The company’s goal is to become a billion dollar plus mid tier gold and copper/gold resources group. Hillgrove’s growth will come from the development of the Kanmantoo Copper/Gold Mine in South Australia, exploration discoveries from its highly prospective greenfield exploration projects in Indonesia and North Queensland, acquisition of new projects and the continuation of its investment successes with key strategic investments in associated businesses.

Principal assets

Kanmantoo Copper/Gold Project

The Kanmantoo Project highlights the technical and commercial capabilities that Hillgrove brings to its projects and is an example of how the mining industry can undertake innovative community, social and environmental initiatives.

Kanmantoo will be a low capital cost copper and gold producer around a medium grade orebody which has excellent potential for the further expansion.

The Project’s location, 55 kilometres from Adelaide, the capital city of South Australia, means it enjoys capital cost advantages being close to road, rail, power infrastructure and Port Adelaide. The use of recycled water and grid power provides the project with significant operating cost advantages. This is supplemented by the Project’s desirability as an employment destination being located both close to Adelaide and within the attractive Adelaide Hills’ setting.

Kanmantoo is configured to initially be a 2.0Mtpa open cut mine and, with the acquisition of the Pillara processing plant, the potential to be increased up to 3.0Mtpa subject to further exploration success and licensing. The Project will be configured to produce up to 20,000 tonnes of copper in concentrate and 8,000 ounces of gold per annum, with production targeted for the first quarter of 2011.

Resource drilling has defined a Mineral Resource of 32.2 million tonnes (2.3Mt Measured, 22.5Mt Indicated and 7.4Mt Inferred) grading 0.9% copper and 0.20g/t gold, containing 292,200 tonnes of copper, 191,100 ounces of gold and 3,313,600 ounces of silver to support an initial mine life of 6.5 years. Hillgrove has defined the potential for an Exploration Target of >50Mt of resources at similar grades to the current resource. It is important to note that this exploration target is conceptual in nature as there has been insufficient exploration to date to define a mineral resource and it is uncertain if further exploration will result in the determination of a mineral resource.

The Project has been awarded a Mining Lease and conditional MARP (pending the tailings storage facility design being completed) by PIRSA. Work is now progressing on finalising the TSF design, arranging financing of the Project, and relocation of the process plant from Pillara to the site, following which construction of the plant can proceed with production slated for 2011.

Indonesia Projects

Hillgrove launched a major initiative into Indonesia in late 2008, as the company saw enormous potential in the Pacific ‘Ring of Fire’, by securing 2,815 square kilometres of ground comprising two major projects – the Bird’s Head Project on the north western tip of the eastern Indonesian province of West Papua and a gold prospect on the island of Sumba, west of Timor.

The Bird’s Head Project (Hillgrove 80%) offers an excellent opportunity to explore for large scale epithermal and porphyry style mineralisation within a geological setting that has been proven to host world class deposits.  The 1,815 square kilometre area covered is in a favourable geological setting for the discovery of copper gold mineralisation. Bird’s Head offers a further advantage: a data package of extensive exploration and drilling information developed by Normandy in the 1980-90’s, which will allow exploration work to be fast-tracked and Hillgrove to plan drilling, with its local partner P.T. Akram Resources.  A site office has been established in the township of Sorong, a base camp has been constructed at the village of Warmandi and field exploration is currently underway. Drilling is currently planned to commence in 2nd quarter 2010.

The Sumba Project (Hillgrove 80%) sits within a set of islands that host numerous large scale copper/gold porphyry systems and epithermal gold deposits, including Newmont’s Batu Hijau Mine on the nearby island of Sumbawa. The Project offers Hillgrove a quick leg up into a zone of previously identified gold mineralisation that was not followed up due to the difficult economic conditions of the late 1990’s. An IUP, awarded to Hillgrove’s Indonesian partner PT Fathi Resources, covers 1,000 square kilometres that is split into two main project areas coinciding with the volcanic basement. The Sumba Project is shaping up to be an exciting exploration initiative with a socialisation programme completed, the base camp and core staff established, and field exploration and sampling already producing highly encouraging results.

Wider Exploration Portfolio

The Company has an exploration portfolio within the Kanmantoo Trough and Gawler Craton, which are recognised as being amongst Australia’s most prospective regions for copper and gold, and is also pursuing exploration projects in Queensland, Indonesia and elsewhere as opportunities arise.

Greenfield exploration projects include:

• Gold exploration at Mt. Rhine, South Australia
• Gold, Silver, Lead and Zinc exploration at Mt. Torrens, South Australia
• Gold, Silver, Lead and Zinc exploration at Aclare, South Australia
• Lead, Zinc, Copper, gold at Wheal Ellen, South Australia

Hillgrove made a strategic investment in InterMet Resources Limited (ASX: ITT: 84.8%) in 2008, broadening the Group’s exploration grounds. InterMet’s core portfolio comprises the Mount Lucy iron ore deposit and Munderra base metal project in North Queensland, and the Lake Gilles gold/base metal project and a suite of paleochannel uranium exploration projects in South Australia.

Strategic focus

As Kanmantoo nears start-up next year, Hillgrove is looking to its project pipeline and broadening its portfolio of green and brown field opportunities which will clearly benefit from an excellent management team and healthy balance sheet. Hillgrove recently sold a key 19.9% strategic shareholding in Eastern Star Gas Limited to Santos Limited for $172 million cash.