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Kalgoorlie Nickel ProjectKalgoorlie Nickel ProjectA Partnership with Inco to create an
Internationally Significant Nickel Producer
19 October 2005
Ian BuchhornManaging Director
ASX: HRR
Disclaimer Forward Looking StatementThe material used in this presentation is intended to be a summary of selected geological data, current and proposed activities, as well as resource estimates based on information available to Heron Resources at the time. It does not include all available information and should not be used in isolation as a basis to invest in Heron Resources. Any potential investor should refer to Heron Resources’ ASX releases and statutory reports before considering investing in the company.
This presentation includes information relating to a completed independent scoping study, completed independent resource estimate and a feasibility study which is in progress and includes “forward looking statements” which include, without limitation, estimates of potential nickel in concentrate production based on mineral resources that are currently being evaluated. While the Company has a reasonable basis on which to express these estimates, any forward looking statement is subject to risk. Risks include, without limitation: nickel metal prices, foreign exchange rate movements, failure to meet joint venture milestones, project funding capacity, concentrate off-take contracts and estimates of future capital and operating costs.
The Company does not undertake to release publicly any revisions to forward looking statements included in this presentation to reflect events or results after the date of this presentation, except as may be required under applicable securities laws.
The Story so far:
HeronHeron’’s profile in developing s profile in developing the Kalgoorlie Nickel Projectthe Kalgoorlie Nickel Project
is one of persistence, persistence is one of persistence, persistence and then more persistenceand then more persistence
Overview of PresentationCompany Profile
Track Record and Nickel Focus
Kalgoorlie Nickel Projectthe right Partnerthe right Projectthe right Location
Sulphide Nickel Project
Nickel and Corporate Strategy
Company Profile – CorporateListed ASX August 1996
Focus on acquisition and explorationAim to develop a long life nickel mine
Capital Structure162m shares at A$0.62, mkt cap A$100mA$12 million cash at bank, debt free
Significant ShareholdersDirectors and associates 23.5%Inco Limited 10.2%BHP Billiton 9.9%
0
20
40
60
80
100
120
140
160
Heron Avoca Pioneer
Company Profile
Scoping Study
Inco Letter of Intent and Placement
Inco Formal JV
2004 Ni Conference
The Story going forward:
Our partnership with Inco Our partnership with Inco positions thepositions the
Kalgoorlie Nickel Project Kalgoorlie Nickel Project to become an Australian nickel to become an Australian nickel
project of international project of international significancesignificance
Inco – the Right Partner for KNPInco selected following global searchA premier integrated nickel producer
Market Capitalisation US$8 billionEstimated net cash US$1.8 billion200,000tpa nickel, second largest producerProposed merger Falconbridge, No 1
World leader in nickel laterite projectsPT Inco – 60,000tpa Ni productionGoro – planned 60,000tpa Ni production
Inco Farm-in & JV Attractive TermsSubject to meeting technical milestones, Inco sole funds Feasibility Study
Pre-Feasibility, minimum US$18mFull Feasibility, minimum US$50m
Inco earn 60% on completion Feasibility and securing project funding
Inco procures all project debt fundingHeron equity fund cap 4.5% of total equityInco lends Heron its remaining equity funds
Inco JV – Funding Mechanisms Assumptions
$1.4 billion$1.4 billion project construction costDebt : equity = 70 : 30, $980m Debt, $420m Equity
Debt project finance procured by Inco
Equity financeKNP JV 60:40, Inco $252m, Heron $168mHeron capped at 4.5% of equity, $19m$19mInco lends Heron $149m, repay cashflow
Inco Farm-in -Timing Milestones Step 1, confirm 120mt at 1.5% Ni
Diamond drilling, screening studiesCompletion deadline July 2006
Step 2, flow sheet selectionBatch metallurgy and mini-pilot, Sep 2007
Step 3, resource and engineeringResource drill out, plant design, Jan 2009
Feasibility StudyBankable, completion deadline July 2011
Inco Farm-in - Step 1 & 2 Metallurgy
Run-of-mine siliceous ore
Consisting of yellow-brown limonite
and coarse silica0.8% Ni
Scrubbed slurryinto pilot plant
trommel screen deck
Screened rejectsSilica fragments 60%Reject grade 0.3% Ni
Screened slurryLimonite 40%
Leach feed grade 1.5% Ni
Screen Upgrade
Inco Farm-in - Step 3 Resources
6658500 mN
6657000 mNSIBERIA NORTH PROJECT
RECENT DRILLINGMAX LEACH FEED GRADE NICKEL (%)
75 MICRON SCREENED
Max Ni (%)
1.5 to 10,0001 to 1.50.75 to 10.5 to 0.750.25 to 0.50 to 0.25
West MineralisedZone
East MineralisedZone
Weighted average leach feed gradesshown using a 1.0% Ni cutoff
0 500 1000
Metres
Cross Section
1.86% Ni (Avg) 1.61% Ni (Avg)
1.45% Ni (Avg) 1.2% Ni (Avg)
1.57% Ni (Avg)
Weighted average leach feed gradesShown using a 1.0% Ni cutoff
KNP – the Right ProjectAmong largest undeveloped Ni projects
Heron’s vast KNP nickel footprint is uniqueFocus on Goongarrie-Siberia siliceous ore357mt at 0.7% Ni and 0.05% CoScreen beneficiation 1.5% Ni leach feedTarget 120mt leach feed, >4mtpa for 25 yrs
Limonite ore, premium metallurgyPressure Acid Leach (PAL) processingPAL proven at Moa Bay and Cawse
MINARA
BHP BILLITON
Heron’s substantial tenement holdings underpin resource base
Mainly 100% owned and unencumberedHistorically under-exploredInco’s funding means this will change
HERON
Ravensthorpe
KNP – the Right Project
Kalpini
Bulong
Goongarrie
KALGOORLIE
MurrinMurrin
ESPERANCE
LEONORA
KNP – Nickel Screen Upgrade321200mE
12m @0.57% Ni
8m @0.96% Ni 24m @
1.00% Ni 8m @2.21% Ni
321600mE
400RL
4m @1.13% Ni18m @
0.75% Ni
4m @1.02% Ni
321400mE 321800mE
6m @0.67% Ni
321000mE
GOOGARRIE HILL PROJECTSection 6678320N
Nickel Head GradeNote x 4 vertical exaggeration
24m @1.00% Ni
24 metres at 1.00%Nickel grade withoutscreening
nontronite ore,no upgrade
KNP – Nickel Screen Upgrade321200mE
12m @0.57% Ni1.05% Ni
LFG
8m @0.96% Ni1.65% Ni
LFG
24m @1.00% Ni1.72% Ni
LFG
8m @2.21% Ni1.22% Ni
LFG
321600mE
400RL
4m @1.13% Ni1.19% Ni
LFG
18m @0.75% Ni1.68% Ni
LFG
4m @1.02% Ni2.09% Ni
LFG
321400mE 321800mE
6m @0.67% Ni0.95% Ni
LFG
321000mE
GOOGARRIE HILL PROJECTSection 6678320N
Nickel Screen UpgradeNote x 4 vertical exaggeration
24m @1.72% Ni
LFG
24 metres at 1.72%Nickel Leach feed gradeafter screening at0.075mm, based onbottle roll testwork
nontronite ore,no upgrade
The Right Location
Infrastructure
KALGOORLIE
ESPERANCEKWINANA
RailGasRoadPorts
Esperance
Kalgoorlie
Leonora Laverton
Murrin MurrinRefinery
Kalpini
Bulong
Goongarrie
Proposed Sulphide Nickel ProjectExplore Heron’s ultramafic holding
Proposed that Inco will:Fund 100% of all exploration costsKeep KNP land holding in good standingRequire discovery of Inferred Min Resource
On Discovery, JV on Development AreaSimilar terms to the Laterite Joint VentureInco earns its 60% on Discovery only
GHOST ROCKS
0 40 80
Kilometres
WINDARRA
Laverton
MURRIN MURRINLeonora
CARR BOYD
CAWSE
Kalgoorlie
CARNILYA HILL
KAMBALDANEPEAN
WIDGIEMOOLTHA
GIBRALTAR
HIGHWAY
EMU LAKE
SNAKE HILL
LAKE REBECCA
PINNACLES SOUTH
YINDARLGOODA
ROE HILLS SOUTH
MINERAL PATCH
WILDARA NORTH
BARDOC
ACRA NORTH
Goongarrie
Bulong
Kalpini
Herontenements
Nickel mines
Yilgarn ultramafics
EMU LAKEHeronNi-SulphideProspect
Sulphide Laterite
Sulphide Nickel Project
Tenements and Nickel Sulphide
Targets
Wellington North - Sulphide Nickel♦ Eastern Komatiite
linear broad magnetics, nickel laterite target, focus of all Heron drilling.
♦ Western Komatiite“string of pearls”magnetic anomalies, Ni sulphide target, no Heron drilling.
♦ Image-Jubilee JV “Gossan Zone”2m at 6.2% Ni
♦ Heron “B Gossan”0.53% Ni, 0.10% Cu 235ppb Pt, 332ppb Pd
Ghost Rocks - Sulphide Nickel
From top left clockwise: copper stained mesocumulate
Gossan float approximate strike length 50m
Copper stained gossan float
Trans East - Sulphide Nickel♦ Previous drilling
identified anomalous regolith geochemistry over 10km of strike
♦ Under shallow cover
♦ Exploration to proceed via EM surveying and RC drilling
Mineral Patch - Sulphide Nickel
HERONE38/931
Max Ni in drilling
1.5 to 10,000 (1)1 to 1.5 (3)0.75 to 1 (6)0.5 to 0.75 (3)0.25 to 0.5 (1)0 to 0.25 (6)
0 1km
Scale
NickelSulphide
TargetNi-Cu-Pt-Pd
anomaly
Nickel and Corporate StrategyHeron investment offers a unique mix of
Milestone driven upside, associated with developmentof world class nickel project
Ability to invest alongside major nickel players Inco & BHPB
Exposure to strong long term
nickel market
Sulphide Nickel
blue sky
Fully funded path towards
40% interest in long-life 50,000 tpa Ni operation
Strong shareholder
returns
Strong shareholder
returns
fundamentals, & long-termnear-term