Heron Resources Corporate Presentation For personal use only

ASX: HRR

Heron Resources Limited

Corporate Presentation

Diggers & Dealers Conference, Kalgoorlie 5 August 2013 F

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Heron Resources Limited 2 Heron Resources Limited

Forward Looking and Compliance Statements

The 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 completed pre-feasibility study and includes “forward looking statements” which include, without limitation, estimates of potential nickel in concentrate production based on mineral resources and flow-sheets 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 project 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 information in this presentation that is related to Exploration is based on information compiled by David von Perger who is a member of Australian Institute of Mining and Metallurgy. David von Perger is a full time employee of Heron Resources Limited. David von Perger has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the exploration activity being undertaking to qualify as Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. David von Perger consents to the inclusion in this presentation of the matters based on his information in the form and context that it appears.

Refer Heron Resources Limited 2012 Annual Report, page 64, Section 8.0, “Statement of Mineral Resources” and accompanying Attribution Statement.

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Corporate Snapshot

Director

Craig Readhead Non-Executive Chairman

Ian Buchhorn Managing Director

Stephen Dennis Non-Executive Director

Top Shareholders

Ian Buchhorn 18.0%

BHP 14.9%

Vale Inco 12.8%

MBM Chaos 8.2%

Ningbo Shanshan Co Ltd 4.8%

Enterprise Valuation

Shares 52 week range $0.120-0.235

Share price (2-Aug) $0.145

Market cap $36.7M

Cash + Listed Investments $42.9M

Overview

Listed 1996

ASX Code HRR

Shares on Issue 252.99M

Cash (Jun-13 Qtr) $39.6M

Listed Investments $3.3M

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Key Asset – our Cash & Minerals Portfolio

• Cash and Investments

– $39.6m cash, $3.3m listed investments (asset value equivalent to $0.17 per share)

– Low overheads, generate value through exploration and project “first mover” plays

• Exploration (Heron 100%)

– Lachlan Fold Belt, Cadia-style copper-gold, Mallee Bull-style copper, Avoca Tank-style copper-gold

– Albany Fraser Mobile Zone, Nova/Bollinger-style nickel-copper-PGM

– KNP Gold Projects (Big Four, Siberia South), shear-hosted gold

• Kalgoorlie Nickel Project (Heron 100%)

– Nickel Laterite Mineral Resource, 727Mt @ 0.72% nickel & 0.044% cobalt, a world-class resource

– PFS Completed by Vale Inco 2009, focus on HPAL, A$34.5m expenditure, Vale Inco earned no equity

– Beneficiated nickel Leach Feed Grade of 1.2 – 1.5% nickel

– Now reviewing alternate processing:

• Simulus Engineers (sulphuric acid process) – test work on three KNP material types commenced

• Direct Nickel (nitric acid process) – finalizing test work ahead of updating scoping study

• Discussions with other groups assessing potential process route optimizations (coordinated by Simulus Engineers)

• Yerilla Nickel-Cobalt Project (Heron 100%, Shanshan right to earn 70%)

– Nickel Laterite Mineral Resource, 135Mt @ 0.73% nickel & 0.045% cobalt

– Heron completed PFS 2008, farmed out to Shanshan 2009, studies continue through Simulus Engineers

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Key Asset – our People

• Board – Non Executive

– Craig Readhead (Non Executive Chairman) corporate and mining lawyer

– Stephen Dennis (Non Executive Director) project management, commercial

• Board – Executive

– Ian Buchhorn (Managing Director) mineral economist, mine geologist

• Senior Management

– Charlie Kempson (GM Business Development) engineering, finance

– David von Perger (Exploration Manager) exploration geologist

– Bryan Horan (Company Secretary and CFO) accounting

• Geologists

– Steven Jones (Senior Geologist) resource geologist, mineral economist

– Lorne McCrum (Project Geologist) exploration geologist

– Kathleen Patrick (Administrative Geologist) statutory compliance geologist

• Consultants

– Legal, database and geophysics

Executive Team completes most projects in-house, including drilling 14,165 metres in 608 holes during 2012, hence Heron’s low burn-rate and cash preservation

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Key Asset – our Track Record

• On sell-side, 17 years of sustained Shareholder value creation, whilst advancing the KNP

– 1996 Heron listed on the ASX raising $8M, portfolio of gold and nickel sulphide targets

– 1998 Large high-grade nickel laterite discoveries at Goongarrie South

– 1999 Takeover bid from Centaur – rejected by Heron Shareholders

– 2002 Spun out Avoca Resources Ltd, 1 for 5 in specie distribution ($0.67 per HRR at AVO merger)

– 2003 Spun out Pioneer Nickel Limited

– 2005 JV with Vale Inco, then BHP responded by buying out Heron’s second largest Shareholder

– 2006 Spun out Rubicon Resources Limited and Epsilon Energy Ltd (later re-named Azimuth)

– 2006 Back-door listing of iron-ore assets through Polaris Metals Limited

– 2006 Nickel laterite discoveries at Jump up Dam, implemented Heap Leach PFS

– 2007 Last major capital raisings, at $1.15 per share (to BHP and Vale Inco)

– 2009 Polaris Metals taken over by Mineral Resources, netting Heron $38M

– 2009 Option on A1 Gold Mine, Heron commence gold mine decline development

– 2010 KNP gold tenements sold to Metaliko Resources Limited netting $2M cash and shares

– 2011 Acquisition of Lachlan copper-gold tenements in NSW, now main exploration focus

– 2012 A1 Gold Mine sold, A1 Consolidated Ltd lists with Heron holding 19%

– 2013 Advancing the KNP through Direct Nickel and Simulus Engineers piloting studies

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Strategy – Business Development

• Preferred Investments

– Production mining operation

• The operation benefits from Heron’s cash injection, facilitates a step change in the operation

– Near-production mining operation

• Heron facilitates the equity funding component of the project funding package

– Feasibility stage project

• Heron funds the resource drill-out and Feasibility Studies to facilitate future project funding

• Preferred Locations and Commodities

– WA – gold, nickel, base metals

• Heron has good operational experience in the jurisdiction, may complement the KNP

– NSW – copper-gold, base metals

• Complements Heron’s extensive Lachlan Fold Belt exploration holding

– International – bulk commodities

• Absolutely essential that common-user infrastructure is available, and minimal sovereign risk

• Targeting east and north Asia markets (seek projects in Australia or west coast North America)

M&A is a prime focus for the Company, as a means to fast-track the acquisition and development of mineral production cash-flow

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Strategy – Exploration

Heron Exploration Targets (all 100% Heron ownership):

• Copper-Gold

– Widely traded commodities, good mix in that strong global economic activity favours copper, economic uncertainty favours gold

– Premium exploration belts available in Australia, being the Lachlan Fold Belt NSW (Cadia, North Parkes porphyry) and Cloncurry NW Queensland (Ernest Henry IOCG)

– Heron projects acquired through tenement applications, first require identified drill targets in prior exploration review

• Nickel-Copper-PGM Sulphides

– Targeting the Proterozoic mobile belts that flank the Yilgarn Archaean greenstone belts, where Heron has an existing exploration presence

– Commodities complement the KNP nickel laterite

– Current active exploration at Bedonia (EM/geochem anomaly for drill testing)

• Gold

– Focus is the Kalgoorlie province greenstones, systematically evaluating existing KNP tenure

– Gold exploration alone maintains the KNP in good standing, preserves the KNP asset value

Divested former Exploration Projects are the source of Heron’s current robust cash position

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Exploration – Lachlan Copper-Gold 100% Heron

• Mt Allen & Osterley Projects, NSW

– Heron’s Mt Allen EL adjoins and immediately south of the 2012 Mallee Bull copper/gold discovery (by Peel Mining)

– Mallee Bull copper discovery and Mt Allen :

• both are southern Cobar Supergroup host rocks, basin margin rift structural settings

• Heron holds over 1,200km2 in Cobar Superbasin under tenure along strike of Mallee Bull copper pipe discovery and McKinnons epithermal gold deposit

– Historical gold workings at Mt Allen and Osterley sampled in Heron field reconnaissance, are the exploration focus:

• Initial Peel Mallee Bull exploration focus was on Four Mile goldfield, then ground EM defined deep conductor, RC drill follow up discovered high grade copper

– Review of historical Mt Allen and Osterley data identified “walk-up” gold and copper targets

• Surface gold veins, interpret as pathfinder to deeper base metal systems (as at Mallee Bull)

• Four target areas for Heron soil auger geochem

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• Osterley Project, NSW

– 25km south of Cobar

– Devonian Upper Amphitheatre Group and Biddabirra sediments

– The Thule Fault is a major fault and has been the focus of previous exploration

– Recent ground EM by Heron has identified a subtle conductor to the SE of old Geopeko gossan

– Anomaly on the western edge of a discrete magnetic low 500m east of Thule Fault

– EM anomaly may be related directly to bedrock mineralisation or represent a splay structure that has localised mineralisation

– EM anomaly under deeper soil cover, soil auger program to provide geochemical coverage, prior to possible drill testing

Osterley Project, aeromagnetic image showing EM anomaly and magnetic low (alteration?) target area

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• Girilambone Project, NSW

– Along strike and immediately adjoining 2011 copper- copper/gold discoveries by Straits Resources (ASX:SRQ)

– Heron drilled four targets based on geology, magnetic and EM surveys

– Up to 1,080ppm copper returned in the drilling associated with minor chalcopyrite, Heron to follow up

– Recent access gained to the Coolabah target directly along strike from the Straits Avoca Tank discovery – copper soil anomaly defined in this area

– Follow-up with targeted RAB programs to map geology/alteration and target mineralisation

Left: RC drilling November 2012 Below: Typical QMH host (quartz-magnetite-hematite), with pyrite

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• Gundagai Project, NSW

– Big Ben Prospect, gold

• Shear zone 10-50m wide, 500m strike quartz-limonite-pyrolusite stockworks hosted by white intensely phyllic altered porphyry dyke

• Recent Heron drilling:

– 20m @ 1.58g/t gold from 27m

includes 1m @ 23.7g/t gold




Coarse gold panned in several intervals

– Califat/Snowball Prospects, copper/gold

• VMS-related, massive sulphide lodes, mined historically

• Heron rock-chip samples: 10.2 - 84.3g/t gold with up to 4.4% copper

• Ground-based EM survey commenced in mid July to generate drill targets

– Basin Creek Prospect, copper

• High grade copper in historic drilling, peak 4.5m @ 18% copper

• Heron is planning ground-based EM with drill follow-up to test any conductors

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• Sussex Project, NSW

– 50km east of Cobar

– Large, complex magnetic high within Ordovician Girilambone meta-sediments

– Lies along the north-west extension of the Gilmore Suture, major mineralized crustal fault

– 10km NE of the Mt Boppy Gold mine

– Reconnaissance auger sampling has defined a large staellite copper/zinc/nickel anomaly and a another more discrete copper/gold /arsenic anomaly

– Follow-up infill and extensional soil auger sampling currently underway.

Sussex Project, major regional aeromagnetic anomaly on Gilmore Suture, Heron soil auger anomalies, follow-up current

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Exploration – Northwest Queensland 100% Heron

• Cloncurry Copper Project, Qld

– Heron applications for 15 tenements covering 1,717km2

– IOCG alteration styles confirmed, magnetic anomalism, silicification, REE anomalism, basis for applications

– Tenement application focus on Proterozoic copper-polymetallic mining centres near Mt Cuthbert, Mammoth East, Ernest Henry, Eloise East and Maramungee

– District-scale reconnaissance sampling has been completed by Heron, confirmed large-scale alteration systems

– Target generation studies completed, extensive areas defined for soil geochemical survey

– Mammoth East Prospect, previous reconnaissance drilling intersected high-level quartz veining with strong gold, copper and lead anomalism, drill-ready for Heron F

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Exploration – Nova-Style Nickel-Copper 100% Heron

• Albany Fraser Mobile Zone, WA – Bedonia Nickel Project

• Magnetic and ground EM anomalies identified

• Bedrock conductors at margin of mafic intrusive bodies

• Heron auger nickel and copper anomalies

• Tenements also host Heron’s coal occurrences in palaeo-channels, 1999 identified 650Mt coal Exploration Target

– Rocky Gully Nickel Project • Strong Ni-Cu-PGM anomalism in

laterite identified in previous Heron drilling

• Mafic/ultramafic intrusive plugs identified

• Heron drilled in 2009, data re-interpreted on basis of Sirius Nova-Bollinger discovery

• Seeking JV partner to progress, while Heron focus remains on Bedonia

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• Bedonia Nickel-Copper-PGM Project – 60km west of Nova-Bollinger Ni-Cu discovery

(ASX:SIR) – Coincident ground EM and magnetic anomalies – Coincident nickel and copper soil auger

anomalies – Drilling expected to commence in August

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• Rocky Gully – Nickel-Copper Project – 85km NW of Albany – Strong Ni-Cu-Co in laterite (this is

uniquely diagnostic at Nova discovery) – Ni-Cu sulphides identified in Heron RC

chips (again diagnostic of Nova) – Ground-based EM completed – Seeking a JV partner

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Exploration–Eastern Goldfields Gold Targets 100% Heron

Targets mainly on KNP Tenure

• Big Four Gold Project, WA (KNP)

– Drilling beneath old gold workings targeting porphyry units within Siberia Ultramafic

– Discussions with local miners underway, reviewing tribute mining to open up ore

• Siberia South Gold Project, WA (KNP)

– Strong gold-in-soil results along strike from old workings

– RAB drilling recently completed - visual mineralization, results pending

• Horse Rocks Gold, WA (non KNP)

– Significant broad zone of gold anomalism in historical drilling

– RAB drilling follow-up planned

Left: panned gold from Big Four RC drilling samples

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Exploration – EGF Gold Targets 100% Heron

• Big Four Gold Project – Heron high-grade gold intercepts – 6m @ 5.28g/t gold from 53m – 2m @ 33.6g/t gold from 108m – 10m @ 4.3g/t gold from 32m – 15m @ 2.27g/t gold from 28m – 9m @ 4.69g/t gold from 14m – 3m @ 10.47g/t gold from 44m – 4m @ 20.14g/t gold from 108m – 6m @ 8.58g/t gold from 125m – 8m @ 5.93g/t gold from 78m

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Exploration – Mt Zephyr Gold/Base-Metals 100% Heron

• Contiguous greenstone tenure – 200km2 , 80km north northeast of

Leonora – Distal VMS system over 5km of strike,

deeper drilling required

• Paul’s Find Prospect (pending tenure) – Rich coarse gold in laminated quartz

vein identified by prospector (>30oz gold nuggets recovered)

• Gale Gold Prospect – Newcrest drilled and identified broad

low grade gold and copper, drilling planned by Heron

• Zephyr North Prospect – Deep Heron diamond hole intersected

magnetite skarn with minor copper

Above: magnetic image with Heron tenements and key prospects Left: Paul’s Find – some of the gold recovered by prospector

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Strategy – Kalgoorlie Nickel Project 100% Heron

• KNP Option Value

– A world-class mineral resource, PFS completed by the World’s leading nickel company in Vale Inco, ~$100 billion in-ground value – such an asset in a $37M market cap company such as Heron represents significant option value

– KNP Option Value will continue to be preserved by Heron, through targeted development studies

• High Pressure Acid Leach (HPAL) Technology

– HPAL is the proven technology for nickel laterite processing, so is bankable

– Any future HPAL development of the KNP by Heron will unequivocally be as a partnership, most likely with a downstream Stainless Steel Materials end-user

– Heron strategy is to optimize existing industry-accepted laterite technologies and apply to the KNP

• Technology Partnerships and Alternatives

Heron aiming for lower capex cost development of segments of the KNP, facilitated by Heron and a specialist technology partner

– Simulus Engineering

– Direct Nickel

– Heap Leach

– Iron Nickel Segregation Roast

In 2007 at the end of the “mid 2000s Nickel Cycle”, the market value of Heron (essentially the KNP value) was up to $350 million

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Kalgoorlie Nickel Project – Feasibility

• Excellent Resource and Infrastructure – 727Mt grading 0.72% nickel and 0.044% cobalt (at

0.5% Ni cog), JORC 2004 Mineral Resource

– Screen beneficiated feed grade 1.2-1.5% nickel

– Located within 100km radius of Kalgoorlie

– All gas, road, rail, port infrastructure present

– Ravensthorpe HPAL nickel laterite technically successful re-commission, industry confidence for HPAL

• Vale Inco completed PFS in 2009 – $34.5 million expenditure, immensely valuable

Feasibility Study data set; • >95,000 metres drilled, deliver JORC resource

• Metallurgical assessment HPAL (-Heap Leach)

– 2.5Mtpa beneficiated leach feed, up to 36Ktpa nickel production over a 34 year mine-life

– Opex US$4.42/lb of nickel (after cobalt credits)

– Pre-production capex US$1.5 billion (in 2009)

• Vale Inco PFS 2009 commentary: “one of the most prospective nickel laterite tenement packages in the world”

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Kalgoorlie Nickel Project – Screen Beneficiation

• Project Attributes

– Screen beneficiation of the nickel laterite is what makes these projects work (screening is both low capex and opex, “project-maker”)

– Flow-sheet utilised successfully at both Ravensthorpe and previously at Cawse

– Screen out hard barren silica material, increases nickel leach feed grade by a factor of 1.5 – 2.0 times

Run-of-mine siliceous ore, yellow-brown limonite and coarse

silica Head grade

0.7 - 0.8% Ni

Scrubbed slurry into pilot plant trommel

screen deck

Screened rejects Silica fragments 60% of output

Reject grade 0.3% Ni

Screened slurry Limonite 40% of output

Leach Feed Grade 1.2 - 1.5% Ni

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Kalgoorlie Nickel Project – Simulus Engineers

• Simulus Engineers

– Simulus will trial its patented process (Carbon Friendly Nickel Production - CFNP) for the recovery of sulphuric acid and other reagents in nickel laterite hydrometallurgical processing

– Recovery of reagents in nickel laterite processing has potential to generate substantial cost savings in plant construction and operation

– Heron has provided three bulk KNP and Yerilla laterite samples to Simulus in Kewdale, Western Australia for the initial test work

– The test work will generate inputs for a Scoping Study to estimate the potential benefits which may be achieved through applying the Simulus technology to the KNP at a commercial scale

– If successful, the initial test work and Scoping Study is intended to lead into a closer partnership between Heron and Simulus through CFNP under which the technology will be further developed

Part of equipment being used by Simulus at their Kewdale facility – Image courtesy Simulus Laboratories

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Kalgoorlie Nickel Project – Direct Nickel

• Direct Nickel – Emerging hydrometallurgical process for

extracting nickel from laterite deposits

– Substantially lower capex and opex compared with existing HPAL operations

– The process is capable of treating the full laterite profile, from limonitic to saprolitic ores using a single flowsheet

– Five samples of KNP-Highway goethite and goethite-silica ore have been tested in both fresh and saline process water

– Extraction of nickel via the Direct Nickel process has mostly been 96-99%

– A new round of testwork commissioned, aimed at identifying where the chlorine reports post leaching

– Next stage will be updated Scoping Study

– Development Target

50Mt at 1.2% nickel leach feed, 3Mtpa plant

32Ktpa nickel, capex around A$1 billion

Image courtesy Direct Nickel, pilot plant at CSIRO, South Perth

• Direct Nickel uses nitric acid to leach nickel laterite ores

• Unique feature is ability to recover ~95% of reagents, thus reducing operating costs

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Kalgoorlie Nickel Project – Heap Leach Review

• Bulong Heap Leach Study

– Conceptual study completed by Heron(consultant ex heap leach project manager from a northern Goldfields nickel laterite operation)

– Heron Bulong is site for leaching operation, assuming:

• High grade saprolite Boulder Block pit, >2% nickel

• Minable material estimated at 20Mt @ 1.2% nickel

• 600,000tpa local acid supply (KNS and local roaster)

• 1.3Mtpa ROM feed at 70% nickel recovery

• Mixed sulphide produced ,suitable for BHP Kwinana

• 15 year mine life

– High level economics:

• Capex A$127M (+/- 50%)

• Opex US$ 3.64/lb nickel

– Study demonstrates economic potential at Boulder Block

– Discussions ongoing with BHP regarding acid supply

– Discussions current with local owners of site infrastructure and additional resources

– Benefits from the current Simulus study

Schematic heap-leach layout from Heron’s Jump Up Dam 2008 PFS study

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Kalgoorlie Nickel Project – Iron Nickel Studies

• Iron-Nickel Sinter

– The high iron content of the goethite-dominated KNP nickel laterite has long been recognised

– Goongarrie South – 2011 estimated high iron mineral resource 48.5Mt @ 41% iron and 0.65% nickel, with 7.6% alumina at 35% iron cut-off

– Bench scale roasting tests at Oretest, Perth, feed grade around 50% iron, 1.2% nickel

Generated a magnetic separated sinter product with up to: • 73% iron • 3.7% nickel • 49.5% mass recovery

– Next step, evaluate potential market acceptance of the product

Goethite-rich nickel laterite within old chrysoprase pit south of Goongarrie South

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Investment Summary

• Strong cash position

– $39.6M cash, $3.3M in listed equity investments – company not constrained when opportunities arise

– $0.17 per Share cash + shares asset value, robust proposition together with the high quality exploration assets

– Compact management team, low overheads, low burn-rate, high skill sets, first-mover track-record

• Business Development

– Focus is M&A where Heron cash can add value to a target company or asset

– Priority targets: WA – gold-base metals, NSW – copper-gold-base metals, International – bulk commodities

• Exploration – excellent portfolio, well funded drill-focussed exploration

– Copper-gold (Cadia/Mallee Bull/Avoca Tank target styles), Lachlan Fold Belt central NSW, 100% owned –

aggressive phase of exploration currently underway, continual target generation, expeditious drill testing

– Nickel-copper (Nova-Bollnger style), Albany Fraser Mobile Zone southwest WA, 100% owned – initial drilling

program expected to commence in August

– Active drilling, 14,165 metres in 608 holes during 2012, similarly aggressive drilling in 2013

– Heron’s strong cash backing limits any downside exploration risk

• Projects

– Kalgoorlie Nickel Project, 100% ownership, one of the world’s largest undeveloped nickel laterites, ~$100

billion in-ground metal value, PFS completed, enormous medium to long-term option value

– Heron is investing in technologies with the potential to enhance the value of the KNP

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Contact:

Ian Buchhorn Managing Director

1/37 Ord Street West Perth WA 6005 T: +61 892 154 440 M:+61 418 831 624

[email protected]

www.heronresources.com.au F

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Heron Resources Corporate Presentation For personal use only