This term was fresh from the streets of Adelaide, South Australia on 27 May 2006.  While it is the first time the author heard the term, the context was clearly, “I’m either an underaged smoker or else really broke and I’m willing to pick up butts of the street and dry them out if that’s what it takes to have a smoke”.  The author quickly cottoned on to the context due to having friends who a few years ago were going through very low lows - and - during this phase actually picked up cigarette butts and dried them out to extract tobacco and make ‘rollies’.  They are better now. 

Example scenario:

Group of Bogans are heading one way on the street, complete with dog, and see another Bogan coming the other way down the street.

Bogan 1 (calls out): ‘How ya goin’’
Bogan 2 (getting closer, speaks slightly above conversational tone): ‘I’m hangin for some butt’.

NOTE:  As far as the author knows this phrase has nothing to do with bottoms.