Hillgrove Resources : 2016 Mineral Resource Statement

Hillgrove Gold Limited

Thursday, 26 May 2016

HILLGROVE ANNOUNCES 2016 MINERAL RESOURCE STATEMENT

Hillgrove Resources is pleased to announce that a new Mineral Resource Estimate (MRE) has been completed. This MRE updates the area bounded by the Giant open pit operation at the Kanmantoo Copper Mine.

• The new MRE removes all historic drill holes not drilled and quality controlled by the Company.

• After allowing for depletion of 38,320 tonnes of copper in Giant since 2013, the 2016 Mineral Resource Estimate contains an additional 11,080 tonnes of copper compared to the 2013 resource model.

• The new 2016 MRE reconciles favourably against both the historical production from Kavanagh and the last three months production.

The Company will release an updated Reserve within the next quarter.

For more information contact:

Mr Steven McClare Mr Paul Kiley

CEO & Managing Director CFO and Company Secretary

Tel: [phone] Tel: [phone]

IIII

HILLGROVE RESOURCES LIMITED ACN 004 297 116 www.hillgroveresources.com

5-7 King William Road, Unley, SA, Australia, 5061 T [phone] F [phone]

Thursday, 26 May 2016

KANMANTOO COPPER MINE - 2016 MINERAL RESOURCE STATEMENT

Hillgrove Resources Limited (ASX:HGO) advises that a new Mineral Resource Estimate has been completed, revising the area bounded by the Giant open pit operation at it's Kanmantoo copper operations.

Overall, the Mineral Resource Estimate completed in 2016 ("2016 MRE") for the Giant copper deposits1 has added 11,100 tonnes of copper metal (49,400 additional tonnes minus depleted mining of 38320 tonnes) compared to the previous 2013 resource model2 for the same deposits, from the same surface and to the same depths.

2016 MINERAL RESOURCE ESTIMATE ≥0.2% Cu, 29 FEBRUARY 2016 For Giant Area Only
Classification	Tonnes (000's)	Cu %	Au g/t	Ag g/t
Giant Area (Kavanagh & Spitfire)	Measured	9,240	0.6	0.1	1.1
	Indicated	5,400	0.6	0.1	0.9
	Inferred	11,400	0.5	0.1	1
	Total	26,040	0.6	0.1	1

Reconciliation of the new 2016 MRE against historic production in Kavanagh indicates that the model under-reports by 5-8% on tonnes and grade for a combined variance of 11% in copper metal tonnes, and will be useful for mine planning and forecasting.

The Total Mineral Resources for all the 11 copper deposits at Kanmantoo (the 2016 MRE plus the 2013 depleted resources) at 0.2% Cu cut-off grade and from the 1 March 2016 surface are now;

KANMANTOO COPPER MINE RESOURCE (≥0.2% Cu, 29 FEBRUARY 2016) TOTAL for All Deposits
Classification	Tonnes (000's)	Cu %	Au g/t	Ag g/t
Measured	10,580	0.6	0.1	1.2
Indicated	10,880	0.7	0.1	1.4
Inferred	13,700	0.5	0.1	1
TOTAL	35,160	0.6	0.1	1.2

The 2016 MRE differs in several significant aspects from the previously reported 2013 Resource3 for the Giant area (Kavanagh plus Spitfire deposits);

1 only includes the previously termed Kavanagh and Spitfire copper domains

2 2013 Mineral Resource Estimate released to ASX on 30 August 2013

3 ASX Release 30 August 2013

• The 2016 MRE is a recoverable resource estimate using a Multiple Indicator Kriging process within broad geologic domains and therefore significantly differs from the 2013 resource estimate that utilised an ordinary kriging process within numerous 0.2% Cu deterministic outlines

• The 2016 MRE has estimated Inferred tonnes for the mineralisation that occurs in the areas that were not previously domained, as a result of detailed reconciliation of the 2013 Resource against production

• The 2016 MRE does not include any of the Historic (pre-2000) drilling, only the Hillgrove Resources controlled drilling from 2004 to 2013

• The 2016 MRE does not include new estimates for Paringa, Nugent (O'Neil), Emily, Critchley, Valentine, Falcon, Mathew (North-West), Slot Extension or Coopers Find. These remain as for the 2013 resource estimates and depleted for production from 1 March 2013 to 29 February 2016

• The 2016 MRE is systematically classified by local drill density and local mineralisation intensity

• The 2016 MRE has removed the 2013 Whittle pit shell as the definition of "economically exploitable" and used the existing actual Mine Permitted area to the same depth as previously reported, and the current mine cut-off grade of 0.2% Cu

• The 2016 MRE has explicitly accounted for dilution due to the mining selectivity, and for the Information Effect attributable to the current grade control sampling pattern.

The changes specific to the areas bounded by the Giant open pit operation is diagrammatically shown below:

The 2016 Mineral Resource Estimate Geology

The Kanmantoo copper operation is located approximately 55km east-south-east of Adelaide, South Australia (Figure 1) on Mining Lease 6345 held 100% by Hillgrove. The mine site is fully permitted and has been operational since 2011.