🕐10.08.09 - 06:52 Uhr

Hillgrove Resources Limited [HGO] - Processing Plant Acquired for Kanmantoo



Hillgrove Resources Limited
ACN 004 297 116
Level 41 Australia Square Tower, 264 George Street, Sydney NSW 2000
Tel: 02 8221 0404 Fax: 02 8221 0407
www.hillgroveresources.com.au
Monday, 10 August 2009
Processing Plant Acquired for Kanmantoo
Hillgrove Resources Limited (ASX:HGO) is pleased to announce that its wholly owned
subsidiary, Hillgrove Copper Pty.

Limited, has entered into a purchase agreement with
Lennard Shelf Pty.

Limited (Teck Resources Limited/Xstrata plc) to acquire the Lennard Shelf
Pillara Mine"s process plant and associated equipment and buildings for the Kanmantoo
Copper/Gold Project.
The Pillara Plant purchase comprises all of the plant and equipment at site; being the float
plant which includes a ball mill and SAG mill, office buildings, crusher, plant spares and
consumables, workshops, warehouse building, sample preparation facility, laboratory, fuel
farm and product storage buildings.
David Archer, the Managing Director of Hillgrove Resources said today "The purchase of the
integrated processing plant will provide the Kanmantoo Project with a great head start and
affords the Project a number of significant advantages".

These include:
• A reduction in the Project"s capital expenditure by an estimated $20 million after cost of
dismantling and modification (total cost to complete construction now estimated at $99.5
million);
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Hillgrove Resources Limited
• Plant configurations using either Hillgrove"s existing Outotec SAG mill or the Pillara SAG
mill can process the planned Kanmantoo run-of-mine throughput of 2.0MTPA with
significant upside capacity to more than 2.5MTPA;
• Reduced lead times for new equipment items will ensure the project will be completed
within a 12 month construction period;
• Potential to sell the existing Kanmantoo SAG mill and mill spares (cost $7.8 million) and
surplus Pillara equipment to net off the cost of the purchase of the Pillara plant; and
• Operating and capital spares being acquired with the Pillara Plant have a replacement
value of $5.4 million and provide a direct and significant saving on start-up costs for
Kanmantoo.
The Pillara Mine, located 375km east of Broome in Western Australia, was established by
Western Metals Limited in 1998 as a lead/zinc mine.

The Mine operated until 2003 and then
by the Lennard Shelf Pty Limited joint venture from 2006 until it was shut down in September
2008.

Design throughput for the mine and plant was 2.7MTPA.

The plant is in excellent
condition and can be dismantled, relocated, reassembled and commissioned without need for
refurbishment.
Mr.

Archer also said "We believe this will provide a very attractive backdrop to an incoming
joint venture party for the Project as it substantially reduces the risk of any capital expenditure
increases.

We have continued to work closely with Abesque Engineering to ensure the
plant"s complete compatibility with the Kanmantoo Project"s requirements".
About Hillgrove
Hillgrove is an Australian resources company listed on the Australian Securities Exchange
(ASX: HGO) focused on developing its Indonesian, South Australian and Queensland base
and precious metals projects.

The Company is targeting the discovery of world class
epithermal gold and porphyry copper/gold deposits in Eastern Indonesia.
Hillgrove"s flagship development is the Kanmantoo Copper Gold Project, located less than
60km from Adelaide in South Australia.

Kanmantoo currently hosts a Mineral Resource of
32.2Mt (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.

With production targeted for the first quarter of 2011, Kanmantoo will be a
2Mt p.a.

open-cut mine producing approximately 17,000 tonnes of copper in concentrate and
8,000 ounces of gold per annum.
The information in this announcement that relates to Exploration Results is based on information compiled by Mr.Dale Ferguson,
who is a Member of The Australasian Institute of Mining and Metallurgy.

Mr.

Ferguson is the General Manager- 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 announcement of the matters based on his information in the form and context in which
it appears.

The Mineral Resource estimate is based on information compiled by Mr Paul Payne, who is a Member of The
Australasian Institute of Mining and Metallurgy.

Mr Payne is Manager - WA Mining Consulting Runge Limited 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 Payne consents to the inclusion in this announcement of the
matters based on his information in the form and context in which it appears.
For more information contact:
Mr David Archer Mr Russell Middleton
Managing Director Chief Financial Officer
Hillgrove Resources Limited Hillgrove Resources Limited
Mobile: 0414 737 767 Mobile: 0418 497 678




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