Company History

Financial Year 2016

  • Successful completion of the Woodlawn Feasibility Study (FS) with the ‘Starter Case’ providing:
    • Robust economics - Post Tax NPV A$207M, Post Tax IRR 32%, Payback 2.3 years
    • Mineral Reserves providing a 9.3 year mine life
    • Steady state production base of 40ktpa Zn, 10ktpa Cu, 12ktpa Pb
    • Development timing that meets the forecasted strong zinc market
  • Woodlawn development funding process commenced and targeted construction start 2017
  • Exploration results continue to highlight the discovery potential of the Woodlawn mineralised system with shallow extensions identified at G Lens and northern extensions at B Lens
  • Commencement of the spin-out of non-Woodlawn assets into Ardea Resources. Targeting an in-specie distribution of Ardea shares to Heron shareholders
  • Completion of A$6.8M placement to Greenstone Resources, becoming Heron’s largest shareholder
  • Improved Zinc market supported by supply demand fundamentals with forecasters projecting further strength in the near to medium term
  • Heron remains well funded with A$22.8M in cash and $A1.7M in investments as at June 30 2016

Financial Year 2015

FY 2015 was a busy time for Heron with a significant resetting of Heron's business. This period was used well to make major inroads into advancing Heron's newly acquired and key project, the Woodlawn Zinc-Copper Project.

These efforts positioned the Company on the pathway to becoming a near term producer and resulting highlights for the year included:

  • Finalisation of the merger with TriAusMin and the seamless integration of the two businesses.
  • Successful completion of the Woodlawn Preliminary Economic Assessment (PEA) that delivered a compelling business case for project development.
  • Commencement of a fully funded Feasibility Study (FS) for Woodlawn, due for completion in the second quarter calendar 2016.
  • Exceptional drilling results received from the Woodlawn Project in the Phase I (PEA) and follow-up Phase II (FS) drilling programs, underpinning a new high grade underground resource.
  • Strong cash position (A$28.1M, 31 August 2015) that was supported by the attraction of Greenstone Resources LP as a cornerstone investor.
  • Well positioned to take advantage of the strong medium term commodity market fundamentals for zinc and copper.

Financial Year 2014

Heron-TriAusMin Merger

The Heron-TriAusMin A$15.6 million all-scrip merger was completed on 5 August 2014 and all integration programs completed in respect of ASX and TSX listing requirements.

Woodlawn Zinc-Copper Project

Robust Funding – $32.9M cash and $3.4M in investments as at 30 June 2014

All current drilling and feasibility programs at Woodlawn are fully funded from 2014 Heron cash reserves. Targeted completion of a Preliminary Economic Assessment (PEA) on the underground project by the end of the March 2015 Quarter.

Statutory

SML20 mining lease has been transferred to a Heron subsidiary and is undergoing renewal for 21 years.

The purchase of free-hold land covering operational areas has been negotiated.

Woodlawn Underground Project (WUP)

2014 drilling program commenced following up the 2013 WLTD015 intercept in the Kate Lens of 9.0 metres at 16.1% zinc and 2.0% copper, initial three holes:

  • WNDD01, 14.4 metres of Complex Ore (assays awaited)
  • WNDD02, 8.8 metres of Complex Ore (assays awaited)
  • WNDD03, 6.3 metres of Semi Massive Breccia Ore (assays awaited)

Geotechnical studies, mine design and management plans have commenced to re-establish access to the WUP via a boxcut and short decline to intersect the former underground development infrastructure.

Woodlawn Tailings Retreatment Project (WRP)

Simulus Engineers commenced a WRP optimisation study, with flotation test-work and capital cost review under way.

Woodlawn Exploration Project (WEP)

As a Volcanogenic Massive Sulphide (VMS) centre, Woodlawn can be expected to generate a profusion of mineralised positions. High priority “brownfields” EM and drill targets have been defined in and around SML20 in the Northwest Corridor immediately NW of Kate Lens, at Murphy’s immediately NE of the proposed boxcut, Cowley Hills a further 2.5km NE, Willows SE and Area A immediately south of the mine. In many instances, drill targets are based on 1970s mapping of gossan/alteration occurrences that remain un-tested.

Development Project

Kalgoorlie Nickel Project (KNP)

Simulus Engineers, completed metallurgical testwork using sulphuric acid leaching with reagent recycling on various KNP ore-types, to produce a 20Ktpa nickel production Scoping Study with A$660 million capex and C1 nickel cost US$4.27 per pound.

Heron subscribed for initial equity in Carbon Friendly Nickel Production (Intellectual Property holder - reagent recycling).

KPMG Corporate Finance is assisting Heron in a partner search.

Exploration Projects

New South Wales – Copper-Gold Exploration

Lachlan Transverse Zone

Lewis Ponds Gold-Copper Project, numerous highly prospective geochemical and VTEM targets require follow-up exploration, highly regarded for its base and precious metal potential. Recent exploration targeted shear-hosted gold-copper at Mt Nicholas, shallow 2014 drill-hole MNDD04 returned 1.47 metres at 1.7% copper from an EM plate that remains open at depth, follow-up planned.

Gilmore Suture

Overflow Gold-Base Metal Project, shear-hosted target 50km NW along strike from the Mineral Hill mining centre, shallow 2014 drill-hole OFTD01A returned 8.6 metres at 1.4% zinc and 0.3g/t gold, confirms a southerly plunge to the lode, follow-up planned.

West Australia – Nickel Sulphide Exploration

Bedonia Nickel-Copper Project, “Nova-style” magnetic anomalies, 3,280 ppm nickel-435ppb PGM soil auger target.

Mt Zephyr Nickel Project, Mt Windarra nickel sulphide host sequence, 1,020ppm nickel soil auger target.


Financial Year 2013

Active drilling occurred throughout the year: 110 holes for 5,037 metres. The Company continued to review business development opportunities in Australia and overseas.

New South Wales - Copper-Gold Exploration

The Company’s 100%-owned tenement portfolio in NSW continued to grow, resulting in some 3,700km² in the Lachlan Fold Belt being under application or granted. Active field programs included:

  • Gundagai Gold Project: Completion of a 15 hole RC drilling program for 1,609 metres. Drilling targeted bulk tonnage gold systems below the historic Big Ben lode workings. Results include 20 metres at 1.58g/t gold from 27 metres.
  • Mt Allen, Osterley Downs and Nymagee East Copper-Gold Projects: Surface EM and soil geochemical surveys defined “Mallee Bull-style” polymetallic targets. Preliminary EM results for Osterley Downs revealed a subtle bedrock conductor, followed up with further soil auger geochemical surveys.
  • Sussex Copper-Gold Project: Soil auger sampling and aeromagnetic data modeling defined a high priority target located 11 kilometres northeast of the Mt Boppy gold mine.
  • Coolabah Copper-Gold Project: A strong copper anomaly over a 1 kilometre strike was returned from Heron’s soil auger sampling located 3 kilometres northwest of the Avoca Tank copper-gold discovery. EM follow up is planned.

West Australia – Nickel and Gold Exploration

  • Big Four Gold Project: a 673 metre RAB program in 26 holes was completed. Best result: 12 metres at 1.12g/t gold.
  • Siberia South Gold Project: a 480 metre RAB program in 33 holes was completed. Best result: 8 metres at 1.90g/t gold.
  • Bedonia Nickel-Copper Project: “Nova-style” nickel-copper target, EM surveying identified conductors coincident with coherent geochemical anomalies and magnetic anomalies, 814 metre RC program in 4 holes was completed.

Kalgoorlie Nickel Project

  • The total combined nickel laterite resource base of the Kalgoorlie Nickel Project (KNP) is updated to an estimate of 795.6 million tonnes grading approximately 0.70% nickel and 0.048% cobalt (approximately 5.6 million tonnes of contained nickel metal, 0.38 million tonnes of contained cobalt metal). The reporting methodology has been updated to reflect changes in the JORC 2012 reporting code
  • These resources form the basis of ongoing metallurgical and mining studies, including the Simulus and Direct Nickel research projects, which aim to significantly reduce the capital and operating cost of processing KNP nickel laterite mineralisation
  • Simulus Engineers: agreement signed to undertake metallurgical testwork using sulphuric acid leaching on various KNP ore-types, and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery technology to the KNP.
  • Direct Nickel: test work continued after favourable results at the Highway Prospect, with up to 98% nickel recoveries using nitric acid leaching.

Financial Year 2012

Kalgoorlie Nickel Project

Heron implemented a strategy of focusing on the core project around the mineral resource base of 727 million tonnes grading 0.72% nickel and 0.044% cobalt. A number of tenements which were considered to be "non-core" to the KNP were relinquished throughout the year in order to reduce on-going holding costs. The KNP has the advantage of being a large resource and the project has many other favourable characteristics including good local infrastructure, low sovereign risk, access to skilled labour, low environmental risk for tailings disposal, and supportive government, environmental agencies and the community. It is these attributes from which Heron seeks to leverage to generate value from this resource base.

Despite the prevailing poor nickel market conditions during 2012, Heron continued to undertake metallurgical testwork on the KNP with the principal aim of seeking to enhance and extract value from the KNP. To facilitate this strategy Heron commenced metallurgical testwork programs with SGS Lakefield Oretest and Direct Nickel which are both aimed at advancing the KNP.

Nickel-Cobalt Study

Heron continues to evaluate alternate hydro-metallurgical processing technologies that may be applicable to the KNP ore types.

As part of this assessment, a metallurgical testwork program is underway with Direct Nickel.

Samples from the Vale Inco 2005-2009 KNP PFS sonic core drilling were provided to Direct Nickel for bench-scale test work at their CSIRO South Perth test facility, to determine levels of extraction from the Direct Nickel process. Extraction tests were undertaken with fresh water and saline water (approximately the equivalent of sea water) to determine the effect of chlorine on the process.

The kinetics of the leach extractions and nickel and cobalt extraction extents are very encouraging for four of the five samples tested. The acid addition in each of these tests was greatly in excess of what would be used in practice, but the results of such tests have proven valuable in showing maximum possible extractions.

The samples were initially analysed using de-ionised water and further testwork was conducted to review the impact of chlorides on the process (the KNP resources contain naturally occurring chlorides and the process water is expected to be hypersaline). The results show that the saline water has little effect on the extraction of nickel and other metals with these results being similar to the previous results with fresh water. Nickel and cobalt extractions (with the exception of sample 1) are still high, while acid addition has dropped. However, it was noted that with the use of saline water, chlorine levels rise to approximately 2.0 - 2.5 grams per litre in the pregnant liquor solution (PLS) and this level is likely to rise as the level of acid addition is optimised. It is considered by Direct Nickel that this level of chlorine may have implications for the materials of construction in any future processing facility. Further testwork with Direct Nickel is current.

Iron-Nickel Study

A review of the potential to produce an iron-nickel product for sale to Chinese pig-nickel producers, principally from the Goongarrie South deposit, where an iron-nickel mineral resource of 48.5 million tonnes grading 41% iron and 0.65% nickel has been delineated, was commenced during the year.

An international engineering consultancy reviewed Heron's ore types from the KNP and the potential marketability of producing iron and nickel products, notably for the ferro-nickel, stainless steel and specialised steel sectors in China. The review benchmarked the ores and concentrates which Heron could produce, and identified the possible uses and markets for each:

  • Quality and quantity of each ore or concentrate considering nickel grade, iron grade, gangue components and impurities, and likely market acceptance.
  • High-level technical appraisal of processing alternatives and potential products.

Particular focus was given to low-capital or stage-wise developments utilising the established regional infrastructure.

SGS Lakefield Oretest in Perth conducted initial benchscale metallurgical testing of KNP ores. Bulk samples consisting of sonic core acquired during the previous KNP pre-feasibility study were provided to SGS Lakefield Oretest.

The initial results at Goongarrie South generated an upgraded iron-nickel sinter product which assays up to 73.4% Fe and 3.71% Ni with 49.5% mass recovery which was particularly encouraging. The testwork with SGS is being reviewed.

Yerilla Nickel-Cobalt Project

Chinese battery manufacturer Shanshan entered a binding frame work agreement with Heron in May 2009 under which it can earn a 70% interest in the Yerilla Project by completing feasibility studies, and funding and construction of a process plant at Yerilla to produce a nickel concentrate. The final hurdle for Shanshan is to commission the project to reach at least 50% of the feasibility study design capacity.

Following bench scale assessment of its segregation roasting technology, Shanshan then completed engineering studies for a combined agitated leach and heap leach processing for the Yerilla project. Operating and capital expenditures were estimated for processing plants both located in Australia and China.

A Deed of Variation to extend the joint venture has yet to be executed with Shanshan to facilitate an extension of the current joint venture. In the event that the extension agreement is not executed, 100% ownership of the Yerilla Project will revert to Heron.

Business Development

The global environment continued to be extremely competitive. Asset prices declined during the year, reflecting the current economic environment, but the quality and quantity of suitable assets remained low. During the year Heron evaluated in excess of 40 base metal and precious metal projects in Australia and abroad.

The A1 Gold Mine in eastern Victoria was successfully divested during the year and the listing of A1 Consolidated Gold Limited, which owns the A1 Gold Mine, on the Australian Securities Exchange was completed in June 2012. Heron owns 26.2 million shares in A1 Consolidated Gold Limited, which were acquired as consideration for the divestment.

During the year, the Company sold its share and option holding in Metaliko Resources Limited.

Exploration

Both tenement acquisition and exploration activity focussed on activities in which Heron had a long-term comparative advantage in Australia. Acquisition activity during the year included a number of properties in the Lachlan Fold Belt of New South Wales. Other prospects were disposed of where exploration had been completed and no further targets were identified.

There were active drilling programs throughout the year, with the following programs completed:

  • Big Four Prospect, 56 RAB holes for 600 metres to define the mineralisation, followed up with 34 RC holes, for 3,662 metres drilling across the zone of gold mineralisation.
  • Siberia-Black Range Prospects, 36 Aircore holes for 2,742 metres, 115 RAB holes for 2,501 metres and 1 diamond core hole for 246.3 metres for target definition.
  • Shay Gap Prospect, 361 RC holes for 3,602 metres defining the target palaeo-channels, but hosting detrital sand rather than iron ore.
  • Binneringie, 1 diamond core hole for 411.5 metres testing a modelled magnetic target which was intersected, but barren.

Mineral Resource 2012

Nickel laterite total inferred mineral resource at 30 June 2012 above a 0.5% nickel cut-off was 862 million tonnes at 0.73% nickel and 0.04% cobalt.


Financial Year 2011

Kalgoorlie Nickel Project

After Vale Inco withdrew from the KNP in July 2009, Heron commenced to systematically reduce the KNP tenement holding and expenditure commitments through the sale of non-resource tenements to various gold explorers, contributing with the A1 Gold Mine sale to the “held-for-sale” asset portfolio valued at $6.2 million on 30 June 2011. This funding has facilitated an increasing KNP expenditure through 2011.

Heron has demonstrated lateral thinking in its Project Development. The KNP nickel laterite project is hosted by the iron ore mineral goethite. On this basis, management completed ground-breaking research which has identified certain KNP ore types as potential feedstock for the iron-nickel industry.

Conventional pressure acid leach nickel-cobalt flowsheet development and nickel sulphide exploration has continued on the KNP, with the nickel sulphide work at Black Range particularly exciting. Specific 2011 KNP programs were as follows:

Pressure Acid Leach Hydrometallurgy

The KNP has the advantage of being a large, high quality nickel resource with significant iron credit. The project has many other favourable characteristics including good local infrastructure, low sovereign risk, access to a skilled labour pool, low environmental risk for tailings disposal, and supportive government, environmental agencies and the community. It is these attributes from which Heron seeks to leverage to generate value from the KNP resource base.

During 2011, Heron focused on geo-metallurgical studies, entering two key research agreements aimed at advancing the KNP:

  • A collaborative research agreement was concluded with the Commonwealth Scientific and Industrial Research Organization (CSIRO) to undertake a detailed mineralogical and metallurgical study of the KNP. The aim was to define which ore types are best suited to conventional Pressure Acid Leach and Heap Leach hydrometallurgical processing (producing intermediate nickel products), and which ore-types may be amenable to pyro-metallurgical smelting (producing iron-nickel).
  • An international engineering consultancy was retained to advise on the pyro-metallurgical treatment (thermal upgrade) and marketing of potential iron-nickel resources identified within the KNP.

Nickel-Cobalt Study

Previous partner Vale Inco withdrew from the KNP in July 2009, having spent $34.5 million on feasibility studies involving a sulphuric acid Pressure Acid Leach hydrometallurgical nickel-cobalt flow-sheet. Heron completed further metallurgical studies based on PAL and a detailed mining study during 2010. The mining study looked at optimizing individual pits and the mining sequence. The study concluded an optimized production rate was 3.75Mtpa producing 36,700tpa nickel in intermediate product, at an operating cost of US$4.17 per pound and capital cost of A$2,834M.

During 2011, hydrometallurgical studies utilizing acids other than sulphuric were initiated. Detailed bench-scale testing is planned for 2012.

Iron-Nickel Study

The international engineering consultancy has been assisting with the Iron-Nickel Scoping Study, evaluating:

  • Technical review and appraisal of the Heron’s ores and potential concentrates (assisted by the CSIRO study).
  • Market studies covering iron and nickel products, notably for the ferro-nickel, stainless steel and specialized steel sectors in China.
  • Preliminary technical and economic studies of various processing routes.

This study has benchmarked the ores and concentrates which Heron could produce, and identified the possible uses and markets for each:

  • Quality and quantity of each ore or concentrate considering nickel grade, iron grade, gangue components and impurities, and likely market acceptance. Resource estimation was completed.
  • High-level technical appraisal of processing alternatives and potential products.
  • Particular focus was on low-capital or stage-wise developments appropriate for Heron, particularly the scope to utilize the extensive established Kalgoorlie region infrastructure.

SGS Oretest in Perth were retained to conduct the initial bench-scale testing of KNP ores. Bulk samples consisting of sonic core acquired during the previous KNP feasibility study were prepared and kiln testing commenced.

Nickel-Copper Sulphide Study

The Vale Inco farm-in agreement only covered rights to the nickel laterite resource, and an evaluation of the nickel sulphide potential was not undertaken. With the termination of the Vale Inco agreement, Heron completed a review of the nickel sulphide potential of the KNP during 2011. The study highlighted the Black Range region as an excellent nickel sulphide target.

Black Range Prospect

The tenement contains a layered mafic complex termed the Ora Banda Sill, with known nickel-copper sulphide occurrences. The mineralised setting is comparable to world-class nickel occurrences such as Voisey’s Bay in Canada. Heron completed a soil geochemical program to define anomalous copper-nickel-PGM zones. Ground Electro-Magnetic (EM) follow up was completed, with excellent anomalies defined. A 50 hole RC drilling program has been surveyed.

A1 Gold Mine

Heron has demonstrated risk minimization in its operational management. In 2009 Heron put in place at the A1 Gold Mine the people, systems and infrastructure to undertake the work safely and to the highest standards. The results of this preparatory work was the exemplary safety record at the A1 Gold Mine, with no lost time injuries for over 50,000 hours worked in a new underground exploration and development project. In February 2011, the Company decided to divest the A1 Gold Mine, on the basis that the new owner could consolidate the district and thus better extract value for Heron shareholders from the asset.

Business Development

Heron has demonstrated persistence and intellectual rigour in its Business Development. The Company has based its decisions on value propositions and resisted transactions that are assessed not to create significant value for Heron shareholders. It should be stated that no project which Heron has declined has subsequently progressed to a viable mining operation. At for 2010, there is a difficult business development environment with many assets fully valued, a competitive market place with many teams from financially sound companies from around the world aggressively competing for the available projects. The Board has faith that Heron’s disciplined acquisition strategy will pay future dividends for shareholders.

Exploration

Heron has demonstrated an ability to acquire and generate the highest quality of Exploration Projects. The Heron exploration pipeline, resulting from increased acquisition activity during 2011, has quickly generated a number of excellent drill targets, any one of which could create significant value for shareholders. The leading projects in 2011 were the Shay Gap iron ore project, the Mt Zephyr base metal-gold project, and the Black Range nickel-copper-PGM project.

Mineral Resource 2010

Nickel laterite total inferred mineral resource at 30 June 2011 above a 0.5% nickel cut-off was 727 million tonnes at 0.72% nickel and 0.04% cobalt. The reduction reflects the loss of Bulong from the resource inventory due to ceasing the legal dispute.


Financial Year 2010

Kalgoorlie Nickel Project

Previous joint venture partner Vale Inco withdrew from the KNP in July 2009, having expended some $34.5 million on feasibility work, ensuring the project remains in good standing as Heron awaits the inevitable upturn in nickel laterite sentiment.

Development at the KNP needed to be pared back to the resource tenements, with non-core tenements sold or relinquished. A PFS Revision commenced, to optimize the previously completed Vale Inco PFS.

The Company decided to focus its attention on the core project covered by the KNP West tenements. The resources located at Bulong and Kalpini have been demonstrated to be less important to the development of the KNP, and this has led the Company to settle the litigation over access to Bulong.

While a search has not yet been successful in locating a suitable partner for development of the KNP, the nickel price continued to improve, and as third party nickel laterite projects come on line, the Company expected renewed interest in the KNP.

Heron firmly believed the KNP held significant option value in an environment of strong nickel price and as technology successes continued in the nickel laterite area.

Yerilla Nickel Cobalt Project

Chinese battery manufacturer Shanshan entered a binding frame work agreement with Heron in May 2009 under which it can earn 70% in the Yerilla Nickel Cobalt Project by completing the feasibility studies, and funding and construction of a process plant at Yerilla to produce a nickel concentrate.

Shanshan commenced pilot testwork in December 2009 on laterite ores at a plant in Changsha China. This testwork was suspended when issues associated with controlling the atmosphere in the roasting kiln were identified during piloting. Alternative processing technologies were reviewed ahead of re-starting the trials.

Exploration

The many previous years of systematic greenfields exploration culminated in discovering advanced stage targets at Mt Zephyr, Kalpini and Rocky Gully.

The A1 Gold Mine team, systems and infrastructure to undertake the work safely and to a high standard were put in place. The results of this preparatory work paid dividends in 2010, with consistent high grade gold core drilingl intercepts. The safety record at the A1 Gold Mine was exemplary, with no lost time injuries for over 50,000 hours worked in a new underground exploration and development project.

Exploration results at Mt Zephyr were most encouraging, with the discovery of massive volcanogenic sulphides associated with EM conductors at the Mt Zephyr VMS prospect. Follow up drilling has generated new targets for diamond drilling.

Business Development

The Business Development group worked particularly hard to identify assets undervalued by the market, to gain access to evaluate these assets and to negotiate commercial terms on a win-win basis for all shareholders. It was a tough environment with many assets fully valued, a crowded market place with many teams from well cashed up companies from around the world fighting for the available projects.

Corporate

Heron monetized its Polaris Metals iron ore investment to underpin the Company’s medium term funding requirements, notably the intense Business Development activity culminating in acquiring the A1 Gold Mine option. Heron sold its interest in Mineral Resources Limited following the takeover of Polaris Metals completed in January 2010. This move was the result of a Heron iron ore strategy commenced in 1999 with the acquisition of the first iron ore resources at Bungalbin and the subsequent vending of these tenements into Polaris in 2006 as a dedicated iron ore vehicle. The cash injection resulted in Heron being in an excellent position to execute on the stated strategy of creating a profitable mining company, while adding value organically with exploration, land acquisition and leveraging off the world-scale KNP and Yerilla nickel laterite projects.

Nickel prices have been firmer, and as technical and commercial success visits competitor projects, this augurs well for the KNP and Yerilla projects.

Mineral Resource 2010

Nickel laterite total inferred mineral resource at 30 June 2010 above a 0.5% nickel cut-off was 971 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2009

Kalgoorlie Nickel Project

Heron assumed full management of the Kalgoorlie Nickel Project following the withdrawal of Vale in July 2009. All data generated by Vale for the four years they managed the project was integrated back into Heron databases and systems. This data represented in excess of 170,000 man hours and $34.5 million dollars of value which Vale contributed to the project during the period of their management.

The project consists of 14 resources with a combined 989 million tonnes of mineralisation at a nickel grade of 0.73%, located north and east of Kalgoorlie in Western Australia. The resources fall geographically into two distinct groups; those hosted on the Walter Williams Formation to the north and west of Kalgoorlie (KNP West), and those located at Bulong and Kalpini to the east of Kalgoorlie (KNP East).

The Walter Williams Formation hosted resources are typically iron rich, siliceous, goethite mineralization suitable for beneficiation to leach feed grades in excess of 1% nickel. The eastern resources are typically nontronite and saprolite dominated with poor beneficiation performance albeit higher head grades and higher acid consumption.

Vale Inco Pre-feasibility Study

A pre-feasibility study was completed by Vale Inco in January 2009 which looked at processing nickel laterite mineralization through the high pressure acid leach (HPAL) flow sheet. This study only considered 4 of the 14 deposits, estimating a mine life of 34 years and production peaking at 36,000 tonnes of nickel in a mixed hydroxide intermediate product. The predicted production profile peaked early in mine life at 36,000 tonnes per annum before dropping off to 23,000 tonnes per annum.

A review of the mining pit optimization and scheduling suggested the production profile could be smoothed considerably, thus stabilizing production at the higher rate with the inclusion of further resources from the inventory.

The Vale Inco study predicted low acid consumption averaging 280kg per tonne of beneficiated leach feed. Acid consumption is one of the key cost drivers in hydrometallurgical processing of nickel laterite and low consumption corresponds with lower operating costs. Cash operating costs were predicted at US$4.42 per pound of nickel produced. Capital costs were predicted at A$1.5 billion for a processing plant located in the Goongarrie area north of Kalgoorlie with a drive in drive out workforce.

The pre-feasibility report states the KNP is one of the most prospective nickel laterite tenement packages in the world, containing a potential resource of 7 million tonnes of nickel metal. The project has some strategic aspects that made it attractive to Vale Inco:

  • good local Infrastructure;
  • low sovereign risk;
  • access to a skilled labour pool;
  • low environmental risk for tailings disposal; and
  • supportive government, environment agencies and community.

Heron Pre-feasibility Study Revision

Heron completed new resource estimates for the KNP ahead of optimization of each mining pit and scheduling the mining sequence to maximise economic return. Long lead time environmental studies to determine base line data are progressing.

Rationalization of the tenement portfolio to focus on nickel laterite resources is complete resulting in a reduction of 130 tenements from 310 to a focused holding of 180.

These studies have continued to add value to the project in parallel with a structured process to identify a partner to work with Heron in developing the project.

Search for a New Partner for the KNP

The Company retained KPMG and Satori Investments from Shanghai to assist in identifying prospective partners for the KNP. Heron believed the potential partner would be a nickel and cobalt end-user or trader and may not be a mining company. Heron’s technical team would form the nucleus of a future project team to complete the feasibility study and take the project into development, with the assistance and financial backing of the project partner. This is also a distinct advantage over the position of Heron in 2005 when it entered into the agreement with Inco. There is now a large talent pool available in Australia with nickel laterite experience from which the Company can draw upon.

Mineral Resource 2009

Nickel laterite total inferred mineral resource at 30 June 2009 above a 0.5% nickel cut-off was 989 million tonnes at 0.73% nickel and 0.05% cobalt.

Yerilla Project

The Heron development team worked deliver a positive Scoping Study for its 100% owned Yerilla Project. At a planned production rate in excess of 20,000 tonnes of intermediate nickel product the project is an internationally significant project.

Langey Crossing

The Company has acquired a 100% interest in an advanced phosphate exploration project some 60km from the port of Derby. The Company was working towards obtaining all approvals necessary to commence drilling.

Acquisitions

The Company has developed a strategy for the acquisition of a near term production asset with the appointment of a Business Development Manager to focus on identification and evaluation of assets capable of acquisition by Heron that are already in production or have the capacity to be in production in the near term.

Exploration

The Heron Exploration Team completed the resource definition of the Yerilla Project plus identification of potential water and calcrete resources in the Yerilla district.

In addition, a number of new projects were developed to a drill ready stage, including: Marloo Dam (nickel), Rocky Gully (nickel), Langey Crossing (phosphate) and Gordon Downs (copper).

A number of noncore projects have been farmed-out during the year to third parties including: Kanowna South (gold) and Balladonia (mineral sands). Heron continues to manage and develop an extensive tenement portfolio in Western Australia through which several grass-roots projects are being nurtured through to a drill-ready stage.

Corporate

Entry into the Technology and Product Supply Agreement with BHP Billiton in January 2008 allowed Heron to access patented Atmospheric Leach Technology which was a strong contributor to the positive Yerilla Scoping Study.


Financial Year 2008

Kalgoorlie Nickel Project

Vale Inco elected to proceed to Step 3 of its earn-in to a 60% interest in the Kalgoorlie Nickel Project (KNP) which encompasses the delivery of a pre-feasibility study.

Heron is pleased with the progress Vale Inco has made on the project and Heron is looking forward to bringing this world class asset to fruition with Vale.

Yerilla Project

The Heron development team worked extremely hard in the second half of the reporting period to deliver a positive Scoping Study for its 100% owned Yerilla Project. At a planned production rate in excess of 20,000 tonnes of intermediate nickel product the project is an internationally significant project.

Langey Crossing

The Company has acquired a 100% interest in an advanced phosphate exploration project some 60km from the port of Derby. The Company is working towards obtaining all approvals necessary to commence drilling and looks forward to early results from its initial drilling campaign.

Acquisitions

The Company has developed a strategy for the acquisition of a near term production asset with the appointment of Mr David von Perger to a newly created role of Business Development Manager. Mr von Perger will focus on identification and evaluation of assets capable of acquisition by Heron that are already in production or have the capacity to be in production in the near term.

Exploration

The Heron Exploration Team completed the resource definition of the Yerilla Project plus identification of potential water and calcrete resources in the Yerilla district. In addition, a number of new projects were developed to a drill ready stage, including: Marloo Dam (nickel), Rocky Gully (nickel), Langey Crossing (phosphate) and Gordon Downs (copper). A number of noncore projects have been farmed-out during the year to third parties including: Kanowna South (gold) and Balladonia (mineral sands). Heron continues to manage and develop an extensive tenement portfolio in Western Australia through which several grass-roots projects are being nurtured through to a drill-ready stage.

Corporate

Entry into the Technology and Product Supply Agreement with BHP Billiton in January 2008 allowed Heron to access patented Atmospheric Leach Technology which was a strong contributor to the positive Yerilla Scoping Study.

Mineral Resource 2008

Nickel laterite total inferred mineral resource at 30 June 2008 above a 0.5% nickel cut-off was 908 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2007

Kalgoorlie Nickel Project (KNP) (Heron 100%, CVRD-Inco earning 60%)

Heron and Joint Venture partner CVRD-Inco completed Step 1 and Step 2 of the pre-feasibility study (PFS) into the KNP. CVRD-Inco has until 30 November 2007 to determine if they will proceed to Step 3 which encompasses the delivery of PFS by January 2009.

CVRD-Inco as part of Step 2 undertook investigations into specific nickel resources, beneficiation methods and nickel extraction flow sheets, which included pressure acid leach, atmospheric acid leach and heap leach.

Heron is encouraged by the results obtained by the Step 2 work. High pressure and atmospheric leaching test-work have demonstrated low acid consumption, rapid leaching and good recoveries for the ore types suited to each of the processing flow sheets. Heron believes that correct streaming and blending of ore types through the optimal process flow sheets can potentially result in substantially enhanced recovery rates.

The next step, Step 3, requires delivery of the PFS by January 2009 followed by a six month evaluation period. This step will involve a significant drilling component to increase confidence in the resource estimates, metallurgical test-work and engineering. The PFS will be conducted by a third party independent engineering consultancy.

Jump-up Dam

At Heron's 100% owned Jump-up Dam Project, the initial scoping study was successfully completed. Heron has now commenced a PFS into the development of Jump-up Dam as a heap leach project producing a minimum of 10,000 tonnes of nickel in concentrate per annum.

The scoping study resulted in a capital cost in the range of US$300 to US$350 million and cash operating costs in the order of US$3.00 to US$3.25 per pound of production.

Exploration success continued with new resource estimates for Jump-up Dam and Boyce Creek. The Jump-up Dam resource was updated to include 22 million tonnes of ore at 1.05% nickel, classified in the indicated category. Heron's total resources stand at 987 million tonnes at approximately 0.74% nickel - just short of 1 billion tonnes of ore.

Explorer to Producer

Heron has continued on the path to transforming itself from an explorer to a nickel producer. The Company now spends more time and resources on mine development activities than on exploration activities.

To deliver on the development plans for Jump-up Dam, the Company has assembled a skilled and experienced development team in addition to retaining acknowledged world experts to advise on aspects of metallurgy, heap leaching and engineering.

The Company announced the appointment of Mr Stephen Dennis and Mr Kenneth Hellsten to the Board in December 2006, who both have experience in nickel laterite developments and operations. The management team was further strengthened by the appointment of Mr Kevin Reynolds and Mr Robert Klug to the roles of Project Manager Jump-up Dam and Commercial Manager respectively.

The management team is well supported by a team of engineers, metallurgists and geologists all focused on the development of the Company's projects.

Corporate

Milestones were the divestment of iron ore (Polaris Metals NL), gold and base metals (Rubicon Resources Limited) and uranium assets (Epsilon Energy Limited), permitting the Company to focus on its nickel development portfolio. The vendor considerations in Rubicon Resources Limited and Epsilon Energy Limited were successfully distributed to Heron shareholders. The vendor consideration for the iron ore assets had a mark to market value of over $14.5 million. Heron also retains a substantial exposure to the future potential of the iron ore assets via its Polaris Metals NL shares and vendor options.

The Company raised $6.2 million through a shareholder share purchase plan in November 2006, which was strongly subscribed for, with over half of all shareholders participating. A further $27.8 million was raised by way of a share placement to institutional investors being clients of the Royal Bank of Canada. The placement funds are being used for the completion of the PFS into Jump-up Dam and to commence demonstration mining and heap leach treatment.

The continued support of shareholders is appreciated by the Company, through both the share purchase plan and substantial shareholders such as BHP Billiton and CVRD-Inco who subscribed to placements during the year.

Mineral Resource 2007

Nickel laterite total inferred mineral resource at 30 June 2007 above a 0.5% nickel cut-off was 903 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2006

During our first decade since listing in August 1996, the Company has had a total focus on nickel laterite resource acquisition and development, assembling the Kalgoorlie Nickel Project (KNP).

Heron has operated in a counter-cyclical acquisition environment, allowing the Company to gain control of its substantial resource base between 1998 and 2004 during times of historically low nickel prices. The nickel price cycle has now seen a major upturn, with the current high prices due to high levels of demand from Asia.

Heron's nickel laterite resources have now attained considerable strategic value. At current metal prices, the run-of-mine ore (0.74% Ni and 0.05% Co) has an in-ground value of A$300 per tonne. Critically, the metallurgical technology exists to economically treat such ore, both through conventional Pressure Acid Leach with Inco, or the new Heap Leach which Heron is pursuing.

Kalgoorlie Nickel Project - Long Term Production Tier

The nickel laterite strategic targets we set continue to be achieved, with 2006 seeing Inco completing Step 1 and proceeding to Step 2 of the KNP feasibility studies.

The key Inco conclusions at the completion of Step 1 were:

  1. The KNP is a large nickel resource in a politically stable region with good existing infrastructure which has the potential to achieve the resource target of 120 million tonnes at a 1.5% Ni Leach Feed Grade.
  2. KNP is one of the better undeveloped nickel laterite opportunities in the world.
  3. No fatal flaws were detected during Step 1, but the core drilling, interpretations and database interpretation raised geological issues involving short range geological variability previously not recognised that will be addressed during Step 2.

Inco and Heron have adopted an aggressive Program and Budget for Step 2 of the KNP, focussed on metallurgical evaluations, notably Pressure Acid Leach. Although Inco has been under bid from CVRD, the Step 2 commitment is firm, irrespective of future bid outcomes.

Near to Medium Term Production Tier

Having set the Company's Long Term growth strategy in train through the Inco KNP transaction, the Company is now focussing on securing Near and Medium Term cash-flow from its 100%-owned non-KNP resources. That production opportunity is from Heap Leach of nickel laterite. The commercial model for Heron is European Nickel plc, which is commissioning a Heap Leach plant at Caldag in Turkey.

With our 2006 Heap Leach test-work indicating laboratory nickel recoveries of 60-80% in 100 days, and extensive shallow open pit ore being defined in current RC drilling, a clear pathway through to Near Term nickel production is available through Heap Leach.

The intention is to commence trial Heap Leach pads at Jump-up Dam in 2007, and depending upon these trial results, aim for nickel production at a demonstration scale in 2008, and commercial scale in 2009. The Heap Leach target is ultimately 10,000tpa nickel production as intermediate product. Discussions are current in respect of feed-stock supply and product off-take.

Corporate Strategies

In my 2005 Review, I foreshadowed the divestment of non-nickel assets, along the lines of Heron's previous Avoca Resources Limited and Pioneer Nickel Limited demergers. These two previous demergers delivered in specie shares to our then Shareholders, which at current Avoca and Pioneer share prices are valued around A$25 million.

The latest demergers are well advanced. The uranium IPO is Epsilon Energy Limited, and is on track for a late 2006 / early 2007 listing on ASX. Epsilon has an exceptional board led by Chairman Bruce Larson and Managing Director Matt Gauci. Our intention is to provide Epsilon shares as an in specie distribution to our Shareholders at no cost, in the first twelve months after Epsilon's listing.

The copper-gold IPO is Rubicon Resources Limited. Rubicon similarly has an exceptional board led by Chairman John Shipp and Managing Director Peter Eaton. Listing is planned for early 2007. An in specie distribution similarly is planned for our Rubicon shares.

Heron's iron ore assets were sold to Polaris Metals NL. Ian Buchhorn has joined the Polaris board, and we are most optimistic of Heron being the recipient of future dividend streams from Polaris as it develops production from the iron ore assets at Poondano and elsewhere.

With the Heap Leach feasibility program commencing and Inco proceeding to Step 2 of the KNP, the Company established a West Perth management office, which we share with Epsilon and Rubicon. The Jump-up Dam project team also will be based there.

Once again, I acknowledge the redoubtable efforts of our Staff, whose work output and creative intellect are first class.

Mineral Resource 2006

Nickel laterite total inferred mineral resource at 30 June 2006 above a 0.5% nickel cut-off was 903 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2005

Without doubt, 2005 has been a great move forward for Heron, the year in which our business plan delivered outstanding growth for Shareholders.

"The objective during 2005 is to form alliances with world majors as potential nickel development partners to assist with the Feasibility Studies required to commission the Kalgoorlie Nickel Project".

I am pleased to report that this objective was achieved, through introducing Inco Limited of Canada as our feasibility, and if warranted, development partner for the Kalgoorlie Nickel Project. A clear pathway through to production is available.

Feasibility Study

Selection of the KNP Partner

This process culminated with Inco executing a binding Letter of Intent on 25 March 2005, and finally a Definitive Agreement on 30 July 2005. The process has been comprehensive, and has required great stamina on the part of the Board to negotiate and document what is by necessity a complex agreement, able to stand as a framework for a A$1.4 billion or greater project with a mine-life to exceed 25 years.

Confirmation of Screen Upgrade to generate 1.5% Nickel Leach Feed Grades

The favourable screen upgrade characteristics of the KNP mineralisation were verified during Heron's 2005 RC drilling. Screening studies to date suggest Run-of-Mine low grade siliceous mineralisation will upgrade through low cost screening to deliver 1.5% Nickel into the plant. The initial focus of Inco in its Feasibility Studies will be to complete the Step 1 wide diameter diamond drilling and use this bulk material to evaluate through independent metallurgist SGS Lakefield Oretest whether plant-scale screen upgrade to 1.5% Nickel is achievable. This is our key milestone for 2006, and if successful, establishes the Kalgoorlie Nickel Project as a world class project.

Corporate

On 8 April 2005, World number 3 nickel company BHP Billiton Limited purchased 15.9 million Heron Shares and is now our third largest Shareholder.

On 15 April 2005, World number 2 nickel company Inco Limited participated in a restricted Share placement of 16.5 million Heron Shares at A$0.75 per Share, raising A$12.4 million, and is now our second largest Shareholder.

We welcome Inco and BHP Billiton to Heron, and would like to think of this as a clear and positive endorsement of the mineral assets held by Heron. As Shareholders, you should be most encouraged by their corporate presence.

Mineral Resource 2005

Nickel laterite total inferred mineral resource at 30 June 2005 above a 0.5% nickel cut-off was 903 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2004

Heron has announced a time frame and pathway to fund and commission the KNP. Several milestones have been achieved by the Company during 2004, to move the KNP towards a definitive Feasibility Study and production:

Independent Mineral Resource Estimates

A JORC-compliant independent mineral resource estimate of 891 million tonne grading 0.74% Ni and 0.05% Co was completed by Snowden Mining Industry Consultants (Snowden).

Independent Scoping Study

Heron retained consulting engineers Sinclair Knight Merz (SKM) to conduct an independent Scoping Study for the KNP. It is apparent that the KNP will have the key attributes typical of a major resource project.

Base case financial modelling, assuming real monetary post tax terms and a nickel price of US$3.50 per pound (current Ni price exceeds US$6.00 per pound) indicates the KNP will have:

  • Approximate 25% internal rate of return on a geared and unhedged basis.
  • Estimated A$607 million net present value at a discount rate of 10%.

These financial returns have been estimated over a project life of 25 years and assume the KNP produces 50,000tpa of Ni-in-intermediate product and 3,000tpa Co-in-intermediate product. The order of magnitude capital estimate for the KNP is A$1,400 million.

The Scoping Study indicates that a treatment plant to produce nickel-cobalt precipitate will be economically robust. On this basis, the Board resolved to commence a Pre-feasibility Study (PFS) for the KNP, aiming for completion in late 2005. It is intended that this study then moves seamlessly to a Bankable Feasibility Study (BFS).

Independent Screen Upgrade Study

The next development target is to confirm the screen upgrade characteristics of the KNP mineralisation. Screening studies to date suggest "run-of-mine" low grade siliceous mineralisation will upgrade to deliver better than 1.5% nickel into the plant. Independent metallurgist SGS Lakefield Oretest (Oretest) is currently conducting operating plant-scale screen upgrade studies on bulk samples.

Corporate

The challenge for Heron is to now extract value from its considerable in-ground resources. The next milestone is to form alliances with world majors as potential nickel development partners to assist with the Feasibility Studies required in order to commission the Kalgoorlie Nickel Project.

Mineral Resource 2004

Nickel laterite total inferred mineral resource at 30 June 2004 above a 0.5% nickel cut-off was 891 million tonnes at 0.74% nickel and 0.05% cobalt.


Financial Year 2003

2003 involved key strategic decisions for Heron.

The commitment to Nickel as the Company's development commodity, through the Kalgoorlie Nickel Project:

  • Drill-confirmed Siliceous Ore purchased at Siberia, ensures that the Kalgoorlie Nickel Project achieves critical mass for a standalone nickel processing operation.
  • The drilled in situ mineral resource 225 million tonne at 1.03% Ni. This resource is sufficient to provide for a 25 year, 40,000 tonnes per annum nickel-in-intermediate product operation based at Goongarrie, 70km north of Kalgoorlie.
  • Heron achieved the dominant ground position covering the Walter Williams Formation Nickel Laterite host rock.
  • Kalgoorlie Nickel Project confirmed as a world class and premium asset:
    • Highest Australian nickel grades;
    • Premium metallurgy;
    • Ore zones consistent chemistry; and
    • Thickest Australian nickel-cobalt ore zones.
    in a premium location:
    • Excellent regional infrastructure;
    • Political stability, no sovereign risk; and
    • Stable, skilled mining work force.
  • Introduce international nickel companies to the Kalgoorlie Nickel Project as potential consortium members, such as the Company's discussions with Jinchuan Group Limited of China during 2003.

Spinning off the nickel sulphide assets into Pioneer Nickel Limited:

  • With Heron's acquisition of high quality nickel laterite in the Goongarrie-Siberia district, the Pioneer tenements were considered less strategic for laterite, and became available to explore for their primary target, being nickel sulphide. In most cases, Heron retained a pre-emptive right to any nickel laterite occurring on the Pioneer tenements.
  • Nickel sulphide assets of Heron were transferred to Pioneer Nickel Limited for the issue of 15 million Pioneer shares.
  • Heron Shareholders to receive an in specie distribution of the Pioneer shares at no cost. Pioneer commenced immediate drill testing of its nickel sulphide intercepts and down-hole EM targets, upon listing on ASX in December 2003.

Gold Assets

  • The Gold Assets, including several open cut resources, are subject to seven joint ventures with local gold producers.

Mineral Resource 2003

Nickel laterite total inferred mineral resource at 30 June 2003 above a 0.5% nickel cut-off was 569 million tonnes at 0.77% nickel and 0.05% cobalt.


Financial Year 2002

During 2002 the Company has concentrated upon evaluating various production opportunities for the Goongarrie Nickel Project. The main thrust was the possible purchase through a consortium, of the Cawse Nickel Operation from the Receivers and Managers of Centaur Mining & Exploration Limited ("Centaur"), Heron's former Strategic Alliance partner. A purchase was not considered prudent at the time, when considering prevailing metal prices, project scale and cost regime.

Development of Nickel Assets

The nickel laterite sector in Australia was a difficult area in which to operate during 2002, reflecting the performance of the three "First Generation" Nickel Laterite projects.

  • The Company strategy was to continue to acquire high-grade defined nickel laterite resources. These are strategic assets aimed at complementing and expanding development options for Goongarrie.
  • Complete the review of the substantial Heron ultramafic portfolio for Nickel Sulphide exploration opportunities.

Avoca Resources Limited, Spin-off of Gold Assets

Heron's gold assets were successfully "spun-off" into a listed company known as Avoca Resources Limited ("Avoca"), which listed on ASX on 15 April 2002. Heron Shareholders, following the 1 for 5 in specie distribution and subscription to the Avoca IPO, owned approximately 50% of Avoca at listing.

Heron retained a significant interest in Avoca through holding 6,000,000 escrowed vendor options. More significantly, Heron retains full nickel rights over some 2,000km² of ultramafic-hosting tenements transferred to Avoca. Avoca is responsible for on-going tenement maintenance, thus preserving future nickel resource targets at no cost to Heron.

Project Generation

  • Heron continued to generate and acquire new conceptual targets throughout Western Australia. The Company held 18 exploration projects covering 16,410km² as contiguous projects within world class exploration provinces.
  • Kimberley Basin: Project areas totalling 3,452km² were acquired in the Kimberley Basin targeting Proterozoic age, rift-related mineralisation. World-wide, rifts are a dominant host for base metal ore deposits.
  • Bangemall Basin: A project area totalling 196km² was acquired in the Bangemall Basin targeting Proterozoic age rift mineralisation. Conceptual target is Cu-Ni-PGM sulphide breccia.

Mineral Resource 2002

Nickel laterite total inferred mineral resource at 30 June 2002 above a 0.5% nickel cut-off was 406 million tonnes at 0.80% nickel and 0.06% cobalt.


Financial Year 2001

The Focus during 2001 was to convert Heron's Nickel Laterite drill targets into an Indicated Mineral Resource.

As at 30 June 2001, the Inferred Mineral Resource above 0.75% Ni cut-off for the Goongarrie-Ghost Rocks-and satellite nickel projects was 180 million tonnes at 1.05% Ni and 0.08% Co.

The inferred mineral resource above 0.50% Ni cut-off for the Goongarrie Rocks-Kalpini and satellite nickel projects was 406 million tonnes at 0.75% Ni and 0.06% Co.

Eighteen months previously, Goongarrie had been no more than an inferred deposit drilled on an 800x80m pattern, and now the Mineral Resource has doubled.

In just 18 months, Heron advanced its technical work such that:

  • Resource Definition Reverse Circulation drilling continued, with over 50,000m in 1000 holes completed. Strict rehabilitation procedures are in place, to ensure that environmental disturbance is minimised during the intense drill activity.
  • Resource Definition drilling was completed at Goongarrie, with all mineralised zones having been drilled on an 80m x 80m pattern. Accordingly 74% of the Goongarrie project resource conformed to the Indicated Mineral Resource category.
  • Confirmation Diamond Drilling was completed, consisting of 406m in 8 holes, which validated the RC drilling data and confirmed an excellent quality ore body.
  • Metallurgical testing of 14 composites of Diamond Drill core was completed, returning excellent results.

Goongarrie has developed into a deposit with exceptional early cashflow potential:

  • Bulk grade, at around 1.3% Ni and 0.1% Co, Goongarrie has amongst the highest documented grades for an Australian laterite. Selective mining can deliver significant tonnages at 1.5% Ni and 0.2% Co.
  • Metallurgy, excellent leaching and rheological performance, which is characteristic of Goethite Ore.
  • Width and continuity, excellent with high grade zones continuous over strike lengths exceeding 2km and widths exceeding 160m. This favours future low cost bulk mining.
  • Highest ore grades are accessed early in the mining, with bonanza grades occurring in a supergene zone at the top of the ore body. This is important for early project payback.

During 2001, genuine production capability was demonstrated:

  • Critical mass was proved for a Standalone processing plant based on Heron's Walter Williams Formation Goethite Ore.
  • As part of a 30 year Strategic Plan, Heron has continued to secure strategic resources of commodities required as potential feed-stocks for processing Nickel Laterite. This will protect a potential $0.9 billion investment against unforeseen operating cost pressures. In all cases, Heron has sought to Joint Venture these tenements, but retain revenue streams and Off-take rights. An increasingly valuable asset is the Balladonia Oil Shale, with its potential energy and sulphur contribution.

Reflecting on-going excellent drilling results during 2001, Heron expended $2.5 million on exploration and continually drilled throughout the year:

  • At Goongarrie, Heron completed 1000 Reverse Circulation ("RC") holes for 50,000 metres to confirm resource continuity. Diamond confirmation drilling increased confidence in the resource and metallurgical testing of composite diamond drill core confirmed excellent results.
  • At Scotia Dam, Heron completed 71 RC holes for 3056 metres to outline resources and confirm geology on an 80 x 80m pattern.
  • At Sibera (20km west of Goongarrie, adjacent to Cawse Nickel Operation tenements) 12 drillholes for 417m encountered ore types typical of the Walter Williams Formation Nickel Laterite.

Heron developed a key position within the Australian Nickel Laterite industry, particularly in the event of any industry rationalisation, as demanded by the capital-intensive nature of the industry. Goongarrie is a premium product on all counts, including high start-up Ni-Co grades, ability to bulk mine, ability to blend Goethite Ore with lower quality ores, and proximity to rail and road infrastructure.

Mineral Resource 2001

Nickel laterite total inferred mineral resource at 30 June 2000 above a 0.5% nickel cut-off was 405 million tonnes at 0.80% nickel and 0.06% cobalt.


Financial Year 2000

Exploration and development success during 2000 at the Goongarrie Nickel project resulted in the Company identifying a deposit acknowledged to be one of the premium ore occurrences in terms of grade, thickness and metallurgy that has been recorded within the fledgling Australian nickel laterite industry. Goongarrie was part of the Cawse Stage II Heron - Centaur Strategic Alliance.

Resource definition RC drilling continued non-stop, with 36,920m in 782 holes completed:

  • Confirmation Diamond Drilling was completed, consisting of 406m in 8 holes, which validated the RC drilling data and confirmed an excellent quality ore body.
  • Detailed metallurgical evaluation was done at the Lakefield Oretest metallurgical laboratory, Perth, with 16 Goongarrie bulk samples tested. Results were excellent.
  • Archaeological, ethnographic, flora, fauna, photogrammetry and baseline environmental surveys were completed, and tenement and hydrological surveys were commenced.

On 8 February 2000, Centaur Mining & Exploration Limited launched a Part C takeover bid to acquire the issued capital of Heron at $0.30 per Share. On 14 March 2000, Heron responded to the bid with a Part D Statement which included an Independent Expert’s Report valuing Heron Shares at $0.86. The Independent Directors of Heron recommended that Shareholders reject the offer by Centaur. The bid lapsed on 25 May 2000 without Centaur acquiring any Shares.

Highlights of the Company’s tenement activities during 2000 were:

  • Consolidation of the nickel laterite tenement holding. This involved tenement applications, outright tenement purchase, and the active trading of non-nickel tenements for demonstrated nickel laterite occurrences.
  • The Heron tenement portfolio remained constant at around 400 tenements, with non-nickel tenements progressively replaced by nickel tenements.

Mineral Resource 2000

Nickel laterite total inferred mineral resource at 30 June 2000 above a 0.5% nickel cut-off was 405 million tonnes at 0.80% nickel and 0.06% cobalt.


Financial Year 1999

Exploration success during 1999 at Goongarrie and Ghost Rocks resulted in the Company more than doubling its resource base. This was achieved with a total 1999 exploration and acquisition budget of $2.5 million.

More significantly, the Company completed a Strategic Alliance Agreement with Centaur Mining and Exploration Limited to toll mill the high grade component of its ore resources through the proposed Cawse Stage II operation. Heron had an entitlement to a minimum of 20% of the Cawse Stage II ore throughput, being 0.8Mtpa of the expected 4Mtpa. This was viewed by Heron as the first step in converting Heron’s on-going exploration success into a 30 year cash flow.

Heron’s inferred mineral resource above a 1.0% nickel cut-off for Goongarrie-Kalpini and satellite nickel projects was 61.4 million tonne at 1.29% nickel and 0.091% cobalt. This category of ore was to be the basis of Heron’s Cawse Stage II toll milling operation.

Assuming Centaur’s Cawse Stage II Bankable Feasibility Study was positive, and that a 4Mtpa autoclave throughput was selected, a minimum of 36.5 million tonne of Heron nickel ore would be likely to be committed to the Cawse toll milling operation.

Centaur’s nominee, Centaur Nickel Investments Pty Ltd, became the second largest Shareholder in the Company, holding 13.844 million Shares or 17.31% of the then issued capital. Ken Hellsten, General Manager Operations for Centaur and one of the driving forces behind the successful commissioning of Cawse Stage I, joined the Heron Board.

In terms of tenement activity, highlights for the Company during 1999 were:

  • Acquiring the Goongarrie-Ghost Rocks project area. This has involved outright tenement purchase, and the exchange of non-nickel tenements for holdings on ultramafic belts. The Heron tenement portfolio has remained constant at around 420, with non-nickel tenements progressively replaced by nickel tenements. The total area of the Eastern Goldfields tenement holding is 13,284km².
  • Consolidation of the Kalpini project area tenement holding, and completion of all ethnographic surveys.

Mineral Resource 1999

Nickel laterite total inferred mineral resource at 30 June 1999 above a 0.5% nickel cut-off was 281 million tonnes at 0.82% nickel and 0.05% cobalt.


Financial Year 1998

At Kalpini, a komatiite with a 1,000ppb nickel soil anomaly in January 1998 was progressed to an inferred mineral resource of 64 million tonne at 1.07% nickel and 0.07% cobalt by June 1998. From March to June 1998, Heron drilled 488 vertical RC drill-holes for a 22,476m advance.

A Scoping Study for a $0.6 billion development was done for the Kalpini Nickel Project. Bulk drill samples were processed to evaluate metallurgical leaching and pulp characteristics, screen beneficiation and acid consumption. A significant screen beneficiation increase of nickel grades by 10-24% is confirmed.

Having recognized the nickel laterite potential, the Heron tenement portfolio increased from 261 to 394 tenements. The acquisitions were restricted to ultramafic belts with demonstrated nickel laterite occurrences, and reflect the large land holdings required to generate economically viable nickel laterite resources for development. Total Eastern Goldfields land holding was 7,440km².

It was quickly recognized that a successful long term nickel laterite strategy, on the basis of very high capital costs, required resource acquisitions to support >20 year mine lives, and each and every identified resource must thus be targeted, irrespective of resource quality and likely timing as plant feed. Acquisitions completed during the year to consolidate the resource base included:

  • Kalpini Nickel Project; tenement consolidation was effected along strike of the Heron Wellington East nickel discovery through the purchase of tenements from Mining Project Investors, Outokumpu Exploration Ventures, Rio Tinto Exploration and private prospectors. The total project area became 848km².
  • Lake Rebecca Nickel Project; purchased from Voyager Gold NL. Heron discovered an inferred mineral resource of 13.0 million tonne at 1.09% nickel, representing potential high grade satellite ore feed for the Kalpini Nickel Project. The total project area was 18km².
  • Raeside Nickel Project; assignment of Joint Venture rights from MPI-Pittson Mineral Ventures Australia was agreed to. Heron had the right to earn a 70% interest from RTE in a 290km² project area at Raeside.
  • Aubils Nickel Project; assignment of Option rights from MPI-PMVA was agreed to. Heron had the right to complete outright purchase from Mavia Pty Ltd of a 34km² project area at Lake Raeside. Ore grade lateritic nickel intercepts were present at Aubils adjoining the Heron Yerilla prospect.
  • Scotia Kanowna Project; adjoining and along the mineralized corridor of the Golden Cities-Federal 1 million ounce gold mining camp, Joint Venture rights were purchased back from MPI-OEV. Ore grade lateritic nickel intercepts were to be evaluated as ore feed for Kalpini. The total project area was 291km².

Mineral Resource 1998

Initial nickel laterite total inferred mineral resource at 30 June 1998 above a 0.5% nickel cut-off was 173 million tonnes at 0.71% nickel and 0.05% cobalt.


Financial Year 1997

Heron listed early in financial year 1997, on 8 August 1996.

Initial Heron exploration focused on gold targets at Yarri and Gindalbie, whilst the joint venture partner MPI-Outokumpu explored the Silver Swan North nickel sulphide target.

Drilling a 100% Heron-owned nickel sulphide target at Wellington North within the Kalpini project intersected nickel laterite. An in-house financial model was generated for PAL nickel laterite processing, which confirmed a valid development target.

New tenement applications were completed at Scotia Kanowna, which with Gindalbie, Wellington North and Kalpini, were the initial acquisitions of what would become the Kalgoorlie Nickel Project.