- Hill End Gold Limited

ACN 072 692 365
Report for September 2010 Quarter
29 October 2010
ASX Code : HEG
HIGHLIGHTS

A maiden resource estimate of 234,400 ounces of gold is announced for the Hargraves
Project.

Total gold resources for all Hill End Gold’s projects are increased by over 80% from
300,000 ounces to 570,000 ounces.

A program of diamond drilling is planned to start in November 2010 to increase and
upgrade the Hargraves resource.

The key corporate objective is to increase gold resources at Hargraves and Hill End to
over one million ounces.

A scoping study is commenced to determine the productivity and profitability of an
expanded mining project at the Hawkins Hill – Reward deposit at Hill End.

The potential of the 90,000 ounce Red Hill deposit is upgraded by a review of previous
exploration that developed a new geological interpretation of the deposit and defined
new drill targets.

Recent recognition of the key structural controls for gold mineralisation at both
Hargraves and Hill End shows that the projects are under-explored with many
compelling targets remaining to be tested.
Hill End Gold Limited (ASX.HEG) has a clear focus on increasing resources for the combined
Hargraves and Hill End Gold Projects to over one million ounces and to commence profitable
production at a significant scale.
Hill End Site and Registered Office
4 Bowen Street
Hill End NSW 2850
Phone +612 6337 8343
Fax +612 6337 8345
Sydney Principal Office
3 Spring Street
Sydney NSW 2000
Phone +612 8249 4416
Fax +612 8249 4919
Website: www.hillendgold.com.au
Email:
admin@hillendgold.com.au
The Hargraves and Hill End Projects cover 860 square kilometres between Bathurst and Mudgee
in New South Wales, Australia and include the three historic goldfields of Hill End, Hargraves
and Windeyer, which are located within a radius of 35 kilometres.
During this past year, exploration programs have significantly increased resources for the
combined Hargraves and Hill End Projects to 570,400 ounces through the 12,000m surface
diamond drill program at Hargraves, the 6,900m of underground diamond drilling program at
Hill End, and the Hill End bulk sampling / trial mining project, which produced 35,000 tonnes at
11g/t gold between March 2008 and May 2010.
The Company wholly owns the Hargraves Project and holds a minimum 85% beneficial interest
in the Mining Leases in the Hill End area and the area formerly subject to Exploration Licence
2037, which is now part of Exploration Licence 5868, and holds a 100% interest in other Hill End
tenements. Other less advanced exploration projects are located in southern NSW and Laos.
HILL END/HARGRAVES TENEMENTS ARE IN A
PROLIFIC GOLD PROVINCE IN THE LACHLAN
FOLD BELT IN NEW SOUTH WALES,
AUSTRALIA
LACHLAN FOLD BELT GOLD ENDOWMENT
CADIA
CORE LOGGING AT RED HILL
2
CORPORATE
On 21 October 2010 a placement of 28,511,111 shares and 14,255,556 options (15c exercise
price expiring 28 February 2012) to sophisticated investors was completed to raise $2,566,000
(before costs). A further issue of 2,544,444 shares and 1,272,222 options to raise $229,000 is
subject to shareholders’ approval at the Annual General Meeting on 26 November 2010.
HILL END PROJECT - HAWKINS HILL – REWARD
As announced to the ASX on 13 October 2010, the Reward Resource has been upgraded to the
following:
Measured Resources
Indicated Resources
Inferred Resources
77,400t at 11.3g/t gold for 28,100 Contained Ounces
180,400t at 6.5g/t gold for 37,700 Contained Ounces
642,200t at 8.8g/t gold for 181,000 Contained Ounces
Total Contained Ounces
246,800 ounces.
The 2010 Resource estimate for Reward relates only to a zone 750 metres long and 300 metres
deep. As the mineralised trend extends over four kilometres and to greater depth, further
drilling from surface and underground is expected to increase the Hawkins Hill - Reward
resources over time.
Compilation of data from drilling, mapping and trial mining at Reward suggests that high grade
gold mineralisation occurs within discrete zones that may be mined more productively and
profitably with systematic and non-selective mining methods. A scoping study is, therefore,
planned to determine the productivity and profitability of an expanded mining project in the
Hawkins Hill – Reward deposit.
In addition, studies have commenced on the Reward mineralised material to test the ability of
various ore sorting techniques to reject a large proportion of waste prior to processing.
HARGRAVES
The Hargraves Project, located 30 kilometres south west of Mudgee in central New South
Wales, Australia, covers a 10 x 4km historic goldfield which was the site of Australia’s first reef
gold mining. The goldfield was discovered in 1851 with a 50kg piece of gold-in-quartz mined
from the surface outcrop of the Big Nugget Hill Deposit. The associated alluvial field contained
many large nuggets up to 2,700 ounces. Exploration Licence 6996, wholly owned by Hill End
Gold Limited (HEG), covers multiple parallel gold-mineralised structures with historical gold
production in addition to the Big Nugget Hill structure which has been the focus of HEG’s drilling
As announced to the ASX on 6 October 2010, an initial JORC Resource estimate has been
completed for the portion of the Big Nugget Hill Deposit at Hargraves drilled to date:
Indicated Resources
Inferred Resources
302,000t at 6.2g/t gold for 60,300 Contained Ounces
1,137,000t at 4.8g/t gold for 174,100 Contained Ounces
Total Contained Ounces
234,400 ounces.
The combined resources for all the Company’s projects have now been increased by 80% to
570,400 ounces of gold.
3
The Big Nugget Hill Deposit at Hargraves is part of 4km wide
mineralised zone with multiple gold prospects in parallel
structures. The Big Nugget Hill Deposit is part of a local group
of five mineralised structures containing numerous prospects.
The key corporate objective is to increase gold resources at Hargraves and Hill End to over one
million ounces.
The Big Nugget Hill Resource relates to only a part of the known extent of the deposit. The zone
included in the resource is 800m long to a depth of about 200m, but the deposit remains open
along trend and at depth beyond this zone. Widely spaced deep drill holes indicate
mineralisation continues to at least 400m depth.
The Big Nugget Hill South area was drilled on 50m spaced sections and the Big Nugget Hill
Central area on approximately 25m spaced sections. Most holes were drilled to about 200m
below surface and every 100m along strike some holes were drilled to about 400m below
surface.
4
The gold occurs close to Feeder structures (faults) along the axis of the Big Nugget Hill fold.
Numerous similar nearby gold-bearing structures with significant historical production remain
largely untested.
The gold mineralisation has been deposited in multiple stacked quartz veins and stockwork
quartz veining adjacent to the Feeder faults. Very high gold grades have been observed at the
intersections of the Feeder faults and the stacked, bedding-parallel quartz reefs. The Feeder
faults are parallel to the cleavage direction (sub-parallel to the axial plane of the Big Nugget Hill
fold) and multiple Feeder faults have been noted on many sections.
The dominant bedding-parallel reefs are spaced at approximately 40-50m vertically down the
Big Nugget Hill fold and high gold grades can extend along the quartz veins for up to 20m either
side of the Feeder faults. Drill holes close to the axis of the fold where Feeder faults are
concentrated have intersected broad zones of mineralisation that may be suitable for extraction
by bulk mining methods.
The stacked quartz reefs in the Big Nugget Hill Deposit show strong structural continuity and are
persistently well-mineralised over the strike length drilled to date. The strong continuity is
illustrated in the figure below which relates to the 400m Central Zone of the deposit.
N
Big Nugget Hill Deposit Central Zone showing
strong structural continuity of stacked quartz veins
Further drilling will be based on the improved understanding of the geological controls of
mineralisation and will focus on interpreted intersections of reefs and Feeder faults. A drilling
program concentrated on the Big Nugget Hill Central Zone is planned to commence during
November 2010.
Recent recognition of the key structural controls for gold mineralisation at both Hargraves and
Hill End shows that the projects are under-explored with many compelling targets remaining to
be tested.
5
Future programs at the Hargraves Project will include:

Extension drilling of the Big Nugget Hill South Zone around 9000N where very high grade
intersections were obtained in the 2010 drilling program.

Testing of the Big Nugget Hill structure further along strike and at depth.

Testing targets at the Tuckers Hill, Hampden Hill, Eldorado and Great Western prospects.

Testing structures adjacent to the Big Nugget Hill structure, including the Florence,
Frenchmans, Happy Dicks and Scotch Hill structures which contain historic gold workings.

Assessment of the potential to develop the Big Nugget Hill deposit by both open pit and
underground methods.
WINDEYER
The Company holds 100% of Exploration Licence (EL7017) over the historic Windeyer goldfield
area, which is adjacent to the Hargraves and Hill End goldfields and is located on a mineralised
structure parallel and to the west of the mineralised Hill End Anticline.
Windeyer has a number of historically rich hardrock deposits and during the 19 th century rich
alluvial deposits were also mined in Clarkes Creek, which rises in the Boiga Mountain area,
which is also covered by EL7017.
No field programs were conducted during the September Quarter.
SCANDINAVIAN
Field work and re-interpretation of the north Reward, Scandinavian and Germantown areas
have identified multiple mineralised structures that are parallel to the Reward Ore Zone to the
west, between the ROZ and the axis of the Hill End Anticline, over a width of 300m.
This wide ‘transfer’ zone is similar to other wide zones of mineralisation observed at South Star,
Red Hill and Big Nugget Hill at Hargraves. These near-axis wide zones are being assessed with
further field work for future drilling programs.
RED HILL
A re-evaluation of all previous work at Red Hill, including re-logging of diamond drill core from
the Company’s 2008 drilling program, has been partially completed. The re-evaluation is
utilising recent advances made by the Company concerning the geological controls on
mineralisation in deposits of this type. The advances have resulted from the Company’s
extensive exploration of the Reward and Big Nugget Hill Deposits, which in many respects are
geological similar to the Red Hill Deposit.
Initial results suggest that the wide high grade Fraser Zone, where one hole intersected 10.7m
@ 13g/t gold, is related to a strong Feeder structure. Importantly, the new interpretation
suggests that previous drilling has not adequately tested the one kilometre long zone of gold
mineralisation at Red Hill and that excellent targets remain for future drilling.
The re-evaluation, once finalised, will form the basis for future drilling programs at Red Hill.
6
GERMANTOWN
No drilling was carried out during the quarter.
NSW UNDERCOVER – MURRAY RIVER AREA
The Company holds Exploration Licences EL6905, 6906, 7124, 7125 and 7298 in the Swan Hill –
Barham area of New South Wales.
The Barham area tenements cover the interpreted extension of the Bendigo Zone from Victoria
into New South Wales. The Bendigo Zone has hosted 50 million ounces in gold deposits where it
outcrops in Victoria and recent studies by the Department of Primary Industries, Victoria have
identified further potential for 70 million ounces of gold beneath shallow sediments covering
the Bendigo Zone rocks.
Many shallow geophysical anomalies have been identified by FrogTech consulting geologists in
the Barham tenement area and a ground-based magnetic and gravity survey on the Tullakool
Anomaly has identified a drill target. Similar FrogTech anomalies are targeted for further work.
Preparation for the sale or joint venture of these non-core assets is underway.
LAOS
The Lao PDR Government has imposed a moratorium on the issue of new mineral concessions
until early 2011, so that our application in the Lak Sao area is currently pending. The Lak Sao
Project area application is being considered at the highest levels of the Department of Mining,
Department of Foreign Investment and the Government of Lao PDR.
The application area of approximately 2,000km2 is located in the Bolikhamxay Province in
Central Laos between the Mekong River and the Vietnam border. The area is approximately 100
kilometres north of the Sepon copper-gold project, operated by China Minmetals Corporation,
in the Truongson Belt. Previous prospecting has identified numerous precious and base metal
occurrences in outcrop and in stream sediment dispersion haloes.
A Lao company has commenced exploring and developing a small gold operation on the Armyheld concession in the Lak Sao area and the possibility of a joint arrangement is being pursued.
Hill End Gold has a 51% interest in the Lak Sao Project with Mekong Resources Pty Ltd.
Other project areas in Laos are under review for application or joint venture.
Attribution
The information in this report that relates to Exploration Results or Mineral Resources is based on information compiled by Mike Quayle and Philip
Bruce. Mr Quayle is a Member of The Australian Institute of Geoscientists and is a full-time geological employee of the company. Mr Bruce is Fellow of
the Australasian Institute of Mining and Metallurgy and both Mr Quayle and Mr Bruce have sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the
2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (The JORC Code). Mr Quayle and Mr
Bruce consent to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.
Yours faithfully
Philip Bruce
Managing Director
7
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.
Name of entity
HILL END GOLD LIMITED
ABN
Quarter ended (“current quarter”)
74 072 692 365
30 Sept 2010
Consolidated statement of cash flows
Cash flows related to operating activities
1.1
Receipts from product sales and related debtors
1.2
Payments for
(a) exploration & evaluation
(b) development and mine suspension
(c) production
(d) administration
Dividends received
Interest and other items of a similar nature
received
Interest and other costs of finance paid
Income taxes paid
Other (provide details if material)
1.3
1.4
1.5
1.6
1.7
Net Operating Cash Flows
1.8
1.9
1.10
1.11
1.12
1.13
Cash flows related to investing activities
Payment for purchases of: (a) prospects
(b) equity investments
(c) other fixed assets
Proceeds from sale of:
(a) prospects
(b) equity investments
(c) other fixed assets
Loans to other entities
Loans repaid by other entities
Other (provide details if material)
Net investing cash flows
Total operating and investing cash flows
(carried forward)
Current quarter
$A’000
324
Year to date
(.3..months)
$A’000
324
(304)
(1,196)
(365)
(304)
(1,196)
(365)
-
-
-
-
(1,541)
(1,541)
(15)
(15)
(15)
(15)
(1,556)
(1,556)
8
1.13
1.14
1.15
1.16
1.17
1.18
1.19
Total operating and investing cash flows
(brought forward)
Cash flows related to financing activities
Proceeds from issues of shares, options, etc.
Proceeds from sale of forfeited shares
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Other (provide details if material)
Net financing cash flows
Net increase (decrease) in cash held
1.20
1.21
Cash at beginning of quarter/year to date
Exchange rate adjustments to item 1.20
1.22
Cash at end of quarter
(1,556)
(1,556)
803
803
803
803
(753)
(753)
1,739
1,739
986
986
Payments to directors of the entity and associates of the
directors
Payments to related entities of the entity and associates of
the related entities
1.23
Aggregate amount of payments to the parties included in item 1.2
1.24
Aggregate amount of loans to the parties included in item 1.10
1.25
Explanation necessary for an understanding of the transactions
Current quarter
$A'000
45
Directors Fees
Non-cash financing and investing activities
2.1
Details of financing and investing transactions which have had a material effect on consolidated
assets and liabilities but did not involve cash flows
N/A
2.2
Details of outlays made by other entities to establish or increase their share in projects in which the
reporting entity has an interest
N/A
Financing facilities available
Add notes as necessary for an understanding of the position.
3.1
Loan facilities
Amount available
$A’000
-
3.2
Credit standby arrangements
-
Amount used
$A’000
-
9
Estimated cash outflows for next quarter
4.1
Exploration and evaluation
$A’000
600
4.2
Development
-
4.3
Production
-
4.4
Administration
450
Total
1,050
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as
shown in the consolidated statement of cash flows) to
the related items in the accounts is as follows.
5.1
Cash on hand and at bank
5.2
Deposits at call
5.3
Bank overdraft
5.4
Other (provide details)
Total: cash at end of quarter (item 1.22)
Current quarter
$A’000
Previous quarter
$A’000
61
44
925
1,695
-
-
-
-
986
1,739
Changes in interests in mining tenements
Tenement
reference
Nature of interest
(note (2))
6.1
Interests in mining
tenements relinquished,
reduced or lapsed
-
-
6.2
Interests in mining
tenements acquired or
increased
-
-
Interest at
beginning
of quarter
Interest at
end of
quarter
-
-
-
-
10
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
-
Issue price per
security (see note
3) (cents)
-
Amount paid up per
security (see note 3)
(cents)
-
-
-
-
-
410,545,086 OFP
410,545,086
Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital, buybacks
+Convertible
debt securities
(description)
Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
Options
(description and
conversion
factor)
10,308,888
10,308,888
9 cents each
9 cents each
-
-
-
-
-
-
Issued during
quarter
Exercised during
quarter
Expired during
quarter
Debentures
(totals only)
Unsecured
notes (totals
only)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Preference
+securities
(description)
Changes during
quarter
(a) Increases
through issues
(b) Decreases
through returns
of capital, buybacks,
redemptions
+Ordinary
securities
Total number
Number quoted
-
800,000
6,835,000
5,154,444
Exercise price
20 cents
20 cents
15 cents
Employee
Employee
Unlisted
Expiry date
Oct 2011
22 Nov 2012
28 Feb 2012
11
Compliance statement
1
This statement has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act or other standards acceptable to ASX
(see note 4).
2
This statement does give a true and fair view of the matters disclosed.
Sign here:
............................................................
(Director/Company secretary)
Print name:
Kevin Lynn..........................................
Date: ..30 October 2010....
Notes
1
The quarterly report provides a basis for informing the market how the entity’s activities
have been financed for the past quarter and the effect on its cash position. An entity wanting to
disclose additional information is encouraged to do so, in a note or notes attached to this report.
2
The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in
mining tenements acquired, exercised or lapsed during the reporting period. If the entity is
involved in a joint venture agreement and there are conditions precedent which will change its
percentage interest in a mining tenement, it should disclose the change of percentage interest and
conditions precedent in the list required for items 6.1 and 6.2.
3
Issued and quoted securities The issue price and amount paid up is not required in
items 7.1 and 7.3 for fully paid securities.
4
The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries
and AASB 1026: Statement of Cash Flows apply to this report.
5
Accounting Standards ASX will accept, for example, the use of International
Accounting Standards for foreign entities. If the standards used do not address a topic, the
Australian standard on that topic (if any) must be complied with.
== == == == ==
12