HILLGROVE RESOURCES LIMITED — AGM Information 2016

May 25, 2016

==> picture [117 x 65] intentionally omitted <==

ANNUAL GENERAL MEETING COMPANY UPDATE STEVE McCLARE IIIII CEO & MANAGING DIRECTOR 26 MAY 2016

==> picture [117 x 65] intentionally omitted <==

SAFETY, COMMUNITY AND ENVIRONMENT

==> picture [720 x 227] intentionally omitted <==

==> picture [117 x 65] intentionally omitted <==

==> picture [355 x 20] intentionally omitted <==

SAFETY HAS SIGNIFICANTLY IMPROVED

==> picture [563 x 294] intentionally omitted <==

KEY TAKEAWAYS

• Significant improvement in safety, lowest TRIFR since operations began in 2011

==> picture [87 x 46] intentionally omitted <==

3

==> picture [117 x 65] intentionally omitted <==

==> picture [355 x 20] intentionally omitted <==

– PREMIER’S AWARD EXCELLENCE IN SUPPORTING COMMUNITIES

==> picture [223 x 228] intentionally omitted <==

==> picture [277 x 195] intentionally omitted <==

KEY TAKEAWAYS

• Social licence to operate is a fundamental pillar of future success

==> picture [87 x 46] intentionally omitted <==

4

==> picture [117 x 65] intentionally omitted <==

==> picture [355 x 20] intentionally omitted <==

– ENVIRONMENTAL PROGRESSIVE AND OFFSET REHABILITATION

==> picture [361 x 159] intentionally omitted <==

==> picture [359 x 114] intentionally omitted <==

==> picture [251 x 278] intentionally omitted <==

• KEY TAKEAWAYS

• 17% of site rehabilitation requirements completed in CY15

• High quality rehabilitation, achieved in a progressive and cost effective manner

==> picture [87 x 46] intentionally omitted <==

5

==> picture [117 x 65] intentionally omitted <==

ANNUAL ACCOUNTS

==> picture [720 x 227] intentionally omitted <==

REPORT HIGHLIGHTS CY15

==> picture [117 x 65] intentionally omitted <==

==> picture [175 x 16] intentionally omitted <==

 Copper in concentrate 17,306 tonnes

 Underlying EBITDA of $17.3M

 Impairment of Assets

 Indonesia $29.9M

 Kanmantoo $69.8M

 Revenue $139.5M - average realised copper price of $3.57/lb (US$2.74/lb)

• C1 cost $2.81/lb (US$2.11/lb)

 $18.1m progressing the Giant Cutback

 Corporate moved Sydney to Adelaide (realising a 45% saving)

KEY TAKEAWAYS

 Cutback progressed to plan, costs on plan but copper production below plan

==> picture [87 x 46] intentionally omitted <==

7

==> picture [117 x 65] intentionally omitted <==

– THE PAST 12 MONTHS POST FINANCING

==> picture [720 x 227] intentionally omitted <==

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

EXECUTIVE SUMMARY

==> picture [146 x 16] intentionally omitted <==

• Lower production in the last 12 months driven by historical oxide stockpiles and upper areas of the Giant Pit,

• Significant focus area, addressed with an updated mineral resource estimate,

• Confidence in mineral resource estimate:

 Based on back validation of Kavanagh pit,

• Performance over the last 3 months,

• Significant value still remains in Kanmantoo Mine,

• However cash flow profile has been reshaped, exacerbated by debt repayments, and

• Being addressed by working together with our stakeholders

KEY TAKEAWAYS

• Directors remain confident significant value in the mine can be achieved

==> picture [87 x 46] intentionally omitted <==

9

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

– CASHFLOW WORKING CAPITAL ANALYSIS

==> picture [42 x 91] intentionally omitted <==

==> picture [145 x 190] intentionally omitted <==

==> picture [145 x 94] intentionally omitted <==

Projected CFADS Copper OX Copper PR Gold Revenue Costs Actual CFADS Revenue Revenue

KEY TAKEAWAYS

• Revenue losses from copper only partially offset by lower expenses and higher precious metals revenue. Resulting in minimal buffer.

==> picture [87 x 46] intentionally omitted <==

10

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

REVENUE ANALYSIS SINCE LAST AGM

• 12 month copper production 4.4kt lower than initially forecast

 56% historical oxide and transitional stockpiles

• 44% primary feed (satellite pits and upper levels of Giant)

• Expected to have minimal impact in the future

 Oxide and transitional completed

• Primary – updated mineral resource estimate

KEY TAKEAWAYS

• Copper production 4.4kt lower than forecast has materially impacted revenue in the last 12 months

==> picture [87 x 46] intentionally omitted <==

11

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

MINERAL RESOURCE ESTIMATE 2016 METHODOLOGY

				2013 MRE	2016 MRE	2016 MRE Comments
			Modelling	OK	MIK	Highly variable mineralisation
			method	linear	non-linear	requires non-linear modelling
					Recoverable	to avoid smoothing
			Historic holes	Included	Excluded	Removes spatial and grade
				79 holes		uncertainty
			Interpretation	Grade >	Alteration	Geological interpretation
			basis	0.2%Cu
			Classification	MII	MII	Meets external reporting
						requirements (JORC)
				KEY TAKEAWAYS
		2016 Model appropriate for complex orebody

==> picture [87 x 46] intentionally omitted <==

12

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

MINERAL RESOURCE ESTIMATE (CONTINUED)

==> picture [658 x 364] intentionally omitted <==

----- Start of picture text -----

40,000
12%
35,000
30,000
(11%)
25,000
20,000
15,000
10,000
5,000
-
2013 MRE Actual 2016 MRE
(mill reconciled)
KEY TAKEAWAYS

Mineral Resource Estimate compared to historic mining in Kavanagh

Old model over predicted
Copper Metal (tonnes)
----- End of picture text -----

• New model is anticipated to under predict

==> picture [87 x 46] intentionally omitted <==

13

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

MINERAL RESOURCE ESTIMATE (CONTINUED)

Mineral Resource Estimate comparison of 2016 MRE to 2013 MRE:

 Extra 11,080 tonnes of copper metal for the same deposits despite depletion

 2016 MRE reconciles favourably

 against historic production from Kavanagh 11% on tonnes of copper metal

 Over last three months 13% on tonnes of copper metal

KEY TAKEAWAYS

 2016 Mineral Resource Estimate increases copper metal, despite mining depletion

==> picture [87 x 46] intentionally omitted <==

14

UPDATED LIFE OF MINE PLAN SUMMARY

==> picture [117 x 65] intentionally omitted <==

==> picture [187 x 16] intentionally omitted <==

==> picture [146 x 16] intentionally omitted <==

• Current life of mine plan reflects the updated geological model

• Last 12 months waste to ore ratio of 5.4:1

• Three phases of remaining mine life:

• Phase 1: Capital Investment (Remainder 2016)

 Relatively high strip ratio (4.3:1)

• Phase 2: Debt Repayment (CY2017)

 Reduced strip ratio (2.6:1) improves cash generation, used to reduce maturing debt

 Phase 3: Shareholder Returns (CY2018 and Beyond)

• Very low strip ratio (1.2:1) and reduced mining costs drive rapid cash generation

KEY TAKEAWAYS

• Production levels modelled to result in a cash shortfall in 2016 and 2017, initiatives progressed to address this gap

==> picture [87 x 46] intentionally omitted <==

15

==> picture [117 x 65] intentionally omitted <==

EXPLORATION

==> picture [720 x 227] intentionally omitted <==

==> picture [117 x 65] intentionally omitted <==

==> picture [121 x 16] intentionally omitted <==

ALONG STRIKE MINERALISATION

==> picture [197 x 277] intentionally omitted <==

• Contiguous geophysical trend extending up to 1km to NNE of existing Giant orebody

• Observed in recent Gravity, but subtle in historic EM/IP due to near-surface effects and lack of QA/QC

• Untested until recent HGO deep RC hole

==> picture [461 x 160] intentionally omitted <==

KEY TAKEAWAYS

• Gravity, Heli TEM and 324m exploration RC hole cast doubt on historic interpretation

==> picture [87 x 46] intentionally omitted <==

17

==> picture [117 x 65] intentionally omitted <==

==> picture [121 x 16] intentionally omitted <==

ALONG STRIKE MINERALISATION

==> picture [688 x 422] intentionally omitted <==

----- Start of picture text -----

 28m @ 0.61% Cu and 0.14g/t Au (324m RC Hole)
 DHEM - Significant off-hole conductors towards pit &
up-dip
 Indicative grades and thickness consistent with current
orebody
 Giant orebody remains open at depth
KEY TAKEAWAYS

Encouraging hole and associated down hole electro magnetic results but further
drilling required
----- End of picture text -----

==> picture [87 x 46] intentionally omitted <==

18

==> picture [117 x 65] intentionally omitted <==

==> picture [121 x 16] intentionally omitted <==

PLANNED EXPLORATION PROGRAM

==> picture [415 x 285] intentionally omitted <==

• KEY TAKEAWAYS

• Near-mine exploration to recommence once operation stabilised

==> picture [87 x 46] intentionally omitted <==

19

==> picture [117 x 65] intentionally omitted <==

CLOSING

==> picture [720 x 227] intentionally omitted <==

==> picture [117 x 65] intentionally omitted <==

==> picture [78 x 16] intentionally omitted <==

EXECUTIVE SUMMARY

 Directors remain confident significant value in the mine can be achieved

• Updated geological model:

 Robust Estimate appropriate for the complex deposit

 Reinforced with historical validation and actual performance over the last 3 months

• Cash flow profile based on the new geological model, exacerbated by debt repayments

 Being addressed by working together with our stakeholders

==> picture [87 x 46] intentionally omitted <==

21

STATEMENT

==> picture [117 x 65] intentionally omitted <==

==> picture [169 x 16] intentionally omitted <==

No representation or warranty is or will be made by any person (including Hillgrove Resources Limited ACN 004 297 116 (“Hillgrove”, “HGO”, or the “Company”) and its officers, directors, employees, advisers and agents) in relation to the accuracy or completeness of all or part of this document (the “Document”), or the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects or returns contained in, or implied by, this Document or any part of it. This Document includes information derived from third party sources that has not been independently verified.

This Document contains certain forward-looking statements with respect to the financial condition, results of operations and business of Hillgrove and certain plans and objectives of the management of Hillgrove. Forward-looking statements can generally be identified by the use of words such as ‘project’, ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘should’, ‘will’ or similar expressions. Indications of, and guidance on, production targets, targeted output, mine development or timelines, exploration or expansion timelines, infrastructure alternatives and financial position and performance are also forwardlooking statements. Any forecast or other forward-looking statement contained in this Document involves known and unknown risks and uncertainties and may involve significant elements of subjective judgment and assumptions as to future events which may or may not be correct. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Hillgrove, and may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements.

Various factors may cause actual results or performance to differ materially. These include without limitation the following: risks specific to Hillgrove’s operations; credit risk; levels of supply and demand and market prices; legislation or regulations throughout the world that affect Hillgrove's business; insurance expenses; the risk of an adverse decision or other outcome relating to governmental investigations; class actions or other claims; growth in costs and expenses; and risk of adverse or unanticipated market, financial or political developments (including without limitation in relation to commodity markets).

You are cautioned not to place undue reliance on forward-looking statements. These forward-looking statements are based on information available to us as of the date of this Document. Except as required by law or regulation (including the ASX Listing Rules) we undertake no obligation to update these forward-looking statements.

This Document is provided for informational purposes only and is subject to change without notice. Subject to any obligations under applicable laws, regulations or securities exchange listing rules, Hillgrove disclaims any obligation or undertaking to release any updates or revisions to this Document to reflect any change in expectations or assumptions. Nothing in this Document should be interpreted to mean that future earnings per share of Hillgrove will necessarily match or exceed its historical published earnings per share, or that there has been no change in the affairs of Hillgrove since the date of this Document.

Nothing contained in this Document constitutes investment, legal, tax or other advice. The information in this Document does not take into account the investment objectives, financial situation or particular needs of any recipient. Before making an investment decision, each recipient of this Document should make its own assessment and take independent professional advice in relation to this Document and any action taken on the basis of this Document.

All currency referred to is Australian dollars ($) unless otherwise indicated (e.g. US$).

==> picture [87 x 46] intentionally omitted <==

----- Start of picture text -----

22
----- End of picture text -----

22

==> picture [117 x 65] intentionally omitted <==

==> picture [169 x 16] intentionally omitted <==

COMPETENT PERSON STATEMENTS

ABOUT HILLGROVE

Hillgrove is an Australian mining company listed on the Australian Securities Exchange (ASX: HGO) focused on the operation of the Kanmantoo Copper Mine in South Australia, and with exploration projects on its Indonesian tenements. The Kanmantoo Copper Mine is located less than 55km from Adelaide in South Australia.

Competent Person's Statement

Kanmantoo Global Mineral Resource Estimate at End February 2016

	JORC 2012	**Tonnage **	Cu	Au	Ag
	Classification	(Mt)	(%)	(g/t)	(g/t)
	Measured	10.6	0.6	0.1	1.4
In Situ Resource	Indicated	10.9	0.7	0.1	1.2
	Inferred	13.7	0.5	0.1	1.0
	Total	35.2	0.6	0.1	1.2

Note: In Situ Resource >0.20% Cu

Kanmantoo Global Ore Reserve Estimate at End February 2013

	JORC 2012	**Tonnage **	Cu	Au	Ag
	Classification	(Mt)	(%)	(g/t)	(g/t)
	Proven	2.5	0.77	0.08	1.7
In Situ Reserve	Probable	18.2	0.72	0.20	2.0
		20.7	0.73	0.18	1.9
LongTerm Stockpiles	Proven	1.4	0.46	N/A	N/A
		1.4	0.46	-	-
	Total	22.1	0.71	0.18	1.9

Note: In Situ Reserve >0.20% Cu. Long Term Stockpiles >0.15% Cu.

The information in this release that relates to the 2016 Mineral Resource for Giant is based upon information compiled by Mr Peter Rolley, who is a Member of The Australian Institute of Geoscientists. Mr Rolley is a full-time employee of Hillgrove Resources Limited and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)’. Mr Rolley has consented to the inclusion in the release of the matters based on their information in the form and context in which it appears.

The information in this release that relates to the 2013 Mineral Resource not including Giant is based upon information compiled by Ms Michaela Wright, who is a Member of The Australasian Institute of Mining and Metallurgy. Ms Wright is a full-time employee of Hillgrove Resources Limited and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)’. Ms Wright has consented to the inclusion in the release of the matters based on their information in the form and context in which it appears.

The information in this release that relates to Ore Reserves is based upon information compiled by Mr Steven McClare, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr McClare is a full-time employee of Hillgrove Resources Limited and has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)’. Mr McClare has consented to the inclusion in the release of the matters based on their information in the form and context in which it appears.

The information in this release that relates to Exploration Results is based on information compiled by Dr David Rawlings, who is a Member of The Australasian Institute of Mining and Metallurgy. Dr Rawlings consults independently as the Kanmantoo Project Exploration Manager for Hillgrove Resources Limited and has sufficient relevant experience to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code)’. Dr Rawlings consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

23