ANNUAL REPORT 2001 Heron Resources Limited 21 Close Way, West Kalgoorlie PO Box 1280, Kalgoorlie, Western Australia, 6433 Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256 Email: [email protected] www.heronresources.com.au HERON RESOURCES LIMITED CORPORATE DIRECTORY SHAREHOLDER REVIEW COMPANY SECRETARY AUDITORS Any Shareholder visiting Kalgoorlie is encouraged to drop in to the office and see how it all works. Ross Arancini BBus, ACA Butler Settineri Chartered Accountants Company Secretary 35-37 Havelock Street Usually a field trip to Goongarrie can be arranged with Pam Buchhorn, your most 110 Hensman Street WEST PERTH WA 6005 capable tour guide. SOUTH PERTH WA 6151 Telephone: (08) 9367 1213 BANKERS Facsimile: (08) 9367 7853 “So this run-of-mine ore is worth $100 a Email: [email protected] Challenge Bank tonne, and Heron’s got 400 million tonnes!” 230-236 Hannan Street Local Kalgoorlie businessmen and REGISTERED AND PRINCIPAL OFFICE KALGOORLIE WA 6430 major Heron Shareholders Dean Willis, 21 Close Way Rino Borromei and Brett Nazzari PO Box 1280 CORPORATE ADVISER with David Crook. KALGOORLIE WA 6433 Carmichael First Capital Pty Limited Telephone: (08) 9091 9253 Kalgoorlie businessman Nigel Byrd at Facsimile: (08) 9091 9256 Level 11, 77 St Georges Terrace PERTH WA 6000 Goongarrie with some of the high grade Email: [email protected] “$600 a tonne revenue value” drill samples. Website: http://www.heronresources.com.au Very encouraging when you’re a major SOLICITORS TO THE COMPANY Heron Shareholder. SHARE REGISTRY McKenzie Lalor Security Transfer Registrars Pty Ltd 74 Egan Street “A rose between two thorns....” Level 1, 168 Adelaide Terrace KALGOORLIE WA 6430 PERTH WA 6000 Alan Rudd, Libby Willis and Telephone: (08) 9221 4200 Pullinger Readhead Stewart Simon Gobbett at Facsimile: (08) 9221 1581 46-50 Kings Park Road the Heron shed. Email: [email protected] WEST PERTH WA 6005 STOCK EXCHANGE Front Cover: Holding high grade black Australian Stock Exchange Limited Goongarrie Ore, assaying 3% Ni and 2% Co. 2 The Esplanade PERTH WA 6000 Background montage of the exploration journals of Keith Quartermaine (Order of Australia), a Scientist and Historian. ASX CODE HRR Jack Otway. “There’s miles and miles of that Laterite SEAT ABBREVIATION at Perrinvale.” Keith Quartermaine led his friends on expeditions into the Heron Heron, Avoca and Balladonia exploration country. Between 1951 and 1976, Keith wrote 26 journals and took HOME BRANCH over 10,000 photographs on his exploration of the Perth Sue Geary, Administration Manager. Nullarbor and Goldfields - exploring, recording and Easily the neatest office at Heron Kalgoorlie. researching the history, flora, fauna, caves, meteorites, INDUSTRY CLASSIFICATION Please telephone Sue on (08) 9091 9253 tektites and geological features of the region. if you have any enquiries. Other Metals 022 Base Metals Keith began writing up his journals at the request of his father who wanted to share in his activities in these remote RESEARCH SERVICE INDEX NO. locations. Mining H50 On these trips Keith was variously accompanied by Harry Wheeler, John Carlisle (Order of Australia), Bill Cleverly, ISIN David Crook (far right) explaining the Pamela Jean Deeps to a very demanding Tom Bateman and Ross and Beverly Quartermaine. audience of Kalgoorlie-based Shareholders and the Board. AU000 000 HRR6 As Heron works in the same country, we take this opportunity to acknowledge Keith Quartermaine, a true Goldfields explorer. All sepia images in this Report are from All photographic page art by Justin Madden, Keith Quartermaine’s volumes. p Reynolds Graphics, Kalgoorlie. p e r K g u o D d n a en le Ei of y es Footsteps of urt Co Bill, Keith and Harry across Lake Yindarlgooda. DIRECTORS Rodney Michael Evans FCA, FCIS, FCIM, AlArbA Chairman (Non Executive) 21 Close Way, Kalgoorlie, Western Australia, 6430 Ian James Buchhorn BSc (Hons), Dipl Geosci, MAusIMM Managing Director (Executive) 21 Close Way, Kalgoorlie, Western Australia, 6430 Robert George Colville AssocRMIT, MAusIMM Director (Non Executive) Level 1, 1 Sleat Road, Applecross, Western Australia, 6153 Goongarrie Country ANNUAL REPORT 2001 1.0 Chairman’s Review...............................................................................................3 2.0 Operations Review ...............................................................................................4 3.0 Corporate Profile ................................................................................................30 4.0 Directors’ Report ................................................................................................32 5.0 Financial Statements........................................................................................36 Statement of Financial Performance......................................................36 Statement of Financial Position.................................................................37 Statement of Cash Flows ..............................................................................38 Notes to and Forming Part of the Accounts......................................39 Directors’ Declaration......................................................................................50 6.0 Independent Audit Report.............................................................................51 7.0 Shareholder Information ................................................................................52 8.0 Interest in Mining Tenements......................................................................55 CONTENTS Glossary of Terms ..............................................................................................67 Avoca Country Page 1 HERON RESOURCES LIMITED FIG.1: EASTERN GOLDFIELDS PROJECT LOCATIONS Heron, Avoca and Balladonia Tenements Heron Avoca Balladonia Tenure Tenure Tenure Heron has acquired a quality project portfolio covering 19,000 km2 of Archaean Nickel and Gold mineralised terrain. Heron’s aim in pegging is to build up contiguous tenement holdings covering several 100km2 of favourable geological structure. Only projects with known mineral resource potential or well defined drilling targets are acquired. Page 2 1.0 CHAIRMANS REVIEW It is with pleasure that I present the sixth Annual Report of Heron Resources Limited ("Heron"). During 2001 the Company has significantly advanced its high quality assets in the Nickel and Precious Metal sectors, while maintaining its strong cash position. During the year, A$2.8 million was raised through a placement, resulting in A$3.1 million in cash at year’s end. Heron Nickel Assets The commodity Resource Definition Reverse Circulation drilling continued almost non-stop during 2001, with 67,017m in emphasis for 1,335 holes now having been completed at Goongarrie. Heron is unequivocally Drilling results at the Pamela Jean Zone have been consistently exceptional, and validate the tenacity Nickel Laterite, and professionalism of the Heron team in exploring this project. Drill intercepts during 2001 include: and the project emphasis is • GSRC1022 111m at 1.37% Ni and 0.07% Co Goongarrie, • GSRC1025 118m at 1.31% Ni and 0.12% Co specifically the • GSRC1030 104m at 1.33% Ni and 0.09% Co Pamela Jean Zone. Discussions are continuing with parties involved in the sale and re-structuring of Cawse Nickel Operations. Your Board is optimistic that the final outcome of these negotiations will be beneficial for your Company. Exploration All key Mining Leases at Goongarrie have been granted. Heron is preparing a Notice of Intent to success during commence mining at Goongarrie. I wish to specifically compliment the efforts of David Crook as Heron’s 2001 at the Exploration Manager and Brian Wyatt representing the Goldfields Land Council for the good spirit shown in Goongarrie negotiating the Native Title Land Access Deeds and State Deeds which will facilitate Goongarrie mining. Nickel Project has resulted in A substantial area of future infrastructure sites was acquired to the immediate west of Goongarrie. Heron Heron identifying now has contiguous tenement coverage from Goongarrie southwest towards the Cawse plant site. the premium Australian Nickel As at 30 June 2001, the total Measured, Indicated and Inferred Mineral Resource above a 0.75% Ni cut-off Laterite deposit for Goongarrie-Kalpini and satellite nickel projects was 180.1 million tonne at 1.05% Ni and 0.08% Co. in terms of grade, thickness The Measured, Indicated and Inferred Mineral Resource above a 0.50% Ni cut-off for the Goongarrie- and metallurgy. Kalpini and satellite nickel projects was 406 million tonne at 0.8% Ni and 0.06% Co. During the year, Centaur variously nominated Peter Lee and Stephen Dennis to the Heron Board, both of whom have now retired. I thank them for their contribution. The Avoca IPO Avoca Precious Metal Assets aims to derive Planning is advanced to "spin-off" Heron’s non-nickel assets into a listed company known as value for Heron shareholders Avoca Resources Limited ("Avoca"). Heron plans to transfer to Avoca 216 tenements in 23 projects, from Heron’s including 15 Joint Ventures with an aggregate of A$9.2 million in farm-out expenditure and a substantial quality Precious royalty portfolio. Newly acquired projects to be owned 100% by Avoca will include: Metal assets. • Powder Sill Platinum Group Element (“PGE”) Project, PGE soil geochemical targets. Together, Heron • Jimberlana PGE Project, three advanced stage PGE-Ni-Cu sulphide layered mafic complex targets. and Avoca • Mungari Gold Project, south along