Hillgrove

The Hillgrove Gold Project, located near Armidale, New South Wales, was purchased by Straits in March 2004. Since that time Straits has been pursuing an aggressive development plan, encompassing additional resource definition, metallurgical testwork and design and mine planning, which culminated in the completion of a Development Plan in late 2005. In June 2006 Straits announced that formal board approval had been given for the Stage 1 development of the Hillgrove antimony/gold mine in NSW. Straits have commenced construction of a demonstration process plant capable of achieving initial mine production rates of approximately 10,000 tonnes per annum of antimony metal and 20,000 ounces of gold (equivalent to 90,000 Au ounces of total production output). In addition tungsten will be produced as a by-product. The initial capital expenditure of the Hillgrove Mine is forecast at approximately A$30 million, which includes process plant expenditure of A$15m and pre-production underground development. Forecast cash costs over the first five years of the Hillgrove operation are A$0.97/lb antimony produced after gold by-product credits. These cash costs exclude any by-product revenue from tungsten which could be significant. .

The Hillgrove mining area comprises a large number of gold/antimony veins, typically subparallel, and of near vertical dip. Veins are generally narrow width (1.5 to 6 metres), but have extensive strike and vertical continuity. The Hillgrove area has been mined since the turn of the century using a variety of small scale hand held mining methods feeding a conventional but complex mill comprising gravity and CIL/CIP gold recovery and concentrate recovery of antimony. More recent innovations by previous owners included the installation of a modern autoclave facility to treat a stockpiled refractory arsenopyrite / gold concentrate. The mine has suffered historically from a poor understanding of the resource inventory. Mining was previously undertaken by simply following the vein system down one level at a time. Consequently the mineralisation was poorly understood, resource / reserve inventories were not brought to account and the mine was never optimised or capitalised adequately. One manifestation of this was the historically poor performance of the mill, which achieved very low gold and antimony recoveries, and concentrates sold were not credited for gold in concentrate.

Straits found Hillgrove to be an underexplored and undervalued gold-antinomy province that required the application of modern exploration, mining and processing technology to realise its full potential. This potential is partly revealed by the mines historical production records, which show that approximately 720,000 ounces of gold and 50,000 tonnes of antimony have been recovered since inception.

 Since acquisition, Straits has undertaken extensive mine development on the Eleanora / Garibaldi veins, and more recently on the Syndicate vein complex, to provide underground drilling positions to test the vertical and strike extent of the orebodies. To date, drilling on these systems has confirmed the nature of the orebodies with depth and allowed the estimation of a gold – antimony resource base of 3.9 million tonnes at 5.2 grams/tonne gold and 2.1% antimony

Parallel metallurgical test work during 2005 has allowed the development of an alternative process flow sheet comprising gravity gold recovery, flash flotation to a bulk concentrate, sequential leaching of gold and antimony to solution and conventional electrowinning of both gold and antinomy to metal.

Location of Hillgrove Tenements