AN UPDATE FROM HILLGROVE RESOURCES LIMITED JULY

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1 AN UPDATE FROM HILLGROVE RESOURC ES LIMITED JULY Vol. 4 From Hillgrove s Managing Director: Greetings to all. With just three months to go beforee first production, things are certainly hopping at Kanmantoo! During my visit last week there had been about 425 people access a the site on one day, including our employees, contractors, and delivery and service personnel. I am sure our neighbours will have noticed the build-uprivate access road has also been noticed. in activity, but hopefully our efforts to ensure personnel accessing site use our With all this activity and people movement, especially in cold, wet and/or windy conditions, maintaining a safe environment for the workforce remains a challenge which I am delighted to say we have met successfully. We have now worked over 400,000 hours on site without a lost-time injury a record we are very proud of, but not complacent! Completion of the plant is nigh, and the challenge is there for ourr workforce and safety supervisors! Drew Simonsen All major items of equipment are now on-site, and most have been installed, or are in thee final stages. There are a few minor structural items suchh as conveyors, crushed ore stockpilee and concentrate storage shed in the final stages, but our activities are now starting to focus on the usual construction end-game piping (plumbing)) and connecting and testing electrical equipment. For a major serial (end-to-end) process,, this latter step is no small exercise, and many a plant suffers delays at this last hurdle. We remain on track for connection to the SA electrical grid on 31 August, after which we will be able to start testing various components of the plant. The DCMB are scheduled to provide treated water to us through the new pipeline (whichh is now complete and has h been pressure tested) from 1 September. Once we have sufficientt water in our return water storage dam, expected mid to late September, we will be able to start wet-testing components of the plant (using water rather than ore) ). The blasts in the pit are now accessing sulphide s ore which will be stockpiled ready for processing by the plant at start-up. In response to some concerns, we have retained consultants and have reviewed our blasting designss and processes, and recent measurement of noise and pressure waves associated with our blasts show that we have made dramatic improvements. I hope thatt the community agrees. We are in advanced stages of hiring ourr permanent plant workforce, and the response from the surroundingg area has been huge which makes our selection taskk very difficult, and unfortunately there will be many a good candidate disappointed. I expect that our next newsletter will report onn first production from the Kanmantoo process plant. I wish you all well and hope that imminent spring lifts all our spirits. Drew Simonsen, Managing Director Enquiries or subscriptions? Lisa at info@hillgrove resources.com.au Job applications? Register via link on the website at resources.com.au/ kanmantoo- Surveyor delineating ore boundary jobs.html b

2 2. Project Update from the General Manager Hello all, One of the most pleasing aspects of my role r has been to see the overwhelming ownership and responsibility everyone has taken on board for their personal safety and the collective c safety of their workmates while working at Kanmantoo. As you know the safe completion of the work associated with our project is our highest priority, but this cannot be achieved without the commitment of all who work on our site. I was honoured to be able to address the whole project workforce at a lunch that was held on site early in July. The purpose of the lunch was too say thank you to all involved with the project to date and to recognise and celebrate the successful and safe progress that has s been made. I have included some interesting statistics for the project to date that shows what we have achieved in a relatively short period of time. There have been over 400,000 hours worked on the project, with over 7,500 personal pre-job risk assessments completed on site. There have been over Task and Safety Observations completed by fellow workers and supervisors of activities. Mining operations have moved over 5 million tonnes of material that s approximately 55,000 truckloads including ~500,000t of ore and have used over 1,300tt of explosives. The Tailings Dam has been constructed ahead of schedulee including the laying of more than 29Ha of HDPE liner. Off-site construction activities include over 13km of pipeline, with 4km of rock trenching, a bridge and two railway crossings. We have also built over 3km of access road. On site construction includes over 73% completion of the ore processing facilities, workshops, stores and concentrate storage facilities. We have just on 3 months of f work to go to complete this project and transfer it intoo operations. Cam Schubert As you will read later in this newsletter, we are well advanced on an exploration drilling program with the completion of 18 holes in close proximity to the existing pit plan, with a view to extending the mine life. Running in parallel to the construction and exploration activities, we have also continuedd with the successful operation and production from f our copper leach operation on site. s In the last 12 months we have produced over 450 tonnes of copper that we have soldd locally in South Australia. I thank the entire workforce for their efforts and continued focus on safe progress, p and the local communities of Kanmantoo and Callington for their support in our efforts to make Kanmantoo in Copper Country one of the great Australian mines that we can all be proud of into the future. Cam Schubert, General Manager Kanmantoo Copperr Mine Kanmantoo Construction Area (15/07/11)

3 3. KCCCC Minutes The Kanmantoo Callington Community Consultative Committee ( KCCCC) was well attended on Wednesday 8 June at the Callington Hall. A presentation and video were shown of the construction and general questions answered. Traffic and noise were the main queries, the answers for which can be read in the Minutes of the Meeting which are attached. The date of the next meeting was also agreed. The next meeting of the Kanmantoo Callington Community Consultative Committee (KCCCC) will be held from 7:30-9:00pm on Thursday 8 September at the Callington Hall. We welcome all interested parties to attendd this meeting. Next KCCCC Meeting is 8 September Local Community Site Visit Our first local community site visit on Sunday 31 July was a great success, and after days of rain turned out to be a wonderful sunny day. The tour designed for local residents of Callington and Kanmantoo directly affected by the project was initially raised at a KCCCC meeting. After mail dropping an Expression of Interest form, we receivedd responses s from over 200 residents interested in touring the mine site. The afternoon included a coach tour through the oxide ore heap leach operation, and viewing of the historic pit area and mining operation from thee lookout point. Our neighbours weree then able to view the processing plant construction areaa and a blast from our office block k deck area. Cam Schubert presented a short update on the project and answered questions regarding our operations, with particular interest shown in the hard rock blasting methods. Many thanks to staff who volunteered their time to assist with the tour. Another three booked tours are planned to accommodate the overwhelming response we received. fully- This program was expressly designed for those living next to the mine operations. General tours are not planned until after production start-upp next year. When they become available they will be advertised in this newsletter, so please sit tight and wait for further information rather than contacting us, as there will be opportunities as we are planning to be around for quite some time! Exploration Programme Progressing Well Exploration activities at Kanmantoo began in earnestt in late May with the arrival of a Kennedy Drilling Reverse Circulation (RC) drill rig from Kalgoorlie in Western Australia. The initial program consisted of 7,500m of RC drilling in and around the currently planned open pits s in an effort to expand the copper resource base and to extend the Kanmantoo minee life. Drilling first targeted near-surface extensions to thee high-grade O Neil Zone, with 12 completed for a total of 2,092m. holes Kennedy Drilling Reverse Circulation (RC) drill rigg in action Geologist checking for visible mineralisation

4 4. With the first few holes completed at O Neil, the Kennedy Drilling RC rig moved to the Emily Star deposit in an effort to also extend that zone, and expand the size of the currently designed Emily Star open pit. The Emily Star and O Neil drilling have been augmented by accelerate progress. Drilling is continuing with both rigs approximately 4, 000m of drilling has been completed. a second rig r brought in to now at Emily Star, where In addition to the drilling a number of geochemical and geophysical programss are underway or planned in an effort to identify further targets t and provide a continuous pipeline of quality drill targets, which should keep the Kanmantoo Exploration team busy for some time yet! Regrind Mill Arrives on Site Regrind Mill being craned into position (15/08/11) Following the delivery of the SAG Mill Shell reported in the last newsletter, another major milestone was the arrival this month of the Regrind Mill. This is a ball mill and will be used to increase copper recovery from the slurry within the flotation circuit, and will also increase our concentrate grade. The Mill will operate at a throughput rate of 15 tonnes per hour and grind slurry within the flotation circuit from 212µm down to 53µm, thereby liberating finer copper minerals from waste rock. Regrind Mill inn place on the northern side of o the processing plant

5 5. All Hands on Deck to Meet Construction Deadline Priorr to installation on the plant site, all the t equipment and steell from the second-hand Pillara processing plant in our lay-down area off Mine Road, near the Neutrog fertiliser plant, had to be checked, cleaned and refurbished as necessary. All this work has now been completedd and the refurb team has just been relocated to the plantt site in the mill workshop area. The site team is now focussed on the final run to Hillgrove s November production deadline. It has been wonderful to seee the hive off activity continuing over the construction area as the large plant and equipment slow down, the detailed piping and electrical work starts in earnest. An integral part of the operation is of course, power, with the substation near the mine entrance well advanced and on track forr commissioning at the end of August. Only then can the systems startt to be tested and we move an exciting step closer to plant start-up. Concentrate Slurry Pump at end e of Flotation area SAG Mill classification circuit nearing completion Crusher area under construction Electricity Sub-Station well underway

6 6. Staff Member Profile Glenn Norris, Processing Manager Hi all, my name is Glenn Norris and I started inn early July as Processing Manager at Kanmantoo. I moved back to Australia in July after spending the last two and a a half years working in Canada for Barrick Gold as Mill Manager at Hemlo Gold Mine. Even though I moved here in the middle of winter it feels prettyy warm after spending three t winters in Northern Ontario, Canada where the temperature would often reach -40 degrees Celsius! In fact an Adelaide Hills winter is more like a Northern Ontario summer! Priorr to moving to Canada I worked at Pillara in Western Australia as Mill Superintendent where I was part of commissioning and operatingg the plant that we noww have heree at Kanmantoo, so it will be good to see it up and running again. I have also worked for BHP at Olympic Dam (SA) and Xstrata at Mount Isa Miness (Qld) in Metallurgy roles. I m looking forward to the progressive recruitment and formationn of the Processing Department and the challenges that will come with commissioning the processing plant later in the year. I am from Adelaide originally so it also good to be back in SA. Outside of work I enjoy going to the gym, runningg and other outdoor activities, suchh as fishing and camping. I will also look at putting thee boots on again and getting back into footy next season. I m also studying for a Masters degree in Finance and looking to complete that next year, although I m currently taking a break from study to focus on the safe commissioning of the processing plant. I look forward to working with the team as we movee the Kanmantoo projectt into production and the start of a new mine in South Australia. Glenn Norris How To Contact Us There are many ways to stay informed about progress at thee Kanmantoo Copper Mines Project, or to seek additional information. General Manager Kanmantoo S.A. office assistance Newsletter Editor Cam Schubert / Susan Wilson Lisa Saw cam.schubert@hillgroveresources.com.au susan.wilson@hillgroveresources.com.au lisa.saw@hillgroveresources.com.au The Kanmantoo Project section on our website provides information on all aspects of o the Project,, the team, and the project news section, which includes past copies of the newsletter. The direct link is to activities in the area at As the communities where we work are so important to us, we have dedicated a section of our website and the local project committee. Under the Kanmantooo Committee section you will find details and minutes of previous meetings of thee Kanmantoo Callington Community Consultative Committee. Employment opportunities and details for the Kanmantoo Project are at mining and exploration e in South Primary Industry and Resources South Australia (PIRSA), the government body that regulates Australia, has a website at that provides a wealth of useful information; includingg the Mining Act 1971, prescribed forms, mines regulation and other details or you can contact: Hans Bailiht Hans. Bailiht@sa.gov.au. To register for the newsletter please go too our website and fill in your details under the t Kanmantooo Project Newss section. The direct link is And if you are receiving the Newsletter by mail and would prefer a far speedier ed version in future please register or lisas@hillgroveresources.com.au. IIII HILLGROVE COPPER PTY LIMITED A SUBSIDIARY OF HILLGROVE RESOURCES LIMITED ABN Eclair Mine Road (cnr Back Callington Rd), Kanmantoo SA 5252, Australia T F