Tuesday, 22 June 2010

HILLGROVE ACQUIRES OPTIONS ON

INDONESIAN BAUXITE PROJECTS
Highlights

Options secured over 70% of companies controlling 1,400km of granted

bauxite exploration licenses in West Kalimantan in Indonesia.

Licences adjacent to large, established bauxite resources and active bauxite

mining operations.

Bauxite occurrences confirmed over widespread areas within the licences,

with values in augur drilling to 55% Al2O3.

Bauxite confirmed as gibbsitic and typified by low reactive silica levels.

Site and laboratory test work confirmed amenability of bauxite to upgrading

to high grade product via simple wet screening.

Licenses adjacent to established transport networks.

Targeting alumina production quality bauxite resources to supply nearby

Chinese demand.

Benefit of options to be transferred to Hillgrove subsidiary InterMet

Resources Limited at cost.

Hillgrove Resources Limited (ASX:HGO) (Hillgrove or Company) advises that it has

secured options to acquire a 70% shareholding in five companies that own nine exploration
licenses (IUPs) over the Landak and Tayan South Bauxite Projects, covering 1,400km in
West Kalimantan, Indonesia.
Hillgrove has, in turn, agreed to transfer these options to its 85% owned subsidiary, InterMet
Resources Limited subject to InterMet shareholder approval. InterMet will refocus its activities
around the bulk commodities bauxite, coal and iron ore both in Australia and Indonesia.
The region is a recognised bauxite province with the Indonesian major, PT Antam, owning the
Tayan bauxite deposit, located between the Landak and South Tayan Projects.
David Archer, Managing Director of Hillgrove said today Our work on the Landak bauxite
deposit shows that high grade, alumina production quality, bauxite can be produced with
favourable recoveries from the deposits so far identified. Hillgroves strategy is to identify and
secure quality projects with clear potential to host substantial resources capable of supporting
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

long-life mining operations. The Company believes the projects in Kalimantan meet all these
criteria in terms of scope and size and will provide an ideal nucleus for InterMet to participate
in the buoyant bulk commodities space.
We are confident in the long-term global aluminium consumption trends and see Indonesia
as a key provider of raw and refined products, particularly to the nearby Chinese market.
The Company will start a rigorous exploration programme over the IUPs, with the aim of
defining a bauxite resource base capable of justifying the establishment of an alumina
refinery.
Hillgrove has already completed several months of due diligence involving recognised mineral
industry consultants Snowden Group, Independent Metallurgical Operations, METS and
Aluminpro Aluminium Industry Professionals, and has conducted site surveys, test pitting and
detailed metallurgical evaluations.
Typical bauxite exposure, South Tayan

Overburden

2m

Bauxite Zone

4m

Saprock

The total acquisition price of the options is US$540,000 cash and the issue of a total of
US$300,000 worth of Hillgrove shares. The option agreements also allow Hillgrove (and its
nominee) to undertake exploration activities on the Landak and Tayan South Projects ahead
of an election to exercise the options.
The options are exercisable by 12 March 2011 and if exercised, will require the payment of
US$3,000,000 in cash plus the equivalent of US$2,000,000 in fully paid ordinary shares of the
Company. Additional payments on reaching resource benchmarks are as follows:

US$1,000,000 cash on definition of first JORC compliant resource of 50 million dry metric
tonnes; and

US$2,000,000 cash on definition of expanding global JORC compliant resources to 100

million dry metric tonnes. A royalty of US$0.30 / dry metric tonne of bauxite ore is payable
on sales of bauxite ore.

Hillgrove is entitled to assign its interests in these options to a related entity, if it so elects.
Hillgrove has elected to assign the benefit of the options to it 85% owned subsidiary, InterMet
Resources Limited, subject to the approval of InterMets shareholders.

Hillgrove Resources Limited

Metallurgical test work has been undertaken on bauxite sourced from eight test pits
excavated by Hillgrove across the project area at Landak.
Test work included particle size analysis of a master composite of test pit material, which
showed clear beneficiation of Al2O3 grade and a significant reduction in total and reactive
silica levels (Figure 1).
XRD analysis of the -1.18mm split of the master composite has confirmed that bauxite is
gibbsitic in nature.
At the 3.3mm screen size Landak bauxite upgraded from a head grade of 41.22% Al2O3,
15.13% total silica and 11.35% reactive silica to 48.8% Al2O3, 46.62% available Al2O3, 7.1%
total silica and 2.7% reactive silica, recovering 49.9% of total alumina.
By screening to 0.5mm, grades decreased slightly to 48.2% Al2O3 with little change to silica
levels, but recovery increased to 64.1% of total alumina.

Figure 1. Grade vs. particle size of master composite

60
50
40
30
Grade (%)

20
10
0
0.0

0.1

1.0

10.0

100.0

Particle Size (mm)

Al2O3

SiO2

Reactive Silica

Available Alumina

The washed grades for Landak bauxite compare favourably with bauxite grades from
operating bauxite mines in the region (Figure 2) and published bauxite resources globally
(Table 1).

Hillgrove Resources Limited

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Table 1. Selected Published Bauxite Resource Grades
Reactive
Si %

Available
Al2O3 %

43.1

3.2

31.6

Australia

NS

2.1

31.1

BHP Billiton

Brazil

NS

4.1

50.2

BHP Billiton

Guinea

NS

1.2

37.7

Rio Tinto

Australia

49.7

NS

NS

Rio Tinto

Brazil

50

NS

NS

Rio Tinto

Guinea

48.4

NS

NS

Rio Tinto

Australia

50.6

NS

NS

Iron Mountain

Australia

38.25

31.61

6.64

Cape Alumina

Australia

53.1

7.5

41.5

(washed)

ANTAM

Indonesia

47

3.5

NS

(washed)

Hillgrove Resources

Indonesia

48.8

2.7

46.2

(washed)

Deposit

Owner

Country

Al2O3
%

North Darling
Range

Bauxite Resources

Australia

BHP Billiton

2
2
3
3
3
3
4
5
6
7

Worsley
MRN
GAC
Gove
Porto Trombetas
Sangaredi
Weipa
Wandoo
Pisolite Hills
Tayan
Landak

Upgraded

(washed)

NS = Not Specified
1
ASX Release 16 January 2010
2
BHP Billiton Annual Report 2009
3
Rio Tinto Annual Report 2008
4
ASX Release 16 March 2010
5
ASX Release 2 July 2009
6
ANTAM Statement of Resources and Reserves 31 December 2007
7
IMO Landak Bauxite Project Report (Cumulative Grade at 3.3mm Screen Size)

About Hillgrove
Hillgrove is an Australian mining 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.
Hillgroves 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 completion of construction targeted for the first quarter of 2011,
Kanmantoo will be a 2.4Mt p.a. open-cut mine producing approximately 20,000 tonnes of
copper in concentrate and 10,000 ounces of gold per annum.
The information in this report that relates to Exploration Results is based on information compiled by Mr. James
Kerr, who is a Member of The Australasian Institute of Geoscientists. Mr. Kerr is Project Evaluation Manager for
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. Kerr consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.

For more information please contact:

Mr David Archer
Managing Director
Hillgrove Resources Limited
Telephone: +61 2 8211 0404
Mobile: 0414 737 767

Hillgrove Resources Limited

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Figure 2. Project and Bauxite Resource Locations
* ANEKA TAMBANG Statement of Mineral Resources and Ore Reserves as at 31 December 2007

LANDAK
48.8%Al2O3
(washed)

Tayan(ANTAM)*
30.9mt@47.5%Al2O3
(washedP&PReserves)

TAYANSOUTH

MungguPasir(ANTAM)*
40mt@46.6%Al2O3
(washedProbableReserve)

BauxiteResource

Hillgrove Resources Limited

6
Figure 3. Landak Project Tenure and Reconnaissance Sampling Al2O3 Grade Map

Hillgrove Resources Limited