Heron Resources Limited

ASX: HRR

Heron Resources Limited

Corporate Presentation

2013 Annual General Meeting Celtic Club, West Perth - 15 November 2013

Heron Resources Limited 2

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 2012 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 2013 Annual Report, page 62, Section 8.0, “Statement of Mineral Resources” and accompanying Attribution Statement. The information in this presentation that is related to Resources is based on information compiled by Steve Jones who is a member of Australian Institute of Mining and Metallurgy. Steve Jones is a full time employee of Heron Resources Limited. Steve Jones 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Steve Jones consents to the inclusion in this presentation of the matters based on his information in the form and context that it appears.


Nov 2012 May 2013

ASX300 M&M

HRR Price AUD$

Ni PriceUS$/tonne

Heron Share Price, Nickel Price and ASX 300 Metals & Mining Index

2500

3100

3700

$US13000

$US16000

$0.12

$0.16

$0.20

$0.24

Nov 2013

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 (15-Oct) $0.14

Market cap $35.4M

Cash + Listed Investments $43.6M

Overview

Listed 1996

ASX Code HRR

Shares on Issue 252.99M

Cash (Sep-2013 Qtr) $38.6M

Listed Investments $5.0M


Cash & Minerals Portfolio

• Cash and Investments

– $38.6m cash, $5.0m 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 and Tropicana gold

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

• Kalgoorlie Nickel Project (Heron 100%)

– Nickel Laterite Mineral Resource, 796Mt @ 0.70% nickel & 0.048% 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, sulphuric acid recovery to 70%

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

• Discussions with other groups assessing potential process route optimizations

– Yerilla Nickel-Cobalt Prospect

• Nickel Laterite Mineral Resource, 140Mt @ 0.73% nickel & 0.052% cobalt (included in KNP resource)

• Heron completed PFS 2008, current flow-sheet studies continue with Simulus Engineers


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 Simulus Engineers and Direct Nickel piloting studies

– 2013 Option to sell 90% Rocky Gully to PLD Corporation, 28.75M PLD Corporation shares


Business Development

• Preferred Investments

– Production mining operation

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

• Aim to consolidate a mining centre through scrip-based transactions

– 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, assets may complement the KNP

– NSW – copper-gold, base metals

• Complements Heron’s extensive Lachlan Fold Belt exploration holding

– International

• Opportunistic, potential low cost assets, look at low sovereign risk jurisdictions, near term production

• Target epithermal/porphyry gold-copper and Proterozoic Mobile Belt base metals and nickel, must be large contiguous tenure with available regional data and immediate drill targets

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


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 “wholesale” through tenement applications, first require identified drill targets in prior exploration review ahead of any application being lodged

• Nickel-Copper-PGM Sulphides

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

– Eastern Goldfields Archaean nickel sulphide, focus is Kalpini

– Commodities complement the KNP nickel laterite

– Current active exploration at Bedonia (initial EM/geochem anomaly drilled, extensive new targets)

• 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

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


• – 

– • 

• 

– 

• 

– 

• 

• 

Exploration – Lachlan Copper-Gold 100% Heron


• 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/grid

– 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 done to provide geochemical coverage, prior to possible drill testing


Left: Osterley Project detail showing copper anomaly in NE splay off the Thule Fault. The modelled EM anomaly lies to the SE in an area of deeper soil cover along a probably lithological contact.

Left: West Lachlan Projects showing Heron tenure in relation to major mines and prospects


• 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



• Sussex Project, NSW

– 50km east of Cobar, 10km NE of the Mt Boppy Gold mine

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

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

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

– Follow-up infill and extensional soil auger sampling completed.

– RAB testing underway


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


• Albany Fraser Mobile Zone, WA

– Bedonia Nickel Project

• Magnetic and ground EM anomalies identified conductors at margin of mafic intrusive bodies

• Heron defined 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

• Project under option to PLD Corporation, while Heron focus remains on Bedonia

Exploration – Nova-Style Nickel-Copper 100% Heron


Exploration – Nova-Style Nickel-Copper 100% Heron

• 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 completed in August, intersected

favourable host meta-gabbro with sulphides, but no Ni-Cu mineralization yet defined

– Additional ground applied for


Gold 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, 8 metres at 1.9g/t gold

• Horse Rocks Gold, WA (non KNP)

– Significant broad zone of gold anomalism in historical drilling

– RAB drilling follow-up

Exploration–Eastern Goldfields Gold 100% Heron


Exploration – EGF Gold Targets 100% Heron

• Big Four Gold Project –

Heron high-grade gold intercepts – 17m @ 4.41g/t gold from 47m







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

– Distal VMS system over 5km of strike, deeper drilling required

• Paul’s Find Prospect – 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

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

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


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 $35M 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


• Simulus Engineers – Simulus trialling 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

– Three bulk KNP and Yerilla laterite samples at Simulus in Kewdale, Western Australia for the initial test work, up to 70% sulphuric acid regeneration in current test work

– The test work will generate inputs for a Scoping Study to estimate the potential benefits of 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 corporate partnership between Heron and Simulus through CFNP under which the technology will be further developed

Kalgoorlie Nickel Project – Simulus Engineers

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


Investment Summary

• Strong cash position

– $38.6M cash, $5.0M in listed equity investments – company not constrained when opportunities arise

– $0.17 per Share cash + shares asset value, robust financial position 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 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 completed, confirmed favourable geological setting, additional tenure acquired

– Active drilling, 19,202 metres in 718 holes during 2012 and 2013

– Heron’s strong cash ensures quick and effective testing of targets

• 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

20

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

Documents

Heron Resources Limited