% 0.0 0

Mean 0.875 65 Source: Wilson HTM

Comparison Approach: We see Robust Resources’ (ROL.AX) Romang Island project as a reasonable geological comparison to HGO’s Sumba project. ROL holds 100% of the Romang Island project, and it is the company’s main asset. Both prospects are located on islands, similar to Newmont’s Batu Hijau mine (9moz), which together form part of the Indonesian archipelago.

Although the projects are at different stages of the exploration life cycle, they both contain near surface gold/silver mineralisation. Robust Resources has only partly drilled the Romang Island project and initial results have intercepted near surface gold/silver mineralisation in conjunction with deeper base metal mineralisation.

An initial drilling program has commenced at Sumba, following previous trenching work by HGO and BHP. The first phase of drilling is targeting an

20 May 2010


average depth of 140m and will be testing for near surface gold and silver mineralisation.

On 27 April 2010, ROL announced plants to acquire the remaining 25% of Romang Island from minority partner PT Gemala Borneo Utama. Total consideration is A$20m consisting of a cash payment of A$6m, plus scrip and a A$2m contingent payment based on the announcement of a 1moz gold equivalent resource in the measured or indicated category. The transaction implies a value of A$80m for the Romang Island project.

• We understand the planned 8,000m drill program at Sumba to have an exploration budget of approximately A$10m, after which we view the maturity of the Sumba project to be at a similar level to the Romang Island Project. As of March 2010, we estimate ROL to have completed 61 holes for 6,300m

• Thus, we assume that after spending A$10m on exploration, the enterprise value of the Sumba project could approximate that of Robust Resources of A$80m, subject to exploration success.

Comparison of The Sumba Project and Robust Resources’ Romang Island Project The Sumba Project Romang Project

Area of the tenements

Has an 80% economic interest that covers an area of 999km2.

100% interest in five mineral titles totalling 25,000ha or 250km2.

Main focuses Pahandanjal prospect - Eastern and Western Vein, Indonesia Gold and base metal mineralisation

Lakuwahi, including Batu Hitam and Batu Mas, Indonesia Gold and base metal mineralisation

Geology The Pahandanjal mineralisation geology consists of andsite volcanics. Mineralisation is hosted within veins and breccia zone within the andesite.

A large, strong hydrothermal mineralising system developed within the caldera, which has been estimated from surface geology, geochemistry and aeromagnetic data to be approximately 20 square kilometres in area

Significant Drill Intersections

Recent trenching Results – from Eastern and Western Vein of the Pahandanjal prospect FT1: 18m @ 3.93 g/t Au, 8.02 g/t Ag FT100: 15m @ 1.51 g/t Au, 6.18 g/t Ag FT5: 34m @ 2.07 g/t Au, 3.85 g/t Ag FT18: 14m @ 6.97 g/t Au, 10.7 g/t Ag FT21: 78m @ 0.8 g/t Au, 4.27 g/t Ag PDL18: 7m @ 24.9 g/t Au, 46 g/t Ag PDL36: 8m @ 7.3 g/t Au, 7.8 g/t Ag

Recent drilling results from Lauwahi LWD062: 82m @ 1.05 g/t Au, 34 g/t Ag LWD065: 61.5m @ 0.59 g/t Au, 43 g/t Ag LWD058: 13m @ 0.6 g/t Au, 24 g/t Ag LWD068: 13m @ 0.71 g/t Au, 19 g/t Ag

Upside Potential 8,000m of Diamond drilling has commenced, testing for gold and base metal mineralisation hosted in epithermal veins. First phase is 14 holes over 2,000. Management targeting 1-3 moz by 2011

Magnetic Survey data shows a mineralisation system covering approximately 13km2, Robust's drilling to date has only covered less than 2% of the system.

Source: Wilson HTM, Hillgrove Resources, Robust Resources

Exploration upside – Birds Head

Probabilistic Approach: Our valuation upside is the sum of the weighed probability of the Sumba project achieving three different resource targets and then valuing those targets with our average gold resource multiple of A$74oz

We see significant geological potential at the Bird’s Head project. Unlike Sumba, management provide no guidance on the potential of the deposit at this stage. However, the Bird’s Head project contains potential porphyry mineralisation, which with its bulk mining potential is likely to attract the attention of major resource groups. However, we have assumed a very low probability of achieving a small resource and have concluded a value of A$17m is appropriate.

20 May 2010


Birds Head Target Resource (100% Basis)

Probability Expected Resources (Moz) Value A$m 10% 1.0 74 25% 0.5 37 65% 0.0 0 Mean 0.225 17

Source: Wilson HTM

Comparison Approach: Due to the infancy of the Bird’s Head project, we do not have any readily available peers for comparison. However, In our research report on Citadel Resource Group, “Possibilities And Probability – Bari Porphyry” dated 10 September 2009, we derived a most likely value for a pre-development porphyry copper discovery of A$124m. Thus, we have estimated the pre-development value of HGO’s 80% interest in the Bird’s Head project in this upside case using this approach to be A$99.2m.

We have chosen to use the probabilistic approach to valuing HGO’s exploration assets, as it offers a more conservative view. Using this method and incorporating the upside potential at Kanmantoo we derive an upside valuation for HGO of A$0.59/share.

DCF Valuation – 31 July 2010 (Upside Case) A$m A$/share Kanmantoo - Open Cut 100.2 0.20 Corporate Items -15.7 -0.03 Interests In Other Entities 3.7 0.01 Exploration/Development 65.2 0.13 Franking Credits 38.8 0.08 Net (Debt)/Cash 97.9 0.19 Additional Capital - Dilution 9.5 0.02 Total Valuation 299.7 0.59

Source: Wilson HTM

Residual Eastern Star Gas Investment On 15 July 2009, HGO completed the sale of its investment in Eastern Star Gas to Santos for A$171m in cash. The sale of 151m shares and 23.7m options equated to a price of A$1.00 per Eastern Star Gas share and A$0.85 per Eastern Star Gas option.

HGO has retained upside on this transaction should Eastern Star Gas be acquired in the 18 months post July 2009. The residual claim extends to 15 January 2011.

Santos is required to make a top-up payment to HGO should Santos or a third party complete an acquisition of a beneficial interest of more than 50% at a price above A$1.00 per share.

If Santos acquires control, HGO is entitled to 100% of the excess above A$1.00 for 175.5m shares.

If a third party acquires control, HGO is entitled to 50% of the excess above A$1.00 on 175.5m shares.

The current share price of Eastern Star Gas is A$0.75/share as of 18/5/10

If Santos were to acquire control at a 30% premium to the closing price of A$0.75/share, The offer price would be below A$1.00 and HGO will not be entitled to any additional funds.

We have assumed no value from HGO’s residual claim in either our base case or upside valuation.

20 May 2010


Kanmantoo Project

The Kanmantoo project is located in the Adelaide Hills region of South Australia, 55km East of Adelaide. The existing pit was mined by Kanmantoo Mines Ltd from 1970-1976 and a total of 4.1Mt @ 0.9% Cu for 36kt Cu was mined.

The deposit is located in the Cambrian Kanmantoo Trough which is part of the Adelaide Geosyncline which hosts BHP’s Olympic Dam mine. Mineralisation occurs in pipe-like Cu-Au stockworks hosting podiform lenses and veins of chalcopyrite, pyrite and chalcocite. Mineralisation is concentrated in the main N-S striking shear that is crossed by a NNE-NE shear with sharp dipping shoots. There is a small oxide cap with a transition zone that leads into a primary sulphide chalcopyrite body.

Kanmantoo Geology

Source: Hillgrove Resources

The CAPEX estimate for the Kanmantoo project is A$98m. The CAPEX is expected to be financed by way of HGO’s existing cash reserves and debt. HGO is in the process of negotiating a project debt financing facility, expected to conclude by May 2010.

Kanmantoo is currently producing 450t of copper concrete for local a customer, Ad Chem. Management expect the sale of product to cease in November to make way for mine development.

20 May 2010


Resources as at November 2008

Type Tonnes

Kt Cu %

Au g/t

Ag g/t

Cu Metal Contained

Au Ounces

Ag Ounces

Oxide 1,125 0.8 0.2 3.3 8,600 6,900 121,000 Transitional 1,620 0.8 0.2 2.9 12,200 9,600 152,000 Fresh 29,447 0.9 0.2 3.2 271,500 174,600 3,040,700 Total 32,192 0.9 0.2 3.2 292,300 191,100 3,313,700


Reserves as at April 2010

Type Tonnes

Kt Cu %

Au g/t

Ag g/t

Cu Tonnes

Au Ounces

Ag Ounces

Proved 2,300 0.87 0.13 3.2 20,010 9,613 236,629 Probable 12,500 0.84 0.18 3.1 105,000 72,339 1,245,841 Total 14.8 0.85 0.17 3.1 125,800 80,891 1,475,076


Kanmantoo hosts a JORC resource of 32.2Mt @ 0.9% copper, 0.2g/t gold, 3.2g/t silver containing 292.2kt of copper, 191.1koz of gold and 3.3Moz of silver.

Approximately 90% of the mining inventory is sulphide and the remaining oxide. Metallurgical test work shows copper recovery from the oxide ore is likely to be 63% and gold recovery 39%. The sulphide ore is expected to have average recoveries of 95% copper, 60% gold and 69% silver.

DFS Pit Shell


20 May 2010


DFS Block Model


The potential for further additions to the copper-gold resource at Kanmantoo is high. The deposit remains open along strike and down dip. It is our view that there is a strong possibility that mine life will be extended firstly by cutbacks, then satellite pits followed by potential future underground.

The Emily star ore body is likely to be the first such development with a targeted mineable inventory of 4mtpa, or approximately 2 years of production. Emily star is located to the south west of the main pit and is in closer proximity to the mill than the current pit. This deposit already contains 1.2mt of material, which is incorporated into the existing reserve.

The Pillara Plant


A Definitive Feasibility Study (DFS) was completed in CY2007, showing positive results.

HGO purchased a decommissioned plant from the Lennard Shelf Pillara Mine from Teck Resources and Xstrata in August 2009. The 2.4Mtpa plant is currently located 375km East of Broome. HGO anticipates the plant will be relocated to the Kanmantoo project site by Q3 2010. The first truck movements commenced at the

20 May 2010


end of April, approximately 200 truck movements will be required.

The plant has operated at 2.7Mtpa with a nameplate capacity of 2.4mtpa, above the planned 2Mtpa outlined in the DFS. The purchase of the Pillara plant includes a float plant, ball and SAG mill, crusher, office buildings, workshops, spares and other miscellaneous items.

The Kanmantoo project is expected to begin commercial production in H1-2011. Mining will take place from two open pits with an initial 6.5 year mine life. We have assumed a 2.4mt pa base case, above the original plan for a 2.0mt pa plant, resulting in production of 20kt Cu, 10koz Au and 150koz Ag.

The LOM average cash operating cost is US$1.50/lb Cu. Copper concentrate sales have already been agreed with RBS Sempra Commodities, to take 100% of the concentrate for sale in Northern China. TC/RC’s are to reflect annual benchmarks.

Permitting

The Kanmantoo project has received full approval for its Mining and Rehabilitation Program (MARP). The completion of the MARP was the final step in the permitting process. The MARP approval was pro-longed due to the mine’s location within the Murry-Darling catchment area. This area is subject to more stringent monitoring and safe guards. Thus, the Kanmantoo project has been set the target of zero emissions from the tailings dam in addition to increased monitoring.

Management remain confident that the increased restrictions will not affect the mine going forward. The existing tailings dam has passed inspections.

As part of the MARP, the mine will be utilising grey water from the local town of Mt Barker approximately 13km to the west.

Regional Exploration

Neighbouring exploration tenements lie within the Kanmantoo Trough and cover approximately 489km2. Mineralisation is likely to extend to depth.

The Wheal Ellen project is located 40km east south east of Adelaide, 7km to the north of Terramin’s Angus silver-lead-zinc mine and within HGO’s tenements. The project contains poly-metallic mineralisation and previous mining recovered approximately 75kt ore at an average grade of 25% Zn, 20% Pb and 12 g/t Ag.

Drill testing of the Wheal Ellen resource extends to only 150m depth, whereas Angus extends to 450m and Kanmantoo extends to 600m. This indicates that there is potential for discovering further mineralisation down dip. Exploration drilling is planned to recommence in 2010. Management see scope for the area to support a resource of 10 to 15mt to feed the Pillara plant.

20 May 2010


Indonesian Exploration HGO are actively exploring two key epithermal and porphyry projects in Indonesia.


Bird’s Head Project

The Bird’s Head project is located in the north-western portion of Papua Barat province in far East Indonesia. HGO has a right to earn an 80% interest in the project by fully funding the exploration work and feasibility studies until a decision to mine is made. Completion of the earn-in will reduce PT Akram Resources’ interest to 20%.

The Bird’s Head project is located along the Orogenic Belt in far Eastern Indonesia. The belt has already yielded multimillion-ounce deposits including Grasberg, Porgera, Ok Tedi and Hidden Valley. Early indications from HGO geologists suggest potential for similar porphyry mineralisation below shallow epithermal veining.

HGO’s tenements cover approximately 1000km2 and the KP licences’ have recently been converted into the new Exploration Mining Business Licence or IUP, for a term of 7 years.

Bird’s Head Project in West Papua, Indonesia


The closet regional centre is Sorong, located approximately 130km to the southwest, the town is supported by regular commercial air and sea services. The

20 May 2010


tenements are located in a sparsely populated area of modest elevation.

The exploration license contains a number of mineralised areas with five major zones identified. Alpha, Bravo and Golf prospects are epithermal style gold targets, whereas Foxtrot and Delta are porphyry style copper-gold targets. The Delta exploration prospect is at an advanced stage and is scheduled to be drilled over the course of the year.

The Alpha prospect is currently located within a protected forest. Under Indonesian mining law, exploration permits in such areas cannot be converted into a mining lease until the forest has been re-classified as a production forest.

This conversion is not unusual. However, the conversion of protected forests into production forests was only legalised by the Indonesian President in January 2010.

Delta Prospect

Source: HGO

HGO has completed initial due diligence on the Delta Area, which confirms that:

1) A large copper signature from soil sampling is due to porphyry style mineralisation.

2) The presence of a disseminated and vein-hosted copper-gold altered intrusive. Assay values are at low to medium grade as expected for porphyry style mineralisation. Peak assays include 5.7g/t gold and 3.7% copper (not same sample).

20 May 2010


Delta Prospect – Significant trench intercepts


Delta Prospect – Copper Rock Geochemistry


Delta Prospect – Gold Rock Geochemistry


20 May 2010


Alpha Prospect Soil geochemistry shows extensive gold mineralisation. Although there have been only 5 drill holes completed to date. Scout drilling results have shown promise. Key results include:

• AD1 - 17.45m @ 2.16g/t gold, 18.36g/t silver, 0.29% copper, 2.08% lead and 5.31% zinc.

• AD4 – 1.6 @ 108.5g/t gold and 16g/t silver.

Gold (g/t) Soil Geochemistry at The Alpha Prospect


Drilling, Trenching and Locations on Gold Soil Geochemistry


20 May 2010


The Sumba Gold Project

The Sumba gold project is located on the island of Sumba, Indonesia, west of Timor. HGO has a right to earn an 80% interest in the project by fully funding the exploration work and feasibility studies until a decision to mine is made. If HGO takes up the right to earn the 80% interest, PT Fathi Resources’ interest in this project will reduce from 100% to 20%.

HGO tenement map, Sumba Island


HGO holds an Exploration Mining Business Licence or IUP over 999km2. The IUP has been grated for a term of 6 years. Historical workings by BHP outlined a corridor of gold mineralisation 2km wide by 10km long, with trenching results up to 7m at 24.9g/t gold and 46g/t silver (Trench PDL18).

The geology consists of andesitic volcanics. Mineralisation is hosted within veins and breccia zone within the andesite.

During 2009, HGO focused on the Pahandanjal prospect, which is located to the south east of the island. Highlights from the trenching of the Western and Eastern Vein Systems are summarised below:

Western Vein System • 4m @ 10.04g/t gold and 17.18g/t silver

• 7m @ 8.34g/t gold and 6.17g/t silver

• 5m @ 7.5g/t gold and 18g/t silver


• 9m @ 6.51g/t gold and 9.40g/t silver, within a 18m zone @ 3.93g/t gold and 8.02g/t silver.




Eastern Vein System • 14m @ 6.97g/t gold and 10.7g/t silver



20 May 2010


• 24m @ 1.06g/t gold and 3.82 silver


• 20m @ 0.54g/t and 0.76g/t silver


HGO has announced an extensive diamond drilling campaign at the Pahandanjal prospect to test for epithermal mineralisation. The program will follow up successful 2009 trenching results from the Western and Eastern veins.

The first phase will include 14 holes over 2,000m followed by a second 2,000m program. If the results are promising, HGO will double to program to 8,000m.

Pahandanjal Prospect – Western Lode


Pahandanjal Prospect – Eastern Lode


20 May 2010


Board of Directors and Management Chairman: The Hon. Dean Brown, AO

Former Premier and Minister of the South Australian Government and Member of the South Australian Parliament from 1973-1985 and 1992-2006. Dean also was Deputy Premier and Leader of the Opposition. He is Chairman of InterMet Resources Limited, a Director of Scantech Limited and Foodbank SA, the Premier’s Special Advisor on the Drought, and a member of several advisory boards. Previously he was a Director of AACM International Pty Ltd (1986-92) and a Senior Agricultural Scientist, SA Government.

Managing Director: David Archer

David has held executive and non-executive roles in a number of Australian and international companies. He founded Savage Resources Limited in 1985. Savage’s portfolio included the Ernest Henry copper gold mine in North West Queensland, the Liddell coal mine in the Hunter Valley in NSW and zinc mining and smelting operations in the United States. He founded and was executive Chairman of PowerTel Limited until 1998. David is currently the Chairman of Crusader Resources Limited and Managing Director of InterMet Resources Limited. He is a barrister (non practising) of the Supreme Court of New South Wales and a Fellow of the Australasian Institute of Mining and Metallurgy.

Non-Executive Director: Ronald Belz

Ron has been a Tax Agent since 1978, a member of CPA Australia since 1982 and a Certified Practising Accountant since 1987. He is in public practice in Edgecliff, Sydney. Ron has extensive knowledge and experience in accounting, taxation and corporate law in Australia. He is currently Treasurer and Board Member of the Academy BJE, the New South Wales Board of Jewish Education.

Non-Executive Director: John Gooding

John is a Mining Engineer with 30 years' experience in the resources industry. He has held executive management positions with Normandy Mining, MIM, Xstrata (CEO Xstrata Copper Australia), Ok Tedi Mining and Roche Mining. John has extensive experience in gold and base metal mining (both open-cut and underground) through the management and operation of mines in Australia and internationally. He is a former board member of the Queensland Resource Council and has held directorships in a number of companies within the resources industry. John is the Managing Director and Chief Executive Officer at Highlands Pacific Limited.

Non-Executive Director: John Quirke

Starting his career as a secondary school teacher, John soon became Private Secretary to a Federal Senator before being elected the Member for Playford in 1989. In 1997, he became a Federal Senator and then Deputy Chief Whip before resigning in 2000. John gained extensive State and Federal committee experience which included competition policy, public works, social development, economics and finance, and has been an active member of numerous legislative committees specialising in mining and economics since. He is a Trustee to the Australia/ Cambodia Foundation and Director of Operation Flinders.

20 May 2010


Senior Management Chief Financial Officer and Company Secretary: Russell Middleton

Russell joined Hillgrove Resources in February 2008 and brings almost 20 years’ experience in the industry, with senior management positions in accounting, commercial and planning roles and significant experience with mine project evaluations and construction of new mines. Russell started his career as a public accountant before joining BHP, where he undertook various roles, then joined Shell as Commercial Manager for the construction, development and production of a major underground mine. More recently Russell has been Chief Financial Officer for contracting and services companies in the mining sector. Russell is also a Director and Company Secretary of InterMet Resources Limited.

General Manager - Exploration and Operations: Dale Ferguson

Dale has played an important role in assisting the development of Hillgrove’s exploration project portfolio, securing tenure and the implementation of its exploration and development programs including the Kanmantoo Copper-Gold Project. Dale has an extensive industry background developed over twelve years having worked previously with Thundelarra Exploration, Resource Exploration and Resource Service Group. He has been associated with a number of discoveries in Australia including Eileen Bore, Copernicus and Salk Ni-PGM, Big Ben PGM and three new kimberlites at the Aries project with Thundelarra, the discovery of the Fields Find and Dauphin Ni-PGM bearing Layered Ultramafic complex’s, and the Weiro and Raven Gold Prospects with Resource Exploration.

General Manager – Business Development: Geoffrey Stewart

Prior to joining Hillgrove in June 2007, Geoff was an integral member of the Pricewaterhouse Coopers Corporate Advisory team for over a decade. He was responsible for designing and presenting strategic initiatives using his lateral skills and market knowledge to identify, catalyse and initiate new transaction scenarios. Geoff has a strong entrepreneurial and marketing background identifying and processing new business matching and project development opportunities. He has developed an extensive network of contacts cultivated through 30 years of trusted interaction and cooperation. Geoff is also a Director of Netfire Solutions Pty Limited.

Executive General Manager – Kanmantoo Project: Cam Schubert

Cam was the Site Senior Executive & GM at Xstrata’s Ernest Henry mine from 2004 to 2007. Prior joining Hillgrove, Mr Schubert was Mine Operations Development Manager at BHP Billiton’s Olympic Dam Expansion Project.

20 May 2010


Outline of Indonesian Mining Law There have been recent changes to the Indonesian mining law. The major changes include the replacement of the existing Contracts of Work (COW) and Kuasa Pertambangan (KP) with a new permit system. The government will honour existing COW’s. However, they will be subject to adjustments provided both the Government and holder agree. The existing KP’s will be converted to the new IUP’s.

The primary method of obtaining an IUP will be through an auction process held by the government.

The new permits, IUPs, are reflective of the location of planned mining activity and the type of mining activity that the applicant wishes to pursue. There are separate IUP’s for metallic minerals, non-metallic minerals, rocks and coal.

IUP’s are issued for either exploration or operational activities. Holders of an exploration IUP are guaranteed to have their permit advanced to an operational IUP if the holder wishes to advance to production. Metallic mineral IUPs for exploration are valid for a maximum of 8 years and an operational IUP is valid for a maximum term of 20 years plus two, 10-year renewals.

The responsibility of IUP issuance is dependent on the specified work area. The area of work is called the WIUP and depending on the size and location of the WIUP, will impact who has the authority to issue the IUP. To complicate matters further, Indonesia consists of 399 regions, 33 provinces and 98 municipalities, and each has its own government and its own legislature.

Foreigners can hold a 100% interest in an IUP. However, foreigners have an obligation to divest a yet to be specified interest beginning in 5 years time. Draft regulation suggests a 20% divesture.

20 May 2010


Share registry as at 31 March 2010

Position Holders Shares Held % of Issue 1 Merrill Lynch (Australia) Nominees Pty Limited 47,886,772 12.60

2 ANZ Nominees Limited 39,738,904 10.46

3 Ras Al Khaimah Minerals & Metals Investments 19,500,000 5.13

4 Mr David Stuart Archer and Associates 17,350,497 4.57

5 Citicorp Nominees Pty Limited 12,854,962 3.38

6 HSBC Custody Nominees (Australia) Limited 11,345,105 2.99

7 Perpetual Trustee Company Limited 8,820,031 2.32

8 National Nominees Limited 7,730,304 2.03

9 Merrill Lynch (Australia) Nominees Pty Limited 6,443,370 1.70

10 Cogent Nominees Pty Limited 5,260,103 1.38

11 Argonaut Resources NL 4,000,000 1.05

12 Nedlohm Nominees Pty Ltd 2,199,070 0.58

13 Clapsy Pty Ltd 2,051,137 0.54

14 Pensaw Pty Ltd 2,000,000 0.53

15 Intergrated Landfill Pty Ltd 1,959,087 0.52

16 Ristovski Nominees Pty Ltd 1,600,000 0.42

17 Mr Michael Walsh McDonald 1,400,080 0.37

18 Aliana Metals Pty Ltd 1,400,000 0.37

19 Transition Metals Pty Ltd 1,400,000 0.37

20 Huntercorp Pacific Pty Ltd 1,327,236 0.35

196,266,658 51.64

20 May 2010


Hillgrove Resources (HGO : $0.275) PRODUCTION Yr Ending Jan 2008A 2009A 2010E 2011E 2012ECopper - (kt) 0 0 0 0 14

Gold - (koz) 0 0 0 0 7

Silver - PH (koz) 0 0 0 0 114

C1 Cash Cost - (US$/lb) 0.00 0.00 0.00 0.00 1.51

PRICES Yr Ending Jan 2008A 2009A 2010E 2011E 2012EGold (US$/oz spot) 719 871 992 1162 1223

Silver (US$/oz spot) 13.72 14.58 15.05 19.19 21.46

Copper (US$/lb) 3.29 2.99 2.46 3.15 3.46

AUDUSD (USD) 0.85 0.84 0.82 0.90 0.87

INVESTMENT & VALUATION FUNDAMENTALS Yr Ending Jan 2008A 2009A 2010E 2011E 2012EEPS Before Abs (c) -0.7 -1.2 -3.7 0.0 5.4EPS Growth (%) N/A -81.2% -192.8% 98.9% 13,525.0PER (x) -33.3 -10.5 -7.7 -700.0 5.2CFPS (c) -1.0 -1.3 -2.0 -5.3 9.6P/CF (x) -23.2 -9.8 -14.4 -5.3 2.9EV/EBITDA (x) -71.8 -13.2 -1.6 -20.3 1.5DPS (c) 0.0 0.0 2.0 0.0 0.0Yield (%) 0.0% 0.0% 7.1% 0.0% 0.0%Franking (%) 0% 0% 0% 0% 0%

DCF VALUATION @ 11.1 % 10 % Yr Ending Jan A$m A$ps A$m A$ps

Kanmantoo - Open Cut 77.8 0.15 82.4 0.16Corporate Items -15.7 -0.03 -16.2 -0.03Interests In Other Entities 3.7 0.01 3.67 0.01Exploration/Development 19.3 0.04 19.2 0.04Franking Credits 26.3 0.05 26.7 0.05Net (Debt)/Cash 97.9 0.19 97.9 0.19Additional Capital - Dilution 9.5 0.02 9.6 0.02Total Valuation 218.9 0.43 223.3 0.44

PROFITABILITY RATIOS Yr Ending Jan 2008A 2009A 2010E 2011E 2012EEBIT / Sales (%) -710.5% 28.5%ROA (%) N/A -6.8% -9.5% -4.2% 22.5%ROE (%) N/A -6.6% -12.9% -0.1% 14.3%ROFE (%) N/A -7.4% -13.0% -5.8% 26.0%

INTERIMS ($m) Half Yr Jul 08 Jan 09 Jul 09 Jan 10 Jul 10Yr Ending Jan 1H A 2H A 1H A 2H E 1H ESales Revenue 0.0 0.0 0.0 1.4 0.0EBIT -2.1 -4.8 -4.9 -5.3 -2.4Net Profit -2.2 13.5 54.0 1.6 7.4EPS -0.8 -0.7 -2.0 -1.7 -0.1

1. Gearing = (Debt + CNotes) / (Debt + Cnotes + Equity)

BALANCE SHEET ($m) Yr Ending Jan 2008A 2009A 2010E 2011E 2012ECash 3.4 7.7 130.4 97.8 61.2Total Assets 74.2 140.9 211.1 249.6 234.5Debt 15.0 44.0 2.5 52.5 2.5Total Liabilities 19.0 56.6 47.3 73.9 23.9Total Shareholders Equity 55.2 83.7 163.5 175.3 210.2Total Funds Employed 66.9 120.5 35.9 130.3 151.9

LIQUIDITY & LEVERAGE RATIOS Yr Ending Jan 2008A 2009A 2010E 2011E 2012EDebt / Equity (%) 27.2% 52.6% 1.5% 30.0% 1.2%Gearing (%) 1 21.4% 34.3% 1.5% 23.0% 1.2%Interest Cover (x) -1.2 -4.7 -0.8 1.0 -13.7Debt / CashFlow (x) -5.9 -9.0 -0.3 -2.0 0.1(Debt+CNotes)/ CashFlow -6.5 -5.4 -0.1 -2.0 0.1

PROFIT & LOSS ($m) Yr Ending Jan 2008A 2009A 2010E 2011E 2012ESales Revenue 0.0 0.0 1.4 0.0 128.4EBITDA -1.2 -6.7 -9.8 -4.8 58.4Depn and Amortisation 0.0 0.2 0.4 0.0 21.8EBIT -1.3 -6.9 -10.2 -4.8 36.6Net Interest Expense 1.1 1.5 12.2 -4.7 -2.7Pre-tax Profit -2.4 -8.4 -22.4 -0.2 39.3Tax -0.6 -3.7 -6.4 0.0 11.8Tax rate (%) 24.8% 44.5% 28.5% -19.2% 30.0%Minorities / pref divs 0.0 0.0 0.0 0.0 0.0Equity accounted NPAT 0.0 0.0 0.0 0.0 0.0Net Profit -1.8 -4.6 -16.0 -0.2 27.5Abnormals -0.2 15.9 71.6 7.7 0.0Reported Net Profit -2.0 11.3 55.6 7.5 27.5

CASHFLOW ($m)

Yr Ending Jan 2008A 2009A 2010E 2011E 2012EOperating Cash Flow -2.5 -4.9 -8.5 -26.9 49.3 Capital Expenditure -2.6 -2.5 -7.2 -60.7 -43.3Expln, Develop, Evaln -3.3 -12.6 -4.4 -10.3 0.0Asset Sales/Acquisitions -8.0 -4.5 165.6 11.0 0.0Other 0.3 1.0 0.0 0.0 0.0Investing Cash Flow -13.6 -18.6 154.0 -60.0 -43.3 Share Issues/(Buybacks) 0.6 42.6 32.8 4.4 7.4Debt Drawdown (Repay) 12.0 -15.0 -47.3 50.0 -50.0Dividends Paid 0.0 0.0 -8.3 0.0 0.0Other Fin. Flows 0.0 0.0 0.0 0.0 0.0Financing Cash Flow 12.6 27.6 -22.8 54.4 -42.6 Cash Increase (Decrease) -3.6 4.1 122.7 -32.5 -36.6

EARNINGS SENSITIVITIES - % CHANGE Yr Ending Jan 2008A 2009A 2010E 2011E 2012E+/-10% US$ Copper Price 0.0% 0.0% 0.0% 0.0% 30.0%

+/-10% US$ Gold Price 0.0% 0.0% 0.0% 0.0% 1.8%

+/- 1c Movement US$/A$ 0.0% 0.0% 0.0% 0.0% 3.6%

+/-10% US$ Silver Price 0.0% 0.0% 0.0% 0.0% 0.5%

20 May 2010


Recommendation Structure BUY: Total return +10% or more over a 12 month period HOLD: Total return expected to be between +10% to -10% over a 12-month period SELL: Total return expected to be -10% or more over a 12 month period TOTAL RETURN OR TSR = capital growth in share price + expected dividend yield in that period Other definitions CS Coverage Suspended. Wilson HTM Ltd has suspended coverage of this company. NR Not Rated. The recommendation has been suspended temporarily. Such suspension is in line with Wilson HTM Investment Group Ltd policies in circumstances where Wilson HTM Corporate Finance Ltd is acting in an advisory capacity in a merger or strategic transaction involving the company and in certain other situations. Disclaimer Whilst Wilson HTM Ltd believes the information contained in this communication is based on reliable information, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. To the extent permitted by law Wilson HTM Ltd disclaims all liability to any person relying on the information contained in this communication in respect of any loss or damage (including consequential loss or damage) however caused, which may be suffered or arise directly or indirectly in respect of such information. Any projections contained in this communication are estimates only. Such projections are subject to market influences and contingent upon matters outside the control of Wilson HTM Ltd and therefore may not be realised in the future. The advice contained in this document is general advice. It has been prepared without taking account of any person’s objectives, financial situation or needs and because of that, any person should, before acting on the advice, consider the appropriateness of the advice, having regard to the client’s objectives, financial situation and needs. Those acting upon such information without first consulting one of Wilson HTM Ltd investment advisors do so entirely at their own risk. This report does not constitute an offer or invitation to purchase any securities and should not be relied upon in connection with any contract or commitment whatsoever. If the advice relates to the acquisition, or possible acquisition, of a particular financial product – the client should obtain a Product Disclosure Statement relating to the product and consider the Statement before making any decision about whether to acquire the product. This communication is not to be disclosed in whole or part or used by any other party without Wilson HTM Ltd's prior written consent.

Disclosure of Interest. Hillgrove Resources The Directors of Wilson HTM Ltd advise that at the date of this report they and their associates have relevant interests in Hillgrove Resources. They also advise that Wilson HTM Ltd and Wilson HTM Corporate Finance Ltd A.B.N. 65 057 547 323 and their associates have received and may receive commissions or fees from Hillgrove Resources in relation to advice or dealings in securities. Some or all of Wilson HTM Ltd authorised representatives may be remunerated wholly or partly by way of commission. In producing research reports, members of Wilson HTM Ltd Research may attend site visits and other meetings hosted by the issuers the subject of its research reports. In some instances the costs of such site visits or meetings may be met in part or in whole by the issuers concerned if Wilson HTM Ltd considers it is appropriate and reasonable in the specific circumstances relating to the site visit or meeting.

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Documents

Hillgrove Resources · DPS c Div Yld % Franking % 2009a 11 ... Management have set a target of 1-3moz by 2011. ... The current inventory is a JORC resource of 32mt containing 292.2kt