For personal use only - Australian Securities Exchange

1 IIII HILLGROVE RESOURCES LIMITED ACN 004 297 116 Level 41 Australia Square, 264 George Street, Sydney NSW 2000, Australia T +61 2 8221 0404 F +61 2 8221 0407 12 October 2011 Company Announcement Office Australian Securities Exchange 20 Bridge Street SYDNEY NSW 2000 Dear Sir/Madam: Re: Lodgement of Half Year Accounts Please find attached the half yearly report and accounts for Hillgrove Resources Limited for the half year ended 31 July 2011. Yours faithfully Russell Middleton Company Secretary For personal use only for tHillanInterthe H31 Jlgrove Rnd its CACN rim Realf-YeJuly 2 Resourcontrolle N 004 29 eportear En2011ces Limed Entit97 116 nded mited ties For personal use onlyHillgrove Resources Limited and its Controlled Entities ACN 004 297 116 1.

2 Contents Page Directors Report 2 Auditor s Independence Declaration 4 Interim Financial Report Consolidated income statement 5 Consolidated statement of comprehensive income 6 Consolidated balance sheet 7 Consolidated statement of changes in equity 8 Consolidated statement of cash flows 9 Notes to the consolidated financial Statements 10 Directors declaration 17 Independent auditor s review report to the members 18 For personal use onlyHillgrove Resources Limited and its Controlled Entities ACN 004 297 116 Report Your directors present their report on the consolidated entity consisting of Hillgrove Resources Limited and the entities it controlled at the end, or during, the half-year ended 31 July 2011. Directors The following persons were directors of Hillgrove Resources Limited during the whole of the half-year and up to the date of this report: The Hon.

3 D C Brown, AO R D Belz J E Gooding J A Quirke E Zemancheff D A Simonsen Review of operations The Profit of the consolidated entity for the half-year was $503,000 (half year to 31 July 2010: loss of $2,664,000). During this period, the group converted its options interests in the West Kalimantan bauxite tenements into of Kalbar resources. This holding was equity accounted and the share of net profit after tax was $ million. The investment was revalued by $ million to reflect the true carrying value of the investment. Transaction costs for raising project finance amounting to $867,000 was written off and investment in Silver Swan was also written down by $546,000 due to lower market prices. Kanmantoo Construction of the Ore Processing Plant at Kanmantoo was 75% complete at the half year end and remains on schedule for ore commissioning during October, and Practical Completion and plant handover by 1 November 2011.

4 Total expenditure for the half year on the Kanmantoo project was $ Cost to complete Kanmantoo construction is currently estimated at 120-125 million, comparing well with the estimate at FID (Final Investment Decision) of $ million. First concentrate product sales are forecast in November with first concentrate expected to be transported to the port in late October or early November. All supporting infrastructure including water pipeline, site access road and power infrastructure is either complete or nearly so. An exploration program was initiated during the half year at Kanmantoo focussing on near mine targets to increase the resource and reserves and ultimately the mine life of Kanmantoo. The Company has adopted commodity and foreign Exchange risk management policies to manage its exposure to the fluctuations in USD copper prices in the future.

5 The company has recorded a liability of $ which reduced from $ million as at 31 January 2011. Since the For personal use onlyHa I C RTItd AAA T D TC Hillgrove Rand its Co reportingof markendonesia In WestProject year tota On Sumgold minwith exp Also on Sumba Corporate Cash onAUD 18 RoundinThe Companvestmentsthe financiadollars. Auditor sA copy of thAct 2001 is This report iDated this 1 The Hon. DChairman Resourceontrolled Eg date of 31edly reducint Papua in have been alling $ mmba Island neralisation penditure foSumba, a IUP was coe n hand as million. g of amoany is of a s Commissial report havs Indepehe auditors set out on pis made in a12th day of ODean Brown s Limited Entities 1 July the cng the recorIndonesia, identified, million. in Indonesihas been dr the half ye3,300 line ompleted.

6 At 31 July 2ounts kind referreion, relatingve been roundence independepage 4. accordanceOctober 201 AO opper pricerded liabilitysignificant pending thea at the Madelineated wear totallingkilometre a2011 was Aed to in Clag to the rouunded in acDeclaratence declarae with a reso11 e has movedy. additional e award of asu (Southwith very eng $ millioaeromagnetAUD mass Order 9unding off ccordance wtion ration as reqolution of thd significantmineralisata drilling pern) Projecncouraging n. ic and radiomillion, toge98/100 issueof amountswith that Cquired undehe directors:Mr D A SimCEO and Mtly lower whtion anomaermit, with ct, 800m strshowings inometric survther with uned by the As in the finalass Order er section 3: monsen Managing DACN hich will havalies at the expenditurrike length n trenchingvey over thndrawn debAustralian Sancial reporto the near307C of the Director 004 297 116ve the impaBird s Heae for the haof significa and test pihe bulk of thbt facilities Securities art.

7 Amountsrest thousaCorporatio6 ad alf ant its he of nd in nd ons For personal use only4 Liability limited by a scheme approved under Professional Standards LegislationPricewaterhouseCoopersABN 52 780 433 757 PricewaterhouseCoopers Centre26 Honeysuckle DrivePO Box 798 NEWCASTLE NSW 2300DX 77 NewcastleAustraliaTelephone +61 2 4925 1100 Facsimile +61 2 4925 s Independence DeclarationAs lead auditor for the review of Hillgrove Resources Limited for the half year ended31 July 2011, Ideclare that to the best of my knowledge and belief, there have been:a) no contraventions of the auditor independence requirements of theCorporations Act 2001inrelation to the review; andb) no contraventions of any applicable code of professional conduct in relation to the declaration is in respect of Hillgrove Resources Limited and the entities it controlled during TurnerNewcastlePartner12 October 2011 PricewaterhouseCoopersFor personal use onlyHillgrove Resources Limited and its Controlled Entities ACN 004 297 116 Income Statement For the half-year ended 31 July 2011 Half-year 2011 2010

8 Note $ 000 $ 000 Revenue from continuing operations 3,574 4,327 Other Income - 29 Cost of Sales (598) (1,041)Accounting, ASIC & Audit (213) (197)Finance costs (74) (121)Computing & Communications (120) (132)Consultants fees (1,105) (389)Depreciation 3 (290) (183)Directors fees (264) (216)Insurance (62) (51)Public Co. expenses (260) (173)Rent (126) (120)Employee benefits expense (2,011) (2,552)Travel (220) (330)Promotion (33) -Legal fees (130) (44)Foreign Exchange gain/(loss) (81) (66)Write-off of exploration expenditure - (161)

9 Realised losses on financial derivatives - (883)Unrealised gains/ (losses) on financial derivatives 277 -Share of net profit from associates using equity method 5 4,499 -Revaluation of investment in associates (2,191) -Impairment of property, plant and equipment (266) -Impairment of available for sale financial instruments (546) -Other expenses (238) (116)Loss on disposal of asset - (2,080)Loss before income tax (478) (4,499)Income tax benefit 981 1,835 Profit / ( Loss) for the half year 503 (2,664)Profit / (Loss) for the half year is attributable to: Equity holders of Hillgrove Resources 335 (2,614)Non-controlling interest 168 (50) 503 (2,664)Earnings per share for profit attributable to the ordinary equity holders of the Company.

10 $ $Basic earnings per share ( )Diluted earnings per share ( )The above consolidated income statement should be read in conjunction with the accompanying personal use onlyHillgrove Resources Limited and its Controlled Entities ACN 004 297 116 Statement of Comprehensive Income For the half-year ended 31 July 2011 Half-year 2011 2010 $ 000 $ 000 Profit / (Loss) for the half year 503 (2,664)