Annual Report 2005 Corporate Directory
DIRECTORS AUDITORS Craig Leslie Readhead BJuris LLB Butler Settineri Chartered Accountants Chairman (Non Executive) 35-37 Havelock Street 46-50 Kings Park Road WEST PERTH WA 6005 WEST PERTH WA 6005 SOLICITOR TO THE COMPANY Ian James Buchhorn BSc (Hons), Dipl Geosci, MAusIMM Pullinger Readhead Lucas Managing Director (Executive) 46-50 Kings Park Road WEST PERTH WA 6005 21 Close Way KALGOORLIE WA 6430 BANKERS Norman Mathew Longworth BSc (Hons), MAusIMM Exploration Director (Executive) Challenge Bank 230-236 Hannan Street 21 Close Way KALGOORLIE WA 6430 KALGOORLIE WA 6430 Allan Trench PhD, BSc (Hons), MBA (Oxford), MAusIMM SHARE REGISTRY Director (non Executive) Security Transfer Registrars Pty Ltd 21 Close Way 770 Canning Highway KALGOORLIE WA 6430 APPLECROSS WA 6153 Telephone: +618 9315 0933 COMPANY SECRETARY Facsimile: +618 9315 2233 Sarah Helen Calvert BBus (Acc), ASA Email: [email protected] Company Secretary 21 Close Way ABN KALGOORLIE WA 6430 30 068 263 098 REGISTERED AND PRINCIPAL OFFICE STOCK EXCHANGE 21 Close Way PO Box 1280 Australian Stock Exchange Limited KALGOORLIE WA 6430 2 The Esplanade PERTH WA 6000 Telephone: +618 9091 9253 Facsimile: +618 9091 9256 Email: [email protected] ASX CODE Website: http://www.heronresources.com.au HRR
Table of Contents 1.0 CHAIRMAN’S REVIEW 2 2.0 OPERATIONS REVIEW 4 3.0 CORPORATE PROFILE 18 4.0 DIRECTORS’ REPORT 24 5.0 FINANCIAL STATEMENTS 31 STATEMENTS OF FINANCIAL PERFORMANCE 31 STATEMENTS OF FINANCIAL POSITION 32 STATEMENTS OF CASH FLOW 33 NOTES TO & FORMING PART OF THE ACCOUNTS 34 DIRECTORS’ DECLARATION 52 Front Cover painting by Barbara Graham, for the book Thukurrpa Yilpanha wiya yamathi Tjapirnku. 6.0 INDEPENDENT AUDIT REPORT 53 The Dreamtime story of why the Goanna and the Lizard are no 7.0 SHAREHOLDER INFORMATION 54 longer friends today. 8.0 STATEMENT OF MINERAL RESOURCES 57 © Wangkanyi Ngurra Tjurta (WNT). 9.0 INTEREST IN MINING TENEMENTS 58 This story is reproduced through the Heron Resources 2005 10.0 GLOSSARY 71 Annual Report pages 5 to 17 with the kind permission of Wangkanyi Ngurra Tjurta language centre, Kalgoorlie WA.
Heron Resources Limited Highlights
DIRECTORS Craig Leslie Readhead CHAIRMAN (NON EXECUTIVE) Ian James Buchhorn MANAGING DIRECTOR (EXECUTIVE) Norman Mathew Longworth EXPLORATION DIRECTOR (EXECUTIVE) Allan Trench DIRECTOR (NON EXECUTIVE)
2005 HAS SEEN INCO JOIN WITH HERON TO DEVELOP THE KALGOORLIE NICKEL PROJECT, with consequent market recognition moving Heron’s market capitalisation from A$20m to A$100m. Heron and Inco are committed to moving towards commissioning the Kalgoorlie Nickel Project, as Feasibility Study milestones are met. • Project Funding: The Kalgoorlie Nickel Project (KNP) is a potential 50,000 tonnes per annum or greater nickel producer, over a 25 year or greater mine life. ➢ Inco sole funds all Feasibility Studies (estimated cost A$90 million) and must procure all project debt funding to earn a 60% interest in the KNP. ➢ Significantly, Inco loans Heron all but 4.5% of the equity funding, which Heron repays from 80% of its future portion of positive cash flow. This means Heron’s equity in the project is not diluted. The KNP funding pathway is in place, subject to positive Feasibility Study outcomes. • Resources: The KNP Leach Feed Grade (LFG) target is 120 million tonne at 1.5% Nickel. This is a significant world nickel target, with grades comparable to or exceeding existing nickel laterite operations. ➢ Heron completed systematic Reverse Circulation drilling at all potential resource areas during 2005, to evaluate screen upgrade of Run-of-Mine mineralisation at a pilot facility in Perth. Target leach feed grades of 1.5% Nickel were returned from bulk drill samples. ➢ Development is focussed on the Goongarrie-Siberia siliceous mineralisation, where the independent JORC-compliant resource on 100%-owned Heron tenements is 357 million tonne at 0.7% Nickel. The KNP resource risk is minimal. • Processing: Inco’s Feasibility Study for the KNP will evaluate processing flow-sheets utilising proven components operating successfully in established Pressure Acid Leach (PAL) plants elsewhere in the world. The KNP processing risk is quantified and is minimal, particularly in view of the Inco technical input. • Location and Infrastructure: The KNP has a premium location and infrastructure: ➢ Plant location is likely to be adjacent to Heron’s Goongarrie resource 80km northwest of Kalgoorlie. ➢ Excellent regional infrastructure, with natural gas pipeline, road, rail and ports within the KNP operations area (the region produces and exports 15% of the World’s nickel and has additional capacity). ➢ Political stability, minimal sovereign risk. ➢ Stable, skilled mining work force, with the ability to have a residential work force for the KNP with lower staff turnover and Intellectual Property better maintained within the site work force. ➢ Stable tailings management, which is the KNP’s greatest advantage over wet tropical laterite competitors. The KNP sovereign risk is minimal, WA being a prime location for major resource development. The operating Cawse, and commissioning Ravensthorpe and Goro nickel laterite projects provide a “blue print” for the on-going development of the KNP: • The KNP ore feed is a siliceous limonite oxide laterite similar to that of the Ravensthorpe and Cawse nickel operations, and the KNP limonite mineralisation style is comparable to Goro. • Siliceous mineralisation is well suited to low cost bulk mining followed by fine screening to achieve a 1.5% Nickel LFG. This upgrade characteristic is a key economic driver of the KNP. Securing Inco as the KNP technical and funding partner means Heron has attained a key project milestone during 2005. The KNP joint venture structure allows a mid-cap A$100 million company such as Heron to be the 40% partner of an A$10 billion company such as Inco in an A$1.4 billion Project. This clearly is an excellent outcome for Heron and its Shareholders.
Annual Report 2005 1 1.0 Chairman’s Review
Figure 1: Eastern Goldfields Project Locations
LEGEND Kalgoorlie Nickel Project tenements (includes Sphere of Influence tenements)
Other Heron tenements
Heron retains pre-emptive nickel-laterite rights
WESTERN AUSTRALIA Balladonia Oil Shale-Uranium tenements
Regent gold/base-metal tenements Kimberley
Ochre Iron-ore tenements Onslow Iron-Sands
Warburton Copper
Kalgoorlie Perth Balladonia
2 Heron Resources Limited It is with pleasure that I present the tenth Annual Report of Heron Resources Limited (Heron). In examining our ten reports since listing in August 1996, it is rewarding to see the continual growth of our asset base with time, and to see the strategic targets we set with our first nickel laterite discovery back in 1997 steadily and systematically achieved. Without doubt, 2005 has been a great move forward for Heron, the year in which our business plan delivered outstanding growth for Shareholders. My Chairman’s Review last year concluded with: “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 (KNP). A clear pathway through to production is available.
Feasibility Study • Selection of the KNP Partner In June 2004, Heron established its platform for the KNP development through completing independent resource estimation and an independent scoping study, which confirmed the KNP could support a viable nickel project. In August 2004, Heron commenced assembling a data room compiling the 400,000 metres of drilling completed by Heron and previous tenement holders since 1997, and the 300 legal agreements entered into to assemble the KNP assets. Following selection of a short-list comprised of World Top 10 nickel companies, the data was made available in October 2004, and negotiations commenced with two preferred partners in February 2005. 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. Inco will use this bulk material to evaluate through an independent metallurgist whether plant-scale screen upgrade to 1.5% Nickel is achievable. This is our key milestone for 2006, and if successful, will establish the KNP 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 acquired 16.5 million Heron Shares through a placement, 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. Heron’s planned corporate activity is to divest its non-nickel assets through three separate public listed vehicles. • Ochre Resources Limited, proposed sale of our iron ore mineral resource tenements in the Pilbara and Koolyanobbing iron ore mining centres to listed company Echelon Resources Limited. • Regent Resources Limited, Olympic Dam-style gold and base metal drill targets in Western Australia. • Balladonia Energy Limited, uranium, oil shale and mineral sands in the western Eucla Basin. Additionally, following an Australia-wide review, Balladonia pegged new uranium tenements in WA, NT and Queensland.
We acknowledge the support of the many stakeholders involved in the KNP, particularly the traditional Custodians of the Land: Yuwa! Ngalipa nhurraku parnangka kanyilku. Greetings! We will take care of your country. Custodian Elder response: Yuwa! Pukurlpa nhurrapa nyinarranhi ngalipaku parnangka. Greetings! Welcome - we are happy for you to come on our country.
Craig Readhead, Chairman
Annual Report 2005 3 2.0 Operations Review
HERON OBJECTIVES DURING 2005 AND ONWARDS 2005 has been an outstanding year for Heron. The Company has an excellent joint venture partner in Inco, an exceptional portfolio of mineral assets, and a strong cash position exceeding A$12.3 million, all of which are driving the current growth in Shareholder value. The partner: As summarised by our Chairman, there has been a major change to Heron’s Shareholder structure. As foreshadowed in our 2004 Annual Report, Heron sought to introduce a major partner to the KNP. The process culminated with Inco becoming the Joint Venture partner, and subsequently taking a 10% placement. The tenements: The intrinsic and fundamental value of Heron is clearly its Western Australia tenement portfolio. In the Eastern Goldfields, arguably the world’s most sought after nickel province, Heron is the dominant land-holder based on the occurrence of ultramafic rocks, the host rock for most Western Australian nickel deposits. The financial position: Heron is well funded and managed by an experienced team with a well regarded track record, all based in Kalgoorlie. This team has guided Heron’s transformation from a A$20 million explorer at 30 June 2004, to a A$100 million mid- cap development company at 30 June 2005.
The Inco Joint Venture On 30 July 2005, Heron signed a definitive Farm-in and Joint Venture agreement with Inco Limited affiliates Inco Australia Limited Partnership and Inco Resources (Australia) Pty Limited (collectively, Inco) providing for the potential development of the Kalgoorlie Nickel Project (KNP or Project). The agreement provides that Inco will earn its interest in the Project by funding all exploration and development and meeting certain exploration and development milestones. If the KNP proceeds to construction, Inco will be responsible for procuring 100% of the debt project finance and will fund all but 4.5% of the of equity funding required for the Project, as a loan to Heron repayable from Heron’s future Project revenues. Upon all milestones being met, Inco will earn a 60% interest in the Project with Heron retaining a 40% interest. Inco will also be entitled to purchase 100% of the KNP off-take on commercial terms. Project milestones on the pathway to production are: • Step 1: A diamond drilling program with a view to testing Heron’s basis for its assumption that the Heron properties contain 120 million tonnes or more of leach feed material at a grade of at least 1.5% Nickel. • Step 2: Determination of whether there is an economically feasible process and flow-sheet for treating the KNP ore based on batch and mini pilot plant test-work, conducting metallurgical investigations, and selection of drilling method for further mineral resource evaluation. • Step 3: Confirmation of the mineral resources, chosen process and products, risk analysis, environmental studies and water quality, development of the capital and operating cost model and the recommended scope, cost and schedule for the BFS. An independent engineering firm will complete the Pre-Feasibility Study (PFS). Upon completion of the PFS, Inco will have spent an estimated US$18 million. • Feasibility Study: Completion of a Bankable Feasibility Study (BFS) by an independent engineering firm at an estimated cost of at least US$50 million. The timetable for the commencement and completion of each Step is set out below:
Latest Latest commencement completion from from Activity 30 July 2005 30 July 2005 Step 1 On signing 12 months Step 2 14 months 26 months Step 3 28 months 42 months Feasibility Study 48 months 72 months
Photo: James Ridley (Heron), John Jackson (Inco Australia) and Laurent Sapor (Inco New Caledonia), logging RC drill chips, Bulong Taurus
4 Heron Resources Limited Joint Venture Mechanisms As discussed above, Inco’s 60% interest will be acquired upon all project milestones being achieved and, if the Feasibility Study is bankable and the market conditions are favourable, a decision to mine is made by Inco and project finance procured by Inco. Inco will be the project operator, subject to the oversight of a management committee comprised of Heron and Inco representatives. If the Feasibility Study is bankable and a decision to mine has not been made by Inco within two years after the completion of the Feasibility Study, then Heron shall have the right to update the Feasibility Study and make a decision to mine as operator, on a 50:50 basis, subject to Inco not electing to proceed Photo: Mat Longworth, Ian Buchhorn, Sarah Calvert on the basis of the updated study. If a decision to mine is not made (all Heron) and Bob Osborne (Inco Canada) reviewing within five years of completion of the first Feasibility Study, Inco’s the KNP Definitive Agreement rights under the KNP Joint Venture agreement lapse. Heron has the right to terminate Inco’s earn-in if it fails to meet its material obligations (including timetable commitments), and Inco is required to withdraw or proceed further on completion of each Step. Inco has the right to suspend activities with adjustment to the timeline for force majeure and third party or government consents required for its exploration. The agreement provides that Inco will have until 1 March 2006 to finalise its selection from a Heron portfolio of tenements in a Sphere of Influence in the Kalgoorlie region for inclusion in the KNP. Currently there are 384 tenements so nominated. Inco has the right to include future Heron tenement acquisitions in the region within the Project. The signing of the Heron-Inco Joint Venture is a significant milestone in the development of one of the world’s largest nickel resources. Heron Shareholders have a clearly defined and properly funded pathway to advance the KNP towards the target of being a major global nickel producing operation. Inco is the second largest producer of primary nickel in the world, with a current market capitalisation of approximately A$10 billion. The company has significant expertise in developing major nickel projects to production, with over 100 years of nickel development, mining and processing experience. Most importantly, Inco has a world wide expertise in nickel laterite, gained through its 60,000tpa operations in Indonesia and the 60,000tpa Goro operation in New Caledonia, currently being commissioned. Having identified Inco as the laterite Joint Venture partner, it was Heron’s preference that Inco be the partner to explore for nickel sulphides within the KNP. The negotiations for the nickel sulphide joint venture are continuing. Since arriving in Kalgoorlie in April 2005, Inco’s technical team has been working closely with Heron and has largely completed preliminary database work, re-logging of existing Heron drill holes and establishing suitable operating systems for a project of the KNP scale. Inco has already demonstrated its extensive technical expertise and major project experience in their KNP work to date, with Step 1 operations now underway. Development and Production Activity The entire corporate focus of Heron is to facilitate nickel production from the Kalgoorlie Nickel Project. Heron is free-carried in the KNP Joint Venture until a decision to mine is made. Its spending obligations are thus minimal. Photo: Mat Longworth (Heron), Bob Osborne (Inco Canada), The key programs for 2006 are: Ramon Andinach (Heron), • Heron’s operational emphasis is to provide all support possible for Inco in their Step John Jackson (Inco Australia), 1 Pre-Feasibility Study programs. To this end, three Heron geoscientists have been Laurent Sapor (Inco New Caledonia) seconded to the Inco Kalgoorlie office. • As part of the Inco April 2005 Placement Agreement, Heron has committed to spend A$1 million on RC drilling at each of Goongarrie and Bulong, to generate additional resources to be offered to Inco for the KNP Joint Venture. Initial drilling programs have been completed by Heron, pursuant to the Placement Agreement. • Heron has continued to acquire new nickel laterite tenements within the KNP Sphere of Influence, and nickel sulphide targets within the proposed nickel sulphide Area of Mutual Interest, for offering to Inco. • Assessment of KNP infrastructure requirements has commenced with presentations made to various regional stakeholders. At this stage, sufficient infrastructure capacity appears to be available to the KNP.
Yilpanha Tjapirnnga yamathi kutharra. Thana thithi pirninha manu wukalku mayiku. Yamathi ngurrirnu yilpa pirni tjapirn pirni pikurru pirni tawarra yingkaku kapingka ngarlpurriku. The Goanna and Lizard family were the very best of friends. They always took their families out together on hunting trips for food. They even travelled along to move to different places to make friends with other reptiles and to take their children out to play and swim.
Annual Report 2005 5 2.0 Operations Review Continued
Photo: Bob Osborne (Inco Canada), Mat Longworth and James Ridley (Heron), John Jackson (Inco Australia), at Heron’s Boulder Block Pit, Bulong
Risk Minimisation for the KNP The KNP will be a “fourth generation” nickel laterite project, able to leverage off the knowledge gained from previous “second generation” Western Australian PAL nickel laterite operations, and the currently commissioning “third generation” Ravensthorpe and Goro nickel laterite operations: • Only components proven in existing PAL operations at throughput levels comparable to those planned for the KNP will be considered. • The PAL process is robust and proven at the current laterite operations. • De-coupled and multiple train flow-sheets are essential to the maintenance of PAL plant availability. • The quality and size of the KNP resource base has significant advantages over the earlier Western Australian PAL projects in terms of the potential for high KNP leach feed grade, ease of materials handling and low acid consumption. • The KNP plant ore feed will be designed around a consistent bulk tonnage siliceous limonite feed mined at a low cut-off grade, with high leach feed grades achieved through “selective screening” rather than “selective mining”. The Heron Board view is that with Inco as the KNP Partner, technical risk is substantially minimised.
Acquisitions and Exploration Activity Heron has continued its aggressive tenement acquisition and exploration throughout 2005, with the number of tenements now 721 and area controlled 26,525km2 (2004: 464 and area controlled 17,444km2). This increase reflects: • Identifying and pegging the Pilbara Channel Iron Deposit (CID) targets, which are now key iron ore exploration projects for the Ochre iron ore divestment to Echelon Resources Limited. Ochre controls some 44 tenements covering 4,363km2. • Identifying and pegging the Western Australian Iron Ore Copper Gold Deposit (IOCAD) targets as geological extensions to the west of the South Australian Middle Proterozoic-aged Stuart Shelf (Olympic Dam, Prominent Hill and the recent spectacular Carrapateena copper-gold discovery). These new tenements are now key gold-copper-uranium exploration projects for the proposed Regent divestment. Regent controls some 179 tenements covering 6,725km2. • Identifying and pegging the Balladonia uranium-mineral sand targets, which are now key exploration projects for the proposed Balladonia divestment. Balladonia controls some 46 tenements covering 7,570km2.
Nickel Sulphide Pursuant to the Inco April 2005 Placement Agreement, Heron is required to spend A$0.5 million on regional nickel sulphide target generation. To this end, excellent komatiite-hosted nickel sulphide targets have been acquired on the Mount Keith Ultramafic Unit, between the Mount Keith nickel mine in the south and Honeymoon Well nickel resource in the north. Additionally, layered mafic complex nickel-copper-PGM targets have been acquired in the Albany-Fraser Province and Binneringie Dyke Suite in Western Australia. These targets will be offered for joint venture to Inco.
Corporate Having both Inco and BHP Billiton on the Heron share register as the number 2 and 3 largest Shareholders is a statement on the quality of Heron’s nickel assets, both the laterite development assets, and the sulphide exploration assets. Heron has developed good working relationships with both parties. BHP Billiton Share Purchase BHP Billiton Limited announced a substantial Shareholding in Heron of 15.9 million Shares. Inco Placement raising A$12.4 million Heron completed an excluded placement to Inco of 16.5 million Shares at A$0.75 per Share to raise $12.375 million (before costs). The new funds raised allow Heron with Inco to evaluate additional resource targets currently outside the KNP, for possible inclusion in the Project. A total of A$4.5 million of the funds raised from the placement will be applied to specific exploration programs, while the remainder of the funds are for working capital at Heron’s sole discretion.
6 Heron Resources Limited Photo by Ramon Andinach: Heron field exploration camp, Perrinvale iron ore sampling program, on a misty winters day.
Initial Public Offers Once the KNP Joint Venture was executed in July 2005, the strategic plan to divest the non-nickel assets was activated: • Ochre Resources Limited, iron ore mineral resources at Poondano in the Pilbara Iron Ore Province and Bungalbin in the Koolyanobbing Iron Ore Province, and exploration targets throughout WA. A Heads of Agreement was signed whereby the Ochre iron ore assets are to be vended into the ASX-listed public company Echelon Resources Limited for a vendor consideration of 25 million shares and 10 million performance options. It is proposed that all or part of the shares will be given to Heron Shareholders at nil cost as an in specie distribution once an escrow period has elapsed. • Regent Resources Limited, gold and base metal drill targets in Western Australia. With the signing of the KNP Joint Venture, Inco will first need to assess Regent tenements within the KNP Sphere of Influence (such as Goongarrie and Bulong), before Regent can assume full unencumbered ownership of non-nickel rights. • Balladonia Energy Limited, a geological review of the Balladonia area identified potential uranium “roll front” geological settings. Additionally, following an Australia-wide review, Balladonia pegged new uranium tenements in WA, NT and Queensland. In respect of the Balladonia oil shales, Heron will seek to retain energy and sulphur off-take rights.
Environmental, Health, Safety and Social (EHSS) Heron’s EHSS commitments are integral to its mission to create Shareholder value. The KNP will be designed around sustainable Company and community development: • The conceptual mine plans have single pass bulk mining followed by in-pit waste and screen rejects dumping, to minimise the mine-affected footprint. • The Kalgoorlie Centre for Management of Arid Environments and Curtin University have been consulted in respect of using local plant species for waste dump rehabilitation. • The Company has strict environmental procedures for its field programs, and additionally supports the Kalgoorlie-Boulder Urban Landcare Group in its efforts to maintain the urban environment and the region’s unique woodland. During 2005 there have been no Lost Time Injury (LTI) incidents involving the Company or its contractors (2004: nil LTI). The Company is strongly supportive of the community of Kalgoorlie-Boulder in which it operates, assisting the now Australia-wide renown Ngunytju Tjitji Pirni (NTP) infant health care centre. Heron is strongly supportive of the Wangkanyi Ngurra Tjurta (WNT) Indigenous language centre in their efforts to promote and develop Indigenous culture in the Eastern Goldfields and beyond. WNT have allowed Heron to use one of their school Language Programs as a design feature in this Annual Report. This generosity of spirit is gratefully acknowledged. Heron provides an Education Bursary for the children of our local Native Title claimants. It is wonderful to see some of Heron’s earliest recipients now commencing mining industry apprenticeships, the precise objective back in 2001 when Heron implemented the Bursary. The entire community, both Indigenous and non-Indigenous, must clearly benefit from the KNP Photo courtesy development. Kalgoorlie Miner: 2003 Heron maintains an active program of consultation with State and Local Government agencies who Heron Bursary recipient have responsibility for the statutory carriage of the KNP development. The Company would like in Jaylin Sambo, starting particular to acknowledge the assistance of the State Government Department of Industry and his mine apprenticeship at a local gold mine. Resources and City of Kalgoorlie-Boulder for their ready availability to consult in KNP matters.
Thirntungka Yilpalu thapirnu Tjapirnnga “Ngayuku kultu palyala? Ngayulu nhurraku kultu palyalku.” One day Goanna asked Lizard, “Will you paint my back? If you do, then I will paint your back too.”
Annual Report 2005 7 2.0 Operations Review Continued
NICKEL FEASIBILITY STUDY AND DEVELOPMENT
2.1 KALGOORLIE NICKEL PROJECT Heron 100% Nickel Rights for all tenements. Inco right to earn 60%, through sole funding BFS and securing project debt finance.
Drilling and Bulk Sample Screen Upgrade Study Heron sole funded an extensive drilling and metallurgical program prior to Inco assuming responsibility for the KNP PFS. The screen upgrade characteristics of the siliceous mineralisation were evaluated using RC drill chip bulk composite samples. Heron completed 16,393m in 375 RC drill holes in the 2005 PFS program. The key operating parameter INCO Farm-in and Joint Venture Agreement of the KNP is the screen Step 1 and 2 Metallurgy - Screen Upgrade upgrade performance, which Screened rejects converts low grade/bulk Silica fragments 60% tonnage siliceous limonite Reject grade 0.3% Ni mineralisation into a world- Scrubbed slurry onto competitive high grade pilot plant trommel limonite leach feed. Screening screen deck recognises that siliceous mineralisation is made up of two separate physical components - silica (which assays at approximately 0.3% Ni and comprises around 60% Run-of-mine siliceous of the mass) and nickel- ore bearing limonite (which assays Consisting of yellow- in excess of 1.5% Ni and brown limonite and comprises around 40% of the coarse plates of silica. mass). If efficient screen Overall head grade separation occurs, by 0.8% Ni removing the silica, mineralisation originally assaying 0.8% Ni can be Screened slurry beneficiated up to 1.5% Ni and Limonite 40% better. Leach feed grade 1.5% Ni
Conceptual Mining Studies Screening will ensure efficient resource utilisation for the KNP, allowing bulk mining in the pits and selective screening in the beneficiation plant, potentially delivering a constant feed chemistry at better than 1.5% Ni to the autoclave. Conceptual studies on strip mining indicate this mining method maximises resource utilisation while minimising mining costs and the environmental footprint, and maximising tailings management and water recycling. This strip mining method is commonly used in coal and mineral sands mining where large shallow ore bodies are exploited and pits are progressively backfilled and rehabilitated. The application of these techniques to mining large scale nickel laterite is not only socially and environmentally responsible, but is a good business plan.
Confirmation Diamond Drilling Program The joint Heron and Inco feasibility programs commenced in mid April 2005: • Metallurgical test-work flow-sheets have been selected, and SGS Lakefield Oretest (Oretest) appointed to complete the Step 1 and 2 screening and pilot plant studies. Some 30 diamond drill holes are planned for confirmation of Heron’s previous RC drilling results in the main KNP Goongarrie-Siberia resource areas. • Drill logging systems have been refined to better reflect metallurgical characteristics, and systematic re-logging of previous Heron drill-holes was completed to better quantify the metallurgical styles. • Heron drill sample pulps covering mineralised intercepts are being check-assayed for QAQC and submitted for referee analysis. • The Heron drill data base has been validated and upgraded for the Inco Feasibility Study requirements.
8 Heron Resources Limited 2.1.1 Goongarrie Nickel Project – Inco Sole Funding The initial KNP feasibility programs are focussing on siliceous ore, of which some 357mt at 0.7% Ni is on 100% Heron-owned tenements in the Goongarrie-Big Four-Siberia region, the likely KNP plant site location. This project area has had Indigenous and environmental clearances completed.
Goongarrie South Re-logging of previous Heron drill-holes has demonstrated continuity for the mineralised zones. A strong structural control on the high grade Pamela Jean Zone mineralisation was defined. In particular, talc shear zones were identified in association with ultramafic basement structures, which control the overlying high grade laterite zones. A program comprising 2,147m of RC drilling covering 42 drill holes was completed on limonite and siliceous resources at the proposed Goongarrie South pit location. Drill results confirm a more extensive distribution of siliceous upgrade mineralisation than previously interpreted, with good screen upgrade characteristics. Best result was 54m at 1.5% Ni LFG (1% Ni LFG cut-off, screening at 75µm, “µm” is a micron, or thousandth of a millimetre).
321000mE 321200mE 321400mE 321600mE 321800mE
RC0274 RC0270 GWRC0269 RC0268 GW RC0272 RC0271 GW GWRC0273 GW RC0267 GW GW 400RL GW RC0266 GW RC0265 GW RC0264 RC0263 GW GW
6m @ 4m @ 0.67% Ni 8m @ 24m @ 1.02% Ni 0.95% Ni 0.96% Ni 1.00% Ni 2.09% Ni 4m @ 8m @ LFG 12m @ 18m @ 1.65% Ni LFG 1.13% Ni 0.57% Ni LFG 1.72% Ni 2.21% Ni 0.75% Ni LFG 1.19% Ni 1.05% Ni 1.22% Ni 1.68% Ni LFG LFG LFG LFG nontronite ore, Legend no upgrade
Soils and alluvial
Upper Siliceous
Upper Siliceous interpreted mineralisation
Lower Siliceous interpreted mineralisation 24m @ 1.00% Ni Lower Siliceous 1.72% Ni LFG Nontronite Note x 4 vertical exaggeration Ultramafic bedrock
Figure 2: Goongarrie Hill Project Section 6678320N - Nickel Screen Upgrade Goongarrie Hill A program comprising 3,159m of RC drilling covering 67 drill holes was completed at the Goongarrie Hill pit location. Significant nickel upgrade results were consistently returned. Following screening, the PAL circuit weighted average Leach Feed Grade for the Upper Siliceous mineralisation at a 1.0% Ni LFG cut-off was 1.5% Ni and 0.06% Co. Results for Lower Siliceous mineralisation were similarly encouraging, returning an average LFG of 1.4% Ni. In addition, preliminary estimates indicate that approximately 84% of the Goongarrie Hill resource comprises siliceous mineralisation and is therefore capable of significant nickel screen upgrade. On the above section, the average non-screened grade is 0.84% Ni, increasing to 1.55% Ni after 75µm screening.
Big Four A program comprising 2,349m of RC drilling covering 49 drill holes was completed at the Big Four siliceous resource. A broad zone of nickel laterite mineralisation has been confirmed by the drilling with better results including 12m at 1.5% Ni and 8m at 1.9% Ni (1% LFG cut-off, screening at 75 µm).
Scotia Dam A program comprising 724m of RC drilling covering 19 drill holes was completed at the Scotia Dam resource. Results confirm that the known mineralised zone is a less siliceous ore type. Accordingly, the upgrade potential is lower. Results include 6m at 1.5% Ni and 14m at 1.3% Ni (1% Ni LFG cut-off, screening at 75µm).
Thana palanha tatirnu yapu purlkanha, yapu karnpinha. Tjuwarlarnu thirntu kamparranhi kurli kultungka. Kultu pulaku palyarnu. Pukurltu winhunarnu kapikutu ma-nhaku kultu pulaku. They climbed the highest breakaway where the rocks are very colourful and pretty. It was a beautiful day, the sun was shining warmly on their backs and soon the painting was over. Happily they both raced to the rock-hole to see how pretty they looked.
Annual Report 2005 9 2.0 Operations Review Continued
2.1.2 Siberia Nickel Project – Inco Sole Funding The most likely mining scenario for Siberia is wet screening the siliceous ore on site, and pumping the mineralised slurry by pipeline to the central processing plant at Goongarrie, located some 20km to the east.
Siberia North and Siberia South A program comprising 6,225m of RC drilling covering 123 drill holes was completed at the Siberia North and South siliceous resource areas. Significant recent drill results include 50m at 1.45% Ni and 50m at 1.40% Ni LFG (1% Ni LFG cut-off, screening at 75µm, see section below). 5120mE 5280mE 4960mE
SIRC1360 SIRC1359 SIRC1358 SIRC1357 SIRC1356 400RL Sandy colluvial overburden
24m @ 1.30% Ni 50m @ 1.48% Ni 350RL 1.11% Ni LFG 1.45% Ni LFG Magnesia 50m @ Discontinuity 0.96% Ni 1.40% Ni LFG MINERALISED 300RL ZONE
Legend
Soils and alluvial
Upper Siliceous
Upper Siliceous interpreted mineralisation 250RL
Mafic bedrock 0 50m Ultramafic bedrock
Figure 3: Kalgoorlie Nickel Project Section 58320N - Nickel Screen Upgrade
A comprehensive program of re-logging previous nickel laterite drill-holes was completed for the Siberia area, initially by Heron and then complemented by Inco staff. From the re-logging, 3-D models were generated of the mineralised profile, so that nickel grades can be related back to ore type. The relationship of mineralisation to basement structures in the Siberia area again confirmed that high grade mineralisation can be modelled on the basis of the identified bedrock structures. The Siberia South and Siberia Tank mineralised systems have been reviewed, and are considered to be a late project plant feed, due to lower grades and greater distance from proposed plant site.
2.1.3 Bulong Nickel Project - Inco Sole Funding With the progressive acquisition of the Bulong Danae, Bulong Supersorb and Bulong Tranche One tenements during 2005, a focus for Heron KNP data reviews and field operations has been Bulong, leading up to an RC drilling program of 2,044m in 64 holes. Inco has seconded an experienced geoscientist from its Indonesian laterite operations to review the Bulong Project, and Inco will formulate geological models and mining plans. The dominant Bulong mineralisation style is siliceous nontronite mineralisation. Metallurgical testwork programs for Bulong have been designed to quantify the suitability of Bulong nontronitic ore for PAL flow-sheets. The Bulong nontronite is highly siliceous (in contrast for example to the Highway nontronite), so appears amenable to screen upgrade.
2.1.4 Kalpini Nickel Project – Inco Sole Funding Validation re-logging was completed as part of the KNP Feasibility Study, confirming a significant ore component is nontronitic mineralisation as opposed to the preferred PAL limonite style. Re-interpretation of the Kalpini komatiite belt has confirmed an absence of thick olivine adcumulate units which in the Eastern Goldfields favour siliceous limonite laterite formation. However, several discrete olivine adcumulate komatiite channels were identified, with elevated copper and PGM in associated ironstones and gossans, which are high priority nickel sulphide exploration targets.
10 Heron Resources Limited 2.2 KALGOORLIE NICKEL PROJECT – HERON FUNDING Heron controls Nickel Rights equity for all tenements. Sphere of Influence for KNP, Inco may elect to include in the KNP Joint Venture, subject to third party rights. Projects peripheral to the main KNP mineralised area are being funded and explored by Heron, using funds raised in the April 2005 Inco placement. If resources are defined, Heron may then offer the tenements to Inco, who at its discretion and subject to third party rights may then include the tenements within the KNP Joint Venture and reimburse Heron’s expenditure.
2.2.1 Highway and Highway Extended – Heron Sole Funding Heron Nickel Rights, 75% at Highway (Helix joint venture); 87.5% at Highway Extended (Dalrymple joint venture). A total of 6,822 metres in 180 holes of Reverse Circulation drilling was completed on a 400 x 80m pattern, covering a 10km strike of the Highway Walter Williams Formation ultramafic. Siliceous limonite mineralisation was encountered within the central ultramafic unit, with nontronite dominant on the eastern third of the ultramafic. An in-fill program of 160 x 80m infill resource definition drilling by Heron has commenced at Highway, with a total of 52 holes for 2,760 metres being drilled to date. Heron’s joint venture equity is expected to reach 75% during the current drilling program and budget. The mineralisation again includes both siliceous limonite and nontronitic ore types. In the case of the nontronite ore, this ore style is less likely to be compatible with the envisaged KNP PAL flow-sheet, and areas characterised by nontronite are likely to be lower in development priority.
2.2.2 Comet Vale – Heron Sole Funding Heron Nickel Rights, right to earn 70% (Reed joint venture). There has been minimal nickel exploration conducted, although favourable Walter Williams Formation was confirmed to be present. No field programs are currently proposed and joint partner Reed Resources Limited, who owns the gold rights, is responsible for maintaining DoIR expenditure commitments.
2.2.3 Siberia Tank – Heron Sole Funding Heron Nickel Rights, 90% (Impress joint venture). A review of previous work was completed, and drill-holes from the former operator of Cawse Nickel Operations were re-logged. On the basis of the review, no drilling is planned in the current RC drilling programs.
2.3 SULPHIDE NICKEL PROJECT (SNP) WILDARA NORTH
Heron 100% Nickel Rights for all tenements. WINDARRA
Heron has the largest ultramafic footprint in the Eastern Goldfields nickel Laverton province, through the land holding accumulated over the last eight years Leonora MURRIN MURRIN in the search for nickel laterite mineralisation. Heron has compiled an MINERAL PATCH extensive regional nickel sulphide data base, which is the basis of its current acquisition programs. SNAKE HILL Heron and Inco are negotiating a separate regional nickel sulphide joint venture. Heron’s role will be project generation, with Inco having the GHOST ROCKS right to earn equity through sole funding to making an ore discovery. HIGHWAY
Targets ready for immediate soil CARR BOYD Goongarrie LAKE REBECCA geochemistry and ground Transient Yilgarn ultramafics BARDOC Electro-Magnetic (TEM) survey to site RC EMU LAKE drill collars include Emu Lake, Pinnacles Nickel mines CAWSE SILVER SWAN PINNACLES SOUTH ACRA NORTH Kalpini South, Ghost Rocks, Mineral Patch Hill Sulphide Laterite and Mt Keith. The remaining targets will Kalgoorlie Heron YINDARLGOODA require initial regional soil geochemistry EMU LAKE Ni-Sulphide Prospect Bulong programs to firm-up TEM targets. GIBRALTAR CARNILYA HILL Heron KAMBALDA tenements NEPEAN Figure 4: Heron tenements and ROE HILLS SOUTH 0 40 80 Nickel Sulphide targets WIDGIEMOOLTHA Kilometres
Yilpanha pukurltu nhangu kultu paluku nhuwari. Palu wukangu wala talturingu kata katukutu. Goanna was very pleased, her back was beautiful. She walked away very proud.
Annual Report 2005 11 2.0 Operations Review Continued
Wellington North Prospect Wellington North Nickel Sulphide HRR Targets Wellington North is a discrete “komatiite channel” magnetic anomaly located HRR soil geochemical HRR Tenements within the northern Kalpini nickel laterite project. Results have been received EM anomalies conductor from Heron sampling of the Wellington North “B Gossan”. Results included
Gossan 0.53% Ni, 0.10% Cu, 235ppb Pt, 332ppb Pd, 185ppb Rh, 532ppb Ru, 130ppb IMA zone Os and 110ppb Ir. These high Platinum Group Metals (PGMs) clearly confirm a
Geochemical gossan derived from nickel sulphide. Previous drilling from the 1960s “Nickel IMA anomalies Boom” notes “massive nickel sulphide” in drill logs, with drill assays exceeding Tenement 1% Ni. The Wellington North gossan zone (and a 2m at 6.2% Ni massive sulphide HRR Targets intercept in competitor diamond drilling within an excised tenement) quite clearly demonstrate a nickel sulphide-endowed komatiite sequence at Kalpini, confirming that systematic soil geochemistry and ground TEM survey is PIO Tenements warranted throughout the entire 100km strike length of the Kalpini ultramafic belt, to locate nickel sulphide drill targets.
IMA Tenement 0 2km Figure 5: Kalpini Nickel Sulphide Targets Scale HRR Heron Resources Limited tenements Acra North PIO Pioneer Nickel Limited tenements Prospect IMA Image Resources NL tenements
Mt Magnetic Nickel Sulphide In the course of the nickel laterite evaluation, a nickel sulphide conceptual target was developed in the Mt Magnetic region, 10- 15km south and southeast of the main Bulong nickel laterite resource area. From Heron’s field mapping, it appears that a conformable felsic volcanic-basal komatiite contact is present. Open file research has identified high PGM values in previous soil sampling, confirming the nickel sulphide exploration model.
Trans East Nickel Sulphide Field studies were completed at Trans East. At the komatiite basal contact, previous drill intercepts of up to 0.7% Ni, 0.01% Cu, 60ppb Pd and 30ppb Pt are associated with a distinct thickening of the komatiite flow from 300m to 700m. Ground TEM is required over the target prior to drilling. 0 1km Scale Laverton Nickel Sulphide MPRC017 MPRC016 MPRC015MPRC019MPRC014MPRC018 Heron laterite drilling at Mineral Patch Hill has indicated an olivine adcumulate target size of 7 x 0.7-1.4km, which is a HERON Nickel E38/931 Sulphide comparable ultramafic area to the LionOre Honeymoon Well Target MPRC004MPRC020MPRC003 MPRC002 MPRC001 nickel sulphide resource. Most significantly at Mineral Patch Hill, Ni-Cu-Pt-Pd anomaly there occurs anomalous PGMs of up to 246ppb Pt and 111ppb Max Ni in drilling 1.5 to 10,000 (1) Pd associated with 0.04-0.09% Cu, which association is a 1 to 1.5 (3) 0.75 to 1 (6) MPRC013 MPRC012 MPRC011 MPRC010 MPRC009 strong nickel sulphide pathfinder. Petrographic studies on Heron 0.5 to 0.75 (3) 0.25 to 0.5 (1) drill chips has confirmed the presence of magmatic sulphides. 0 to 0.25 (6)
Figure 6: Mineral Patch Hill Nickel Sulphide Targets MPRC008 MPRC007 MPRC006 MPRC005 Wildara North Nickel Sulphide Wildara North is located 20km north along the structural trend of the 275000mE Thunderbox gold mining centre. Heron 274000mE Abd Agg has completed soil auger sampling across regional gold and nickel targets. A Aux significant nickel-in-soil anomaly is present Aog peaking at 0.31% Ni on a mapped 79000mN ultramafic. Low order coincident anomalism of up to 63ppm Cu with 18ppb Pt and 6ppb Pd is present, Soils Ni (ppm) 1,000 to 4,000 indicating a potential nickel sulphide 500 to 1,000 Agg 300 to 500 setting. 200 to 300 100 to 200 -100 to 100 Nickel TEM survey of the soil anomaly is planned. Ala Sulphide Agg Granite Target Abd Basalt Aog Gabbro Ni-Cu-Pt-Pd Aux Peridotite 0 200m anomaly Figure 7: Windara North Nickel Sulphide Ala Amphibolite Scale Targets
12 Heron Resources Limited DIVESTMENTS AND INITIAL PUBLIC OFFERS 2.4 REGENT RESOURCES LIMITED, PROPOSED GOLD-COPPER DIVESTMENT The proposed Initial Public Offer (IPO) will include Heron’s Iron Ore Copper-Gold Deposit (IOCAD) copper-gold-uranium and Volcanogenic Massive Sulphide (VMS) base metal-gold assets in Western Australia. 2.4.1 Warburton Iron Ore Copper-Gold Deposits (IOCAD) The target is IOCAD copper-gold-uranium mineralization developed in Stuart Shelf equivalent Middle Proterozoic rocks that extend from South Australia into the Western Desert region of Western Australia. The area was explored for copper in the late 1960s and early 1970s by WMC, who recorded over 150 copper occurrences and successfully intersected high-grade copper mineralisation in a number of diamond drill-holes. The WMC copper exploration wound down with their discovery in 1975 of Olympic Dam in the central Stuart Shelf of South Australia. Heron conducted further research on old WMC drill core at the GSWA core library in Kalgoorlie. Samples from the core confirmed high grade copper mineralization, with results including 14m at 1.26% Cu from 86m, including 4m at 2.78% Cu. The most striking feature of the core is the pervasive red hematite alteration occurring in most rock types. The dominant rock types are mafic to intermediate volcanics and a pebbly porphyry clast breccia / conglomerate. This style of terrestrial volcanism is commonly present in IOCAD geological settings. A large number of regional gravity-magnetic anomalies have been identified as targets. 2.4.2 Bardoc Tectonic Zone Gold The Bardoc Tectonic Zone (BTZ) is part of the Boorara-Menzies and Boulder-Lefroy fault systems, one of the major structures controlling gold mineralisation in the Eastern Goldfields. Gold mining centres from south to north that occur within the Bardoc Tectonic Zone and associated splays include Paddington, Broad Arrow, Wendy Gully, Windanya, Bardoc, Goongarrie, Comet Vale, Menzies and Ghost Rocks, all of which adjoin the KNP nickel laterite tenements. Regent is to acquire gold rights over the eastern portion of Heron’s Windanya to Goongarrie to Ghost Rocks nickel projects, covering Siberia Formation basalt and dolerite overlying and east of the Walter Williams Formation ultramafic, which hosts the KNP nickel laterite resources. Gold deposits owned by Heron include the Baden Powell and Goongarrie Lady open-cuts. 2.4.3 Bulong Gold The project area consists of non-nickel tenements purchased from the Bulong Companies (Tranche One), Danae (Bulong East) and Supersorb (Taurus). The merged holding consolidates a contiguous zone covering the historical Taurus-Bulong gold workings, associated with quartz-veined felsic volcanics at the eastern margin of the Bulong Ultramafic Complex. Initial work has commenced with a detailed data compilation. Field mapping was completed, and on this basis, a Ground Disturbance Authority (GDA) lodged for costeaning of the target areas (100ppb Au soil geochemistry), to determine mineralisation styles and vein densities. Regional soil sampling of targets by Heron has defined a high priority gold drill target at Bulong South, with a 1.4km strike length anomaly peaking at 192ppb gold. 2.4.4 Yindarlgooda VMS and Gold The Yindarlgooda massive pyrite and supergene gold occurrences confirm the potential for VMS style Cu-Zn-Au deposits. The Yindarlgooda sulphides also represent potential strategic sulphuric acid resources for the KNP laterite, so Heron will seek to retain sulphur off-take. The main gold target is Queen Lapage. A previous pit is recorded to have produced 35,000t at 9.3g/t Au, and has a remnant resource stated by the previous operator, probably as refractory ore. Initial Queen Lapage ironstone / meta-sediment sampling has returned uniform 35-55% FeO, 70-300ppm Cu, 100-1200ppm Zn and 0.05-2.4g/t Au. Most significantly, the peak gold occurs in sericite schist, which is a key geological pathfinder for VMS “Footwall Alteration”. The results confirm that exhalative VMS models apply at Yindarlgooda. 2.4.5 Keith Kilkenny Tectonic Zone Gold The Keith Kilkenny Tectonic Zone (KKTZ) is a major crustal rift hosting significant historical gold mining centres from south to north at Carasue Dam, Porphyry, Yerilla and Sons of Gwalia. As a rift setting, there are discrete ultramafic units which Heron has previously acquired and drilled as nickel laterite targets (not included in Heron’s JORC-compliant inventory). In the course of its nickel exploration, Heron has identified the KKTZ gold targets. Additionally, Heron has gold mineralised systems at Banjo, Yarri and Nils Desperandum, which previously have been significant gold mining operations, with previous tenement holders reporting well defined resource positions.
Nharru Tjapirntu thulurrarnu ma-nhangu kultu kuyarnmarta. Palu mirrarnu yulangu purlkanha. But when Lizard looked into the water and saw her reflection she was horrified and wild. She cried with a temper.
Annual Report 2005 13 2.0 Operations Review Continued
2.5 OCHRE RESOURCES LIMITED, PROPOSED IRON ORE DIVESTMENT After reviewing various iron ore corporate opportunities, the Board resolved to sell Heron’s iron assets to the ASX-listed company Echelon Resources Limited for a consideration of 25 million vendor shares (currently valued at around A$10 million) and 10 million performance options. Potential exists for cash flow operations from the Bungalbin and Poondano Prospects, since both contain direct shipping grade iron ore in locations with good infrastructure. The business model is to use these projects for cash flow generation, to fund development of the potentially large tonnage Ashburton and Onslow Projects. 2.5.1 Bungalbin Iron Ore The Portman Mining Limited (Portman) Bungalbin Agreement required the commencement of mining by Portman on or before 4 July 2005. This was not achieved, so Heron is now discussing future development options. In view of Portman’s established regional iron ore infrastructure, Heron (through its assignee Echelon) is prepared to seek alternate arrangements with Portman. Excellent iron ore drilling results were received from the Mt Jackson J5 Prospect located some 50km north of the Koolyanobbing iron ore mining operation. The drilling comprised 40 angled RC drill-holes for 3,532 metres, targeting hematite- goethite enrichment of banded iron formations (BIF) along 800 metres of strike of the J5 Prospect. Significant results include:
1500mE 2000mE • J5RC10 -60m at 60.0% iron from surface;
RC002 • J5RC11-62m at 62.5% iron from 2m; 38500mN • J5RC12 -69m at 65.0% iron from surface;
RC005 Outcrop RC001 • J5RC17 -46m at 65.5% iron from 27m; Banded Iron Formation RC025 Chert RC020 RC006 RC004 RC027 • J5RC22 -49m at 62.7% iron from 2m; Mineralised iron formation . RC003 RC009 RC024 Cherty Banded Iron Formation RC035 RC026 RC028 . RC040 RC007 RC008 geothite-hematite mineralisation RC023 RC010 • J5RC36 -66m at 64.0% iron from 10m; Teriary Conglomerate (Canga) RC029 RC011 RC034 RC012 RC022 RC039 Jaspilitic BIF RC021 RC030 • J5RC40 -73m at 63.0% iron from 2m. geothite mineralisation RC013 Mafic volcanics, undifferentiated RC032 RC037 RC031 RC014 Canga . RC016 RC038 RC018 Subcrop RC019 RC017 RC033 RC036 Banded Iron Formation RC015 Figure 8: J5 Prospect with drill collars and geology 0 100 200
Metres 38000mN
The mineralisation is open along strike and there is potential to extend the known zones of mineralisation with further drilling. The iron grades are comparable to those being mined by Portman at Windarling and Koolyanobbing. At the Mt Jackson J4 Prospect, RC drilling of 7 holes for 768 meters, geological interpretation, botanical surveys and aerial photographic survey of the Bungalbin Range were completed. Best drill results were 45m at 58.7% Fe and 53m at 59.2% Fe. 2.5.2 Bungalbin Aurora Iron Ore The two excellent Algoma-style iron ore occurrences, one in-situ haematite and the second kanga (transported Channel Iron Deposit or CID) have been identified from previous Heron helicopter-based sampling programs. Several outcropping iron ore occurrences returned shipping grade iron assays, which have been followed up with vehicle-based mapping and sampling. 2.5.3 Poondano Channel Iron Deposit The project covers a significant iron ore occurrence 30km SE of the iron ore shipping centre of Port Hedland. Previous work indicates that Robe River-style pisolite iron deposits outcrop over a 6km strike length at Poondano with grades up to 59% Fe. Sampling by Ochre has confirmed the historical grades, which are in line with those found in similar pisolitic deposits that are currently being mined by other companies in the Pilbara Iron Ore Province. There is no historical drill exploration, which would facilitate estimation of the depth extent of the deposit, and hence the resource potential. Photo: Poondano iron ore resource, mesa of ironstone occurring above surrounding plains.
14 Heron Resources Limited 2.5.4 Ashburton Channel Iron Deposits Landsat and digital terrane modeling has identified several detrital or Channel Iron Deposit target areas in the northern Ashburton Basin directly south downstream from the Paraburdoo hard rock iron ore deposits. Several Exploration Licences were applied for by Ochre targeting CIDs. Heron has field checked and sampled the main Ashburton targets. There is a high proportion of iron-rich material in the raised gravel beds. Large tonnages of material are present and it will be evaluated through drilling and metallurgy as to whether a suitable iron-rich product can be extracted from the gravels. Photo: Low lying ridges of ironstone.
2.5.5 Onslow Iron Sands The project area is located 10km along the coast south-west of Onslow. A modest sized iron-sand deposit was delineated in the early 1970s, however, a scoping study at the time found it to be uneconomic. Given the now much improved iron ore prices it was considered that the area warranted a renewed assessment. 2.5.6 Bandicoot Range Iron Ore The Bandicoot Range project is located directly west of Kununurra and 50km from the Port of Wyndam. The tenement contains a number of iron occurrences that were evaluated in the 1970s. Previous reports indicate rock-chip assays of up to 65% Fe which will provide a focus for initial exploration in the area. Joint venture documentation is being drafted with Mt Anketell Pty Ltd, who will have the right to earn a 60% equity in the project. 2.5.7 Perrinvale Iron Ore and VMS Mt Burgess Mining withdrew from the Perrinvale joint venture in 2005. Data was returned and the project reviewed to assess its iron ore potential. Digital terrane models, detailed aeromagnetics and mapped geology confirmed the presence of significant strike lengths of BIF within all tenements. Unfortunately none of the previous sampling included iron assays. Accordingly, Heron completed a significant mapping and rock chip sampling program of the BIF horizons through all tenements, confirming secondary iron ore enrichment of the BIF units. 2.5.8 Northam Iron Ore The Northam Iron Ore project comprises Exploration Licence applications covering BIF units near Northam, Western Australia. Again, the target was selected on the basis of good transport infrastructure, and proximity to an iron processing facility at Kwinana. Northam is a conceptual project targeting iron-enriched BIF units within the Western Gneiss Terrane similar to those found at the Jack Hill iron deposit to the north. Field reconnaissance by Heron identified strong iron enrichment, confirming that potential does exist in the area. Photo: The outcropping ironstone ridge shown returned a 59% Fe analysis.
2.5.9 Jamieson Iron-Titanium-Vanadium-PGM The prospect is located in the Musgrave Province and is a layered mafic complex with banded magnetite-hosted titanium and vanadium mineralisation. As well as magnetite mineralisation, potential exists for Platinum Group Metals (PGMs). In this location, iron ore production would be as a by-product from titanium, vanadium or PGM primary mineralisation.
Palu winhunarnu yilpakutu, ma-warrkirnu, pungkulanhi tawarra, “Ngayulu nhurraku kultu karnpinha nhuwari palyarnu, wala nhurra ngayuku kultu kuyarnkarnu.” Then she raced over to Goanna and started shouting at her, for Goanna had painted Lizard’s back with ugly colours, while Goanna’s back was painted pretty with yellow, green and light-brown in neat stripes.
Annual Report 2005 15 2.0 Operations Review Continued
2.6 BALLADONIA ENERGY LIMITED, PROPOSED URANIUM-OIL SHALE-MINERAL SAND DIVESTMENT The 5,859km2 contiguous project area covering 39 tenements is located 200km SE of Kalgoorlie on the western margin of the Eucla Basin. Balladonia acquired the tenement portfolio as a potential strategic source of sulphur and energy for the KNP laterite developments. Subsequent studies have identified uranium and mineral sand targets, including economic grade zircon intersections, suitable for drill testing once the tenements are granted. Uranium As well as uranium targets within the Balladonia project area, the Company has pegged several new uranium properties with documented radiometric anomalies in WA, NT and Queensland. 2.6.1 Balladonia As part of the 1980s oil shale exploration at Balladonia, down-hole radiometric logging was systematically completed as a means of geological correlation. An extensive uranium anomaly is indicated, comparable to that of the Mulga Downs uranium resource located to the north of Balladonia. Mulga Downs is also an oil shale setting, and is the third largest uranium resource in Western Australia. 2.6.2 Mount Phillips Uranium The project is in the Gascoyne region of Western Australia covering several uranium occurrences in valley calcrete units along some 60 kilometres of the Gascoyne River and Mount James Creek valleys. The Mount Phillips exploration model is palaeo-channel uranium in calcrete occurring as carnotite. Grades of up to 0.25% U3O8 are reported within calcrete adjacent to Balladonia’s tenure. There are a large number of basement uranium occurrences in the catchment area of the Gascoyne Valley. These basement uranium occurrences provide an ideal source for the secondary uranium deposited within the valley calcretes. Given the extensive nature of the project area’s anomalism, there is good potential to Figure 9: Mt Phillips discover economic uranium deposits using modern exploration Uranium Project - techniques. Known Uranium Occurrences 2.6.3 Mt Denison Uranium A 130km2 area has been applied for in the Mt Denison area 240km NW of Alice Springs in the Northern Territory. The area covers part of the Mid-Proterozoic aged Wangala Granite which is characterised by a regionally elevated uranium response (also an IOCAD copper-gold-uranium target). Elevated uranium has previously been reported from micaceous apatite schists within the granite, with rock-chips up to 0.09% U3O8.
Heavy Mineral Sands Heavy mineral sands occur in transgressive strandlines west of the Balladonia oil shales. High zircon is recorded in previous mineral sand drilling at Balladonia. Significant zircon discoveries were made by other explorers in 2005 in the eastern Eucla Basin.
Lignite / Oil Shale The oil shale resources are swamp deposits formed in Eocene-aged paralic lake valleys at the western edge of the Eucla Basin sea. As a result of a later rise in sea level, the swamps were buried and the shoreline shifted westward forming coastal beaches and dune systems (strandlines, with documented heavy mineral sands). With the oil price exceeding US$60 per barrel, Heron’s oil shale assets are attracting interest. Resource estimates are qualitative at best, but from reviewing previous exploration data, there is a substantial tonnage potential at a Fischer Oil Yield of 133 litre per tonne. There is a significant sulphur content in the oil shales, for which Heron would seek to retain offtake rights for future nickel laterite processing. An independent consultant completed a Known review of the Balladonia Oil Shale during the year, and potential development mineral sand concepts are under review. occurrence
Figure 10: Digital Terrane Model of the Balladonia Oil Shale and Mineral Sand Project
IAN BUCHHORN MANAGING DIRECTOR The information is based on, and accurately reflects, information compiled by Ian James Buchhorn, who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has 31 years experience as an exploration geologist, 24 years experience as a mineral economist, and 9 years experience in evaluating nickel laterite mineral resources, and has the appropriate relevant qualifications, experience and competence to be considered as a “Competent Person” as defined in the JORC Code.
16 Heron Resources Limited Statutory Information
3.0 CORPORATE PROFILE 18
CORPORATE GOVERNANCE STATEMENT 18
4.0 DIRECTORS’ REPORT 24
AUDIT INDEPENDENCE DECLARATION 30
5.0 FINANCIAL STATEMENTS 31
STATEMENTS OF FINANCIAL PERFORMANCE 31
STATEMENTS OF FINANCIAL POSITION 32
STATEMENTS OF CASH FLOW 33
NOTES TO AND FORMING PART OF THE ACCOUNTS 34
DIRECTORS’ DECLARATION 52
6.0 INDEPENDENT AUDIT REPORT 53
7.0 SHAREHOLDER INFORMATION 54
8.0 STATEMENT OF MINERAL RESOURCES 57
9.0 INTEREST IN MINING TENEMENTS 58
10.0 GLOSSARY 71
Thukurrpa watharnu thana kamu wiya yamathi nyina. Thukurrpa watharnu Tjapirnku kultu parnaly- parnalypa. Palunha parnapirinhpa nharru purtu nhakula. They had a big fight and were never friends again. That’s why today when you see Lizard, she is still dusty and sometimes it is hard to see her as she blends in with the dusty earth. Illustrations by Barbara Graham. Translated into written Wangkatha by Jean McKenzie. Published by Wangkanyi Ngurra Tjurta, Kalgoorlie.
Annual Report 2005 17 3.0 Corporate Profile
HERON RESOURCES LIMITED (“Heron”) is a Kalgoorlie-based exploration and development company. The corporate aim is to become a profitable mining company through the development, in Joint Venture with Inco Limited (“Inco”) of Canada, of the Kalgoorlie Nickel Project in the Eastern Goldfields of Western Australia.
In terms of the core nickel assets, the Company undertakes cost-effective resource definition drilling and feasibility studies in relation to provision of additional nickel laterite resources to the Kalgoorlie Nickel Project Joint Venture, and seeks to generate new nickel sulphide targets for the proposed Inco nickel sulphide joint venture. Additionally, the Company is carrying out the corporate programs necessary for the de-merger of non-core non-nickel assets.
The management of the Company is based in Kalgoorlie. Accordingly, the Company has excellent access to tenement acquisition opportunities and to specialist contractor services. Administrative overheads are also maintained at lower levels due to the Kalgoorlie base.
The Company is managed and staffed by a team of seven professional geoscientists with extensive industry experience. Specialist consultants are used as required, particularly in disciplines where due diligence may be required. Field programs such as drill rig access, drill site rehabilitation and hydrological monitoring are implemented under long-term contracts to experienced operators.
OBJECTIVES • To convert the Kalgoorlie Nickel Project laterite Mineral Resources into profitable Joint Venture mining operations for the Company; • To increase the value of the Company through the continued acquisition, exploration and development of nickel resources; • To establish mining cash flows that increase the Company's market capitalisation and value to Shareholders; • To conduct operations in a safe and environmentally responsible manner, to offer employment opportunities to those who live in the exploration provinces, and to respect and nurture the Indigenous culture of the exploration provinces; • To establish where possible a residential work force, to provide a working environment which also supports a healthy family life, and • Manage the risk in all social, exploration, development and corporate endeavours.
STRATEGY • Acquire the maximum available equity in nickel and associated commodity Mineral Resource projects through pegging or outright purchase, concentrating within the Eastern Goldfields of Western Australia; • Focus on cost-effective drill exploration to convert exploration targets into Mineral Resources; • Use the best management, technical and financial control techniques; and • Work with a Nickel Industry Partner being Inco to spread development and funding risk.
CORPORATE GOVERNANCE STATEMENT
The Board of Heron is committed to achieving and demonstrating the highest standards of Corporate Governance.
The Board is responsible to its Shareholders for the performance of the Company, and wherever possible seeks the input of its Shareholders through both formal and informal meetings, distributing Company reports and electronic contacts.
The Board is focused on: • Enhancing the interests of Shareholders and other key stakeholders; and • Ensuring the Company is properly managed.
The Board believes that sound Corporate Governance practices will assist in the creation of Shareholder wealth and provide accountability and control systems commensurate with the risks involved.
This Statement outlines the main corporate governance practices in place during the financial year, noting where practices depart from the ASX Corporate Governance Council Recommendations and the Board's reasons for an alternate approach. Where the Board supports a recommendation, but is yet to fully implement it, a complementary policy or practice has also been identified.
18 Heron Resources Limited The following additional information about the Company's Corporate Governance practices is set out on the Company's website at: www.heronresources.com.au • Board Charter; • Summary of policy on securities trading; • Summary of continuous disclosure policy ; • Summary of arrangements regarding communication with Shareholders; • Summary of Company's risk management policy; • Audit & Finance Committee Charter; and • Code of Conduct.
EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE GOVERNANCE RECOMMENDATIONS
Principle 1. Lay Solid Foundations for Management and Oversight Council Recommendation 1.1: Formalise and disclose the functions reserved to the board and those delegated to management. The Company complies with this recommendation. The Company has adopted a formal written Board Charter.
Principle 2. Structure the Board to Add Value Council Recommendation 2.1: The majority of the board should be independent directors. The Company does not comply with this recommendation. Currently one of the four Directors comprising the Board is considered independent within ASX Corporate Governance Guidelines. The Company believes that Messrs Readhead, Buchhorn, Trench and Longworth have the skills and experience to properly and effectively discharge the Board’s duties. The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the expense of appointing additional independent non-executive directors. Details of the members of the Board, their experience, expertise and qualifications are set out in the Directors’ Report in Section 4.0 following of the Annual Report. Council Recommendation 2.2: The chairperson should be an independent director. The Company does not comply with this recommendation. The Chairman, Mr Craig Readhead is not independent. The Board believes that Mr Readhead brings quality and independent judgment to all relevant issues falling within the scope of the role of a Chairman. The Board considers that the Company is not currently of a size, nor are its affairs of such complexity to necessitate the appointment of an independent non-executive Chairman. Council Recommendation 2.3: The roles of chairperson and managing director should not be exercised by the same individual. The Company complies with this recommendation.
Annual Report 2005 19 3.0 Corporate Profile Continued
Council Recommendation 2.4: The Board should establish a nomination committee. The Company does not comply with this recommendation. The Board considers that the Company is not currently of a size to justify the formation of a nomination committee. The Board as a whole undertakes the process of reviewing the skill base and experience of existing Directors to enable identification or attributes required in new Directors. An independent consultant has been engaged to continue to identify new candidates for the Board, and discussions continue at an informal level with persons so identified to gauge their interest and optimal timing, if appropriate, to assume a Board role. When Directors have concerns about issues being considered by the Board, they are (by a majority decision of the Board) entitled to seek independent professional advice at the Company’s expense. The Company’s Constitution specifies that all non-executive Directors must retire from office on a three year rotational basis. Should the Company’s activities increase in size, scope and nature, the appointment of a nomination committee will be reviewed by the Board and implemented if appropriate.
Principle 3. Promote Ethical and Responsible Decision-Making Council Recommendation 3.1: Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to: 3.1.1 The practices necessary to maintain confidence in the Company’s integrity; and 3.1.2 The responsibility and accountability of individuals for reporting and investigating reports of unethical practices. The Company complies with this recommendation. The Company has adopted a Code of Conduct to guide the Directors and Officers. Prior to the adoption of the formal written Code of Conduct the Board considers that its business practices, as overseen by the Board, were equivalent to the Code of Conduct as formally adopted. The Code of Conduct requires that all Directors and Officers: • Actively promote the highest standards of ethics and integrity in carrying out their duties for the Company; • Disclose any actual or perceived conflicts of interest of a direct or indirect nature of which they become aware and which they believe could compromise in any way the perceived or actual reputation or performance of the Company; • Respect confidentiality of all information of a confidential nature, which is acquired in the course of the Company's business and not disclose or make improper use of such confidential information to any person unless specific authorisation is given for disclosure or disclosure is legally mandated; • Deal with the Company's Shareholders, consultants, suppliers, competitors and each other with the highest level of honesty, fairness and integrity and to observe the rule and spirit of the legal and regulatory environment in which the Company operates; and • Protect the assets of the Company to ensure availability for legitimate business purposes and ensure all corporate opportunities are enjoyed by the Company and that no property, information or position belonging to the Company or opportunity arising from these are used for personal gain or to compete with the Company. Council Recommendation 3.2: Disclose the policy concerning trading in company securities by directors, officers and employees. The Company complies with this recommendation. The Board has adopted a policy and procedure on dealing in the Company's securities by Directors, Officers and employees which prohibits dealing in the Company's securities when those persons possess unpublished market price sensitive information. It also requires Directors to notify the Chairman of the Company when trading in the Company occurs. In the case of the Chairman, they must notify a non-executive Director. Directors must also notify the Company Secretary of any trade in the Company’s securities within two days of such trade occurring so that the Company Secretary can comply with the ASX Listing Rule 3.19A.2 requirement to notify ASX of any change in a notifiable interest held by a Director.
20 Heron Resources Limited Principle 4. Safeguard Integrity in Financial Reporting Council Recommendation 4.1: Require the chief executive officer (or equivalent) and the chief financial officer (or equivalent) to state in writing to the board that the company’s financial reports present a true and fair view, in all material respects, of the company’s financial condition and operational results and are in accordance with relevant accounting standards. The Company complies with this recommendation. For years or half years commencing 30 June 2004 onwards the Company’s Managing Director and the Company Secretary (or Chairman where so delegated by the Board) have reported in writing to the Board that to the best of their knowledge: • The financial statements of the Company for each half year and full year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results and are in accordance with accounting standards; • The above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board; and • The Company’s risk management and internal compliance and control framework is operating efficiently and effectively in all material aspects. Council Recommendation 4.2: The board should establish an audit committee. The Company does not comply with this recommendation. The Board believes that the Company is not of a size, nor are its financial affairs of such complexity to justify the formation of an audit committee. The Board as a whole undertakes the functions normally associated with an audit committee. Council Recommendation 4.3: Structure the audit committee so that it consists of: • Only non-executive directors; • A majority of independent directors; • An independent chairperson, who is not the chairperson of the board; and • At least three members. Refer Council Recommendation 4.2. Council Recommendation 4.4: The audit committee should have a formal charter. Refer Council Recommendation 4.2.
Principle 5. Make Timely and Balanced Disclosure Council Recommendation 5.1: Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior management level of that compliance. The Company complies with this recommendation. The Company has adopted a continuous disclosure policy that requires all Directors, Officers and executives to inform the Managing Director or in their absence the Company Secretary of any potentially material information as soon as practicable after they become aware of that information. Information is material if it is likely that the information would influence investors who commonly acquire securities on ASX in deciding whether to buy sell or hold the Company’s securities. The Managing Director is responsible for interpreting and monitoring the Company’s disclosure policy and where necessary informing the Board and Company Secretary. Prior to the adoption of the continuous disclosure policy there were no written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and accountability for compliance, however the policies and procedures enunciated in the formally adopted policy were applied prior to their adoption in writing. The Managing Director has been nominated as the person responsible for communications with ASX, with Company Secretary delegated in respect of administrative matters. The Managing Director’s role includes responsibility for ensuring compliance with the continuous disclosure requirements in ASX Listing Rules and overseeing and coordinating information disclosure to ASX, Shareholders, analysts, brokers, the media and the public. The Managing Director ensures disclosed information is available through the Company’s website and its links.
Annual Report 2005 21 3.0 Corporate Profile Continued
Principle 6. Respect the Rights of Shareholders Council Recommendation 6.1: Design and disclose a communications strategy to promote effective communication with shareholders and encourage effective participation at general meetings. The Company complies with this recommendation. The Company’s communication strategy requires communication with Shareholders in an open, regular and timely manner so that the market has sufficient information to make informed investment decisions on the operations and results of the Company. The Company’s website is the main means of Shareholder communication. Those Shareholders who notify the Company of not having access to the website are provided with hard-copy information. Meetings of the Company are held in locations with significant Shareholder presence, notably Perth and Kalgoorlie, Western Australia. Additionally, executive directors make tours elsewhere in Australia whenever possible to meet with Shareholders, media, financial institutions and representatives of the sharebroking sector. Such tours generally correspond with occasions on which the Company has been invited to present papers at technical, financial or other conferences. The Company retains a media consultant whose responsibility is to monitor and ensure the Company’s activities are reported in the optimum forums, notably the financial press of Australia, in a fair and reasonable manner so as to provide a commentary on the Company’s activities for both Shareholders and other interested parties. Council Recommendation 6.2: Request the external auditor to attend the annual general meeting and be available to answer shareholder questions about the conduct of the audit and the preparation and content of the auditor’s report. The Company complies with this recommendation. It has since its public listing been the Company’s practice to require the external auditor, Butler Settineri, to attend the Annual General Meeting of the Company and be available to answer Shareholder questions about the conduct of the audit and the preparation and content of the audit report.
Principle 7. Recognise and Manage Risk Council Recommendation 7.1: The board or appropriate board committee should establish policies on risk oversight and management. The Company complies with this recommendation. The Board is responsible for risk management and control and they examine and consider areas of significant business risk on an ongoing basis and implement policy to minimise exposure to these risks. Arrangements put in place by the Board to monitor risk management include: • Detailed strategic plans compiled by the Managing Director which document the business plan and areas of risk to that plan; • Detailed monthly reporting in respect of operations by the Managing Director; and • Completion of monthly statements of financial performance, financial position and cash flows compared to budget. The Company retains a corporate advisor, with responsibility to particularly advise on capital market trends, capital raising opportunities and general market issues. The advisor attends Board meetings by invitation to report on risks (and opportunities). The risk management policy of the Company will continue to be developed as its operations and areas of potential risk continue to evolve. Council Recommendation 7.2: The chief executive officer (or equivalent) and the chief financial officer (or equivalent) should state in writing that: 7.2.1 the statement given in accordance with best practice recommendation 4.1 (the integrity of financial statements) is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the board; and 7.2.2 the company’s risk management and internal compliance and control system is operating efficiently and effectively in all material respects. The Company complies with this recommendation.
22 Heron Resources Limited Principle 8. Encourage Enhanced Performance Council Recommendation 8.1: Disclose the process for performance evaluation of the board, its committees and individual directors, and key executives. The Company complies with this recommendation. The Company operates a management review system which it terms “Management by Objective”, which facilitates an annual and open written review of all staff and management performance. Additionally, the Board has adopted a self-evaluation process to measure its own performance during each financial year. This process includes a review as appropriate in relation to the composition and skills mix of the Directors of the Company. Where felt to be of value, the process in the past has been implemented by the Company’s auditors or corporate advisor, and in more recent years, has been facilitated at informal meetings of directors with assistance from invited experts.
Principle 9. Remunerate Fairly and Responsibly Council Recommendation 9.1: Provide disclosure in relation to the company’s remuneration policies to enable investors to understand (i) the costs and benefits of those policies; and (ii) the link between remuneration paid to directors and key executives and corporate performance. The Company complies with this recommendation. The Chairman in consultation with independent Directors makes recommendations to the full Board on the remuneration packages provided for Officers and the Directors themselves. When appropriate the Board has used the services of external advisers to assist them in this process. Non-executive Directors receive a fixed fee for providing their services as directors. Council Recommendation 9.2: The Board should establish a remuneration committee. The Company does not comply with this recommendation. The Board considers that based on the Company's stage of development, no benefits or efficiencies are to be gained by delegating this function to a separate committee. Council Recommendation 9.3: Clearly distinguish the structure of the non-executive directors’ remuneration from that of executives. The Company complies with this recommendation. Council Recommendation 9.4: Ensure that the payment of equity based executive remuneration is made in accordance with thresholds set in plans approved by Shareholders. The Company complies with this recommendation. The Company’s Employee Option Plan was approved by Shareholders in general meeting.
Principle 10. Recognise the Legitimate Interests of Stakeholders Council Recommendation 10.1: Establish and disclose a code of conduct to guide compliance with legal and other obligations to legitimate stakeholders. The Company complies with this recommendation. The Board of directors has adopted a Code of Conduct. The Code of Conduct formalises, in written form, business practices and principles previously adopted by the Board.
Annual Report 2005 23 4.0 Directors’ Report
The Directors submit their Report on the Company and its controlled entities for the year ended 30 June 2005. DIRECTORS The names and details of the Directors of the Company in office at any time during or since the end of the year are: Director Craig Leslie Readhead - B.Juris. LL.B. Appointed 23 November 2001 Position Chairman (Non-Executive) Craig Readhead is a lawyer with 27 years legal and corporate advisory experience with specialisation in the resources sector, including the implementation of large scale mining projects both in Australia and overseas. Mr Readhead is a former president of the Australian Mining and Petroleum Law Association and is the Managing Partner of specialist mining and corporate law firm Pullinger Readhead Lucas. Other current directorships Chairman of Agincourt Resources Limited since 2003 Non-executive Director of Mount Gibson Iron Limited since 2002 Chairman of Halcyon Group Limited since 2000 Former directorships in last 3 years Chairman of Pioneer Nickel Limited from 2003 to 2005 Chairman of New World Alloys Limited from 2000 to 2003 Director Ian James Buchhorn - BSc (Hons), Dip Geosci (Min Econ), MAusIMM Appointed 17 February 1995 Position Managing Director Ian Buchhorn is a Mineral Economist and Geologist with 31 years experience. Prior to listing Heron in 1996 as founding managing director, Mr Buchhorn worked with Anglo American Corporation in southern Africa, and Comalco, Shell/Billiton and Elders Resources in Australia, as well as setting up and managing Australia's first specialist mining grade control consultancy. Mr Buchhorn has worked on feasibility studies, bauxite and industrial mineral mining and exploration, gold and base metal project generation, and in corporate evaluations. For the last 19 years Mr Buchhorn has acquired and developed mining projects throughout the Eastern Goldfields of Western Australia and operated as a Registered Mine Manager. Mr Buchhorn is active within the local community, serving as a Councillor for the City of Kalgoorlie-Boulder. Other current directorships Non-executive Director of Pioneer Nickel Limited since 2003 Former directorships in last 3 years Non-executive Director of Avoca Resources Limited from 2001 to 2005 Director Allan Trench BSc (Hons), PhD, MSc (Min Econ), MBA (Oxon) Appointed 08 December 2003 Position Director (Non-Executive) Allan Trench is a business management consultant, mineral economist and geologist, experienced in strategic planning, market analysis and value-based acquisitions across a range of companies and commodities including the nickel, cobalt, precious metals and industrial mineral sectors. Mr Trench was formerly an exploration manager at WMC, specialising in nickel, and a strategic planner for Barrick Gold. Other current directorships Non-executive director of Pioneer Nickel Limited since 2003 Former directorships in last 3 years None. Director Norman Mathew Longworth BSc (Hons), MAusIMM Appointed 03 May 2004 Position Exploration Director Mathew Longworth is a Geologist with 19 years exploration and development experience, having commenced his career with Shell/ Billiton in Queensland and Shell Coal in the Hunter Valley. Mr Longworth then worked at Shell’s Kalgoorlie office on the Sunrise Dam deposit, and at Union Reefs during the feasibility study. Mr Longworth then joined Pancontinental in Kalgoorlie, and upon the takeover of Pancontinental by the Goldfields/ RGC group, he managed exploration in the Kalgoorlie District for Goldfields, and subsequently AurionGold after the merger with Delta Gold. This included the period when Goldfields discovered the Raleigh and Aphrodite gold deposits. Mr Longworth joined Heron as exploration manager in December 2003. Other current directorships None. Former directorships in last 3 years None.
24 Heron Resources Limited COMPANY SECRETARY The company secretary is Sarah Helen Calvert B. Bus (Acc) ASA. Mrs Calvert was appointed to the position of company secretary in 2004, having joined the Company in 2003 as administration manager and accountant. Mrs Calvert has had a career in Australia and overseas in the financial services, exploration and mining industries. Since 1984 Mrs Calvert has held accounting and management positions with various mining companies including Whim Creek Consolidated, New Victoria Resources, Normandy Mining, Newcrest Mining, and Heron. Mrs Calvert is a full-time employee of Heron, and provides company secretarial services exclusively to Heron and its wholly owned subsidiaries.
PRINCIPAL ACTIVITIES The principal activities of the consolidated entity during the year were: • Laterite nickel mineral exploration and development through sole funded and joint venture activities; and • Non-laterite nickel mineral exploration activities, generally in relation to mineral properties intended for divestment. There has been no significant change in the nature of these activities during the year.
OPERATING RESULTS The loss of the consolidated entity for the 2005 financial year after income tax of nil (2004 : nil) was $577,121 (2004 : $365,134).
DIVIDENDS No dividends were paid during the year and the Directors do not recommend the payment of a dividend.
OPERATIONS REVIEW The detailed review of operations of the consolidated entity for the year is contained in Section 2.0 of this Annual Report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS Other than noted below there were no significant changes in the state of affairs of the consolidated entity during the year. There were two significant changes to the Share register: • On 8 April 2005, BHP Billiton Limited purchased shares held by Heron’s then second largest shareholder OMG Cawse Limited, and BHP Billiton is now Heron’s third largest Shareholder. It should be noted that BHP Billiton Limited is the third largest nickel company in the world. • On 15 April 2005, Inco Limited participated in a restricted share placement, to become Heron’s second largest Shareholder. It should be noted that Inco Limited is the second largest nickel company in the world. In August 2004, 4,000,000 Shares were issued at $0.25 each to provide additional working capital for the commencement of the Company’s Pre-Feasibility Study for the Kalgoorlie Nickel Project. In September 2004, a placement prospectus was lodged and 8,160,000 shares were issued by the Company at $0.25 for working capital for the Pre-Feasibility Study for the Kalgoorlie Nickel Project, including drilling and screen upgrade work. In September 2004, the Company entered into an agreement to acquire the Big Four Prospect from Placer Dome. The consideration for the acquisition included an initial payment of $250,000 to purchase the nickel laterite resource. A second additional payment is to be made on the basis of the Indicated Mineral Resource above a 1% Nickel cut-off grade as calculated by an independent consultant. In February 2005, 500,000 shares were issued by the Company to Danae Resources NL at $0.22 for the acquisition of mining tenements at Bulong East. In April 2005, 16,500,000 shares were issued by the Company to Inco at $0.75 each. The funds from the placement are to be applied to evaluate additional resource targets within the Kalgoorlie Nickel Project, fund nickel sulphide project generation and provide working capital. In December 2004, 200,000, shares were issued at $0.26 and in June 2005, 2,000,000 shares were issued at $0.35 by the Company to the corporate advisor Argonaut Capital Limited, pursuant to provision of services and reaching certain market capitalisation milestones following Inco becoming partner for the Kalgoorlie Nickel Project.
Annual Report 2005 25 4.0 Directors’ Report Continued
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR Other than noted, at the date of this Report there is no matter or circumstance which has arisen since 30 June 2005 that has significantly affected or may significantly affect: • The operations, in the financial years subsequent to 30 June 2005, of the consolidated entity; • The results of those operations; or • The state of affairs, in the financial years subsequent to 30 June 2005, of the consolidated entity. On 30 July 2005, Heron signed a definitive farm-in and Joint Venture agreement with Inco Limited affiliates Inco Australia Limited Partnership and Inco Resources (Australia) Pty Limited (collectively, Inco) providing for the potential development of the Kalgoorlie Nickel Project (KNP or Project). The agreement provides that Inco will earn its interest in the Project by funding all exploration and development and meeting certain exploration milestones. If the KNP proceeds to construction, Inco will be responsible for procuring 100% of the debt project finance and will fund all but 4.5% of the equity funding required for the Project, as a loan repayable from future Project revenues. Upon all milestones being met, Inco will earn a 60% interest in the Project with Heron retaining a 40% interest. Inco will also be entitled to purchase 100% of the KNP off-take on commercial terms. By Directors’ Circular Resolution on 11 August 2005 the following wholly owned subsidiaries had corporate structure and/or name changes: • Hampton Nickel (Bulong Operations) Pty Ltd was changed to Balladonia Energy Pty Ltd. By Special Resolution on 18 August 2005 the corporate structure of Balladonia Energy Pty Ltd was changed to Balladonia Energy Limited. This change was to re-establish the name “Balladonia”, and to continue to evaluate the potential of documented uranium, oil-shale and mineral sand occurrences on tenements held in the Balladonia area and to contribute to the generation of the energy, sulphur and lime requirements of the Company's nickel laterite projects. • Regent Resources Limited was changed to Hampton Nickel Limited and is being used by the Company to hold the Bulong nickel properties and to acquire further nickel properties in the Bulong district. By Special Resolution on 11 August 2005 a new subsidiary company was to be registered. The new entity Regent Resources Limited ("Regent") was incorporated on 19 August 2005 to seek and acquire gold and base-metal properties in the course of the Company's exploration activities. On 19 September 2005, Heron announced it had entered into a Heads of Agreement with Echelon Resources Limited (Echelon), to merge its iron ore interest into Echelon. Subject to the parties’ due diligence and Echelon and Heron shareholder approval, Heron will receive 25 million shares and 10 million performance options in Echelon. Heron has stated that it may distribute all or part of the Echelon shares at nil cost to Heron Shareholders.
OPTIONS The following Options were issued during the year: Number Issued Expiry Date Exercise Price 2,000,000 31 December 2005 $0.20 1,300,000 31 July 2006 $0.33 2,400,000 16 December 2007 $0.25 3,000,000 31 December 2007 $0.25 375,000 31 December 2008 $0.25
The following Options were exercised during the year: Number Issued Expiry Date Exercise Price 500,000 30 June 2005 $0.339556 500,000 30 June 2005 $0.489556 500,000 16 December 2007 $0.25 200,000 31 December 2008 $0.25
26 Heron Resources Limited The following Options expired/lapsed during the year: Number Issued Expiry Date Exercise Price 735,000 19 October 2004* $0.339556 735,000 19 October 2004* $0.489556 50,000 19 October 2004 $0.35 50,000 19 October 2004 $0.50 2,000,000 20 December 2004 $0.35 * Issued pursuant to the Company’s Employee Option Plan and lapsed on cessation of employment.
As at 30 June 2005 the Company had the following Options on issue: Number Issued Expiry Date Exercise Price 2,000,000 31 December 2005 $0.20 1,300,000 31 July 2006 $0.33 4,243,172 30 June 2007 $0.25 4,050,000 16 December 2007 $0.25 3,000,000 31 December 2007 $0.25 175,000 31 December 2008 $0.25 No Option holder has any right under the Options to participate in any other Share issue of the Company or of any other entity.
LIKELY DEVELOPMENTS The Company will continue its core nickel development activities through sole funded exploration and joint ventures where appropriate. The Company is continually assessing commercial opportunities for corporate growth. Because of the unpredictable nature of these opportunities, developments could occur at short notice. Further information on the likely developments in the operations of the consolidated entity and the expected results of those operations have not been included in this Report because the Directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.
DIRECTORS’ SHAREHOLDING IN THE COMPANY As at the date of this Report the interests of the Directors in the Shares of the Company were: Director Ordinary Shares Options over Ordinary Shares Direct Indirect Direct Indirect C L Readhead - 329,325 - 500,000 I J Buchhorn 2,447,857 35,963,298 - 6,000,000 A Trench 184,500 - - 300,000 N M Longworth 32,000 250,000 200,000 1,000,000
DIRECTORS MEETINGS During the year the Company held 9 meetings of Directors. The attendance of the Directors at meetings of the Board were: Director Meetings held Number of while a Director meetings attended C L Readhead 9 9 I J Buchhorn 9 9 A Trench 9 9 N M Longworth 9 9
DIRECTOR AND SENIOR EXECUTIVE REMUNERATION The Board seeks independent advice on remuneration policies and practices, involving the remuneration packages and terms of employment of Directors. Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executive officers in the context of prevailing market conditions. There is no direct link between Director and Senior Executive remuneration and corporate performance.
Annual Report 2005 27 4.0 Directors’ Report Continued
Remuneration levels and other terms of employment for Mr Buchhorn and Mr Longworth are formalised in service agreements. The agreement with Mr Buchhorn requires the provision of his services as Managing Director of the Company and contains the following major provisions: • No fixed term; • Current base salary of $200,000 inclusive of superannuation; and • Termination can be made by either Mr Buchhorn or the Company by giving not less than 6 months notice. Forfeiture or payment of 6 months salary as the case may be may be made or given in lieu of notice. The agreement with Mr Longworth requires the provision of his services as manager of the Company’s exploration activities and contains the following major provisions: • No fixed term; • Current base salary of $180,000 inclusive of superannuation and vehicle allowance; • In the event that the Company terminates Mr Longworth’s employment other than for matters concerning fraud and dishonesty and the like, the Company will pay Mr Longworth the maximum amount payable in accordance with the formula prescribed by section 200G of the Corporations Act. Non-executive Directors received a fixed fee for their services as directors. Non-executive Directors fees not exceeding an aggregate of $175,000 per annum have been approved by the Company in a general meeting. There is no direct link between non-executive Directors fees and corporate performance. There are no termination or retirement benefits for non-executive Directors (other than statutory superannuation). During the reporting period an evaluation of the remuneration of Directors and senior executives was carried out by the full Board. No Director was involved in discussions regarding his own remuneration. Other than outlined above, since the end of the previous financial year, no Director has received or become entitled to receive a benefit, other than benefits disclosed in the financial statements as emoluments or the fixed salary of a full-time employee of the Company or a related body corporate, by reason of a contract made by the Company with the Director or with a firm of which he is a member, or with an entity in which he has a substantial financial interest. Details of the nature and amount of each major element of the remuneration of each Director of the Company are detailed below: Salary Directors’ Non-Cash Super Options Retirement Total Fees Benefits Contributions Benefits $$$$$$$ Directors CL Readhead - 45,871 - 4,129 - 50,000 IJ Buchhorn 158,851 - - 41,148 - - 199,999 A Trench - 22,936 - 2,064 23,160 - 48,160 NM Longworth 155,960 - 9,308 14,036 - - 179,304 During the year, following Shareholder approval, a total of 5,300,000 Options, were issued to the following Directors: Mr Longworth 1,000,000 expiring on 31 December 2007 and exercisable at $0.25, Mr Trench 300,000 expiring on 16 December 2007 and exercisable at $0.25, Mr Buchhorn 4,000,000, being 2,000,000 expiring on 31 December 2005 and exercisable at $0.20 and 2,000,000 expiring on 31 December 2007 and exercisable at $0.25. Mr Longworth and 2,000,000 of Mr Buchhorn's options were subject to conditions that were met on 30 July 2005 and were therefore not included in their remuneration for financial year ending 30 June 2005. Fair values for the options at grant date, as included in the above table, were independently determined using Black and Scholes and binomial pricing models that took into account the exercise price of the Option, the term of the Option, the vesting and performance criteria, the non-tradable nature of the Option, the Share price at grant date and the expected price volatility of the underlying Share and the risk-free interest rate for the term of the Option. No other Options were issued to Directors during the year.
INSURANCE OF OFFICERS During the financial year the Company has paid an insurance premium in respect of a Directors’ and Officers’ Liability Insurance Contract. The insurance premium relates to liabilities that may arise from an Officer’s position, with the exception of conduct involving a willful breach of duty or improper use of information or position to gain personal advantage. The officers covered by the insurance policies are the Directors and the Company Secretary. The contract of insurance prohibits the disclosure of the nature of the liabilities and the amount of premium.
28 Heron Resources Limited CORPORATE GOVERNANCE The Company has undertaken a thorough review of its Corporate Governance practices and policies in accordance with the ASX Corporate Governances Best Practices Recommendations. The consolidated entity’s Corporate Governance Statement is contained in Section 3.0, the Corporate Profile section of the Annual Report.
ENVIRONMENTAL REGULATION The consolidated entity is subject to and compliant with all aspects of environmental regulation in respect of its exploration and development activities. The Directors are not aware of any environmental regulation which is not being complied with.
ABORIGINAL CULTURE AND HERITAGE The consolidated entity is subject to and compliant with all aspects of Aboriginal Heritage regulation in respect of its exploration and development activities. The Directors are not aware of any regulation which is not being complied with. The Directors are committed to cultural respect and Indigenous Reconciliation.
NON-AUDIT SERVICES The consolidated entity has employed the auditor on assignments additional to their statutory audit duties where the auditor’s expertise and experience with the consolidated entity are important. Details of the amounts paid to the auditor (Butler Settineri) for non-audit services provided during the year are set out below. The Board of Directors has considered the position and is satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor independence requirements of the Corporations Act 2001.
Non-Audit Services Butler Settineri Chartered Accountants Consolidated 2005 2004 $$ Fringe Benefit Taxation Returns 500 0
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 30.
Signed in accordance with a resolution of Directors
C L READHEAD Chairman Perth, 28 September 2005
Annual Report 2005 29 4.0 Audit Independence Declaration
30 Heron Resources Limited 5.0 Financial Statements
STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2005 Consolidated Entity Parent Entity Notes 2005 2004 2005 2004 $$$ $ REVENUES FROM ORDINARY ACTIVITIES 2 1,462,059 567,313 1,437,112 552,192
Accountancy (34,004) (36,194) (34,004) (36,194) Advertising (29,201) (4,079) (29,201) (4,079) Computer software and services (107,692) (23,384) (107,692) (23,384) Conferences and seminars (26,990) (11,828) (26,990) (11,828) Consultants (930,690) (2,683) (930,690) (2,683) Depreciation expense 3 (b) (38,447) (31,481) (38,447) (31,481) Directors Fees (50,000) (26,065) (50,000) (21,004) Employee benefits expense (93,907) (31,964) (93,907) (19,193) Insurance (48,697) (72,014) (48,697) (72,014) Legal (29,238) 1,845 (25,368) 1,845 Media & PR (67,450) - (67,450) - Rental Expenses (45,622) (75,313) (45,622) (75,313) Report/Printing Expenses (39,577) (9,992) (39,417) (8,792) Stock Exchange (58,122) (30,208) (55,187) (26,198)
Other expenses from ordinary activities 3(c) (172,591) (211,563) (167,477) (165,722) Cost of tenements and data sold (45,868) (351,252) (45,868) (314,128) Exploration expenditure written off (221,084) (77,508) (87,875) (14,400) De-merger of controlled entity 14(b) - 61,236 - -
LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE (577,121) (365,134) (456,780) (272,376)
INCOME TAX EXPENSE 4 - - - -
LOSS FROM ORDINARY ACTIVITIES AFTER INCOME TAX EXPENSE (577,121) (365,134) (456,780) (272,376)
NET LOSS ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY 13 (577,121) (365,134) (456,780) (272,376)
Basic earnings per Share 23 ($0.0041) ($0.0030) Diluted earnings per Share 23 ($0.0041) ($0.0030)
The accompanying notes form part of these financial statements
Annual Report 2005 31 5.0 Financial Statements Continued
STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2005 Consolidated Entity Parent Entity Notes 2005 2004 2005 2004 $$$ $ CURRENT ASSETS Cash assets 12,331,660 1,378,243 12,127,055 1,322,118 Receivables 5 314,175 72,397 315,495 72,397 TOTAL CURRENT ASSETS 12,645,835 1,450,640 12,442,550 1,394,515
NON-CURRENT ASSETS Receivables 6 - - 4,881,587 3,257,655 Investments 7 440,000 - 440,130 20 Property, plant and equipment 8 51,079 54,608 51,079 54,608 Exploration and evaluation costs carried forward 9 20,594,985 16,449,009 16,209,188 13,420,068 TOTAL NON-CURRENT ASSETS 21,086,064 16,503,617 21,581,984 16,732,351
TOTAL ASSETS 33,731,899 17,954,257 34,024,534 18,126,866
CURRENT LIABILITIES Payables 10 226,650 482,500 226,334482,500 Provisions 11 174,307 116,284 174,307 116,284 TOTAL CURRENT LIABILITIES 400,957 598,784 400,641 598,784
TOTAL LIABILITIES 400,957 598,784 400,641 598,784
NET ASSETS 33,330,942 17,355,473 33,623,893 17,528,082
EQUITY Contributed equity 12 43,779,780 27,267,189 43,779,780 27,267,189 Revaluation Reserve 21(b) 40,000 - 40,000 - Accumulated losses 13 (10,488,838) (9,911,716) (10,195,887) (9,739,107)
TOTAL EQUITY 33,330,942 17,355,473 33,623,893 17,528,082
The accompanying notes form part of these financial statements
32 Heron Resources Limited STATEMENTS OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2005 Consolidated Entity Parent Entity Notes 2005 2004 2005 2004 $$$ $
CASH FLOWS FROM OPERATING ACTIVITIES Interest received 90,186 77,556 89,785 77,435 Proceeds from sale of data and tenements 80,000 15,000 60,000 - Option fees received 27,796 15,000 23,250 15,000 Administration fees received - 105,537 - 105,537 Sale of Options 720,000 - 720,000 - Sale of Rights 38,500 - 38,500 - Goods & Services Tax (refunded)/paid - 9,331 - 6,985 Payments to suppliers (1,284,460) (478,453) (1,279,234) (409,580) NET CASH OUTFLOWS FROM OPERATING ACTIVITIES 14(a) (327,978) (256,029) (347,699) (204,623)
CASH FLOWS FROM INVESTING ACTIVITIES Exploration expenditure (4,262,278) (1,799,406) (2,766,995) (1,761,837) Investment in controlled entity - - - - Proceeds from sale of plant & equipment - - - - Acquisition of plant & equipment (34,918) (36,302) (34,918) (35,712) Cash outflow on de-merger of controlled entity 14(b) - (15,027) - - NET CASH (OUTFLOWS) / INFLOWS FROM INVESTING ACTIVITIES (4,297,196) (1,850,735) (2,801,913) (1,797,549)
CASH FLOWS FROM FINANCING ACTIVITIES Loans to controlled entities - - (1,624,042) (25,528) Loan repaid by Avoca Resources Ltd - 127 - 127 Loan repaid by Pioneer Nickel Ltd - 139,457 - 107,945 Loan from related party - 10,000 - 10,000 Refundable bonds (20,000) 20,000 (20,000) 20,000 Proceeds from issue of Shares 16,004,556 2,636,323 16,004,556 2,608,323 Share issue costs (405,965) (20,000) (405,965) (20,000) NET CASH INFLOWS / (OUTFLOWS) FROM FINANCING ACTIVITIES 15,578,591 2,785,907 13,954,549 2,700,867
NET INCREASE / (DECREASE) IN CASH HELD 10,953,417 679,143 10,804,937 698,695 Cash at the beginning of the financial year 1,378,243 699,100 1,322,118 623,423 CASH AT THE END OF THE FINANCIAL YEAR 14(d) 12,331,660 1,378,243 12,127,055 1,322,118
Non-cash financing and investing activities 14(c)
The accompanying notes form part of these financial statements
Annual Report 2005 33 5.0 Financial Statements Continued
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2005
NOTE 1. STATEMENT OF ACCOUNTING POLICIES The financial report is a general purpose financial report which has been prepared in accordance with applicable Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001. The financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets. The accounting policies have been consistently applied, unless otherwise stated. The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial statements.
a) Principles of Consolidation The consolidated accounts comprise the accounts of Heron Resources Limited (“Heron”, the parent entity) and its controlled entities. A controlled entity is any entity controlled by Heron. Control exists where Heron has the capacity to dominate the decision making in relation to the financial and operating policies of another entity so that the other entity operates with Heron to achieve the objectives of Heron. A list of controlled entities is contained in Note 21. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation. Where controlled entities have entered or left the consolidated entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.
b) Income Tax The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense shown in the statement of financial performance is based on the profit from ordinary activities before income tax adjusted for any permanent differences. Timing differences which arise due to the different accounting periods in which items of revenue and expense are included in the determination of profit from ordinary activities before income tax and taxable income are brought to account as either a provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicable to the period in which the benefit will be received or the liability will become payable. Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonable doubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of the realisation of the benefit. The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income tax legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
c) Exploration, Evaluation, Development and Restoration Costs Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest. Accumulated costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, or by its sale, or where the activities in the area have not reached a stage which permits a reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made. Accumulated costs are not carried forward in respect of any area of interest unless rights to tenure of that area are current. Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration, evaluation and development phases that give rise to the need for restoration. d) Investments Investments are brought to account at cost or at Directors’ valuation. The carrying amount of investments is reviewed annually by Directors to ensure it is not in excess of the recoverable amount of these investments.
34 Heron Resources Limited e) Property, Plant and Equipment Plant and equipment is measured at cost. Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each item of property, plant and equipment over its expected useful life. Major depreciation periods for plant and equipment are 5 to 15 years.
f) Interests in Joint Ventures The consolidated entity’s share of the assets, liabilities, revenue and expenses of joint ventures is included in the appropriate items of the statements of financial position and performance. Details of the joint ventures are set out in Note 20.
g) Employee Entitlements Liabilities for wages and salaries, annual leave and field leave are recognised and are measured as the amount unpaid at the reporting date at current pay rates in respect of employees’ service up to that date.
h) Cash Cash on hand and in banks and short-term deposits are stated at nominal value. For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within two working days, net of outstanding bank overdrafts.
i) Acquisition of Assets The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition. Where shares are issued in an acquisition, the value of the shares is determined by reference to the fair value of the assets acquired, including goodwill where applicable. Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure, development properties or mine properties, based on the stage of development reached at the date of acquisition. Assets acquired may also include mineral reserves, mineral resources and unexplored and unevaluated areas. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of acquisition. The discount rate used is the rate at which a similar borrowing could be obtained under comparable terms and conditions. A liability for restructuring costs is recognised as at the date of acquisition of an entity or part thereof when there is a demonstrable commitment to a restructuring of the acquired entity and a reliable estimate of the amount of the liability can be made. .
j) Recoverable Amount of Non-Current Assets The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal. Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to its recoverable amount. Where the net cash inflows are derived from a group of assets working together, recoverable amount is determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reverses a revaluation increment previously credited to, and still included in the balance of, the asset revaluation reserve, the decrement is debited directly to that reserve. Otherwise the decrement is recognised as an expense in the statement of financial performance. The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to their present values using a market-determined, risk adjusted discount rate.
k) Trade and Other Payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity. These amounts are unsecured and are usually paid within 30 days of recognition.
l) Receivables and Revenue Recognition Sale of Mining Tenements The gross proceeds of the sale of mining tenements, data and rights are included as revenue. The profit or loss on disposal is brought to account at the date an unconditional contract is executed. Interest Interest is recognised on control of the right to receive the interest payment.
Annual Report 2005 35 5.0 Financial Statements Continued
NOTE 1. STATEMENT OF ACCOUNTING POLICIES continued
m) Earnings per Share i) Basic Earnings per Share Basic earnings per Share is determined by dividing the profit from ordinary activities after related income tax expense by the weighted average number of ordinary Shares outstanding during the financial year. ii) Diluted Earnings per Share Diluted earnings per Share is determined by dividing the profit from ordinary activities after related income tax expense adjusted for the effect of earnings on potential ordinary Shares, by the weighted average number of ordinary Shares (both issued and potentially dilutive) outstanding during the financial year.
Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $
NOTE 2. REVENUE FROM ORDINARY ACTIVITIES Revenues from operating activities Proceeds from sale of tenements and data 518,500 375,000 498,500 360,000 Option fee received 27,796 15,000 23,250 15,000 Administration fees received - 105,537 - 105,537 Revenues from non-operating activities Sale of Options 720,000 - 720,000 - Interest received – other persons/corporations 195,763 71,776 195,362 71,655 Total revenues from ordinary activities 1,462,059 567,313 1,437,112 552,192
NOTE 3. LOSS FROM ORDINARY ACTIVITIES The loss from ordinary activities before income tax expense has been determined after crediting and charging the following items: a) Net Gain Profit on sale of tenements and data 414,132 23,748 414,132 45,872 b) Expenses Depreciation Plant & equipment (8,252) (6,950) (8,252) (6,950) Office equipment & furniture (26,883) (9,998) (26,883) (9,998) Motor vehicles (3,312) (14,533) (3,312) (14,533) c) Other Expenses includes the following: Loan write off – Avoca Resources Limited - (31,165) - (31,165) Audit and other professional fees (39,688) (16,652) (35,688) (12,403) Office utilities and expenses (10,451) (32,090) (10,451) (20,397) Office expenses and supplies (63,791) (50,613) (62,677) (50,137) Share Registry (27,561) (44,076) (27,561) (26,198) Travel & accommodation expense (11,518) (22,189) (11,518) (10,644) Telephone & Communication (19,582) (14,778) (19,582) (14,778) (172,591) (211,563) (167,477) (165,722)
36 Heron Resources Limited Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $
NOTE 4. INCOME TAX Prima facie income tax benefit on operating loss reconciles to the income tax expense as follows: Loss from ordinary activities (577,121) (365,134) (456,780) (272,376)
Prima facie tax at 30% (173,136) (109,540) (137,034) (81,713) Non deductible items (30,050) 10,255 (31,211) 10,255 Timing differences and tax losses not brought to account 203,186 99,285 168,245 71,458 Income tax expense - -
The Directors estimate the potential tax losses available to the consolidated head entity to be $21,949,027 (2004 : $17,090,409). The future income tax benefit arising from tax losses has not been recognised as an asset because recovery is not virtually certain. The tax benefits will only be obtained if: a) The consolidated head entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the losses to be realised; b) The consolidated entity and the tax consolidated group continues to comply with the conditions for deductibility imposed by tax legislation; and c) No changes in tax legislation adversely affect the Company in realising the benefit from the deductions for losses.
The company tax was consolidated on 1 July 2003. The company has no franking credits available.
NOTE 5. RECEIVABLES (CURRENT) Accrued interest 104,408 4,177 104,408 4,177 Goods & services tax paid 209,767 68,220 211,087 68,220 314,175 72,397 315,495 72,397
NOTE 6. RECEIVABLE (NON CURRENT) Loans to controlled entities (Note 15) - - 4,881,587 3,257,655 - - 4,881,587 3,257,655
NOTE 7. INVESTMENTS IN ENTITIES Shares in controlled entities – at cost (Note 21) - - 130 20 Shares in other entities - revalued (Note 21) 440,000 - 440,000 - 440,000 - 440,130 20
Annual Report 2005 37 5.0 Financial Statements Continued
Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $
NOTE 8. PROPERTY PLANT AND EQUIPMENT Plant and equipment at cost 112,217 106,541 112,217 106,541 Accumulated depreciation (97,517) (89,266) (97,517) (89,266) 14,700 17,275 14,700 17,275 Office equipment & furniture at cost 99,200 69,958 99,200 69,958 Accumulated depreciation (71,638) (44,754) (71,638) (44,754) 27,562 25,204 27,562 25,204 Motor vehicles at cost 158,433 158,433 158,433 158,433 Accumulated depreciation (149,616) (146,304) (149,616) (146,304) 8,817 12,129 8,817 12,129 Total property, plant and equipment 51,079 54,608 51,079 54,608
Consolidated Entity Parent Entity 2005 2005 $ $ Reconciliation Plant and equipment: Carrying amount at 1 July 2004 17,275 17,275 Additions 5,676 5,676 Disposals - - Depreciation Expense (8,251) (8,251) Carrying value at 30 June 2005 14,700 14,700
Office equipment and furniture: Carrying amount at 1 July 2004 25,204 25,204 Additions 29,241 29,241 Disposals - - Depreciation Expense (26,883) (26,883) Carrying value at 30 June 2005 27,562 27,562
Motor vehicles: Carrying amount at 1 July 2004 12,129 12,129 Additions - - Disposals - - Depreciation Expense (3,312) (3,312) Carrying value at 30 June 2005 8,817 8,817
38 Heron Resources Limited Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $
NOTE 9. EXPLORATION AND EVALUATION COSTS CARRIED FORWARD Balance at beginning of year 16,449,009 14,791,984 13,420,068 11,619,174 Acquisition costs 1,214,546 389,820 441,301 377,570 De-merger of controlled entity - (67,493) - - Exploration and evaluation costs incurred during the year 3,198,381 1,763,458 2,481,562 1,698,621 Exploration and evaluation costs of tenements/data disposed of (45,868) (351,252) (45,868) (260,897) Exploration and evaluation costs of mining tenements transferred - - - - Exploration and evaluation costs written off (221,083) (77,508) (87,875) (14,400) Balance at end of year 20,594,985 16,449,009 16,209,188 13,420,068
The ultimate recoupment of costs carried forward is dependent upon the successful development and/or commercial exploitation or alternatively, sale of respective areas of interest.
NOTE 10. PAYABLES (CURRENT) Trade creditors and accruals 226,650 482,500 226,334 482,500 226,650 482,500 226,334 482,500
Trade creditors are non-interest bearing and are normally settled on 30 day terms.
NOTE 11. PROVISIONS (CURRENT) Employee entitlements 174,307 116,284 174,307 116,284 174,307 116,284 174,307 116,284
NOTE 12. CONTRIBUTED EQUITY Shares Issued and paid up capital 162,199,600 (2004: 128,939,600) Ordinary Shares fully paid 44,736,064 27,817,509 44,736,064 27,817,509 Less: Capital Raising Expenses (956,284) (550,320) (956,284) (550,320) 43,779,780 27,267,189 43,779,780 27,267,189
Movements in issued and paid up capital of the parent entity during the year are as follows: 2005 Number $ Balance at beginning of year 128,939,600 27,817,509 Issued during the year 33,260,000 16,918,555 Balance at end of year 162,199,600 44,736,064
Annual Report 2005 39 5.0 Financial Statements Continued
NOTE 12. CONTRIBUTED EQUITY continued 4,000,000 Shares were issued at $0.25 per Share for additional working capital for the Pre-Feasibility Study on the Kalgoorlie Nickel Project. 8,160,000 Shares were issued at $0.25 per Share for additional working capital for the Pre-Feasibility Study on the Kalgoorlie Nickel Project. 400,000 Shares were issued at $0.26 per Share to consultants for services rendered. 500,000 Shares were issued at $0.22 per Share as consideration for the acquisition of mining tenements. 16,500,000 Shares were issued at $0.75 per Share for working capital and funds for the Kalgoorlie Nickel Project Feasibility Study. 2,000,000 Shares were issued at $0.35 per Share to consultants for services rendered. 700,000 Shares were issued at $0.25 per Shares as exercise of options. 500,000 Shares were issued at $0.339556 per Share as exercise of options. 500,000 Shares were issued at $0.489556 per Share as exercise of options.
Ordinary Shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on Shares held.
Ordinary Shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.
Options The following Options were issued during the year: Number Issued Expiry Date Exercise Price 2,000,000 31 December 2005 $0.20 1,300,000 31 July 2006 $0.33 2,400,000 16 December 2007 $0.25 3,000,000 31 December 2007 $0.25 375,000 31 December 2008 $0.25 The following options were exercised during the year: Number Issued Expiry Date Exercise Price 500,000 30 June 2005 $0.34 500,000 30 June 2005 $0.49 500,000 16 December 2007 $0.25 200,000 31 December 2008 $0.25 The following Options expired/lapsed during the year: Number Issued Expiry Date Exercise Price 735,000 19 October 2004* $0.35 735,000 19 October 2004* $0.50 50,000 19 October 2004 $0.35 50,000 19 October 2004 $0.50 2,000,000 20 December 2004 $0.35 * Issued pursuant to the Company’s Employee Option Plan and lapsed on cessation of employment. As at 30 June 2005 the Company had the following Options on issue: Number Issued Expiry Date Exercise Price 2,000,000 31 December 2005 $0.20 1,300,000 31 July 2006 $0.33 4,243,172 30 June 2007 $0.25 4,050,000 16 December 2007 $0.25 3,000,000 31 December 2007 $0.25 175,000 31 December 2008 $0.25
40 Heron Resources Limited Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $
NOTE 13. ACCUMULATED LOSSES Balance at the beginning of the year 9,911,716 9,554,290 9,739,107 9,466,731 Less: Accumulated losses on de-merger of controlled entity - (7,708) - - Net loss 577,121 365,134 456,780 272,376 Balance at end of the year 10,488,837 9,911,716 10,195,887 9,739,107
NOTE 14. STATEMENT OF CASH FLOWS a) Reconciliation of operating loss after income tax to the net cash flows from operations: Operating loss after income tax (577,121) (365,134) (456,780) (272,376) Add/(less) Exploration and evaluation costs written off 221,083 77,508 87,875 14,400 Depreciation 38,447 31,480 38,447 31,480 Loan write off - 30,175 - 30,175 Non cash sale of tenements (400,000) - (400,000) - Expenses settled by share issues 804,000 804,000 (Profit)/Loss on sale of tenements/data - (8,748) - (45,872) (Increase)/decrease in accrued interest and GST (241,777) (2,490) (243,097) (2,490) Increase/(decrease) in creditors, accruals and provisions (172,610) 42,405 (178,144) 40,060 De-merger of controlled entity - (61,225) - - (327,978) (256,029) (347,699) (204,623)
b) De-merger of controlled entity On 15 October 2003 Shareholders approved the de-merger of subsidiary Pioneer Nickel Limited. The following is a financial summary for Pioneer Nickel Limited. The de-merger was by way of a pro-rata in-specie distribution of 15,000,010 Pioneer Nickel Limited shares held by the Company to Shareholders on the basis of approximately on Pioneer Nickel Limited share for every 8.6 Shares held in the Company. 2004 $
The following is a financial summary for Pioneer Nickel Limited: Carrying amounts of assets and liabilities as at 28 October 2003 Cash 15,027 Receivables 1,709 Plant and equipment 590 Exploration and evaluation costs carried forward 441,198 Total Assets 458,524 Loan from Heron Resources Limited (139,457) Total Liabilities (139,457) Net Assets 319,067
Annual Report 2005 41 5.0 Financial Statements Continued
NOTE 14. STATEMENT OF CASH FLOWS continued 2004 $
Financial performance information from 1 July 2003 to 28 October 2003 Revenue from ordinary activities 58 Expenses from ordinary activities (61,294) Loss from ordinary activities before income tax (61,236) Income tax expense - Net Loss (61,236)
Cash flow information from 1 July 2003 to 28 October 2003 Net cash outflow from ordinary activities (62,934) Net cash outflow from investing activities (14,304) Net cash inflow from financing activities 59,512 Net decrease in cash generated (17,726)
c) During the year the following non cash transaction occurred in the Company: • issued 500,000 shares at $0.22 per Share as payment for the acquisition of tenements. • issued 200,000 shares at $0.26 per Share as payment for consulting services. • issued 200,000 shares at $0.26 per Share as payment for consulting services. • issued 2,000,000 shares at $0.35 per Share as payment for success fee for consulting services.
Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $ d) Reconciliation of Cash Cash on hand and at bank 12,331,660 1,378,243 12,127,055 1,322,118 Closing cash balance 12,331,660 1,378,243 12,127,055 1,322,118
Environmental Bonds of $208,997 (2004 : $108,997) are included in Cash on hand and at bank. This amount is held as security term deposits and is not available to the Company for ordinary activities. Escrow Accounts of $134,925 (2004 : $286,270) are included in Cash on hand and at bank. These amounts are held in trust accounts pending the completion of purchase agreements that the Company has entered into and are not available for ordinary activities.
NOTE 15. DIRECTOR AND EXECUTIVE DISCLOSURES The Directors of the Company during the financial year were: Non-Executive Directors Craig Leslie Readhead Allan Trench Executive Directors Ian James Buchhorn Norman Mathew Longworth
The Board seeks independent advice on remuneration policies and practices, involving the remuneration packages and terms of employment of Directors. Remuneration levels are competitively set to attract the most qualified and experienced Directors and Senior Executive Officers in the context of prevailing market conditions. There is no direct link between Directors and Senior Executive remuneration and corporation performance.
42 Heron Resources Limited NOTE 15. DIRECTOR AND EXECUTIVE DISCLOSURES continued Remuneration level and other terms of employment for Mr Buchhorn and Mr Longworth are formalised in service agreements. The agreement with Mr Buchhorn requires the provision of his services as Managing Director of the Company and contains the following major provisions: • No fixed term; • Current base salary of $200,000 inclusive of superannuation; and • Termination can be made by either Mr Buchhorn or the Company by giving not less than 6 months notice. Forfeiture or payment of 6 months salary as the case may be may be made or given in lieu of notice. The agreement with Mr Longworth requires the provision of his services as manager of the Company’s exploration activities and contains the following major provisions: • No fixed term; • Current base salary of $180,000 inclusive of superannuation and vehicle allowance; and • In the event that the Company terminates Mr Longworth’s employment other than for matters concerning fraud and dishonesty and the like the Company will pay Mr Longworth the maximum amount payable in accordance with the formula prescribed by section 200G of the Corporations Act. Non-executive Directors received a fixed fee for their services as directors. Non-executive Directors fees not exceeding an aggregate of $175,000 per annum have been approved by the Company in a general meeting. There is no direct link between non-executive Directors fees and corporate performance. There are no termination or retirement benefits for non-executive Directors (other than statutory superannuation). During the reporting period an evaluation of the remuneration of Directors and senior executives was carried out by the full Board. No Director was involved in discussions regarding his own remuneration. Other than outlined above, since the end of the previous financial year, no Director has received or become entitled to receive a benefit, other than benefits disclosed in the financial statements as emoluments or the fixed salary of a full-time employee of the Company or a related body corporate, by reason of a contract made by the Company with the Director or with a firm of which he is a member, or with an entity in which he has a substantial financial interest.
2005 Salary Directors’ Non-Cash Super Options Retirement Total Fees Benefits Contributions Benefits $$$$$$$ Directors CL Readhead - 45,871 - 4,129 - - 50,000 A Trench - 22,936 - 2,064 23,160 - 48,160 IJ Buchhorn 158,851 - - 41,148 - - 199,999 NM Longworth 155,960 - 9,308 14,036 - - 179,304 314,811 68,807 9,308 61,377 23,160 - 477,463
2004 291,907 54,415 1,667 47,635 17,820 - 413,444
Directors Holdings of Shares and Options
Shares Held at Purchased Sold Held at 1 July 2004 30 June 2005 CL Readhead 259,325 40,000 - 299,325 A Trench 104,500 80,000 - 184,500 IJ Buchhorn 37,261,155 1,150,000 - 38,411,155 NM Longworth 32,000 250,000 - 282,000
Annual Report 2005 43 5.0 Financial Statements Continued
NOTE 15. DIRECTOR AND EXECUTIVE DISCLOSURES continued
Options Expiry Exercise Held at Issued Exercised Held at Date Price 1 July 2004 30 June 2005 CL Readhead 16 December 2007 $0.25 500,000 - - 500,000 A Trench 16 December 2007 $0.25 - 300,000 - 300,000 IJ Buchhorn 30 June 2005 $0.33956 500,000 - 500,000 - 30 June 2005 $0.48956 500,000 - 500,000 - 30 June 2007 $0.25 1,000,000 - - 1,000,000 16 December 2007 $0.25 1,000,000 - - 1,000,000 31 December 2005 $0.20 - 2,000,000 - 2,000,000 31 December 2007 $0.25 - 2,000,000 - 2,000,000 NM Longworth 16 December 2007 $0.25 - 200,000 - 200,000 31 December 2007 $0.25 - 1,000,000 - 1,000,000
During the year, following Shareholder approval, a total of 5,300,000 Options, were issued to the following Directors: Mr Longworth 1,000,000 expiring on 31 December 2007 and exercisable at $0.25, Mr Trench 300,000 expiring on 16 December 2007 and exercisable at $0.25, Mr Buchhorn 4,000,000, being 2,000,000 expiring on 31 December 2005 and exercisable at $0.20 and 2,000,000 expiring on 31 December 2007 and exercisable at $0.25. Mr Longworth and 2,000,000 of Mr Buchhorn's options where subject to conditions that were met on 30 July 2005 and were therefore not included in their remuneration for financial year ending 30 June 2005. Fair values for the options at grant date, as included in the above table, were independently determined using Black and Scholes and binomial pricing models that took into account the exercise price of the Option, the term of the Option, the vesting and performance criteria, the non-tradeable nature of the Option, the Share price at grant date and the expected price volatility of the underlying Share and the risk-free interest rate for the term of the Option. No other Options were issued to Directors or Senior Executives during the year. Other related party transactions during the financial year were: • payment of $49,751 (2004 : $75,316) to an entity related to Mr I J Buchhorn for the provision of office accommodation on normal commercial terms and conditions; • payment of $0 (2004 : $500) to parties related to Mr I J Buchhorn for the provision of secretarial services and temporary staff on normal commercial terms and conditions; • payment of $23,279 (2004 : $49,004) to Mr R J Arancini for the provision of company secretarial, taxation and corporate services on normal commercial terms and conditions; • payment of $192,198 (2004 : $119,889) to Pullinger Readhead Lucas of which Mr C L Readhead is a partner for legal services on normal commercial terms and conditions; • Interest-free loan of $582,386 (2004 : $441,048) was made by the parent entity to the controlled entity Hampton Nickel (Bulong Operations) Pty Ltd; • Interest-free loan of $4,075,508 (2004 : $2,816,608) was made by the parent entity to the controlled entity Regent Resources Limited; • Interest-free loan of $154,307 (2004 : nil) was made by the parent entity to the controlled entity Ochre Resources Limited; • Interest-free loan of $69,386 (2004 : nil) was made by the parent entity to the controlled entity Atriplex Limited;
Heron Resources Limited is the ultimate parent entity. Heron Resources Limited is a listed public company incorporated and domiciled in Australia. Ownership interest in the controlled entities is as set out in Note 21.
44 Heron Resources Limited NOTE 16. FINANCIAL INSTRUMENTS a) Terms, conditions and accounting policies The consolidated entity’s accounting policies, including the terms and conditions of each class of financial asset, financial liability and equity instrument, both recognised and unrecognised at the balance date, are as follows: Recognised Financial Statement Accounting Policies Terms and Conditions Instruments of Financial Position Notes i) Financial assets 11am Call Accounts 11am Call Accounts are carried The 11am Call Accounts are at call at cost. with an interest rate of 5.30% (2004 : 3.90%). Term Deposits Term Deposits are carried at cost. Term Deposits are secured with a 4 month term with an interest rate of 5.79% (2004 : nil) Environmental Bonds Environmental Bonds are carried Environmental Bonds are security at cost. term deposits with a 6 month term with an interest rate of 4.90% (2004 : 3.30%). Escrow Accounts Escrow Accounts are carried at cost. Escrow Accounts are term deposits with an interest rate of 4.50%. (2004 : 4.00%) Accrued Interest 5 Recognised on an accruals basis. Interest is credited periodically. Goods & Services 5 Recognised on an accruals basis. Business Activity Statements are lodged Tax Paid on a quarterly basis. ii) Financial liabilities Trade creditors 10 Liabilities are recognised for amounts Trade liabilities are normally settled and accruals to be paid in the future for goods and on 30 day terms. services received, whether or not billed to the consolidated entity. iii) Equity Ordinary Shares 12 Ordinary Share capital is recognised Details of the Shares issued and the at the fair value of the consideration terms and conditions of the Options received by the Company. outstanding over ordinary Shares at balance date are set out in Note 12. b) Interest rate risk The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at the balance date are as follows:
Financial Instruments Floating Fixed interest Total carrying Weighted average interest rate rate maturing in amount effective 1 year or less interest rate 2005 2004 2005 2004 2005 2004 2005 2004 $$ $$$$%% i) Financial assets Cash at bank 387,784 59,871 - - 387,784 59,871 2.10 2.00 11am Call Accounts 2,599,954 923,105 - - 2,599,954 923,105 5.30 3.90 Term Deposits - - 9,000,000 - 9,000,000 - 5.80 - Environmental Bonds 208,997 108,997 - - 208,997 108,997 4.90 3.30 Escrow Accounts 134,925 286,270 - - 134,925 286,270 4.50 4.00 Accrued Interest 104,408 4,177 - - 104,408 4,177 - - Goods & Services Tax 209,766 68,220 - - 209,766 68,220 - - Total financial assets 3,645,834 1,450,640 9,000,000 -12,645,834 1,450,640 - -
ii) Financial liabilities Trade creditors and accruals 226,650 482,500 - - 226,650 482,500 - - Total financial liabilities 226,650 482,500 - - 226,650 482,500 - -
Annual Report 2005 45 5.0 Financial Statements Continued
NOTE 16. FINANCIAL INSTRUMENTS continued
c) Net fair values Total carrying amount Aggregate net fair value 2005 2004 2005 2004 $$$$ Financial assets Cash at bank 387,784 59,871 387,784 59,871 11am Call Accounts 2,599,954 923,105 2,599,954 923,105 Term Deposits 9,000,000 - 9,000,000 - Environmental Bonds 208,997 108,997 208,997 108,997 Escrow Accounts 134,925 286,270 134,925 286,270 Accrued Interest 104,408 4,177 104,408 4,177 Goods & Services Tax 209,766 68,220 209,766 68,220 Total financial assets 12,645,834 1,450,640 12,645,834 1,450,640
Financial liabilities Trade creditors and accruals 226,650 482,500 226,650 482,500 Total financial liabilities 226,650 482,500 226,650 482,500
d) The following methods and assumptions are used to determine the net fair values of financial assets and liabilities. Recognised financial instruments: Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short-term maturity. Receivables and trade creditors: The carrying amount approximates fair value. e) The credit risk of the financial assets of the Company is considered minimal as there is limited exposure.
NOTE 17. AUDITORS’ REMUNERATION Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $ Amounts received or due and receivable by the Auditors for: audit services 19,356 22,300 15,356 15,800 other services 500 - 500 -
NOTE 18. COMMITMENTS FOR EXPENDITURE Exploration Commitments In order to maintain current rights of tenure to exploration and mining tenements, the consolidated entity has the following discretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon expiry of the leases, are not provided for in the financial statements and are payable based on granted tenements:
Not later than 1 year 3,240,280 1,500,000 2,885,040 1,250,000 Later than 1 year but not later than 5 years 12,961,120 6,000,000 11,540,160 5,000,000 Later than 5 years - - - -
If the consolidated entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the balance sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration rights to third parties will reduce or extinguish these obligations. Those amounts detailed above do not include expenditure commitments which are the responsibility of joint venture partners (Note 20).
46 Heron Resources Limited NOTE 19. SEGMENT INFORMATION The consolidated entity operates in the mineral exploration industry in Australia.
NOTE 20. JOINT VENTURE AGREEMENTS The consolidated entity has entered into the following joint venture agreements (as at 1 July 2005):
Project Operator Right toFarm-in Earn Expenditure Bungalbin and Mount Jackson Portman Mining Limited 100%1 - King of Creation Bronzewing Gold NL 70% $250,000 Gidji Jackson Gold Limited 70% $300,000 Kanowna South Nickel Sulphide JV Yilgarn Mining Limited 70% $500,000 Bungalbin Gold Project Scimitar Resources Limited 100%2 - Frances Lesley Leviathan Resources Limited 100%3 - Bandicoot Range JV Mt Anketell Pty Ltd 60% $200,000 TOTAL $1,250,000
1 Heron had a royalty based on tonnes of iron ore sold by Portman Mining Limited, pursuant to an agreement the first five year phase of which expired on 4 July 2005. There is a provision for a two year extension and discussions have commenced with Portman as to the basis on which Portman will be required to advance development of iron ore deposits on those tenements during the period. 2 Heron owns iron ore rights. 3 Heron owns nickel rights.
NOTE 21(a) INVESTMENTS IN CONTROLLED ENTITIES Name of Country of Class of Equity Holding Cost of Parent Entity’s Entity Registration Shares Investment 2005 2004 2005 2004 $$ Hampton Nickel Australia Ordinary 100% 100% 10 10 (Bulong Operations) Pty Ltd Regent Resources Limited Australia Ordinary 100% 100% 10 10 Ochre Resources Limited Australia Ordinary 100% - 100 - Atriplex Limited Australia Ordinary 100% - 10 -
Balladonia Energy NL (“Balladonia”) was registered to evaluate the potential of documented uranium, oil-shale and mineral sand occurrences in the Balladonia area and to contribute to the generation of the energy, sulphur and lime requirements of the Company's nickel laterite projects. Balladonia’s name and corporate status was changed to Hampton Nickel (Bulong Operations) Pty Ltd on 23 September 2004. Hampton Nickel (Bulong Operations) Pty Ltd has since changed its name to Balladonia Energy Pty Ltd ("Balladonia") on 19 August 2005. Regent Resources Limited (“Regent”) was registered on 10 April 2002. Regent Resources Limited name was changed on the 19 August 2005 to Hampton Nickel Limited and is being used by the Company to hold the Bulong nickel properties and to acquire further nickel properties in the Bulong district. Ochre Resources Limited ("Ochre") was registered on 7 February 2005 to seek and acquire iron ore properties in the course of the Company's exploration activities. Atriplex Limited ("Atriplex") was registered on 7 April 2005 to seek and acquire nickel sulphide properties in the course of the Company's exploration activities.
Annual Report 2005 47 5.0 Financial Statements Continued
NOTE 21(b) INVESTMENTS IN OTHER ENTITIES Name of Country of Class of Cost of Cost of Parent Entity’s Entity Registration Shares Consolidated Entity's Investment Investment 2005 2004 2005 2004 $$ $ $ Scimitar Resources Australia Ordinary 400,000 - 400,000 - Limited at cost Revaluation 30 June 2005 determined by reference 40,000 - 40,000 - to trading price on close of trade. 440,000 - 440,000 -
Scimitar Resources Limited is a listed public exploration company with 16,935,003 fully paid shares on issue. Heron holds 2,000,000 issued fully paid shares which equates to a holding of 12%.
NOTE 22. CONTINGENT LIABILITIES Native title claims have been made with respect to areas which include tenements in which the consolidated entity has interests. The consolidated entity is unable to determine the prospects for success or otherwise of the claims and, in any event, whether or not and to what extent the claims may significantly affect the consolidated entity or its projects. Agreement is being reached with native title claimants regarding certain areas in which the consolidated entity has interests.
NOTE 23. EARNINGS PER SHARE 2005 2004 $$ Basic earnings per Share (0.0041) (0.0030) Weighted average number of ordinary Shares outstanding during the year used in the calculation of basic earnings per Share 142,070,913 123,167,145 Diluted earnings per Share (0.0041) (0.0030) Weighted average number of ordinary Shares outstanding during the year used in the calculation of diluted earnings per Share. 142,070,913 123,367,494 Earnings/(loss) used in calculating basic and diluted earnings/(loss) per Share (577,121) (365,134) Heron has on issue 14,768,172 Options which are not dilutive.
NOTE 24. EMPLOYEE ENTITLEMENTS Consolidated Entity Parent Entity 2005 2004 2005 2004 $$$ $ a) Employee Entitlements The aggregate employee entitlement is comprised of: Provisions (Current) 174,307 116,284 174,307 116,284
b) Employee Share Scheme An Employee Share Option Plan has been established for Heron Resources Limited, where employees, Directors and Officers of the consolidated entity are issued with Options over ordinary Shares of Heron Resources Limited. At the 2004 Annual General Meeting approval by Shareholders for adoption of Employee Share Option Plan No 2 was given. The Options, issued for no consideration, are in general exercisable at a fixed price at commencement date, unless otherwise stated and ending on the expiry date. There are currently thirteen employees, directors and officers eligible for this scheme. The Options cannot be transferred and will not be quoted on the ASX. During the year 7,400,000 Options were issued, 100,000 Options lapsed or expired and 1,500,000 Options were exercised under the scheme.
48 Heron Resources Limited NOTE 24. EMPLOYEE ENTITLEMENTS continued As at 30 June 2005, Options on issue under this scheme were:
Number Expiry Date Exercise Issued Price 2,000,000 31 December 2005 $0.20 1,000,000 30 June 2007 $0.25 3,950,000 16 December 2007 $0.25 3,000,000 31 December 2007 $0.25 9,950,000
c) The consolidated entity had 11 employees as at 30 June 2005 (2004 : 4 employees).
NOTE 25. SUBSEQUENT EVENTS Other than noted below, there is no matter or circumstance which has arisen since 30 June 2005 that has significantly affected or may significantly affect: a) The operations, in the financial years subsequent to 30 June 2005, of the consolidated entity; b) The results of those operations; or c) The state of affairs, in the financial years subsequent to 30 June 2005, of the consolidated entity. On 30 July 2005, Heron signed a definitive farm-in and Joint Venture agreement with Inco Limited affiliates Inco Australia Limited Partnership and Inco Resources (Australia) Pty Limited (collectively, Inco) providing for the potential development of the Kalgoorlie Nickel Project. The agreement provides that Inco will earn its interest in the Project by funding all exploration and development and meeting certain exploration milestones. If the KNP proceeds to construction, Inco will be responsible for procuring 100% of the debt project finance and will fund all but 4.5% of equity funding required for the Project, as a loan repayable from future Project revenues. Upon all milestones being met, Inco will earn a 60% interest in the Project with Heron retaining a 40% interest. Inco will also be entitled to purchase 100% of the KNP off-take on commercial terms. By Directors’ Circular Resolution on 11 August 2005 the following wholly owned subsidiaries had corporate structure and/or name changes: • Hampton Nickel (Bulong Operations) Pty Ltd was changed to Balladonia Energy Pty Ltd. By Special Resolution on 18 August 2005 the corporate structure of Balladonia Energy Pty Ltd was changed to Balladonia Energy Limited to be suitable as a vehicle for a public listing of Balladonia. This change was to re-establish the name “Balladonia”, and to continue to evaluate the potential of documented uranium, oil-shale and mineral sand occurrences in the Balladonia area and to contribute to the generation of the energy, sulphur and lime requirements of the Company's nickel laterite projects. • Regent Resources Limited was changed to Hampton Nickel Limited and is being used by the Company to hold the Bulong nickel properties and to acquire further nickel properties in the Bulong district. By the Special Resolution on 11 August 2005 a new subsidiary company was to be registered. The new entity Regent Resources Limited ("Regent") was incorporated on 19 August 2005 to seek and acquire gold and base-metal properties in the course of the Company's exploration activities. On 19 September 2005, Heron announced it had entered into a Heads of Agreement with Echelon Resource Limited (Echelon), to merge its iron ore interest into Echelon. Subject to the parties’ due diligence and Echelon and Heron shareholder approval, Heron will receive 25 million shares and 10 million performance options in Echelon. Heron has stated it may distribute all or part of the Echelon shares at nil cost to Heron Shareholders.
NOTE 26. INTERNATIONAL FINANCIAL REPORTING STANDARDS The Australian Accounting Standards Board (AASB) is adopting the International Financial Reporting Standards (IFRS) for application to reporting periods beginning on or after 1 January 2005. This financial report has been prepared in accordance with Australian accounting standards and other financial reporting requirements (Australian GAAP). The differences between Australian GAAP and IFRS identified to date as potentially having a significant effect on the Company’s financial performance and financial position are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS. The actual effects of transition to AIFRS may differ from the estimates disclosed due to ongoing work being undertaken by the Company in relation to AIFRS. The adoption of AIFRS will be reflected in the consolidated and parent entity’s financial statements for the year ending 30 June 2006. On first time adoption of AIFRS, comparatives for the financial year ended 30 June 2005 are required to be restated.
Annual Report 2005 49 5.0 Financial Statements Continued
NOTE 26. INTERNATIONAL FINANCIAL REPORTING STANDARDS continued The key potential implications of the conversion to IFRS on the entity are as follows: a) Income Tax This financial year the consolidated entity has applied the liability method of tax-effect accounting where the income tax expense is based on the accounting profit or loss. Under AASB 112: Income Taxes, the entity will be required to adopt a balance sheet approach under which temporary differences are identified for each asset and liability rather than the effects of timing and permanent differences between taxable income and accounting profit. The consolidated entity’s Tax advisor has prepared a tax balance sheet as required by AIFRS for 30 June 2005. The result of these AIFRS calculations will not impact on the financial statements as the deferred tax assets are not recognised and included as an asset because recovery is considered not probable in the next five years. This is due to the Feasibility Study time frame being five to six years, construction some two years and ramp up to full production an additional period. The probability of production and consequent deferred tax benefits has increased each year as the Company advances its Kalgoorlie Nickel Project development work. b) Equity-based compensation benefits Equity-based compensation in the form of shares and options will be recognised as expenses in the periods during which the employee provides related service.
1. Reconciliation of equity as presented under AGAAP to that under AIFRS
Consolidated Entity Parent Entity 20052 20041 20052 20041 $$$ $ Total equity/(deficit) under AGAAP 33,330,941 17,355,473 33,623,893 17,528,082
Adjustments to retained earnings (net of tax) Recognition of share-based payment expense (i) (251,827) - (251,827) - 33,079,114 17,355,473 33,372,066 17,528,082 Adjustments to revaluation reserves (net of tax) Recognition of share-based payment expense (i) 251,827 - 251,827 -
Total equity/(deficit) under AIFRS 33,330,941 17,355,473 33,623,893 17,528,082
1 This column represents the adjustments as at the date of transition to AIFRS. 2 This column represents the cumulative adjustments as at the date of transition to AIFRS and those for the year ended 30 June 2005.
(i) Under AASB Share based Payments, the Consolidated entity would recognise the fair value of options granted after 7 November 2002 that were unvested at 1 January 2005 to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity. Share based payment costs are not recognised under AGAAP. The adjustment has been calculated by measuring the value of the options at grant date using the Black and Scholes method.
50 Heron Resources Limited NOTE 26. INTERNATIONAL FINANCIAL REPORTING STANDARDS continued
2. Reconciliation of net loss under AGAAP to that under AIFRS Consolidated Entity Parent Entity 20052 20041 20052 20041 Net loss as reported under AGAAP (577,121) (365,134) (456,780) (272,376)
Share-based payment expense (i) (251,827) - (251,827) -
Total equity under AIFRS (828,948) (365,134) (708,607) (272,376)
(i) Under AASB Share based Payments, the Consolidated entity would recognise the fair value of options granted after 7 November 2002 that were unvested at 1 January 2005 to directors, employees, consultants and other advisors as an expense on a pro-rata basis over the vesting period in the income statement with a corresponding adjustment to equity. Share based payment costs are not recognised under AGAAP. The adjustment has been calculated by measuring the value of the options at grant date using the Black and Scholes method. This would result in an increase in the net loss from AGAAP to AIFRS. c) Comparatives Changes in accounting policies will be recognised by restating comparatives rather than making current year adjustments with note disclosure of prior year effects. d) Exploration Expenditure The Company in consultation with management and external advisors is developing an impairment testing policy that tests all assets at 1 July 2004. As this stage with regards to capitalised exploration, impairment testing has been considered. The Company’s core business is mineral exploration and the acquisition of tenements. Because of this the exploration and evaluation costs are carried in the balance sheet until such time that they become projects. Therefore there will be minimal impact from AASB6: Exploration for and Evaluation of Mineral Resources. Taking into consideration the issue of impairment there will be no material adjustments under AIFRS. e) Financial Instruments The Directors have elected to apply the first-time adoption exemption available to the consolidated entity to defer the date of transition of AASB 132 ‘Financial Instruments: Disclosure and Presentation’ and AASB 139 ‘Financial Instruments: Recognition and Measurement’ to 1 July 2005. Accordingly, there are no quantitative impacts on the 30 June 2005 financial statements.
Annual Report 2005 51 5.0 Directors’ Declaration
In accordance with a resolution of the Directors of Heron Resources Limited it is declared that: a) The financial statements and notes comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and b) Give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2005 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date. In the Directors’ opinion: a) The financial statements and notes are in accordance with the Corporations Act 2001; and b) At the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts when they become due and payable; and c) The Directors have been given the declarations by the Chief Financial Officer required by section 295A of the Corporations Act 2001.
On behalf of the Board
C L READHEAD Chairman
Perth, 28 September 2005
52 Heron Resources Limited 6.0 Independent Audit Report
To the members of Heron Resources Limited
Scope We have audited the financial report of Heron Resources Limited (“the Company”) for the financial year ended 30 June 2005 as set out in pages 31 to 52. The Directors are responsible for the financial report which includes the financial statements of the Company and the consolidated financial statements of the consolidated entity comprising the Company and the entities it controlled at the end of, or during, the financial year. We have conducted an independent audit of the financial report in order to express an opinion on it to members of the Company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements and the Corporations Act 2001 in Australia so as to present a view which is consistent with our understanding of the consolidated entity’s financial position, and performance as represented by the results of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis.
Audit Opinion In our opinion, the financial report of the Company is in accordance with: a) the Corporations Act 2001, including: i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2005 and of their performance for the year ended on that date; and ii) complying with Accounting Standards and the Corporations Regulations 2001; and b) other mandatory professional reporting requirements.
BUTLER SETTINERI PAUL J CHABREL Chartered Accountants Partner
Perth, 28 September 2005
Annual Report 2005 53 7.0 Shareholder Information
AT 2 SEPTEMBER 2005 1. Issued Shares and Options a) Distribution of Shareholders: Size of Holding Number of Holders Shares Held 1 - 1,000 98 77,456 1,001 - 5,000 679 2,281,724 5,001 - 10,000 584 4,869,901 10,001 - 100,000 942 28,872,315 100,001 - 119 126,298,204 2,422 162,399,600
b) The twenty largest Shareholders hold 63.13% of the issued fully paid capital of the Company. c) Substantial Shareholders who have notified the Company: Holder Number of Shares % Kurana Pty Ltd 32,075,000 19.75 Inco Australia Pty Ltd 16,500,000 10.16 BHP Minerals Holdings 15,890,310 9.78 MBM Corporation Pty Ltd 10,778,300 6.64 d) Distribution of Optionholders: The following Options were on issue: i) 2,000,000 exercisable on or before 31 December 2005 payment of $0.20 per Option exercised; ii) 1,300,000 exercisable on or before 31 July 2006 payment of $0.33 per Option exercised; iii) 4,243,172 exercisable on or before 30 June 2007 payment of $0.25 per Option exercised; iv) 3,850,000 exercisable on or before 16 December 2007 payment of $0.25 per Option exercised; v) 3,000,000 exercisable on or before 31 December 2007 payment of $0.25 per Option exercised; vi) 175,000 exercisable on or before 31 December 2008 payment of $0.25 per Option exercised. Size of Holding Number of Holders Options Held 1 - 1,000 0 0 1,001 - 5,000 0 0 5,001 - 10,000 3 27,172 10,001 - 100,000 12 465,000 100,001 - 18 14,076,000 33 14,568,172 e) There were 42 Shareholders who held less than a marketable parcel. f) No securities have been classified by ASX as restricted.
VOTING RIGHTS In accordance with the Company’s Constitution, voting rights are on the basis of a show of hands, one vote for every registered holder and on a poll, one vote for each Share held by registered holders. Twenty Largest Shareholders as at 2 September 2005 Number of Shares % 1 Kurana Pty Ltd 32,075,000 19.75 2 Inco Aust Holdings Pty Ltd 16,500,000 10.16 3 BHP Minerals Holdings 15,890,310 9.78 4 MBM Corporation Pty Ltd 10,778,300 6.64 5 Koltai Holdings 4,765,679 2.93 6 Chaos Investments 4,345,000 2.68 7 Buchhorn Ian James 2,447,857 1.51 8 Argonaut Capital 2,000,000 1.23 9 Manorina Mining 1,818,200 1.12 10 Buchhorn Pamela Jean 1,519,998 0.94 11 Williams, John Samuel 1,514,900 0.93 12 Baracus Pty Ltd 1,410,000 0.87 13 J P Morgan Nominees 1,100,000 0.68 14 ANZ Nominees Ltd 1,100,000 0.68 15 Heraghty, Stephen J 1,040,700 0.64 16 Sheerwater Pty Ltd 1,000,000 0.62 17 Alexandrou, Kim Elizabeth 1,000,000 0.62 18 Corporate Alexander 750,000 0.46 19 Owvimar Investments 750,000 0.46 20 Kimlex Investments 700,000 0.43 TOTAL 102,506,044 63.13
54 Heron Resources Limited Optionholders as at 2 September 2005 Optionholders (Options exercisable on or before 31 July 2006) were: Number of Options % of Issued Options Kimlex Investments Pty Ltd 200,000 15.39 MBM Corporation Pty Ltd 1,100,000 84.61 TOTAL 1,300,000 100.00 Optionholders (Options exercisable on or before 30 June 2007) were: Number of Options % of Issued Options SJH Enterprises Pty Ltd 9,692 0.22 Zedella Pty Ltd 8,000 0.18 Wardle B J 15,000 0.35 Wardle M P 15,000 0.35 Wardle M C 15,000 0.35 Donnelly J L 15,000 0.35 Donnelly M J 15,000 0.35 Donnelly H L 15,000 0.35 Wardle D J 155,000 3.65 Alexander Corporate Enterprises Pty Ltd 9,480 0.22 Kimlex Investments Pty Ltd 300,000 7.07 Williams J S & Allwood D A 814,000 19.18 Koltai Holdings Pty Ltd 856,000 20.17 Ocean Grove Investments Pty Ltd 286,000 6.79 Trindal Pty Ltd 143,000 3.37 PK Trading (WA) Pty Ltd 572,000 13.48 Kurana Pty Ltd 1,000,000 23.57 TOTAL 4,243,172 100.00 Optionholders (Options exercisable on or before 16 December 2007) were: Number of Options % of Issued Options Hengold Pty Ltd 500,000 12.99 Kurana Pty Ltd 1,000,000 25.98 Kimlex Pty Ltd 100,000 2.60 Longworth N M 200,000 5.19 Calvert S 50,000 1.30 Calvert S 200,000 5.19 Calvert S 300,000 7.79 von Perger D 20,000 0.52 von Perger J 80,000 2.08 von Perger D 100,000 2.60 von Perger J 400,000 10.39 Ridley K A 100,000 2.60 Ridley J E 100,000 2.60 Spurling L P 200,000 5.19 Taylor P 200,000 5.19 Trench S 300,000 7.79 TOTAL 3,850,000 100.00 Optionholders (Options exercisable on or before 31 December 2007) were: Number of Options % of Issued Options Mat Mining Pty Ltd 1,000,000 33.33 Hazurn Pty Ltd 2,000,000 66.67 TOTAL 3,000,000 100.00 Optionholders (Options exercisable on or before 31 December 2005) were: Number of Options % of Issued Options Hazurn Pty Ltd 2,000,000 100.00 TOTAL 2,000,000 100.00 Optionholders (Options exercisable on or before 31 December 2008) were: Number of Options % of Issued Options Maithilee Shirgaonkar 25,000 14.29 Hui Kei Man 50,000 28.57 Le Shay Chong 50,000 28.57 Daniel Dures 50,000 28.57 TOTAL 175,000 100.00
Annual Report 2005 55 7.0 Shareholder Information Continued
Summary of Optionholders as at 2 September 2005 Number of Options % of Issued Options 1. Hazurn Pty Ltd 4,000,000 27.46 2. Kurana Pty Ltd. 2,000,000 13.73 3. MBM Corporation Pty Ltd 1,100,000 7.56 4. Mat Mining Pty Ltd 1,000,000 6.86 5. Koltai Holdings Pty Ltd 856,000 5.88 6. Williams JS & Allwood DA 814,000 5.59 7. Kimlex Investments Pty Ltd 600,000 4.12 8. P K Trading (WA) Pty Ltd 572,000 3.93 9. Calvert S 550,000 3.78 10. Hengold Pty Ltd 500,000 3.43 11. von Perger J 480,000 3.30 12. Trench S 300,000 2.06 13. Ocean Grove Investments 286,000 1.96 14. Taylor P 200,000 1.37 15. Spurling L P 200,000 1.37 16. Longworth N M 200,000 1.37 17. Wardle D J 155,000 1.06 18. Trindal Pty Ltd 143,000 0.98 19. von Perger D 120,000 0.82 20. Ridley J E 100,000 0.69 21. Ridley K A 100,000 0.69 22. Daniel Dures 50,000 0.34 23. Le Shay Chong 50,000 0.34 24. Hui Kei Man 50,000 0.34 25. Maithilee Shirgaonkar 25,000 0.17 26. Donnelly H L 15,000 0.10 27. Donnelly M J 15,000 0.10 28. Donnelly J L 15,000 0.10 29. Wardle M C 15,000 0.10 30. Wardle M P 15,000 0.10 31. Wardle B J 15,000 0.10 32. SJH Enterprises Pty Ltd 9,692 0.07 33. Alexander Corporation Enterprises Pty Ltd 9,480 0.07 34. Zedella Pty Ltd 8,000 0.06 14,568,172 100.00
56 Heron Resources Limited 8.0 Statement of Mineral Resources
Project Prospect million Ni Co Ni Co Cut-off Category Estimation tonnes % % tonnes tonnes %Ni Method Goongarrie Big Four Heron 32.6 0.77 0.065 251,600 21,200 0.5 Inferred Krige1 Goongarrie Big Four Placer3 29.2 0.71 0.049 208,400 14,300 0.5 Inferred Krige1 Goongarrie Goongarrie Hill 50.9 0.67 0.043 342,000 21,700 0.5 Inferred Krige1 Goongarrie Goongarrie South 11.7 0.96 0.079 112,200 9,300 0.5 Measured Krige1 Goongarrie Goongarrie South 54.6 0.77 0.062 420,500 33,800 0.5 Indicated Krige1 Goongarrie Goongarrie South 12.2 0.65 0.058 79,900 7,100 0.5 Inferred Krige1 Goongarrie Highway4 96.2 0.74 0.054 707,600 51,700 0.5 Inferred Krige1 Goongarrie Scotia 11.2 0.77 0.080 86,400 9,000 0.5 Inferred Krige1
Sub-Total Goongarrie 298.6 0.74 0.056 2,208,600 168,100
Siberia Siberia South 111.8 0.65 0.035 727,200 38,800 0.5 Inferred Krige1 Siberia Siberia North 67.3 0.71 0.053 475,200 35,500 0.5 Inferred Krige1 Siberia Black Range 20.4 0.75 0.102 152,400 20,800 0.5 Inferred Krige1 Siberia Ghost Rocks 47.3 0.66 0.042 312,900 19,900 0.5 Inferred Krige1
Sub-Total Siberia 246.8 0.68 0.047 1,667,700 115,000
Bulong Bulong5 100.0 0.87 0.052 862,000 51,000 0.5 Indicated Krige1 Bulong Bulong5 165.0 0.75 0.046 1,244,000 76,000 0.5 Inferred Krige1
Sub-Total Bulong 265.0 0.80 0.048 2,106,000 127,000
Kalpini Kalpini 76.4 0.73 0.044 559,200 33,500 0.5 Inferred Krige1 Rebecca Rebecca 16.2 0.94 0.050 152,300 8,100 0.5 Inferred End Area2
Sub-Total Hampton 92.6 0.77 0.045 711,500 41,600
Kalgoorlie Nickel Project 903.0 0.74 0.050 6,693,800 451,700 Total
1 Mark Murphy Attribution Statement The information in this report that relates to Mineral Resources or mineralisation is based on information compiled by Mark Murphy, who is a Member of the Australian Institute of Geoscientists. Mark Murphy has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 1999 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mark Murphy consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. Mark Murphy is a full-time employee of Snowden Mining Industry Consultants.
2 Mathew Longworth Attribution Statement The information in this report that relates to Mineral Resources or mineralisation is based on information compiled by Norman Mathew Longworth, who is a Member of the Australasian Institute of Mining and Metallurgy. Norman Mathew Longworth has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 1999 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Norman Mathew Longworth consents to the inclusion in the report of the matters based on their information in the form and context in which it appears. Norman Mathew Longworth is a full-time employee of Heron Resources Limited, being employed as Exploration Director.
3 Resource ownership subject to a letter agreement dated 3 September 2004 between Heron and Placer Dome Asia Pacific Pty Ltd.
4 Resource ownership subject to a formal agreement dated 22 December 2003 whereby Heron purchased the rights of Golden State Resources Limited in a joint venture with Helix Resources NL.
5 Resource ownership subject to a letter agreement dated 8 April 2004 whereby Heron entered into an agreement for the purchase of all mineral rights for mining tenements in the Bulong Project beneficially owned by Bulong Operations Pty Ltd and Bulong Nickel Pty Ltd (both with Receivers and Managers Appointed and In Liquidation). In respect of the Bulong Tranche 2 Tenements where LionOre (Avalon) Pty Ltd is the registered tenement holder, LionOre has not yet agreed to a means by which Heron can gain access for exploration purposes, although both parties have separately agreed with the previous tenement holder (and vendor of the rights to both Heron and LionOre) to negotiate exploration access rights for Heron.
Annual Report 2005 57 9.0 Interest in Mining Tenements 6 September 2005
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status
HERON NICKEL LATERITE AND NICKEL SULPHIDE PROJECTS KALGOORLIE NICKEL PROJECT Goongarrie Prospect Goongarrie West 68km NNW of Kalgoorlie E24/00124 100.0 1 196.00 A Goongarrie West 45km NW of Kalgoorlie E24/00130 100.0 1 64.40 A Comet Vale 90km NNW of Kalgoorlie E29/00462 100.0 1 89.60 A Twin Hills 150km N of Kalgoorlie E29/00490 100.0 1 42.00 A Comet Vale 96km NNW of Kalgoorlie E29/00508 100.0 1 8.40 A Ghost Rocks 147km NNW of Kalgoorlie E29/00517 100.0 1 196.00 A Ghost Rocks 145km NNW of Kalgoorlie M29/00291 100.0 1 {8.96} A Four Corners Well 187km NW of Kalgoorlie E29/00527 100.0 1 30.80 A Goongarrie 76km NNW of Kalgoorlie E29/00536 100.0 1 154.00 A Simpson Bore 187km NW of Kalgoorlie E29/00544 100.0 1 19.60 A Snake Hill 170km NW of Kalgoorlie E29/00586 100.0 1 56.00 A Comet Vale 90km NNW of Kalgoorlie E29/00553 100.0 1 145.60 A Ghost Rocks South 134km NNW of Kalgoorlie E29/00563 100.0 1 58.80 A Riverina 190km NW of Kalgoorlie E29/00575 100.0 1 2.80 A Morleys 144km NW of Kalgoorlie E30/00247 100.0 1 61.60 G Mt Morely 150km NW of Kalgoorlie E30/00289 100.0 1 28.00 A Baden Powell 55km NNW of Kalgoorlie M24/00481 100.0 1 1.20 A Blue Dam 60km NNW of Kalgoorlie M24/00539 100.0 1 6.58 A Blue Dam 60km NNW of Kalgoorlie M24/00540 100.0 1 4.53 A Scotia Dam 67km NNW of Kalgoorlie M24/00541 100.0 1 5.20 G Baden Powell 55km NNW of Kalgoorlie M24/00587 100.0 1 3.24 A Blue Reef 60km NNW of Kalgoorlie M24/00697 100.0 1 2.00 A Blue Reef 60km NNW of Kalgoorlie M24/00719 100.0 1 1.28 A Scotia North 75km NNW of Kalgoorlie M24/00744 100.0 1 0.06 G Vettersberg 50km NNW of Kalgoorlie M24/00749 100.0 1 9.31 A Vettersberg 55km NNW of Kalgoorlie M24/00750 100.0 1 4.46 A Scotia East 68km NNW of Kalgoorlie M24/00798 100.0 1 0.25 G Scotia 62km NNE of Kalgoorlie M24/00843 100.0 1 4.71 A Scotia 62km NNE of Kalgoorlie M24/00898 100.0 1 7.10 A Goongarrie West 87km NNW of Kalgoorlie M29/00167 100.0 1 0.80 G Goongarrie West 86km NNW of Kalgoorlie M29/00202 100.0 1 5.94 G Goongarrie South 77km NNW of Kalgoorlie M29/00272 100.0 1 6.03 G Canegrass 74km NNW of Kalgoorlie M29/00278 100.0 1 8.03 G Goongarrie Lady 82km NNW of Kalgoorlie M29/00281 100.0 1 3.46 A Goongarrie South 75km NNW of Kalgoorlie M29/00283 100.0 1 5.53 G Goongarrie West 84km NNW of Kalgoorlie M29/00292 100.0 1 4.29 A Goongarrie 82km NNW of Kalgoorlie M29/00320 100.0 1 0.23 A Menzies South 109km NNW of Kalgoorlie M29/00323 100.0 1 0.78 A Goongarrie Hill North 100km NNW of Kalgoorlie M29/00388 100.0 1 2.38 A Goongarrie Hill North 100km NNW of Kalgoorlie P29/01849 100.0 1 {2.00] A Vettersberg 62km NNW of Kalgoorlie P24/03672 100.0 1 0.34 G Vettersberg 62km NNW of Kalgoorlie P24/03695 100.0 1 1.95 G Vetters North 62km NNW of Kalgoorlie P24/03734 100.0 1 1.84 G Vetters North 62km NNW of Kalgoorlie M24/00921 100.0 1 2.13 A Windanya 46km NNW of Kalgoorlie P24/03765 100.0 1 2.00 A Windanya 47km NNW of Kalgoorlie P24/03766 100.0 1 1.99 A Windanya 48km NNW of Kalgoorlie P24/03767 100.0 1 1.99 A Windanya 49km NNW of Kalgoorlie P24/03768 100.0 1 1.98 A Windanya 50km NNW of Kalgoorlie P24/03769 100.0 1 1.94 A Windanya 51km NNW of Kalgoorlie P24/03770 100.0 1 1.80 A Windanya 53km NNW of Kalgoorlie P24/03771 100.0 1 2.00 A Windanya 55km NNW of Kalgoorlie P24/03772 100.0 1 1.99 A Grafters South 64km NNW of Kalgoorlie P24/03777 100.0 1 1.26 G Grafters South 63km NNW of Kalgoorlie P24/03778 100.0 1 1.22 G Grafters South 62km NNW of Kalgoorlie P24/03779 100.0 1 2.00 G Grafters South 63km NNW of Kalgoorlie P24/03780 100.0 1 1.87 G Grafters South 65km NNW of Kalgoorlie P24/03781 100.0 1 1.13 G Scotia Dam South 63km NNW of Kalgoorlie M24/00919 100.0 1 {1.13} A Windanya 55km NNW of Kalgoorlie P24/03790 100.0 1 1.16 G Windanya 55km NNW of Kalgoorlie P24/03791 100.0 1 1.36 G Windanya 55km NNW of Kalgoorlie P24/03792 100.0 1 1.68 G Windanya 55km NNW of Kalgoorlie P24/03797 100.0 1 1.86 G Windanya 55km NNW of Kalgoorlie M24/00920 100.0 1 4.40 A Scotia 63km NNW of Kalgoorlie P24/03804 100.0 1 1.32 G Scotia Siding 63km NNW of Kalgoorlie M24/00918 100.0 1 {1.32} A Canegrass 75km NNW of Kalgoorlie P24/03810 100.0 1 0.61 G Camel Hump 60km NNW of Kalgoorlie P24/03859 100.0 1 1.07 G Goongarrie Hill North 99km NNW of Kalgoorlie P29/01671 100.0 1 0.39 G Ghost Rocks 134km NNW of Kalgoorlie P29/01681 100.0 1 0.50 G Ghost Rocks 134km NNW of Kalgoorlie M29/00337 100.0 1 {0.50} A Ghost Rocks 134km NNW of Kalgoorlie P29/01682 100.0 1 0.75 G Comet Vale 90km NNW of Kalgoorlie P29/01684 100.0 1 0.06 G Comet Vale 90km NNW of Kalgoorlie M29/00338 100.0 1 {0.06} A Yunndaga East 110km NNW of Kalgoorlie P29/01827 100.0 1 1.40 G Yunndaga East 110km NNW of Kalgoorlie P29/01828 100.0 1 1.88 G Yunndaga East 110km NNW of Kalgoorlie P29/01829 100.0 1 1.42 G
58 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status
KALGOORLIE NICKEL PROJECT Goongarrie Prospect continued Yunndaga East 110km NNW of Kalgoorlie P29/01830 100.0 1 1.14 G Highway North 110km NNW of Kalgoorlie P29/01850 100.0 1 1.84 A Highway North 110km NNW of Kalgoorlie P29/01851 100.0 1 1.91 A Highway North 110km NNW of Kalgoorlie P29/01852 100.0 1 1.98 A Highway North 110km NNW of Kalgoorlie P29/01853 100.0 1 1.95 A 75 1,299.08 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Highway Prospect Highway 100km NNW of Kalgoorlie E29/00139 62.0 1,2 {59.97} G Highway 100km NNW of Kalgoorlie M29/00214 62.0 1,2 9.50 A 1 9.50 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 2 Helix Resources NL has a 49% equity and is diluting in the current program and budget. Heron is manager of the joint venture. KALGOORLIE NICKEL PROJECT Highway Extended Prospect Highway North 105km NNW of Kalgoorlie P29/01362 87.5 1,3 0.91 G Highway North 105km NNW of Kalgoorlie P29/01363 87.5 1,3 0.90 G Highway North 105km NNW of Kalgoorlie P29/01364 87.5 1,3 1.21 G Highway North 105km NNW of Kalgoorlie P29/01365 87.5 1,3 1.20 G Highway North 105km NNW of Kalgoorlie P29/01366 87.5 1,3 1.21 G Highway North 105km NNW of Kalgoorlie P29/01367 87.5 1,3 1.21 G Highway North 105km NNW of Kalgoorlie P29/01368 87.5 1,3 1.21 G Highway North 105km NNW of Kalgoorlie P29/01369 87.5 1,3 1.20 G Highway North 110km NNW of Kalgoorlie M29/00209 87.5 1,3 {9.05} A 8 9.05 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 3 Dalrymple Resources Limited has a 12.5% equity free carried to BFS. Heron is manager of the joint venture. KALGOORLIE NICKEL PROJECT Comet Vale Prospect Comet Vale 90km NNW of Kalgoorlie M29/00185 70.0 1,4 0.08 G Comet Vale 90km NNW of Kalgoorlie M29/00186 70.0 1,4 2.86 A 2 2.94 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 4 Heron has a right to earn a 70% interest in nickel rights from Reed Resources Limited. Heron is manager of the joint venture. KALGOORLIE NICKEL PROJECT Big Four Prospect Placer Big Four 70km NNW of Kalgoorlie E24/00074 100.0 1,5 {22.40} G Placer Big Four 70km NNW of Kalgoorlie E29/00131 100.0 1,5 {16.91} G Placer Big Four 70km NNW of Kalgoorlie E29/00411 100.0 1,5 16.80 A Placer Big Four 70km NNW of Kalgoorlie E29/00421 100.0 1,5 11.20 A Placer Big Four 70km NNW of Kalgoorlie M24/00731 100.0 1,5 6.03 A Placer Big Four 70km NNW of Kalgoorlie M24/00732 100.0 1,5 5.09 A Placer Big Four 70km NNW of Kalgoorlie M24/00778 100.0 1,5 8.90 A Placer Big Four 70km NNW of Kalgoorlie M24/00781 100.0 1,5 0.80 A Placer Big Four 70km NNW of Kalgoorlie M29/00168 100.0 1,5 9.18 A Placer Big Four 70km NNW of Kalgoorlie M29/00169 100.0 1,5 9.74 A Placer Big Four 70km NNW of Kalgoorlie M29/00268 100.0 1,5 3.90 A Placer Big Four 70km NNW of Kalgoorlie E29/00407 100.0 1,5 19.60 A Placer Big Four 70km NNW of Kalgoorlie E29/00412 100.0 1,5 16.80 A Placer Big Four 70km NNW of Kalgoorlie E29/00419 100.0 1,5 11.20 A Placer Big Four 70km NNW of Kalgoorlie M24/00648 100.0 1,5 0.74 A Placer Big Four 70km NNW of Kalgoorlie P24/03642 100.0 1,5 1.13 A Placer Big Four 70km NNW of Kalgoorlie M24/00780 100.0 1,5 1.78 A Placer Big Four 70km NNW of Kalgoorlie M24/00783 100.0 1,5 0.65 A 16 123.54 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 5 Heron has a right to acquire a 100% interest in all mineral rights from Placer Dome Asia Pacific Limited KALGOORLIE NICKEL PROJECT Siberia Prospect Goongarrie West 73km NW of Kalgoorlie E24/00116 100.0 1 98.00 G Wongi Bore 78km NW of Kalgoorlie E29/00531 100.0 1 {5.6} A Wongi Hill 78km NW of Kalgoorlie E29/00535 100.0 1 151.20 A Wongi Hill 78km NW of Kalgoorlie E29/00569 100.0 1 5.60 A Siberia North 78km NW of Kalgoorlie M24/00634 100.0 1 1.90 G Siberia 75km NW of Kalgoorlie M24/00658 100.0 1 3.75 A Siberia 75km NW of Kalgoorlie M24/00659 100.0 1 8.97 A Siberia 75km NW of Kalgoorlie M24/00661 100.0 1 1.17 A Siberia 75km NW of Kalgoorlie M24/00685 100.0 1 3.42 A Siberia 75km NW of Kalgoorlie M24/00686 100.0 1 2.15 A Black Range 63km NW of Kalgoorlie M24/00757 100.0 1 5.91 A Black Range 63km NW of Kalgoorlie M24/00912 100.0 1 2.84 A Siberia 78km NW of Kalgoorlie M29/00312 100.0 1 {4.78} A
Annual Report 2005 59 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Tenement ID Heron Interest Area km2 Status
KALGOORLIE NICKEL PROJECT Siberia Prospect continued Siberia 75km NW of Kalgoorlie P24/03144 100.0 1 0.99 G Siberia 75km NW of Kalgoorlie P24/03145 100.0 1 1.19 G Siberia 75km NW of Kalgoorlie P24/03146 100.0 1 0.88 G Siberia 75km NW of Kalgoorlie M24/00663 100.0 1 {3.06} A Siberia 75km NW of Kalgoorlie P24/03169 100.0 1 1.30 G Siberia 75km NW of Kalgoorlie M24/00664 100.0 1 {1.43} A Siberia 75km NW of Kalgoorlie P24/03189 100.0 1 1.64 G Siberia 75km NW of Kalgoorlie M24/00660 100.0 1 {1.74} A Siberia 75km NW of Kalgoorlie P24/03276 100.0 1 1.31 G Siberia 75km NW of Kalgoorlie M24/00690 100.0 1 {1.30} A Camperdown 78km NW of Kalgoorlie P24/03748 100.0 1 1.62 G Camperdown 78km NW of Kalgoorlie P24/03749 100.0 1 1.87 G Camperdown 78km NW of Kalgoorlie P24/03750 100.0 1 1.82 G Camperdown 78km NW of Kalgoorlie M24/00916 100.0 1 {5.44} A Bardoc West 71km NW of Kalgoorlie P24/03764 100.0 1 1.46 G Siberia North 78km NW of Kalgoorlie P24/03811 100.0 1 0.70 G Siberia North 78km NW of Kalgoorlie M24/00915 100.0 1 {0.70} A Cave Hill 75km NW of Kalgoorlie P24/03857 100.0 1 1.50 G Cave Hill 75km NW of Kalgoorlie M24/00917 100.0 1 {1.50} A Linger and Die 70km NW of Kalgoorlie P24/03952 100.0 1 0.09 A Linger and Die 70km NW of Kalgoorlie P24/03953 100.0 1 0.03 A Linger and Die 70km NW of Kalgoorlie P24/03954 100.0 1 0.00 A Siberia 75km NW of Kalgoorlie P24/03943 100.0 1 0.11 G 27 301.42 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Siberia Tank Prospect Siberia Tank 75km NW of Kalgoorlie P24/03179 90.0 1,6 1.21 G Siberia Tank 75km NW of Kalgoorlie P24/03180 90.0 1,6 2.00 G Siberia Tank 75km NW of Kalgoorlie P24/03181 90.0 1,6 1.95 G Siberia Tank 75km NW of Kalgoorlie P24/03182 90.0 1,6 1.20 G Siberia Tank 75km NW of Kalgoorlie P24/03183 90.0 1,6 1.19 G Siberia Tank 75km NW of Kalgoorlie P24/03184 90.0 1,6 1.20 G Siberia Tank 75km NW of Kalgoorlie M24/00665 90.0 1,6 {8.25} A 6 8.74 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 6 Impress Ventures Limited has 10% equity in the tenements free-carried to a decision to mine. KALGOORLIE NICKEL PROJECT SMC Siberia Prospect Siberia North 78km NW of Kalgoorlie E24/00092 100 of Ni only 1,7 8.40 G Siberia North 78km NW of Kalgoorlie M24/00797 100 of Ni only 1,7 {8.06) A Siberia South 71km NW of Kalgoorlie M24/00845 100 of Ni only 1,7 8.97 G Siberia South 71km NW of Kalgoorlie M24/00846 100 of Ni only 1,7 6.07 G Siberia South 71km NW of Kalgoorlie M24/00847 100 of Ni only 1,7 8.12 G Siberia South 71km NW of Kalgoorlie M24/00848 100 of Ni only 1,7 7.89 G Siberia North 78km NW of Kalgoorlie P24/03233 100 of Ni only 1,7 0.56 G Siberia North 78km NW of Kalgoorlie M24/00683 100 of Ni only 1,7 {0.56} A Siberia North 71km NW of Kalgoorlie P24/03518 100 of Ni only 1,7 1.92 G Siberia North 71km NW of Kalgoorlie M24/00772 100 of Ni only 1,7 {1.98} A Siberia East 70km NW of Kalgoorlie P24/03827 100 of Ni only 1,7 1.32 A Siberia East 70km NW of Kalgoorlie P24/03828 100 of Ni only 1,7 1.70 A 9 44.95 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 7 Siberia Mining Corporation owns the gold rights. KALGOORLIE NICKEL PROJECT Bulong Tranche 1 Prospect Bulong 40km E of Kalgoorlie E25/00067 100.0 1 10.62 G Bulong 40km E of Kalgoorlie M25/00160 100.0 1 {5.40} A Bulong 40km E of Kalgoorlie M25/00196 100.0 1 {5.18} A Bulong 40km E of Kalgoorlie M25/00197 100.0 1 {3.99} A Bulong 40km E of Kalgoorlie M27/00275 100.0 1 {4.98} A Bulong 40km E of Kalgoorlie M27/00276 100.0 1 {7.99} A Bulong 40km E of Kalgoorlie E27/00094 100.0 1 47.60 G Bulong 40km E of Kalgoorlie M27/00341 100.0 1 {7.52} A Bulong 40km E of Kalgoorlie M27/00342 100.0 1 {8.67} A Bulong 40km E of Kalgoorlie M27/00343 100.0 1 {8.67} A Bulong 40km E of Kalgoorlie M27/00344 100.0 1 {2.21} A Bulong 40km E of Kalgoorlie M27/00345 100.0 1 {8.85} A Bulong 40km E of Kalgoorlie E27/00291 100.0 1 22.40 A Bulong 40km E of Kalgoorlie M27/00295 100.0 1 {5.91} A Bulong 40km E of Kalgoorlie M25/00111 100.0 1 1.19 G Bulong 40km E of Kalgoorlie M25/00123 100.0 1 9.94 G Bulong 40km E of Kalgoorlie M25/00127 100.0 1 5.83 G Bulong 40km E of Kalgoorlie M25/00128 100.0 1 5.60 G Bulong 40km E of Kalgoorlie M25/00134 100.0 1 8.16 G
60 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KALGOORLIE NICKEL PROJECT Bulong Tranche 1 Prospect continued Bulong 40km E of Kalgoorlie M25/00145 100.0 1 1.72 G Bulong 40km E of Kalgoorlie M25/00149 100.0 1 4.00 G Bulong 40km E of Kalgoorlie M25/00187 100.0 1 0.50 G Bulong 40km E of Kalgoorlie M25/00263 100.0 1 1.20 A Bulong 40km E of Kalgoorlie M25/00300 100.0 1 0.38 A Bulong 40km E of Kalgoorlie M27/00190 100.0 1 9.37 G Bulong 40km E of Kalgoorlie P25/01042 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01043 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01044 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01045 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01046 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01047 100.0 1 1.20 G Bulong 40km E of Kalgoorlie M25/00161 100.0 1 {6.40} A Bulong 40km E of Kalgoorlie P25/01049 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01050 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01051 100.0 1 1.22 G Bulong 40km E of Kalgoorlie M25/00162 100.0 1 {3.66} A Bulong 40km E of Kalgoorlie P25/01058 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01061 100.0 1 1.20 G Bulong 40km E of Kalgoorlie P25/01062 100.0 1 1.16 G Bulong 40km E of Kalgoorlie P25/01063 100.0 1 0.88 G Bulong 40km E of Kalgoorlie M25/00165 100.0 1 {4.45} A Bulong 40km E of Kalgoorlie P25/01071 100.0 1 1.01 G Bulong 40km E of Kalgoorlie M25/00171 100.0 1 {1.01} A Bulong 40km E of Kalgoorlie M25/00175 100.0 1 2.21 A Bulong 40km E of Kalgoorlie M25/00184 100.0 1 0.91 A Bulong 40km E of Kalgoorlie P25/01193 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01194 100.0 1 1.21 G Bulong 40km E of Kalgoorlie M25/00206 100.0 1 {2.14} A Bulong 40km E of Kalgoorlie P25/01196 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01197 100.0 1 1.17 G Bulong 40km E of Kalgoorlie P25/01198 100.0 1 1.19 G Bulong 40km E of Kalgoorlie P25/01199 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01200 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01201 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01202 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01203 100.0 1 1.21 G Bulong 40km E of Kalgoorlie M25/00210 100.0 1 {9.58} A Bulong 40km E of Kalgoorlie P25/01204 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01205 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01206 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01207 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01208 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01209 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01210 100.0 1 1.21 G Bulong 40km E of Kalgoorlie P25/01211 100.0 1 1.21 G Bulong 40km E of Kalgoorlie M25/00209 100.0 1 {9.6} A Bulong 40km E of Kalgoorlie P25/01212 100.0 1 1.21 G Bulong 40km E of Kalgoorlie M25/00208 100.0 1 {1.21} A Bulong 40km E of Kalgoorlie P25/01213 100.0 1 1.21 G Bulong 40km E of Kalgoorlie M25/00220 100.0 1 {1.21} A Bulong 40km E of Kalgoorlie P25/01214 100.0 1 1.82 G Bulong 40km E of Kalgoorlie M25/00207 100.0 1 {1.82} A Bulong 40km E of Kalgoorlie M25/00231 100.0 1 0.02 A Bulong 40km E of Kalgoorlie P25/01235 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01236 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01237 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01238 100.0 1 1.22 G Bulong 40km E of Kalgoorlie P25/01239 100.0 1 1.22 G Bulong 40km E of Kalgoorlie M25/00234 100.0 1 {6.06} A Bulong 40km E of Kalgoorlie M25/00245 100.0 1 1.95 A Bulong 40km E of Kalgoorlie P25/01422 100.0 1 0.05 G Bulong 40km E of Kalgoorlie M25/00260 100.0 1 {0.04} A Bulong 40km E of Kalgoorlie P25/01668 100.0 1 0.02 A Bulong 40km E of Kalgoorlie P25/01669 100.0 1 1.57 G Bulong 40km E of Kalgoorlie P25/01670 100.0 1 1.57 G Bulong 40km E of Kalgoorlie P25/01671 100.0 1 1.83 G Bulong 40km E of Kalgoorlie P25/01672 100.0 1 1.64 G Bulong 40km E of Kalgoorlie P25/01724 100.0 1 1.21 A Bulong 40km E of Kalgoorlie P25/01725 100.0 1 1.21 A Bulong 40km E of Kalgoorlie P25/01726 100.0 1 0.10 A Bulong 40km E of Kalgoorlie P25/01757 100.0 1 0.20 A Bulong 40km E of Kalgoorlie P25/01758 100.0 1 0.08 A Bulong 40km E of Kalgoorlie M27/00294 100.0 1 {1.76} A Bulong 40km E of Kalgoorlie M27/00291 100.0 1 1.99 A Bulong 40km E of Kalgoorlie P27/01578 100.0 1 0.24 G Bulong 40km E of Kalgoorlie P27/01579 100.0 1 0.24 A
Annual Report 2005 61 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KALGOORLIE NICKEL PROJECT Bulong Tranche 1 Prospect continued Bulong 40km E of Kalgoorlie M25/00339 100.0 1 1.21 A Bulong 40km E of Kalgoorlie M25/00340 100.0 1 1.22 A Bulong 40km E of Kalgoorlie L27/00065 100.0 1 35.45 G Bulong 40km E of Kalgoorlie L27/00066 100.0 1 3.24 G Bulong 40km E of Kalgoorlie L27/00067 100.0 1 9.39 G Bulong 40km E of Kalgoorlie L27/00072 100.0 1 3.35 G Bulong 40km E of Kalgoorlie L27/00073 100.0 1 6.08 G 79 256.52 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Bulong Tranche 2 Prospect Bulong 40km E of Kalgoorlie M25/00075 right to 100 1,8 6.42 G Bulong 40km E of Kalgoorlie M25/00076 right to 100 1,8 9.79 G Bulong 40km E of Kalgoorlie M25/00077 right to 100 1,8 9.92 G Bulong 40km E of Kalgoorlie M25/00078 right to 100 1,8 10.00 G Bulong 40km E of Kalgoorlie M27/00189 right to 100 1,8 7.26 G 5 43.39 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 8 Heron has the right to explore, mine and develop minerals in the tenements, subject to completing access agreement KALGOORLIE NICKEL PROJECT Bulong Danae Prospect L Yindarlgooda-Bennet Dam 34km East of Kalgoorlie L25/00007 100.0 1 0.01 G Gumbulgera Hill 34km East of Kalgoorlie M25/00019 100.0 1 1.09 G Gumbulgera Hill 34km East of Kalgoorlie M25/00032 100.0 1 1.89 G Bulong 34km East of Kalgoorlie M25/00036 100.0 1 1.25 G Lake Yindarlgooda 34km East of Kalgoorlie M25/00058 100.0 1 1.21 G Gumbulgera Hill 34km East of Kalgoorlie M25/00059 100.0 1 0.84 G Bulong 34km East of Kalgoorlie M25/00064 100.0 1 1.01 G Bennet Dam 34km East of Kalgoorlie M25/00081 100.0 1 1.36 G Bennet Dam 34km East of Kalgoorlie M25/00082 100.0 1 0.98 G Bulong 34km East of Kalgoorlie P25/01175 100.0 1 1.21 G Bulong 34km East of Kalgoorlie P25/01176 100.0 1 1.69 G Bulong 34km East of Kalgoorlie P25/01177 100.0 1 0.75 G Bulong 34km East of Kalgoorlie M25/00191 100.0 1 {3.63} A Bulong 34km East of Kalgoorlie P25/01179 100.0 1 1.21 G Bulong Townsite 34km East of Kalgoorlie M25/00226 100.0 1 {1.21} A 13 14.50 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Bulong East Prospect Clinker Hill 32km SE of Kalgoorlie E25/00250 100.0 1 58.80 A Queen Lapage 45km ENE of Kalgoorlie E25/00273 100.0 1 184.80 A Boorara Hill East 25km ESE of Kalgoorlie E25/00321 100.0 1 2.80 A Mt Mcleay 50km NE of Kalgoorlie E27/00243 100.0 1 16.80 A Mayday North 53km NE of Kalgoorlie E27/00264 100.0 1 {14.00} A Mayday 53km NE of Kalgoorlie E27/00296 100.0 1 5.60 A Gindalbie 50km NE of Kalgoorlie E27/00305 100.0 1 47.60 A Gindalbie 60km NE of Kalgoorlie E27/00322 100.0 1 11.20 A Kalpini South 72km ESE of Kalgoorlie E28/01079 100.0 1 44.80 G Kalpini West 50km NE of Kalgoorlie M27/00371 100.0 1 3.37 A Kalpini West 53km NE of Kalgoorlie M27/00372 100.0 1 1.64 A Gindalbie 45km NE of Kalgoorlie M27/00383 100.0 1 3.57 A Garibaldi 48km NNE of Kalgoorlie M27/00386 100.0 1 0.29 A Mt Magnetic 37km ESE of Kalgoorlie P25/01720 100.0 1 1.20 A Mt Magnetic 37km ESE of Kalgoorlie P25/01721 100.0 1 1.20 A Wombola North 42km SE of Kalgoorlie P25/01735 100.0 1 1.18 A Wombola North 42km SE of Kalgoorlie P25/01736 100.0 1 1.14 G Wombola North 44km SE of Kalgoorlie P26/03090 100.0 1 1.41 G Wombola North 44km SE of Kalgoorlie P26/03091 100.0 1 1.08 G Simplex Hill East 40km SE of Kalgoorlie P26/03300 100.0 1 1.18 G Garibaldi 48km NE of Kalgoorlie P27/01491 100.0 1 1.34 G Garibaldi 48km NE of Kalgoorlie M27/00432 100.0 1 {1.34} A Eldona Dam North 40km NE of Kalgoorlie P27/01517 100.0 1 0.72 G Our Swamp Dam 43km ENE of Kalgoorlie P27/01575 100.0 1 1.41 G Our Swamp Dam 44km ENE of Kalgoorlie P27/01576 100.0 1 1.92 G Forestry Dam 40km NE of Kalgoorlie P27/01661 100.0 1 1.42 G Leaky Dam 50km NE of Kalgoorlie P27/01675 100.0 1 1.99 A 24 396.81 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Kalpini Prospect Binti Binti South 74km NE of Kalgoorlie E27/00168 100.0 1 {47.60} G Binti Binti South 77km NE of Kalgoorlie M27/00408 100.0 1 8.90 A Binti Binti South 74km NE of Kalgoorlie M27/00409 100.0 1 5.94 A Binti Binti South 74km NE of Kalgoorlie M27/00410 100.0 1 8.90 A
62 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KALGOORLIE NICKEL PROJECT Kalpini Prospect continued Kurnalpi Hill 88km NE of Kalgoorlie E28/01108 100.0 1 33.60 G Mooree Hill 75km NE of Kalgoorlie E28/01187 100.0 1 19.60 G Wellington North 63km NE of Kalgoorlie E28/01224 100.0 1 184.80 G Wellington North 68km NE of Kalgoorlie M27/00395 100.0 1 {2.61} A Yowie Hill 86km ENE of Kalgoorlie E28/01295 100.0 1 8.40 G Acra East 75km NE of Kalgoorlie E28/01413 100.0 1 81.20 A Acra Southeast 70km NE of Kalgoorlie E28/01428 100.0 1 14.00 A Arcoona 72Km NE of Kalgoorlie E28/01511 100.0 1 165.20 A Yowie Hill 85 km ENE of Kalgoorlie E28/01512 100.0 1 39.20 A Jumungie Hill 82km NE of Kalgoorlie E28/01013 100.0 1 8.40 G Lake Yindarlgooda 61km ENE of Kalgoorlie E28/01522 100.0 1 2.80 A Acra Chrysoprase 62km NE of Kalgoorlie M28/00127 100.0 1 0.32 G Acra North 65km NE of Kalgoorlie M28/00199 100.0 1 9.76 G Acra North 65km NE of Kalgoorlie M28/00201 100.0 1 9.63 G Betsy Bore 66km NE of Kalgoorlie M28/00205 100.0 1 8.50 G Binti Binti 81km NE of Kalgoorlie M31/00297 100.0 1 8.90 A Binti Binti 80km NE of Kalgoorlie M31/00305 100.0 1 5.93 A Wellington North 68km NE of Kalgoorlie P27/01562 100.0 1 0.47 G Acra North 61km NE of Kalgoorlie P28/00983 100.0 1 0.36 G Acra East 65km NE of Kalgoorlie P28/01000 100.0 1 0.29 G Acra East 65km NE of Kalgoorlie P28/01001 100.0 1 0.98 G Kurnalpi West 70km NE of Kalgoorlie P28/01004 100.0 1 0.87 G Kurnalpi West 70km NE of Kalgoorlie P28/01005 100.0 1 1.58 G Acra Southeast 70km NE of Kalgoorlie P28/01006 100.0 1 1.17 G 26 629.70 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Lake Rebecca Prospect Mulgabbie 112km NE of Kalgoorlie E28/00823 100.0 1 8.40 A Mulgabbie West 99km NE of Kalgoorlie E28/00976 100.0 1 8.40 A Mac's Dam 100km E of Kalgoorlie E28/01503 100.0 1 11.20 G Wallbrook Hill 118km NE of Kalgoorlie E31/00586 100 of Ni only 1 86.80 G Lake Rebecca 114km NE of Kalgoorlie M31/00318 100.0 1 4.39 A Yilgangi South 125km NE of Kalgoorlie P31/01710 100.0 1 1.99 A Yilgangi South 125km NE of Kalgoorlie P31/01711 100.0 1 1.99 A Yilgangi South 125km NE of Kalgoorlie P31/01712 100.0 1 1.99 A Yilgangi South 125km NE of Kalgoorlie P31/01713 100.0 1 1.98 A 9 127.14 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Coolgardie Prospect Coolgardie West 8km W of Coolgardie E15/00899 100.0 1 30.80 A Carbine North 62km NW of Kalgoorlie E16/00276 100 of Ni only 1 25.20 A Chadwin 88km NW of Kalgoorlie E16/00277 100 of Ni only 1 16.80 A Frances Lesley 90km NW of Kalgoorlie E16/00278 100 of Ni only 1 2.80 A Dunnsville 62km NW of Kalgoorlie E16/00292 100.0 1 22.40 A Two Gum Dam 60km NW of Kalgoorlie E16/00295 100.0 1 5.60 G Slattery Dam 62km NW of Kalgoorlie E16/00299 100.0 1 11.20 A Saddle Dam 96km NW of Kalgoorlie E16/00315 100.0 1 19.60 A Tindals 3.5km ESE of Coolgardie M15/01465 100.0 1 0.08 A Charlie Dam 95km NW of Kalgoorlie M16/00493 100.0 1 3.01 A Charlie Dam 95km NW of Kalgoorlie M16/00494 100.0 1 3.04 A Charlie Dam 95km NW of Kalgoorlie M16/00495 100.0 1 6.99 A Gibraltar 60km W of Kalgoorlie P15/04678 100.0 1 0.10 G Pamela 60km W of Kalgoorlie P15/04728 100.0 1 0.18 G Tindals 3.5km ESE of Coolgardie P15/04734 100.0 1 0.05 A Gibraltar 60km W of Kalgoorlie P15/04733 100.0 1 1.79 A Mungari 25km E of Kalgoorlie P15/04739 100.0 1 0.39 A Saddle Dam 94km NW of Kalgoorlie P16/02123 100.0 1 1.75 G Saddle Dam 94km NW of Kalgoorlie P16/02124 100.0 1 1.86 G Saddle Dam 94km NW of Kalgoorlie P16/02125 100.0 1 1.30 G Chadwin West 79km NW of Kalgoorlie P16/02249 100.0 1 1.84 G Chadwin East 76km NW of Kalgoorlie P16/02250 100.0 1 1.91 G Riches Find 77km NW of Kalgoorlie P24/03956 100.0 1 0.38 A Saunders Find North 120km NW of Kalgoorlie P30/00990 100.0 1 0.04 G Saunders Find East 120km NW of Kalgoorlie P30/00991 100.0 1 0.22 G 25 159.32 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE NICKEL PROJECT Frances Lesley Nickel Joint Venture Prospect Frances Lesley 95km NW of Kalgoorlie E16/00174 100 of Ni only 1,9 2.80 G Frances Lesley 100km NW of Kalgoorlie E16/00192 100 of Ni only 1,9 44.80 G Frances Lesley 88km NW of Kalgoorlie E16/00239 100 of Ni only 1,9 33.60 G Frances Lesley 98km NW of Kalgoorlie M16/00385 100 of Ni only 1,9 2.00 A 4 83.20 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 9 Mining Project Investors Pty Ltd retains gold and silver mineral rights, to which Siberia Mining Corporation are earning in.
Annual Report 2005 63 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status LAVERTON PROJECT Laverton Nickel Prospect Mineral Patch Hill 75km SE of Laverton E38/00931 100 of Ni only 9,10 50.40 G Corktree Well W 36km N of Laverton E38/00948 100.0 10 30.80 G Mount Varden 43km N of Laverton E38/01695 100.0 10 89.60 A Merolia 51km SE of Laverton E38/01696 100.0 10 131.60 A Erlistoun 60km N of Laverton E38/01724 100.0 10 72.80 A Laverton South 43km S of Laverton E38/01726 100.0 10 2.80 A Burtville 41km S of Laverton E38/01727 100.0 10 22.40 A Erlistoun-Kurrajong Well 50km N of Laverton E38/01742 100.0 10 30.80 A Perseverance Well 53km WNW of Laverton E39/00738 100.0 10 2.80 G Perseverance Well 53km WNW of Laverton M39/00928 100.0 10 {3.02} A Jasper Hills 120km SE of Laverton E39/00907 100.0 10 22.40 G Stella Range 120km SE of Laverton E39/01076 100.0 10 196.00 A Goglia Well 75km SE of Laverton E39/01106 100.0 10 36.40 A Stella Range 126km SE of Laverton E39/01124 100.0 10 11.20 A Murrin Murrin 60km WSW of Laverton P39/04228 100.0 10 1.21 G Murrin Murrin 50 ESE of Leonora P39/04409 100.0 10 1.21 A Murrin Murrin 50 ESE of Leonora P39/04410 100.0 10 1.21 A Murrin Murrin 50 ESE of Leonora P39/04411 100.0 10 1.21 A Macey Hill 44km ESE of Leonora P39/04348 100.0 10 0.97 A 18 701.21 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV 9 Mining Project Investors Pty Ltd retains gold and silver mineral rights KEITH KILKENNY PROJECT Wildara North Prospect Mount McClure 135km NNW of Leonora E36/00387 100.0 10 16.80 G Table Hill 102km NNW of Leonora E36/00483 100.0 10 22.40 G Mount McClure 125km NNW of Leonora E36/00492 100.0 10 42.00 G Warrida Well 135km NNW of Leonora E36/00554 100.0 10 39.20 A McAuley 120km NW of Leonora E36/00520 100.0 10 5.60 A Lake Darlot 1 103km NNW of Leonora E37/00753 100.0 10 134.40 A Lake Darlot 2 103km NNW of Leonora E37/00791 100.0 10 22.40 A Barwidgee 220km N of Leonora E53/01119 100.0 10 11.20 G Mt Keith North 218km NNW of Leonora P53/01229 100.0 10 0.48 A Mt Keith North 218km NNW of Leonora P53/01230 100.0 10 0.54 A Mt Keith North 218km NNW of Leonora P53/01231 100.0 10 0.55 A Mt Keith North 218km NNW of Leonora P53/01232 100.0 10 0.53 A 12 296.10 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV WHEATBELT PROJECT Wheatbelt Nickel Prospect Roundtop/Jimberlana 126km West of Norseman E63/00958 100.0 10 33.60 A Roundtop Hill West 126km West of Norseman E63/00986 100.0 10 16.80 A Bencubbin South 85km WNW of Southern Cross E70/02767 100.0 10 123.20 A Mukinbudin East 130km WNW of Southern Cross E70/02768 100.0 10 106.40 A Rocky Gully 85km NW of Albany E70/02801 100.0 10 128.80 A 5 408.80 10 Proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV BOORARA PROJECT Kanowna South Nickel Sulphide Joint Venture Kanowna 17km ENE of Kalgoorlie P27/01550 100.0 11 1.99 G Kanowna 16km ENE of Kalgoorlie P27/01551 100.0 11 1.81 G Kanowna 15km ENE of Kalgoorlie P27/01552 100.0 11 1.69 G Kanowna 16km ENE of Kalgoorlie P27/01553 100.0 11 1.95 G Kanowna 16km ENE of Kalgoorlie P27/01554 100.0 11 1.97 G Kanowna 17km ENE of Kalgoorlie P27/01555 100.0 11 1.98 G Kanowna 19km ENE of Kalgoorlie P27/01556 100.0 11 1.99 G Kanowna 16km ENE of Kalgoorlie P27/01557 100.0 11 1.99 G Kanowna 15km ENE of Kalgoorlie P27/01558 100.0 11 1.99 G Kanowna 16km ENE of Kalgoorlie P27/01559 100.0 11 1.99 G Kanowna 15km ENE of Kalgoorlie P27/01560 100.0 11 1.99 G Kanowna 14km ENE of Kalgoorlie P27/01561 100.0 11 1.99 G 12 23.33 11 Yilgarn Mining Limited has a right to earn a 70% interest
HERON NICKEL PROJECT TOTAL 376 4941.11
GOLD AND COPPER PROJECTS FOR POTENTIAL DIVESTMENT THROUGH REGENT RESOURCES LIMITED BULONG GOLD PROJECT Yindarlgooda Prospect Mulgarrie 41km NNE of Kalgoorlie E24/00126 100.0 10 56.00 A Scotia East 44km NNW of Kalgoorlie E24/00133 100.0 10 140.00 A Mulgarrie 41km NNE of Kalgoorlie E24/00134 100.0 10 28.00 A
64 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status Yindarlgooda 46km E of Kalgoorlie E25/00222 100.0 10 50.40 G Pipeclay Peaks 66km ESE of Kalgoorlie E25/00241 100.0 10 11.20 G Lake Yindarlgooda 54km ENE of Kalgoorlie E25/00271 100.0 10 14.00 G Lake Yindarlgooda 58km ENE of Kalgoorlie E25/00272 100.0 10 16.80 A Seabrook Hills 73km SE of Kalgoorlie E25/00293 100.0 10 2.80 G Trans Find 55km ESE of Kalgoorlie E25/00298 100.0 10 159.60 G Trans Find East 65km E of Kalgoorlie E25/00303 100.0 10 22.40 G Reef Dam 60km NE of Kalgoorlie E25/00305 100.0 10 22.40 G Lake Yindarlgooda 45km East of Kalgoorlie E25/00316 100.0 10 22.40 A Wattle Dam 55km E of Kalgoorlie E25/00319 100.0 10 67.20 A Mulgarrie 41km NNE of Kalgoorlie E27/00306 100.0 10 36.40 A Lake Yindarlgooda 59km ENE of Kalgoorlie E28/01192 100 of Ni 10 5.60 G Cowarna Downs 96km SE of Kalgoorlie E28/01310 100.0 10 67.20 G Karonie South 128km SE of Kalgoorlie E28/01341 100.0 10 148.40 G Madoona Downs 119km SE of Kalgoorlie E28/01427 100.0 10 109.20 G TransFind East 70km East of Kalgoorlie E28/01501 100.0 10 28.00 A Big Dyke 125km SE of Kalgoorlie E28/01563 100.0 10 98.00 A Mulgarrie 41km NNE of Kalgoorlie M27/00419 100.0 10 6.11 A Queen Lapage 51km ENE of Kalgoorlie P25/01777 100.0 10 0.19 G Trans Find South 1 62km E of Kalgoorlie P25/01814 100.0 10 1.78 G Trans Find South 2 62km E of Kalgoorlie P25/01815 100.0 10 1.78 A Trans Find South 3 62km E of Kalgoorlie P25/01817 100.0 10 1.69 G Trans Find South 4 62km E of Kalgoorlie P25/01818 100.0 10 1.73 G Kalgoorlie West 5km W of Kalgoorlie P26/03283 100.0 10 0.87 A Kalgoorlie West 5km W of Kalgoorlie P26/03284 100.0 10 1.83 A Kalgoorlie West 5km W of Kalgoorlie P26/03285 100.0 10 1.99 A Kalgoorlie Within Kalgoorlie P26/03308 100.0 10 2.00 A Kalgoorlie Within Kalgoorlie P26/03309 100.0 10 1.12 A Kalgoorlie West 5km W of Kalgoorlie P26/03320 100.0 10 0.79 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01649 100.0 10 1.35 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01650 100.0 10 2.00 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01651 100.0 10 1.99 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01652 100.0 10 1.36 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01653 100.0 10 1.35 A Kanowna Racetrack 17km NE of Kalgoorlie P27/01654 100.0 10 2.00 A Garibaldi 46km NE of Kalgoorlie P27/01655 100.0 10 0.10 G 39 1,138.02 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV BULONG GOLD PROJECT Boorara Prospect Widgiemooltha 82km S of Kalgoorlie E15/00856 100.0 10 2.80 A Peter Dam 75km SE of Kalgoorlie E15/00869 100.0 10 103.60 A Mt Monger 50km SE of Kalgoorlie E25/00307 100.0 10 47.60 G Mt Monger 50km SE of Kalgoorlie E25/00313 100.0 10 11.20 A Cutters Luck 32km SSE of Kalgoorlie E26/00110 100.0 10 67.20 A Cutters Luck 48km SSE of Kalgoorlie E26/00115 100.0 10 25.20 A Cutters Luck 48km SSE of Kalgoorlie M26/00667 100.0 10 2.27 A Balagundi 19km ENE of Kalgoorlie P25/01832 100.0 10 0.44 A Cutters Luck 44km SSE of Kalgoorlie P26/02909 100.0 10 1.66 A Abattoir South 30km S of Kalgoorlie P26/03286 100.0 10 1.91 G Abattoir North 10km N of Kalgoorlie P26/03292 100.0 10 1.96 G Abattoir North 10km N of Kalgoorlie P26/03293 100.0 10 1.96 G Wombola 46km SE of Kalgoorlie P26/03298 100.0 10 1.34 G Wombola 46km SE of Kalgoorlie P26/03299 100.0 10 0.90 G Kurramia 10km NE of Kalgoorlie P26/03317 100.0 10 1.88 A Kurramia 10km NE of Kalgoorlie P26/03318 100.0 10 1.25 A 16 270.04 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV KEITH KILKENNY PROJECT Yarri Prospect Yindi 125km ENE of Kalgoorlie E28/01481 100.0 10 16.80 A Claypan Dam 158km NNE of Kalgoorlie E31/00347 100.0 10 2.80 G Yerilla Ck Dam 155km NNE of Kalgoorlie E31/00348 100.0 10 11.20 A Mt Catherine East 143km NNE of Kalgoorlie E31/00372 100.0 10 5.60 A Mt Catherine East 138km NNE of Kalgoorlie E31/00373 100.0 10 2.80 A Duck Hill South 1151km NE of Kalgoorlie E31/00415 100.0 10 81.20 A Claypan Well 141km NNE of Kalgoorlie E31/00446 100.0 10 8.40 G McAuliffe Well 150km NNE of Kalgoorlie E31/00518 100.0 10 47.60 G Mt Catherine 141km NNE of Kalgoorlie E31/00529 100.0 10 2.80 A Westward Ho Well 140km NNE of Kalgoorlie E31/00576 100.0 10 30.80 A Deenya Hill 130km NE of Kalgoorlie E31/00582 100.0 10 8.40 A Mt Catherine 145km NNE of Kalgoorlie E31/00628 100.0 10 28.00 A Jump Up Dam 129km NE of Kalgoorlie E31/00664 100.0 10 22.40 G Webb Find 136km NE of Kalgoorlie E31/00670 100.0 10 14.00 A Jungle Dam 143km NE of Kalgoorlie E31/00675 100.0 10 2.80 G
Annual Report 2005 65 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KEITH KILKENNY PROJECT Yarri Prospect continued Mt Catherine 140km NNE of Kalgoorlie E31/00678 100.0 10 22.40 A Yerilla North 150km NNE of Kalgoorlie E31/00683 100.0 10 64.40 A Yerilla SE 140km NNE of Kalgoorlie E31/00684 100.0 10 53.20 A Hobble Gap 170km NE of Kalgoorlie E31/00694 100.0 10 56.00 A Murphy Well 177km NNE of Kalgoorlie E39/00831 100.0 10 33.60 A Mt Percy 163km NNE of Kalgoorlie E39/00883 100.0 10 196.00 A Aubils 166km NNE of Kalgoorlie E39/00957 100.0 10 95.20 A Butcher Well North 191km NE of Kalgoorlie E39/01100 100.0 10 5.60 A Mt Remarkable 157km NNE of Kalgoorlie E39/01111 100.0 10 196.00 A Kilmore Hill 170km NNE of Kalgoorlie E39/01120 100.0 10 58.80 A Mt Howe 170km NE of Kalgoorlie E39/01132 100.0 10 8.40 A Mt Remarkable 166km NNE of Kalgoorlie E39/01139 100.0 10 134.40 A Yarri 137km NE of Kalgoorlie M31/00141 100.0 10 0.20 A Yilgangi Castle 129km NE of Kalgoorlie M31/00173 100.0 10 0.34 A Mt Catherine 142km NNE of Kalgoorlie M31/00249 100.0 10 0.58 A Boyce Creek 142km NNE of Kalgoorlie M31/00278 100.0 10 0.70 A Webb Find 153km NE of Kalgoorlie M31/00281 100.0 10 1.20 A Boyce Creek 142km NNE of Kalgoorlie M31/00296 100.0 10 5.80 A Boyce Creek 142km NNE of Kalgoorlie M31/00300 100.0 10 1.11 A Banjo Well 141km NE of Kalgoorlie M31/00310 100.0 10 4.70 A Yarri 136km NE of Kalgoorlie M31/00314 100.0 10 4.40 A Yerilla 146km NNE of Kalgoorlie M31/00317 100.0 10 9.28 A Yilgangi North 131km NE of Kalgoorlie M31/00355 100.0 10 5.19 A Aubils 170km NNE of Kalgoorlie M39/00656 100.0 10 1.48 A Aubils 168km NNE of Kalgoorlie M39/00657 100.0 10 4.44 A Aubils 166km NNE of Kalgoorlie M39/00658 100.0 10 1.48 A Aubils 166km NNE of Kalgoorlie M39/00659 100.0 10 1.48 A Aubils 170km NNE of Kalgoorlie M39/00660 100.0 10 1.48 A Aubils 169km NNE of Kalgoorlie M39/00662 100.0 10 2.96 A Jump Up Dam 129km NE of Kalgoorlie P31/01669 100.0 10 1.21 G Nils Desperandum 135km NE of Kalgoorlie P31/01680 100.0 10 0.05 G Jump Up Dam South 130km NE of Kalgoorlie P31/01697 100.0 10 0.60 G Jump Up Dam North 130km NE of Kalgoorlie P31/01698 100.0 10 0.70 G Yilgangi South 125km NE of Kalgoorlie P31/01709 100.0 10 1.55 A Yilgangi South 125km NE of Kalgoorlie P31/01714 100.0 10 1.84 A Yilgangi South 125km NE of Kalgoorlie P31/01715 100.0 10 1.82 A 51 1,264.18 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV KEITH KILKENNY PROJECT Kookynie Prospect Melita North 20km SE of Leonora E37/00790 100.0 10 39.20 A Teutonic Bore 50km NNW of Leonora E37/00829 100.0 10 2.80 A Mt Kildare 52km SE of Leonora E39/01101 100.0 10 61.60 A Glenorn 30km SSE of Leonora E39/01146 100.0 10 8.40 A Glenorn 30km SSE of Leonora E39/01147 100.0 10 11.20 A Desdemona North 21km SSE of Leonora E40/00122 100.0 10 2.80 A Mt Melita 30km SE of Leonora E40/00186 100.0 10 58.80 A Niagara 57km S of Leonora E40/00195 100.0 10 67.20 A Two Dees 57km S of Leonora E40/00199 100.0 10 67.20 A Niagara 57km S of Leonora E40/00200 100.0 10 8.40 A Tampa 30km SSE of Leonora E40/00202 100.0 10 39.20 A Desdemona 30km SSE of Leonora E40/00204 100.0 10 19.60 A Mt Melita 30km SE of Leonora E40/00206 100.0 10 44.80 A Hawks Well East 35km SSE of Leonora E40/00209 100.0 10 56.00 A Hawks Well West 30km SSE of Leonora E40/00211 100.0 10 5.60 A Malcolm East 22km ESE of Leonora M37/00727 100.0 10 4.43 A Malcolm East 21km ESE of Leonora M37/00728 100.0 10 5.73 A Malcolm East 23km ESE of Leonora M37/00729 100.0 10 9.74 A Malcolm East 22km ESE of Leonora M37/00730 100.0 10 8.00 A Alice Gold Mine 17km ESE of Leonora M37/00953 100.0 10 0.10 A Leonora East 7.5km E of Leonora P37/06705 100.0 10 1.95 G Malcolm 25km E of Leonora P37/06774 100.0 10 1.88 A Malcolm 25km E of Leonora P37/06775 100.0 10 1.21 A Malcolm 25km E of Leonora P37/06776 100.0 10 1.21 A Malcolm 25km E of Leonora P37/06777 100.0 10 1.19 A Malcolm 25km E of Leonora P37/06778 100.0 10 1.00 A Mt Stewart 23km E of Leonora P37/06876 100.0 10 0.97 A Mt Stewart 23km E of Leonora P37/06877 100.0 10 1.14 A Mt Stewart 23km E of Leonora P37/06878 100.0 10 1.95 A Mt Stewart 23km E of Leonora P37/06879 100.0 10 1.08 A Mt Stewart 23km E of Leonora P37/06880 100.0 10 1.21 A Mt Stewart 23km E of Leonora P37/06881 100.0 10 1.10 A Mt Stewart 23km E of Leonora P37/06882 100.0 10 1.20 A Mt Stewart 23km E of Leonora P37/06883 100.0 10 1.95 A Mt Stewart 23km E of Leonora P37/06884 100.0 10 1.78 A Mt Stewart 23km E of Leonora P37/06885 100.0 10 1.68 A
66 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KEITH KILKENNY PROJECT Kookynie Prospect continued Mt Stewart 23km E of Leonora P37/06886 100.0 10 1.96 A Mt Stewart 23km E of Leonora P37/06887 100.0 10 1.97 A Redcastle 60km E of Leonora P39/04341 100.0 10 1.80 G Redcastle 60km E of Leonora P39/04342 100.0 10 1.88 G Redcastle 60km E of Leonora P39/04357 100.0 10 2.00 A 41 552.91 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV KIMBERLEY PROJECT Kimberley Plateau Prospect Robinson River 100km NE of Derby E04/01387 100.0 196.00 A Drysdale River 262km NW of Kununurra E80/02951 100.0 196.00 A Kalumburu 267km NW of Kununurra E80/02952 100.0 196.00 A King Edward River 266km NW of Kununurra E80/02953 100.0 196.00 A Mt Ramsay 208km SW of Kununurra E80/03145 100.0 196.00 A Carson River 250km NW of Kununurra E80/03508 100.0 196.00 A Gordon Downs 40km NE of Halls Creek E80/03531 100.0 187.60 A 7 1,363.60 PILBARA PROJECT Bangemall Prospect Nuninga Spring 120km SSW of Newman E52/01660 100.0 196.00 G Marrila 225km NNE of Carnarvon E08/01581 100.0 70.00 A 2 266.00 MUSGRAVE PROJECT Warburton Copper Prospect Gunbarrel 1 750km NE of Kalgoorlie E60/02132 100.0 176.40 A Pussy Cat Hill 730km NE of Kalgoorlie E69/01932 100.0 179.20 A Ainslie Gorge 720km NE of Kalgoorlie E69/01933 100.0 196.00 A Mt Talbot 720km NE of Kalgoorlie E69/01934 100.0 196.00 A Warburton North 740km NE of Kalgoorlie E69/01935 100.0 196.00 A Jamieson Range 830km NE of Kalgoorlie E69/02032 100.0 196.00 A Neale 460km ENE of Kalgoorlie E69/02120 100.0 196.00 A Gibson Desert 830km NE of Kalgoorlie E69/02127 100.0 117.60 A Welcome Creek 850km N of Kalgoorlie E69/02128 100.0 100.80 A Gunbarrel 4 750km NE of Kalgoorlie E69/02129 100.0 196.00 A Gunbarrel 3 750km NE of Kalgoorlie E69/02130 100.0 196.00 A Gunbarrel 2 750km NE of Kalgoorlie E69/02131 100.0 196.00 A 13 1,139.60 BOORARA PROJECT Gidgi Joint Venture Prospect Gidji Roaster 14km N of Kalgoorlie E24/00111 100.0 12 64.40 A Five Mill Hill 6km NNE of Kalgoorlie M26/00736 100.0 12 {7.04} A Kurramia 8km NE of Kalgoorlie M26/00780 100.0 12 1.60 A Kurramia South 10km NE of Kalgoorlie P26/02977 100.0 12 0.89 G Kurramia 10km NE of Kalgoorlie P26/02979 100.0 12 0.18 G Kurramia 10km NE of Kalgoorlie P26/02994 100.0 12 1.40 G Five Mill Hill 7km NNE of Kalgoorlie P26/03112 100.0 12 1.55 A Five Mill Hill 5km NNE of Kalgoorlie P26/03113 100.0 12 1.51 A Five Mill Hill 5km NNE of Kalgoorlie P26/03114 100.0 12 2.00 A Five Mill Hill 6km NNE of Kalgoorlie P26/03115 100.0 12 2.00 A 9 78.66 12 Jackson Gold Limited has the right to earn a 70% interest. Heron retains all nickel rights. LAVERTON PROJECT King of Creation Joint Venture Prospect Doris Well 60km N of Laverton E38/01368 100.0 13 22.40 A King of Creation 53km N of Laverton E38/01375 100.0 13 2.80 A 2 25.20 13 Bronzewing Gold NL has the right to earn a 70% interest
REGENT TOTAL 179 6,725.56
IRON ORE PROJECTS FOR DIVESTMENT THROUGH PROPOSED SALE TO ECHELON RESOURCES LIMITED SOUTHERN CROSS PROJECT Bungalbin Iron Ore Prospect Bungalbin 102km NNE of Southern Cross E77/00842 100.0 14 106.40 G Mount Jackson 106km NNE of Southern Cross E77/00896 100.0 14 11.20 G Mt Jackson 105km NNE of Southern Cross E77/00919 100.0 14 53.20 G 3 170.80 14 By an agreement between Portman Mining Limited and Heron dated 31 May 1999, Heron sold to Portman the rights to explore and mine for iron ore on these tenements and also agreed to sell them as mining leases to Portman. Heron has a royalty based on tonnes of iron ore sold by Portman. The agreement allowed five years to Portman to commence mining operations (which it has not done) but also provided for a two year extension of that period. Heron (and Heron’s assignee Echelon) have commenced negotiations with Portman as to the basis on which Portman will be required to advance development of those iron ore deposits during that two year period.
Annual Report 2005 67 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status SOUTHERN CROSS PROJECT Bungalbin Aurora Iron Ore Prospect Mt Dimer 112km NNE of Southern Cross E77/00946 100.0 15 86.80 G Timberfield 123km NNE of Southern Cross E77/00947 100.0 15 89.60 A Yeeding Hill 108km N of Southern Cross E77/01071 100.0 15 22.40 A Bungalbin Hill 97km NNE of Southern Cross E77/01076 100.0 15 61.60 G Bungalbin Hill 109km NNE of Southern Cross E77/01077 100.0 15 14.00 G Mt Jackson 103km NNE of Southern Cross E77/01097 100.0 15 134.40 A Mt Jackson 106km NNE of Southern Cross E77/01099 100.0 15 2.80 A Mt Dimer 105km NE of Southern Cross E77/01115 100.0 15 196.00 A Mt Dimer 100km NNE of Southern Cross E77/01129 100.0 15 14.00 A Dimer South 100km NNE of Southern Cross E77/01130 100.0 15 25.20 G Mt Jackson 107km NNE of Southern Cross P77/03371 100.0 15 0.21 A Mt Jackson 106km NNE of Southern Cross P77/03372 100.0 15 0.46 A 12 723.07 15 Scimitar Resources Limited owns non-iron ore rights. Heron owns all iron ore rights. SOUTHERN CROSS PROJECT Perrinvale Prospect Ranford Peak 231km NW of Kalgoorlie E29/00434 100.0 25.20 G Mount Marmion 208km NW of Kalgoorlie E29/00435 100.0 22.40 G Metzke Find 208km NW of Kalgoorlie E29/00564 100.0 117.60 A Lawrence Find 160km NW of Kalgoorlie E30/00203 100.0 196.00 A Lawrence Find North 188km NW of Kalgoorlie E30/00226 100.0 47.60 G Lawrence Find 176km NW of Kalgoorlie E30/00228 100.0 16.80 G Illaara 196km NW of Kalgoorlie E30/00254 100.0 126.00 G Clackline 60km E of Perth E70/02782 100.0 112.00 A Northam 85km E of Perth E70/02783 100.0 168.00 A Chittering 110km NE of Perth E70/02784 100.0 140.00 A Evanston 175km N of Southern Cross E77/01268 100.0 84.00 A Koolyanobbing South 40km NE of Southern Cross E77/01272 100.0 75.60 A 12 1,131.20 PILBARA PROJECT Pilbara Prospect Gibbings Island 130km N of Derby E04/01553 100.0 50.40 A Onslow 20km WSW of Onslow E08/01458 100.0 196.00 A Onslow 20km WSW of Onslow E08/01465 100.0 196.00 A Turee Creek 310 km SSE of Karratha E08/01511 100.0 196.00 A Seven Mile Creek 290 km SSE of Karratha E08/01512 100.0 140.00 A Mininer Creek 320 km SSE of Karratha E08/01513 100.0 196.00 A Peedamulla 15km ENE of Onslow E08/01524 100.0 196.00 A Poondano Waterhole 30km E of Port Hedland E45/02723 100.0 196.00 A De Grey 50km E of Port Hedland E45/02736 100.0 196.00 A No 3 Desert Bore 190km E of Port Hedland E45/02739 100.0 196.00 A Pannawonica East 120km S of Karratha E47/01525 100.0 64.40 A Pannawonica South 110km S of Karratha E47/01526 100.0 8.40 A Woollawoorah Hill 110km S of Karratha E47/01527 100.0 30.80 A Paraburdoo South 300km SSE of Karratha E47/01528 100.0 72.80 A Urary Creek 340km SSE of Karratha E52/01859 100.0 196.00 A Lee Steere Range 230km NE of Wiluna E69/02126 100.0 131.60 A 16 2,262.40 EAST KIMBERLEY PROJECT Kununarra Prospect Bandicoot Range 5km W of Kununarra E80/03367 100.0 16 151.20 A 1 151.20 16 Dampier Mining Pty Ltd has the right to earn a 60% interest in the tenement
OCHRE TOTAL 44 4,363.07
URANIUM, MINERAL SANDS, OIL SHALE PROJECTS FOR POTENTIAL DIVESTMENT THROUGH BALLADONIA ENERGY LIMITED BALLADONIA OIL-SHALE PROJECT Heartbreak 9 46km NNE of Norseman E15/00656 100.0 61.60 G Junction Lake South 65km NE of Norseman E28/01551 100.0 196.00 A Kakarook 250km NE of Kalgoorlie E39/01115 100.0 196.00 A Heartbreak 1 76km E of Norseman E63/00707 100.0 196.00 A Heartbreak 2 70km NE of Norseman E63/00708 100.0 196.00 A Heartbreak 82km E of Norseman E63/00711 100.0 156.80 G Geordie Rock 87km SSW of Norseman E63/00720 100.0 112.00 G Lake Dundas 34km SSW of Norseman E63/00736 100.0 64.40 G Yardina SE 70km NE of Norseman E63/00944 100.0 196.00 A Jeffreys West 40km NE of Norseman E63/00968 100.0 47.60 A Walgorina Rock East 73km ENE of Norseman E63/00969 100.0 8.40 A The Yates 140km S of Norseman E63/00970 100.0 196.00 A Charlina Rocks 153km ESE of Norseman E69/01473 100.0 196.00 A Balladonia 168km ESE of Norseman E69/01474 100.0 196.00 A Boingaring Rocks 156km ESE of Norseman E69/01475 100.0 196.00 A
68 Heron Resources Limited Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status BALLADONIA OIL-SHALE PROJECT continued Afghan Rock 185km ESE of Norseman E69/01476 100.0 196.00 A Balladonia West 153km ESE of Norseman E69/01477 100.0 196.00 A Charlina South 147km ESE of Norseman E69/01478 100.0 196.00 A Charlina West 143km ESE of Norseman E69/01479 100.0 196.00 A Curnadinia Rock 163km ESE of Norseman E69/01480 100.0 196.00 A Yalodinya Rock 159km ESE of Norseman E69/01481 100.0 134.40 A Charlina East 162km ESE of Norseman E69/01482 100.0 81.20 A Chidalinya Rock 193km ESE of Norseman E69/01492 100.0 106.40 A Jerandilla 190km ESE of Norseman E69/01493 100.0 196.00 A Eclipse Hill 189km SE of Norseman E69/01495 100.0 196.00 A Bonnie Hill 178km SE of Norseman E69/01499 100.0 196.00 A Florabell Hill 190km SE of Norseman E69/01500 100.0 196.00 A Balladonia 184km E of Norseman E69/01717 100.0 196.00 A Balladonia Central 169km ESE of Norseman E69/01742 100.0 179.20 A Balladonia Central 166km ESE of Norseman E69/01743 100.0 168.00 A Condabina South 180km ESE of Norseman E69/02075 100.0 196.00 A Namerlonia Rock 180km SE of Norseman E69/02076 100.0 196.00 A Yalodinya Rock 2 165km ESE of Norseman E69/02077 100.0 196.00 A Brooks Soak 190km E of Norseman E69/02078 100.0 95.20 A Balladonia Rock 190km E of Norseman E69/02079 100.0 120.40 A Yalodinya Rock North 165km ESE of Norseman E69/02080 100.0 42.00 A Lort River 110km SSW of Norseman E74/00278 100.0 151.20 A Mount Deans 12km SSW of Norseman M63/00417 100.0 9.87 A Mount Deans 15km SSW of Norseman M63/00418 100.0 9.26 A 39 5,859.93 WEST AUSTRALIA URANIUM PROJECT Gascoyne River 260km E of Carnarvon E09/01195 100.0 196.00 A Mt James Creek 260km E of Carnarvon E09/01196 100.0 196.00 A Ida Valley 245km NW of Kalgoorlie E29/00582 100.0 100.80 A 3 492.80 QUEENSLAND URANIUM PROJECT Werrington South 290km W of Townsville EPM15032 100.0 92.40 A Pandanus West 235km W of Townsville EPM15041 100.0 280.00 A 2 372.40 NORTHERN TERRITORY URANIUM PROJECT Mt Denison 240km NW of Alice Springs 24622 100.0 364.00 A Dulcie Range 225km NE of Alice Springs 24638 100.0 481.60 A 2 845.60
BALLADONIA TOTAL 46 7,570.73
PIONEER NICKEL LIMITED TENEMENTS - HERON RETAINS CERTAIN NICKEL RIGHTS KALGOORLIE PROJECT - HERON RETAINS NICKEL LATERITE RIGHTS Sampson 66km NE of Kalgoorlie E27/00273 Ni Lat 1001 176.40 A Kalpini 61km NE of Kalgoorlie E27/00278 Ni Lat 1001 114.80 A Acra 61km NE of Kalgoorlie E28/01223 Ni Lat 1001 106.40 G Boomerang Lake 103km NE of Kalgoorlie E31/00519 Ni Lat 1001 156.80 G Mt Ballona 87km NE of Kalgoorlie E31/00575 Ni Lat 1001 67.20 A Jungle Hill 140km NE of Kalgoorlie E31/00579 Ni Lat 1001 81.20 G Boomerang North 122km NE of Kalgoorlie E31/00581 Ni Lat 1001 78.40 G Jubilee 60km NE of Kalgoorlie P28/00972 Ni Lat 1001 1.20 G Jubilee 60km NE of Kalgoorlie P28/00991 Ni Lat 1001 1.29 G 9 783.69 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV KALGOORLIE PROJECT - HERON RETAINS A PRE-EMPTIVE RIGHT TO NICKEL LATERITE Pioneer 125km SSE of Kalgoorlie E15/00573 preempt Ni Lat 36.40 G Pioneer 136km SSE of Kalgoorlie E63/00753 preempt Ni Lat 33.60 G Higginsville 92km S of Kalgoorlie E15/00804 preempt Ni Lat 8.40 G Higginsville 80km SSE of Kalgoorlie E15/00807 preempt Ni Lat 47.60 A Higginsville 132km SSE of Kalgoorlie E63/00845 preempt Ni Lat 123.20 A Higginsville 128km S of Kalgoorlie E63/00846 preempt Ni Lat 196.00 G Higginsville 158km S of Kalgoorlie E63/00847 preempt Ni Lat 117.60 G Higginsville 128km S of Kalgoorlie E63/00849 preempt Ni Lat 28.00 G Wattle Dam 65km S of Kalgoorlie E15/00718 preempt Ni Lat 50.40 G Wattle Dam 65km S of Kalgoorlie M15/01101 preempt Ni Lat 5.19 G Wattle Dam 65km S of Kalgoorlie M15/01264 preempt Ni Lat 0.85 G Wattle Dam 65km S of Kalgoorlie M15/01263 preempt Ni Lat 2.17 G Wattle Dam 65km S of Kalgoorlie P15/03767 preempt Ni Lat 0.60 G Wattle Dam 65km S of Kalgoorlie M15/01323 preempt Ni Lat {0.50} A
Annual Report 2005 69 9.0 Interest in Mining Tenements Continued
Prospect Location Geographic Identifier Tenement Heron Interest Area km2 Status KALGOORLIE PROJECT - HERON RETAINS A PRE-EMPTIVE RIGHT TO NICKEL LATERITE continued Wattle Dam 65km S of Kalgoorlie P15/03873 preempt Ni Lat 0.84 G Wattle Dam 65km S of Kalgoorlie M15/01338 preempt Ni Lat 0.87 A Wattle Dam 65km S of Kalgoorlie P15/04479 preempt Ni Lat 1.38 G Larkinville JV 71km SW of Kalgoorlie E15/00679 preempt Ni Lat 1 114.80 G Larkinville JV 73km SSE of Kalgoorlie E15/00689 preempt Ni Lat 78.40 G Larkinville JV 88km SSE of Kalgoorlie E15/00742 preempt Ni Lat 19.60 G Larkinville JV 70km WNW of Kalgoorlie E16/00269 preempt Ni Lat 100.80 G Larkinville JV 75km SSE of Kalgoorlie P15/04213 preempt Ni Lat 1.22 G Larkinville JV 75km SSE of Kalgoorlie P15/04214 preempt Ni Lat 1.21 G Larkinville JV 55km SW of Kalgoorlie P15/04435 preempt Ni Lat 1.62 G Larkinville JV 55km SW of Kalgoorlie P15/04436 preempt Ni Lat 1.90 G Larkinville JV 57km SW of Kalgoorlie P15/04437 preempt Ni Lat 1.87 G Larkinville JV 56km SW of Kalgoorlie P15/04438 preempt Ni Lat 1.92 G Larkinville JV 56km SW of Kalgoorlie P15/04439 preempt Ni Lat 2.00 G Larkinville JV 56km SW of Kalgoorlie P15/04440 preempt Ni Lat 0.27 G Larkinville JV 65km SSE of Kalgoorlie P15/04464 preempt Ni Lat 0.22 G Larkinville JV 48km SW of Kalgoorlie E15/00805 preempt Ni Lat 47.60 A Silver Swan Northwest 48km N of Kalgoorlie E27/00145 preempt Ni Lat 1 47.60 G Silver Swan Northwest 62km N of Kalgoorlie M24/00901 preempt Ni Lat 1 8.30 A Silver Swan Northwest 62km N of Kalgoorlie M24/00902 preempt Ni Lat 1 9.94 A Silver Swan Northwest 62km N of Kalgoorlie M27/00439 preempt Ni Lat 1 8.22 A Silver Swan Northwest 62km N of Kalgoorlie M27/00440 preempt Ni Lat 1 5.93 A Silver Swan Northwest 60km N of Kalgoorlie M24/00799 preempt Ni Lat 1 9.53 A Silver Swan Northwest 55km N of Kalgoorlie M24/00800 preempt Ni Lat 1 6.41 A Silver Swan Northwest 65km ENE of Kalgoorlie E27/00290 preempt Ni Lat 1 196.00 A Silver Swan Northwest 65km ENE of Kalgoorlie E27/00294 preempt Ni Lat 1 2.80 G Silver Swan Northwest 51km NNE of Kalgoorlie E27/00299 preempt Ni Lat 1 2.80 G Silver Swan Northwest 48km N of Kalgoorlie E27/00300 preempt Ni Lat 1 19.60 G Silver Swan Northwest 68km NE of Kalgoorlie E27/00309 preempt Ni Lat 1 42.00 A Silver Swan Northwest 70km ENE of Kalgoorlie E31/00617 preempt Ni Lat 1 2.80 A Silver Swan Northwest 46km NNE of Kalgoorlie M27/00388 preempt Ni Lat 1 5.54 A 44 1,390.12 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, first right of refusal on nickel laterite may be offered to the KNP JV
PIONEER TOTAL 53 2,173.81
AVOCA RESOURCES LIMITED TENEMENTS - HERON RETAINS NICKEL RIGHTS KALGOORLIE PROJECT Lake Carnage 70km NW of Kalgoorlie E24/00120 100 of Ni 1 25.20 G Blister Dam 73km NW of Kalgoorlie P16/02149 100 of Ni 1 1.40 G Blister Dam 73km NW of Kalgoorlie P16/02150 100 of Ni 1 1.92 G Blister Dam 73km NW of Kalgoorlie P16/02151 100 of Ni 1 1.77 G Blister Dam 76km NW of Kalgoorlie P24/03773 100 of Ni 1 1.70 G Blister Dam 76km NW of Kalgoorlie P24/03774 100 of Ni 1 1.92 G Tap Rock Hill 88km NE of Kalgoorlie E28/00927 100 of Ni 1 156.80 G Hampton 71km E of Kalgoorlie E28/01117 100 of Ni 10 16.80 G Sawmill Dam 77km ESE of Kalgoorlie E28/01129 100 of Ni 10 19.60 G Pineapple Dam 66km E of Kalgoorlie E28/01188 100 of Ni 10 11.20 A Avoca Downs 83km ESE of Kalgoorlie E28/01199 100 of Ni 10 165.20 G Adelaide Dams 78km E of Kalgoorlie E28/01309 100 of Ni 10 44.80 G Low Trap Hills 81km E of Kalgoorlie E28/01225 100 of Ni 10 28.00 G Elsie Dam 114km NE Kalgoorlie E28/01226 100 of Ni 10 5.60 G Glenorn Station S 59km SW of Leonora E31/00410 100 of Ni 10 30.80 G Lake Rebecca 116km NW of Kalgoorlie E31/00465 100 of Ni 1 2.80 G Lake Rebecca 118km NW of Kalgoorlie E31/00479 100 of Ni 1 5.60 G Mt Boyce 134km NW of Kalgoorlie E31/00524 100 of Ni 10 112.00 G Mt Boyce 134km NW of Kalgoorlie E31/00618 100 of Ni 10 33.60 A Mt Zephyr 79km NE of Leonora E39/00538 100 of Ni 10 25.20 G Mt Zephyr 72km NE of Leonora E39/00940 100 of Ni 10 58.80 A 21 750.71 1 Located within Sphere of Influence outline for Inco KNP Joint Venture, and subject to any existing rights, may be offered to the KNP JV 10 Located within Area of Mutual Interest for proposed Inco Nickel Sulphide Joint Venture, and subject to any existing rights, may be offered to Sulphide JV
AVOCA TOTAL 21 750.71
TOTAL TENEMENTS 721 26,525
70 Heron Resources Limited Glossary
"Alteration" means rock-forming minerals which have been chemically changed. "Ankerite" means Carbonate of Calcium, Iron, Magnesium and Manganese. "Anomaly" means a value higher or lower than expected, which outlines a zone of potential exploration interest but not necessarily of commercial significance. "Antigorite" means a platy green Magnesium Silicate of the serpentine group, derived from the weathering of olivine. At Goongarrie, antigorite is diagnostic in the lowermost ore profile. "Au" means gold. "Autoclave" means a reaction vessel in which ore is mixed with high temperature and pressure solutions to enable metals to enter into solution as a precursor to extraction in metallic form. "Breccia" means a broken fragmental rock, usually related to fault zones. Due to the open spaces within a breccia, such rocks are a favourable site for groundwater movement. "Chlorite" means a platy green Magnesium Aluminosilicate resembling the mica group, derived from the weathering of antigorite. At Goongarrie, chlorite is diagnostic in the lower ore profile. "Co" means cobalt. "Cu" means copper. "Dunite" means peridotite where the mafic mineral is olivine. "Duricrust" means a hard weathering crust which is typically ferruginous and aluminous. "Feasibility Study" means: A "Pre-feasibility Study" (PFS) s an engineering and cost study of a mining operation, processing plant and plant infrastructure, which for the Kalgoorlie Nickel Project includes a flow sheet that covers ore beneficiation, high pressure acid leach, CCD washing, solution purification and cobalt and nickel extraction as an intermediate precipitate. Included in the cost estimates will be infrastructure, tailings disposal, power supply, and owner's costs. The plant design may change as a result of testwork analysis, optimisation studies and engineering improvements performed during execution of the Pre-feasibility Study. Operating and capital cost estimates are to an accuracy of ± 25%. In the case of the Kalgoorlie Nickel Project, the drill density would be such that the resource status is Indicated Mineral Resource. A "Bankable Feasibility Study" (BFS) is an engineering and cost study addressing the same issues as a "Pre-feasibility Study", but in such detail that it contains sufficient information to satisfy a bank, that it can rely on cash flows and earnings from the project to repay any project loan, and that the assets of the project are suitable as collateral for the loan. The bank must feel comfortable that on a worst case scenario the loan will be repaid. Engineering design concepts will have largely been finalised, and operating and capital cost estimates are to an accuracy of ± 15%. In the case of the Kalgoorlie Nickel Project, the drill density would be such that the resource status is Proved Ore Reserve for the first five years of production. "Felsic" means light coloured feldspar and silica rich igneous rock. "Gabbro" means a dark coloured mafic intrusive rock consisting dominantly of feldspar and pyroxene. "Geochemical Survey" means the systematic study of the variation of chemical elements in rocks or soils. "Gibbsite" means Aluminium Hydroxide, a principal component of bauxite. At Goongarrie, gibbsite is diagnostic in the uppermost ore profile. "Goethite" means Iron Hydroxide, being a yellow, red and brown ochre. At Goongarrie, goethite occurs throughout the total upper ore profile. "Goethite Ore" means nickel-cobalt laterite mineralisation consisting mainly of the hydrated iron oxide mineral goethite, with nickel and cobalt occurring in association with iron and manganese oxide minerals, and total Fe2O3 exceeding 40%. Goethite is an optimal ore type. "Gossan" means the weathered oxidised surface expression of a sulphide-bearing deposit, and consists predominantly of hydrated iron oxides with distinctive boxwork cellular textures. "g/t" means grams per tonne. "km" means kilometres. "km2" means square kilometres. “KNP” means Kalgoorlie Nickel Project, a nickel laterite project located through an arc 40-140km north-north west to east of Kalgoorlie. "Komatiite" means an ultramafic rock with high magnesium content extruded from a volcano. Textural variations include: "Orthocumulate" means a rock which exhibits a high proportion of crystallised trapped interstitial ("intercumulus") liquid. The surrounded ("cumulus") olivine crystals are subhedral to euhedral in form. This komatiite type is regarded as prospective for nickel sulphide mineralisation (e.g. Silver Swan nickel mine). "Mesocumulate" means a rock with cumulus crystals exhibiting extensive mutual boundary contact, but retaining some recognisable interstitial material. This komatiite type is regarded as prospective for nickel laterite mineralisation. "Adcumulate" means a rock with little or no intercumulus material and characterised dominantly by anhedral crystals. This komatiite type is prospective for nickel laterite mineralisation. “LFG” means leach feed grade, the grade of ore being supplied to the processing plant following wet screening of dry mined ore. "m" means metres. "Maghemite" means a strongly magnetic form of hematite, an Iron Oxide. “Manganiferous Ore” means nickel-cobalt laterite mineralisation consisting mainly of the hydrated iron oxide mineral goethite and gibbsite, with nickel and cobalt occurring in association with iron and manganese oxide minerals. "Mineralisation" means, in economic geology, the introduction of valuable elements into a rock body. "Ni" means nickel. "Nickel Laterite" means nickel and cobalt occurring as an oxidised hydrated iron oxide and ferruginous clay assemblage overlying weathered ultramafic rock. "Nickel Sulphide" means nickel and copper occurring as an un-oxidised sulphide assemblage associated with fresh ultramafic rock.
Annual Report 2005 71 Glossary Continued
"Norite" means a form of gabbro where hypersthene is the mafic material. "Oil Shale" means a sedimentary rock containing low grade lignite coal and a hydrocarbon material termed kerogen. "Olivine" means a magnesium-iron silicate mineral, often occurring in rocks prospective for nickel. "Option" means a Share option to subscribe for fully paid ordinary Shares in Heron. "PAL" means Pressure Acid Leach, a Nickel Laterite processing technique in which ore is dissolved in hot high pressure sulphuric acid contained within a titanium-lined reaction vessel termed an autoclave, to release nickel and cobalt into solution, for precipitation as an intermediate product or electroplating as a pure metal. "Pedogenic" means pertaining to soil formation. "Peridotite" means an ultramafic rock consisting of olivine and pyroxene, with minimal feldspar. "PGM" means Platinum Group Metal, refer “Precious Metals” below. "prospect" means a target upon which exploration programs are planned or have commenced. "project" means a grouping of prospects within a specific geographic location, often with a common geological setting. "province" means a grouping of projects within a geological district defined by a major mineralised crustal structure. "ppb" means parts per billion. "ppm" means parts per million. "Precious Metals" means gold, silver and the Platinum Group Metals, ruthenium, rhodium, palladium, osmium, iridium and platinum. The metals are chemically inert, malleable, dense and used in jewellery, and are of high unit value. "RAB drilling" means the drilling technique in which a sample is returned to surface outside the rod string by compressed air. Sample quality is poor. "RC drilling" means the drilling method employing a rotating or hammering action on a drill bit which returns a sample to the surface inside the rod string by compressed air. Sample quality is very good, particularly if the drill hole is dry. "Resources and Ore Reserves" means: "Proved Ore Reserve" is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments, which may include Feasibility Studies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. The term "economic" implies that extraction of the Ore Reserve has been established or analytically demonstrated to be viable and justifiable under reasonable investment assumptions. Proved Ore Reserve will require some degree of lateral continuity validation through diamond drilling, wide diameter (900mm) bulk sample drilling, trial mining, exploration winze or most likely for Kalgoorlie Nickel Project, 10x10m pattern RC drilling. "Measured Mineral Resource" is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and/or grade continuity. At the Kalgoorlie Nickel Project, Heron’s least dense drill RC pattern for Measured Mineral Resource status is 40x20m. "Indicated Mineral Resource" is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and / or grade continuity but are spaced closely enough for continuity to be assumed. At the Kalgoorlie Nickel Project, Heron’s least dense RC drill pattern for Indicated Mineral Resource status is 80x80m. "Inferred Mineral Resource" is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and / or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. At the Kalgoorlie Nickel Project, Heron’s least dense RC drill pattern for Inferred Mineral Resource status is 400x80m. "ROM" means run-of-mine ore, referring to the grade and type of ore that is expected to be fed to the processing plant on a day to day basis. "SAL" means Saprolite Acid Leaching, being the process whereby Saprolite Ore has its nickel and cobalt content leached by atmosphere pressure sulphuric acid leaching (the acid source being the discharge slurry from a PAL autoclave). "Saprolite Ore" means nickel laterite mineralisation consisting of hydrated magnesium silicate minerals with nickel and cobalt occurring in association with the silicate phases. The ore is a weathered clay-rich rock which retains original rock textures, and is significantly more competent than Manganiferous, Goethite or Siliceous Ore. "Scoping Study" means a first pass estimate of engineering requirements and costs of a mining operation, processing plant and plant infrastructure. Included in the cost estimates will be infrastructure, tailings disposal, power supply, and owner's costs. The plant design may change as a result of testwork analysis, optimisation studies and engineering improvements performed during execution of the follow-up Pre- feasibility Study. Operating and capital cost estimates are to an order of magnitude accuracy of ± 30%. "Siliceous Ore" means nickel laterite mineralisation consisting of chalcedonic silica and hydrated iron oxide with nickel and cobalt occurring in association with iron and manganese oxide minerals. The ore nickel and cobalt grades may be increased by 50-100% through wet screening and rejection of low grade siliceous fragments within the ore. Total SiO2 exceeds 40%. "Specific Gravity" or "SG" means the mass per unit volume of material, usually in reference to ore and waste. "Waste: Ore Ratio" means BCM of waste + BCM of low grade sub-ore divided by BCM of ROM ore. "WWF" means Walter Williams Formation, an ultramafic rock consisting dominantly of the magnesium silicate mineral olivine which weathers to form nickel laterite ore. The unit is named in honour of the late 19th Century prospector, Walter Williams, who perished from thirst at Ghost Rocks. "Ultramafic" means rocks composed almost entirely of mafic minerals which are prospective for nickel mineralisation. "Volcaniclastics" means sedimentary rocks derived from fragmental volcanic rocks.
72 Heron Resources Limited Photo Gallery - Heron in the Community
<< Proud Recipients of the 2005 Heron Education Bursary Vera-Sharhn Dimer, at left who attends St Josephs Primary School in Boulder, and Beige-Erica Dimer, at right from John Paul College in Kalgoorlie. Congratulations on receiving the Bursary, and all the best in your future careers. Vera-Sharhn and Beige-Erica and family are Central West Goldfields People.
Kalgoorlie Boulder Urban Landcare Group >> Winter 2005 Newsletter “Thanks to Heron Resources” “KBULG welcomes Heron Resources as our first Business Membership and also extends thanks to Heron for sponsoring the replacement of the Karlkurla Park plant identification labels. We also extend our thanks to Ian Buchhorn for replacing and fixing these on weekends voluntarily, with his son Daniel pictured here”.
<< Ngunytju Tjitji Pirni (NTP) Heron continues its support for the NTP infant health clinic in Kalgoorlie. Debbie Broughton at left is Registered Nurse, Ann Forrest is Senior Health Worker and Shelley Coleman holding the training doll so professionally is Aboriginal Health Worker. NTP has Australia-wide support for its work with children, with Professor Fiona Stanley OA, its patron and mentor.
Wangkanyi Ngurra Tjurta (WNT) >> (Home of Many Languages) Sharon Hume (Manager WNT) receiving a sponsorship cheque from Heron Managing Director Ian Buchhorn to assist in producing a Wangkatha language book for local Primary Schools. WNT is also busy commissioning the Goldfield's first Indigenous Community radio station (Tjuma Pulka). A great achievement for WNT.
<< Diggers and Dealers 2005 Daniel Buchhorn and Emily von Perger in front of the Heron display at this years Diggers and Dealers. “On the one hand we have got Australia’s biggest nickel deposit, and on the other hand Emily’s dad has found mountains* of iron ore”. *mountains - not a JORC-Compliant term. - means more than “big mobs” but less than “humungus”.
Annual Report 2005 Landscape by Ramon Andinach, Geologist, Heron Resources Limited.
Emu Lake, on the nickel sulphide komatiite ridge facing west
21 Close Way, Kalgoorlie PO Box 1280, Kalgoorlie WA 6430 Telephone: +618 9091 9253 Facsimile: +618 9091 9256 Email: [email protected] Website: www.heronresources.com.au Design and artwork Reynolds Graphics, Kalgoorlie