Heron Resources Limited
ABN 30 068 263 098
Corporate Directory
DIRECTORS
Chairman (Non-Executive)
Craig Leslie Readhead BJuris LL.B. FAICD
Managing Director (Executive)
Ian James Buchhorn BSc (Hons), DiplGeosci (Min Econ),
MAusIMM
Director (Non-Executive)
Stephen Bruce Dennis BCom, LL.B., GDipAppFin (Finsia),
CFTP
COMPANY SECRETARY
Bryan Horan FCCA.
REGISTERED OFFICE
Level 1, 37 Ord Street
West Perth 6005 Western Australia
Telephone: +61 8 9215 4444
+61 8 9215 4490
Facsimile:
heron@heronresources.com.au
Email:
www.heronresources.com.au
Website:
SHARE REGISTRY
Security Transfer Registrars Pty Ltd
770 Canning Highway
Applecross 6153 Western Australia
Telephone: +61 8 9315 2333
Facsimile: +61 8 9315 2233
Email:
registrar@securitytransfer.com.au
AUDITORS
Butler Settineri (Audit) Pty Ltd
Unit 16, 1st Floor, 100 Railway Road
Subiaco 6008 Western Australia
SOLICITORS TO THE COMPANY
DLA Piper
Level 31, Central Park, 152-158 St George's Terrace
Perth 6000 Western Australia
BANKERS
Westpac Bank
230-236 Hannan Street
Kalgoorlie 6430 Western Australia
STOCK EXCHANGE
Australian Securities Exchange Limited
2 The Esplanade
Perth 6000 Western Australia
ASX CODE
HRR
SEAT ABBREVIATION
Heron
HOME BRANCH
Perth
INDUSTRY CLASSIFICATION
GICS classification code is 15104020
Diversified Metals and Mining
ISIN
AU000 000 HRR6
Cover graphics represent the Company's three principal
spheres of operation; Business Development, Exploration and
Projects. All three spheres are attuned to prevailing market
circumstances and the opportunities that arise.
Strategy and Support: DBM
Highlights
$39.6M cash and $3.3M investments
as at 30 June 2013
Business Development
The Company continues to review business development opportunities in Australia and overseas, to acquire operating mining
assets, pre-development resources, or advanced stage exploration projects. It is a key objective of the Company to complete a
significant transaction when a suitable opportunity is identified.
Exploration Projects
Active drilling throughout the year, 110 holes for 5,037 metres.
(cid:129)
New South Wales - Copper-Gold Exploration
The Company’s 100%-owned tenement portfolio in NSW continues to grow with some 3,700km2 in the Lachlan Fold
Belt now under application or granted.
Currently active field programs include:
-
-
-
-
Gundagai Gold Project, a 15 hole RC drilling program for 1,609 metres has been completed. Drilling targeted bulk
tonnage gold systems below the historic Big Ben lode workings. Results include 20 metres at 1.58g/t gold from
27 metres.
Mt Allen, Osterley Downs and Nymagee East Copper-Gold Projects, surface EM and soil geochemical surveys are
defining “Mallee Bull-style” polymetallic targets. Preliminary EM results for Osterley Downs have revealed a subtle
bedrock conductor that is being followed up with further soil auger geochemical surveys.
Sussex Copper-Gold Project, soil auger sampling and aeromagnetic data modeling has defined a high priority target
located 11 kilometres northeast of the Mt Boppy gold mine.
Coolabah Copper-Gold Project, a strong copper anomaly over a 1 kilometre strike was returned from Heron’s soil
auger sampling located 3 kilometres northwest of the Avoca Tank copper-gold discovery. EM follow up is planned.
(cid:129) West Australia – Nickel and Gold Exploration
-
-
-
Big Four Gold Project, a 673 metre RAB program in 26 holes was completed, best result 12 metres at 1.12g/t gold.
Siberia South Gold Project, 480 metre RAB program in 33 holes completed, best result 8 metres at 1.90g/t gold.
Bedonia Nickel-Copper Project, “Nova-style” nickel-copper target, EM surveying identified conductors coincident
with coherent geochemical anomalies and magnetic anomalies, 814 metre RC program in 4 holes was completed.
Development Project
(cid:129)
Kalgoorlie Nickel Project (KNP)
-
-
Simulus Engineers, agreement signed to undertake metallurgical testwork using sulphuric acid leaching on various
KNP ore-types, and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery
technology to the KNP.
Direct Nickel, testwork continues after favourable results at the Highway Prospect, with up to 98% nickel
recoveries using nitric acid leaching.
Annual Report 2013
1
Heron Projects
Enlargement of the
Eastern Goldfields
Figure 1: Tenement Holdings
2
Heron Resources Limited
Heron has active gold,
copper and nickel
exploration programs in
NSW, WA and Queensland
all focussed on generating
drill targets leading to
economic discoveries.
Chairman’s Letter
Dear Shareholders,
2013 has been a year of steady advancement for Heron against a backdrop of extremely challenging equities markets both in Australia and
elsewhere with many resource companies experiencing weaker equity prices. Heron responded to this difficult market situation by divesting
non-core assets and deferring non-essential expenditure.
However, with a cash balance of $39.6 million as at 30 June 2013, we saw the opportunity to take a somewhat counter cyclic view on
project and tenement acquisition and in the latter part of the year significantly re-built our management team and commenced aggressive
project and exploration licence evaluation with a particular focus on the Lachlan Copper-Gold Province of NSW. The aim is to take full
advantage of the opportunities which invariably arise in stressed markets.
The Company has three principal spheres of operation; Business Development led by General Manager Strategy and Business Development
Charlie Kempson, Exploration led by General Manager Exploration Dave von Perger and his team of four, and Projects which are coordinated
by Managing Director Ian Buchhorn. All three spheres are attuned to prevailing market circumstances and the opportunities that arise.
Business Development
With its robust cash position and in-house expertise, the Company is in a particularly strong position to take advantage of business
development opportunities, both in Australia and overseas. It aims to acquire operating mining assets or pre-development projects in order
to enhance long-term value for Shareholders. The Company has reviewed numerous business development opportunities over the last year
and currently has a number of promising opportunities under consideration. The style of opportunity tends to be focused on consolidation
within a particular mining field or commodity, and seeks to utilize Heron’s cash and management expertise to facilitate a step-change in the
target’s operations. The appointment of Charlie Kempson in March 2013 to a leadership role has increased the depth of our Business
Development team.
Exploration
The Company is continuing its exploration programs on its existing assets and is seeking additional exploration opportunities to supplement
its exploration portfolio. During the year, Heron continued to acquire exploration licences in the Lachlan Fold Belt of New South Wales,
targeting the world-class styles of copper-gold mineralization which is characterized by that area. This exploration activity commonly
complements our business development targets.
Over the last twelve months a number of field exploration programs have been completed, particularly in NSW, with initial drilling of the
Gundagai prospects returning ore grade gold. Additionally, the active gold exploration program on the KNP tenure has yielded encouraging
results at the Big Four, Siberia South and Black Range prospects, all of which have yielded ore grade intersections.
Projects
At current nickel prices, Heron's Kalgoorlie Nickel Project (KNP) is unlikely to be developed as a High Pressure Acid Leach project because it
does not provide an acceptable risk adjusted rate of return for the development capital required (estimated to be in excess of $2 billion). As
Shareholders will be aware, since the withdrawal of Vale Inco from the project in 2009, the Company has significantly ramped up its
metallurgical studies on the KNP, with these now being focused on low capital cost opportunities and feedstock re-cycling with the aim of
generating substantial improvements to both the capital and operating characteristics of the KNP flowsheet.
The metallurgical testwork program continues using the Direct Nickel nitric acid leach technology which shows encouraging recoveries.
In addition, we have recently commenced a new program with Simulus Engineers using sulphuric acid leaching and reagent recycling. The
Company intends to maintain its 100% ownership of the KNP project and will keep the project under constant review as the nickel price
improves and technical developments for nickel laterite projects continue to evolve. Future development scenarios include both joint venture
or spin-out of the KNP assets in conjunction with a strategic development partner.
In conclusion, I will reiterate that the Management and Board are committed to achieving success with the development and exploration
pursuits of the Company and the creation of value for Shareholders. I would like to thank my fellow Directors and the Heron Management
team, who have worked very hard during the year to ensure that we make the most of our assets and the opportunities.
My thanks must go as well to our loyal Shareholders who continue to support us. While I understand the frustration that some of us may feel,
rest assured that no stone is being left unturned in our quest to create real value for all Shareholders.
Craig Readhead
Chairman
Annual Report 2013
3
Directors & Management
CRAIG LESLIE READHEAD
BJuris LL.B. FAICD
CHAIRMAN (NON-EXECUTIVE)
Craig Readhead is a lawyer with over 30
years legal and corporate advisory experience
with specialization 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 a Partner of specialist mining and corporate law
firm Allion Legal.
BRYAN HORAN
FCCA.
COMPANY SECRETARY & FINANCIAL
CONTROLLER
Mr Horan was appointed to the position of
Financial Controller in February 2008 and
Company Secretary in November 2010. Mr
Horan joined the Company in March 2007 as a management
accountant. Mr Horan’s career includes 10 years working in various
accounting positions in London in industries such as media,
warehousing & distribution and pharmaceutical. Since living in Perth
Mr Horan has also held accounting positions with Australian Mines
Ltd and Perilya Ltd.
STEPHEN BRUCE DENNIS
BCom, LL.B., GDipAppFin (Finsia), CFTP
DIRECTOR (NON-EXECUTIVE)
DAVID VON PERGER
BSc (Hons) MAusIMM
GENERAL MANAGER EXPLORATION
Stephen Dennis has been actively involved in
the mining industry for over 30 years. He has
held senior management positions at MIM
Holdings Limited, Minara Resources Limited,
and Brambles Australia Limited. Mr Dennis is
currently the Chief Executive Officer and Managing Director of CBH
Resources Limited, the Australian subsidiary of Toho Zinc Co., Ltd of
Japan. Mr Dennis is non-executive Chairman of Cott Oil and Gas
Limited.
David von Perger was appointed to this
position in February 2006. Mr von Perger is a
geologist with some 20 years experience in
mineral exploration. Mr von Perger has
worked on several important styles of
mineral deposits. His experience includes four years as a business
analyst for a major mining group involving analysis of mining
operations, project development and assessment of new
opportunities. Since joining Heron in February 2004, Mr von Perger
has been responsible for the identification and acquisition of several
new nickel, gold, iron-ore and base-metal projects.
IAN JAMES BUCHHORN
BSc (Hons), DiplGeosci (Min Econ),
MAusIMM
MANAGING DIRECTOR (EXECUTIVE)
CHARLIE KEMPSON
MEng (Oxon) MBA GAICD
GENERAL MANAGER STRATEGY &
BUSINESS DEVELOPMENT
Ian Buchhorn is a Mineral Economist and
Geologist with over 30 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, industrial mineral mining
and exploration, gold and base metal project generation, and in
corporate evaluations. For the last 25 years Mr Buchhorn has
developed mining projects throughout the Eastern Goldfields of
Western Australia and operated as a Registered Mine Manager.
Mr Kempson is a senior corporate finance
executive who was most recently an equity
partner and Director of Azure Capital Limited,
a mining focused corporate advisor, where he worked for nine years
advising across a range of industries including mining, oil & gas and
related services on business development, corporate strategy,
finance, and mergers and acquisitions. Prior to his arrival in
Australia in 2002 Mr Kempson spent five years with investment
banks Commerzbank AG and Barclays Capital in London and
Germany, and four years working in technical roles for Logica (now
part of CGI Group).
The Company has three principal spheres of operation; Business
Development, Exploration & Projects. The Board and Management
work together to complete cost effective evaluations aimed at
creating Shareholder value.
4
Heron Resources Limited
1.0 Managing Director's Report
In October 2012, Mr Ian Buchhorn resumed the role of Managing Director which he previously held from 1996 to 2007.
At the November 2012 Annual General Meeting, Non-executive Director Mr Ken Hellsten retired, ending six years of outstanding contribution
to Heron. Ken’s support and valuable contribution is most appreciated.
Following on from these changes, the Board has taken the opportunity to undertake a review of the Strategic Plan of the Company in
consultation with key Shareholders. The objective of this review was to provide strategic direction for Heron’s key activities, primarily in the
areas of Business Development, Exploration and Projects. The Company is very fortunate to be in a uniquely strong financial position, and this
enables Heron to pursue a more aggressive and focused strategy, particularly with respect to exploration and business development activities.
The Company has maintained its strong cash position, and at 30 June 2013 held $39.6 million in cash and $3.3 million in listed investments.
Being in this strong financial position enables the Company to vigorously pursue new business development opportunities as and when they
are identified. Additionally, as soon as drill targets are identified by the Exploration Team, the Company has unfettered capability to quickly
drill these targets. For both the Business Development and Exploration activities of the Company, this strong cash position ensures a robust
pipeline of opportunities are available to Heron.
BUSINESS DEVELOPMENT
The Company’s growth strategy in 2013 was strongly aligned to seeking out new Business Development opportunities , and in parallel pursuing
a more active Exploration effort.
Mr Charlie Kempson was appointed General Manager, Strategy & Business Development in March 2013. Mr Kempson’s skills in strategic
analysis and mergers & acquisitions has significantly enhanced the Company’s ability to identify suitable Business Development opportunities
and to undertake a major transaction.
A strategic framework for Business Development has been adopted:
Preferred Investments
(cid:129)
Production mining operation, targeting good quality ore bodies.
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.
(cid:129)
(cid:129)
Heron funds the resource drill-out and Feasibility Studies to facilitate future project
funding.
Preferred Locations and Commodities
(cid:129)
WA – gold, nickel, base metals.
Heron has good operational experience in the jurisdiction, and acquisition targets
commonly complement the KNP.
(cid:129)
(cid:129)
NSW – copper-gold, base metals.
Complements Heron’s extensive Lachlan Fold Belt exploration holding.
International – bulk commodities.
Essential that common-user infrastructure is available, and minimal sovereign risk.
Targeting east and north Asia markets (seek projects in Australia or west coast
Americas).
hip s
e ria d rill c
S ib
For the foreseeable future, identifying suitable new Business
Development opportunities will remain a prime focus for the
Company, as a means to fast-track the acquisition and development
of mineral production cash-flow.
Annual Report 2013
5
1.0 MANAGING DIRECTOR'S REPORT CONTINUED
EXPLORATION
A strategic framework for Exploration throughout Australia has been adopted (Figure 1, 2 and 9):
Copper-Gold Targets – Lachlan Fold Belt of NSW
(cid:129)
(cid:129)
(cid:129)
Copper and gold are widely traded commodities, and are a good mix in that strong global economic activity
favours copper, while economic uncertainty favours gold.
Premium copper-gold exploration belts are available in Australia, being the Lachlan Fold Belt of NSW (Cadia,
North Parkes porphyry) and Cloncurry NW Queensland (Ernest Henry).
Heron exploration projects are all acquired 100% unencumbered through tenement applications, with
applications first requiring identified drill targets in a prior exploration review.
Nickel-Copper-PGM Sulphides – Albany-Fraser Mobile Zone of WA
(cid:129)
(cid:129)
(cid:129)
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 and auger geochemistry completed, anomaly has had initial drill
testing).
Gold – Archaean of WA
(cid:129)
(cid:129)
Focus is the Kalgoorlie province greenstones, in particular systematically evaluating existing KNP tenure.
Gold exploration alone maintains the KNP in good standing, so preserving the KNP asset value.
Heron Exploration Targets all have 100% Heron ownership
(cid:129)
(cid:129)
This avoids onerous conditions precedent, free-carried interests and royalty liabilities.
Quick decisions can be made regarding further exploration programs or relinquishment.
Drilling is the Focus
g
a rtz v einin
u
n q
e
B ig B
(cid:129)
(cid:129)
Unless a drill target is readily generated, Heron simply doesn’t apply for the ground.
Targeting is based on Heron’s sophisticated data interrogation capability and long-standing field knowledge of the target provinces.
The Company’s 100%-owned tenement portfolio in NSW continues to
grow with some 3,700km2 in the Lachlan Fold Belt now
under application or granted, and continual soil auger geochemistry and
ground EM surveys being implemented.
From July 2012 to June 2013, Heron completed the following drilling programs:
Prospect
NSW
Girilambone
Gundagai
WA
Mt Zephyr
Big Four
Horse Rocks
Siberia South
Total
Drill
Type
Holes
Drilled
Metres
Drilled
Comments
RC
RC
DDH
RAB
RAB
RAB
7
15
1
26
28
33
1,270
1,613
394
673
607
480
110
5,037
Good alteration up to 1,000ppm Cu in RC drilling, further drilling planned
Several ore intercepts, peak 20m @ 1.58g/t Au, 8m @ 1.07g/t Au
19m @ 0.21% Zn and 27m @ 0.14% Zn - distal part of large VMS system
12m @ 1.12g/t Au
Further follow-up planned to test broad anomalous intercepts
8m @ 1.9g/t Au, 8m @ 1.33g/t - RC follow-up being undertaken
6
Heron Resources Limited
Drilling Big Ben
DEVELOPMENT PROJECTS
The Kalgoorlie Nickel Project (KNP) remained the primary development focus of Heron during 2013, with targeted metallurgical test-work
completed.
(cid:129)
KNP Option Value
A world-class mineral resource, PFS completed in 2009 by the world’s leading nickel company in Vale Inco
~$100 billion in-ground value – such an asset in a $37 million market capitalization 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 a proven technology for nickel laterite processing, so is bankable, subject to refining the flowsheet with reagent
recycling and ambient pressure leaching.
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 them to the KNP
Technology Partnerships and Alternatives
Heron is aiming for lower capex cost development of segments of the KNP, facilitated by Heron and a specialist technology partner.
Simulus Engineering, using sulphuric acid leaching and reagent recovery for all KNP nickel ores, including Yerilla.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Direct Nickel, using nitric acid leaching and reagent recovery focussing on Highway nickel ore.
Heap Leach, focussing on Bulong and Kalpini saprolite nickel ore.
Iron-Nickel Segregation Roast, focussing on Goongarrie and Siberia goethite nickel ore.
Annual Report 2013
7
2.0 Operations Report
Health, Safety, Environment and Community (HSEC)
Heron Resources Limited continues to demonstrate its commitment to “Zero Harm” to the Company’s employees, the communities in which
Heron works and to the environment. This is achieved by all employees and contractors being inducted in promoting and maintaining a safe
and healthy working environment.
HEALTH AND SAFETY
Heron maintained its LTI-free record with no Lost Time Injuries occurring during the year. The LTI gauge of performance demonstrates an
outstanding result for Heron and reinforces the employees’ and contractors’ commitment to the highest of safety standards. The result also
re-affirms that the systems implemented throughout the Company are effective and that exploration activities can be undertaken safely.
Continuing vigilance is required to maintain this performance.
Routine Fitness-for-Work (FFW) testing continues to play an important part in keeping Heron’s work sites safe and free from the risk of injury.
ENVIRONMENT
Heron’s HSEC Management System has continued to demonstrate its value in assisting staff to identify environmental impacts, not only
meeting our commitment to minimizing environmental impacts, but also ensuring that business activities remain in regulatory compliance. Our
activities continue to be scrutinized by internal audits and checks and have also been subject to external audits by government regulators.
Heron’s robust environmental management systems ensured compliance with statutory requirements during the year.
COMMUNITY AND STAKEHOLDER ENGAGEMENT
The Company continued to promote educational opportunities for the communities in which we operate. This is Heron's thirteenth year of
donations to the Central Goldfields Education Trust (CGET) which was established by Heron in 2000. To date we have proudly donated over
$200,000, benefiting numerous local students. The Heron Trust supports students in completing their secondary graduation, encouraging entry
to tertiary education and professional employment, and making a real difference to Indigenous education in the Goldfields.
Drilling Big Ben
Competent Persons Statement
The information in this report that is related to Heron’s exploration activities 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 and has sufficient experience that is
relevant to the style of mineralization and type of deposit under consideration, and to the exploration activity that is 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 report of the matters based on his information in the form and context that it appears.
8
Heron Resources Limited
2.0 OPERATIONS REPORT CONTINUED
Exploration Projects
NEW SOUTH WALES COPPER-GOLD PROJECTS (all projects 100% Heron)
The Company continues to focus its exploration activities in the Lachlan Fold Belt of NSW (Figure 2) with RC drilling, Electro-Magnetic (EM)
and soil auger sampling surveys being completed in the last year. Additional tenements have also been applied for in the Gundagai, Tarago
and Parkes areas with over 3,700km2 now held. The targets are primarily copper-gold mineralization including Besshi style VMS, similar to
that being mined at the Tritton operation, porphyry copper-gold of the Cadia/Ridgeway style, and high-grade epithermal gold veins of the
Temora style.
Figure 2: Lachlan Fold Belt
tenure and mineralization
Annual Report 2013
9
2.0 OPERATIONS REPORT CONTINUED
GUNDAGAI GOLD-COPPER PROJECT
The Gundagai tenements and applications covering some 500km2 (Figure 3) are located 315km southwest of Sydney. Several old gold workings
hosted by mineralized porphyry units exist in the Heron tenement area with mining dating back to 1842, however prior to Heron’s involvement
there has been little or no modern exploration.
Big Ben Gold Prospect
The Big Ben gold prospect is located 7km south of Gundagai, and contains a sequence of meta-sandstones and conglomerates intruded by
multiple north-south trending mineralized porphyry dykes.
The porphyry contains a stockwork and
sheeted veins of quartz(-pyrolusite-limonite)
that were historically mined and yielded
several high-grade gold lodes. The Heron
exploration target is a bulk tonnage gold
stockworks hosted in a brittle porphyry
intrusive.
A 15 hole RC drilling program for 1,613 metres
was completed. Several intervals had panned
visible gold indicating coarse gold in the
system. Peak assay was 1 metre at 23.7g/t
gold from 27 metres in BBRC007. A program of
resampling and screen fire assays is being
undertaken to determine the precision of the
gold assays due to this presence of coarse
gold.
The high grade results are encouraging and
will be assessed in more detail to determine
(as
the potential for high-grade zones
historically mined), that can be targeted with
further deep drilling.
The system is open to the south, under alluvial
cover.
Califat and Snowball Copper-Gold
Prospects
The Califat and Snowball copper-gold
prospects are
located 15km south of
Gundagai. The numerous old copper workings
the area contain abundant
throughout
azurite
secondary
mineralization and have yielded high grade
gold of up to 84 g/t from mullock samples.
malachite
and
Figure 3: Gundagai, Heron tenement locations and mineralized centres
A surface EM survey was completed over the
zones of known mineralization to generate drill targets.
Basin Creek Copper Prospect
Historic workings have significant VMS-style copper mineralization hosted within a package of Silurian sediments and felsic volcanic rocks.
Previous drill results include 4.5 metres at 18% copper, 4.5 metres at 3.1% copper and 3.0 metres at 5.5% copper. A mapping program was
completed for target generation.
Perseverance Gold Prospect
The Perseverance prospect covers a sequence of Ordovician meta-sediments some 50km south of Wagga Wagga. The area was applied for
primarily for the significant Coppabella lead, silver, zinc and fluorite workings that occur around the edge of a Silurian and Devonian granite
intrusion. Several high grade historic gold workings also occur in the area. The vein system mineralogy suggests epithermal gold affinities.
10
Heron Resources Limited
2.0 OPERATIONS REPORT CONTINUED
WEST LACHLAN COPPER-GOLD PROJECTS
Heron’s West Lachlan projects cover Ordovician and Devonian sequences in the western part of the Lachlan Fold Belt and Cobar Basin. Access
is excellent both in terms of roads and tracks, but also in terms of the positive reception from the local land owners and graziers. As tenements
are being granted, reconnaissance field work has quickly commenced, including rock-chip sampling, soil auger programs and EM surveys.
Sussex Copper-Gold Project
Sussex covering some 600km2 is located 50km east of Cobar and 10km northeast of the Mt Boppy gold mine. The area contains a large,
complex, magnetic high within Girilambone Beds along the northern extension of the Gilmore Suture, one of the controlling metallogenic
structures in the Lachlan Fold Belt. The target magnetic anomaly is located along strike from several historical base-metal and gold workings.
Results from the Heron soil auger sampling revealed a large, coherent copper-zinc-nickel anomaly on the south side of the magnetic anomaly,
plus an additional copper-gold-arsenic anomaly over a small satellite magnetic high in the south.
Follow-up auger sampling has commenced in the area to extend and infill the existing lines, prior to drill testing.
Sheeted quartz veins, Osterley Downs
Osterley Downs Copper-Gold Project
Osterley Downs covering some 300km2 is located 25km southwest of Cobar, and contains predominantly
turbiditic sediments of the Devonian Upper Amphitheatre Group and sandstone of the Biddabirra Formation.
The Thule Fault, which runs through the centre of the area, is a major regional structure that was targeted by
previous explorers as a conduit for mineralizing fluids containing gold and copper mineralization associated
with fault breccia units.
Better results from historic GeoPeko drilling at Osterley Downs include 6 metres at 0.56g/t gold. The focus
of Heron’s exploration is on subsidiary structures adjacent to the main Thule Fault. Such subsidiary cross-
cutting dilational structures are often the focus for Cobar Basin style mineralization.
A surface-based EM survey, which targeted the Thule Fault and mapped gossan occurrences, has been
completed. A number of mapped gossan zones within Devonian sediments were identified by previous
explorers in the early 1990s and have had little follow-up since that time. The Heron EM program has
identified a subtle, but coherent anomaly directly to the southeast of an old GeoPeko gossan zone in an area
of deeper soil cover. The anomaly is associated with a discrete magnetic low and could be related directly
to mineralization at depth, or a structural offset where mineralization has been re-mobilised. A program of
soil auger sampling has commenced to further test this area.
Mt Allen Copper-Gold Project
Mt Allen covering some 300km2 is located on the tenement block at the southern boundary of the Peel
Exploration holding which hosts the Mallee Bull polymetallic discovery.
The Mt Allen area has a complex array of NE trending structures splaying off the dominant NNW trending
Cobar Basin margin structures.
The Mallee Bull discovery is located 15km northeast of Mt Allen on Heron’s interpreted NE trending structures. Soil auger sampling is
underway on four initial targets identified from Heron’s regional geological and structural interpretations. Initial results include a subtle but
coherent copper anomaly of up to 54ppm over 500 metres.
Nymagee East Copper-Gold Project
This project area covering some 512km2 comprises a number of tenement applications located 75km southeast of Cobar and 15km northeast
of the Nymagee copper mine. The tenements cover a complex zone of north-west trending Devonian-aged sediments and the Ordovician-aged
Girilambone Beds adjacent to the southern extension of the Coonara Fault (hosts the Overflow and Mineral Hill copper-gold mines 10km and
50km south). The tenements lie within the strongly mineralized Gilmore Suture Zone.
Several gold and base-metal occurrences exist within the applications and these are the immediate focus for generating drill targets. Site
reconnaissance has been completed and a soil auger program will commence when tenements are granted.
Eurow Copper-Gold Project
Eurow covers Ordovician and Devonian-aged meta-sediments intruded by Silurian and Devonian granites, located some 40km southeast of
Parkes in central NSW. Eurow is proximal to the intersection of the Narromine-Coolac Fault Zone and the Lachlan Transverse Zone. The
tenement was primarily acquired for the historic Eurow-Vychan copper-gold workings where a small non-JORC compliant resource has been
previously reported. Previous drilling below the workings included intercepts of 8 metres at 2.94% copper and 0.85g/t gold from 47 metres,
3 metres at 4.0% copper and 1.25g/t gold from 73 metres, and 4.4 metres at 1.57% copper and 0.63g/t gold from 212 metres. The
mineralization is planar and stratiform and associated with pyrrhotite sulphide (highly conductive and magnetic). There are excellent targets
for follow-up drilling based on Heron’s data review.
Annual Report 2013
11
Califat copper in old mine mullock
Girilambone Copper-Gold Project
The Girilambone copper-gold project is
located within two granted tenements
(EL7955 and EL7951) 25km and 60km
northwest of Nyngan NSW (Figure 4).
Heron is targeting Tritton/Avoca Tank style
copper-gold mineralization within mafic
units of the Ordovician Girilambone Beds.
Seven RC holes for 1,270 metres were
drilled at the Girilambone Prospect. Best
result was from testing a subtle EM
conductor adjacent to a larger magnetic
anomaly. Strong sericite, chlorite and
carbonate alteration was observed, with
individual 1 metre samples of sulphidic
zones with minor chalcopyrite returning up
to 0.11% copper.
Soil auger programs in the Coolabah area
have generated a strong coherent copper
anomaly located 3.5km northwest along
strike of the Avoca Tank discovery (Straits
Resources Limited). Auger soils show a
moderate copper anomaly of up to 97ppm
over 1500 metres with multi-element
signature with elements such as arsenic,
silver and bismuth showing a strong
coincidence. A moving loop EM survey will
be done to test for deeper zones of
mineralization.
Figure 4: Girilambone Project
Tenements and Targets
over Magnetic Image
12
Heron Resources Limited
2.0 OPERATIONS REPORT CONTINUED
ALBANY FRASER NICKEL-COPPER PROJECTS, WESTERN AUSTRALIA
Bedonia Nickel-Copper Prospect (100% Heron)
The Company’s Bedonia Project covers 720km2 and is located 75km east of Norseman, Western Australia and some 60km west-southwest of
the Nova-Bollinger nickel-copper discovery by Sirius Resources NL.
Heron is seeking “Nova-Bollinger style” nickel-copper PGM mineralization within the Proterozoic Mount Andrews Gneiss Complex where there
is potential for discrete mineralized intrusive bodies (Figures 5, 6).
The Bedonia EM anomaly considered to be related to a bedrock conductive body with a time constant modelled at around 14 milliseconds.
The conductive unit was modeled as being some 200 metres below the surface, which is relatively deep and may account for the more subtle
response seen at the surface.
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Figure 5: Albany Fraser location plan
on regional aeromagnetics.
Heron completed an RC drilling program of 4 holes for 814 metres. No significant sulphides were intersected. Down hole EM interpretations
are awaited, to determine the position of conductors.
Figure 6a:
Bedonia Project
Copper auger soil
results on
aeromagnetic
image
Figure 6b:
Bedonia Project
Nickel auger soil
results on
aeromagnetic
image
Annual Report 2013
13
2.0 OPERATIONS REPORT CONTINUED
Rocky Gully Nickel-Copper Prospect (100% Heron, PLD Corporation right to purchase 90%)
At Rocky Gully, 85km northwest of Albany, the Company is targeting nickel-copper sulphide mineralization associated with mafic-ultramafic
intrusions in the area. Previous work by Heron had identified a number of mafic-ultramafic intrusive bodies within the Proterozoic Birunup
Gneiss Complex. These bodies are associated with strong nickel-copper-cobalt anomalies in lateritic soils. Previous Heron reconnaissance
drilling in the area identified nickel-copper mineralization in laterite as well as nickel-copper sulphides in the bedrock sequence (comparable
initial exploration history to Nova-Bollinger).
The Company granted a 12 month option to PLD Corporation Limited to purchase a 90% interest in Rocky Gully at PLD’s election for either
$230,000 cash or the issue of 28.75 million shares in PLD.
MT ZEPHYR GOLD AND BASE-METAL PROJECT, WESTERN AUSTRALIA (100% Heron)
Figure 7: Mt Zephyr Cross Section showing location of ZNDD011.
The Mt Zephyr Project is located 80km north
northeast of Leonora and represents a 5 kilometre
strike of volcanics with strong indications of
Volcanogenic Massive Sulphide
(VMS) style
mineralization. The Company is currently seeking a
joint venture partner to drill a sequence of deeper
holes down-dip from the distal style VMS
mineralization discovered by Heron.
The Company completed a diamond core hole
ZNDD0011 beneath ZNDD06 where broad zones of
massive and semi-massive sulphides were
previously intersected including a number of
chalcopyrite rich volcanic clasts (grading up to 4%
copper with hand held XRF analysis).
The recently drilled ZNDD0011 intersected a similar
sequence to that found in ZNDD0006 and the
assays have confirmed that the sequence continues
down dip, but unfortunately with a similar base-
metal tenor. At this stage no further drilling is
planned on this section.
Mt Zephyr stratiform sulphides
The results for ZNDD0011 included 19 metres at 0.21% zinc and 0.04% copper from 231 metres and 27 metres
at 0.14% zinc and 0.02% copper from 303 metres.
The Mt Zephyr tenure is a contiguous greenstone package, and remains highly prospective.
The area is also highly prospective for gold mineralization with high-grade laminated quartz reefs in the north
of the project area.
Nickel sulphide targets were generated. A surface EM survey at Two Bills Well failed to find any significant
bedrock conductors. Further nickel sulphide targets are currently being assessed to the north of the Two Bills
Well prospect along similar ultramafic stratigraphy.
14
Heron Resources Limited
2.0 OPERATIONS REPORT CONTINUED
Figure 8:
Cloncurry region,
Heron tenement
locations and
mineralized centres
NORTHWEST QUEENSLAND COPPER-GOLD
PROJECT (100% Heron)
The Company has acquired a portfolio of 12 tenements
covering some 1,147km2 in the Mt Isa Inlier of northwest
Queensland, targeting copper-gold-REE mineralization in
Iron Oxide Copper Gold (IOCG) settings (Figure 8).
The Mt Isa Inlier is a world-class Proterozoic mining
province hosting the large copper, lead and zinc mines at
Mt Isa and George Fisher and the copper-gold mines at
Ernest Henry and Osborne plus several other significant
mines and development projects. The potential for new
economic discoveries in the area is high.
In particular, within Heron’s Mammoth East Prospect
in EPMs 19122 and 19168, previous exploration
identified a zone of high-level copper-gold mineralized
quartz veining within basalt and quartzite of the
Proterozoic Haslingden Group, with the anomaly
extending over 500 metres of strike and 50-100 metres
wide, hosted within a polyphase epithermal quartz vein.
The northwest Queensland acquisitions reflect the
Company’s positive view of Proterozoic copper-gold
systems. The Company is currently seeking expressions
of interest from parties who would be interested in
farming into or acquiring the tenements. An Information
Memorandum on the project areas was completed and
has been forwarded to potential interested parties.
Project Development
KALGOORLIE NICKEL PROJECT
(100% Heron)
The concept and implementation of the Kalgoorlie Nickel Project (KNP) by Heron commenced in 1997. The journey has been one of challenges,
including a hostile bid for Heron in 2000, a competitive process that brought in Vale Inco as partner in 2005, and finally the Global Financial
Crisis in 2008 leading to the withdrawal of Vale Inco from the partnership in 2009.
The KNP has several attributes in keeping with a world-class mineral deposit:
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Excellent Resource, 796 million tonnes at 0.70% nickel and 0.048% cobalt (for details of resource categories and distribution
between project areas see the attached statement of mineral resources, Section 8, Statement of Mineral resources), JORC 2012-
compliant Mineral Resource, good range of geo-metallurgy ore types for flow-sheet optimization and mine scheduling.
Screen beneficiated Leach Feed Grade of 1.2-1.5% nickel for siliceous ore, abundance resource tonnes so ability for aggressive
screening to increase the Leach Feed Grade.
Located within 100km radius of Kalgoorlie, with consequent excellent Infrastructure, with all gas, road, rail, port infrastructure present
and available to multi-users.
Benign environmental setting, low risk tailings disposal for the KNP “dry laterites” (contrast the tropical “wet laterites”).
Strong community and government support, no sovereign risk, access to skilled workforce.
Ravensthorpe HPAL nickel laterite plant has been successfully re-commissioned, providing industry confidence for sulphuric acid
leaching.
Vale Inco PFS 2009 commentary: “one of the most prospective nickel
laterite tenement packages in the world”
Annual Report 2013
15
2.0 OPERATIONS REPORT CONTINUED
Vale Inco completed a Pre-Feasibility Study (PFS) in 2009:
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$34.5 million project expenditure, immensely valuable Feasibility Study data set;
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(cid:129)
>95,000 metres drilled, to deliver JORC resource.
Metallurgical assessment of HPAL (and lesser Heap Leach studies).
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2.5 million tonne per annum beneficiated leach feed, up to 36,000 tonnes per annum 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).
Metallurgical Test Work Programs
The Company recognizes the potential inherent value of the KNP. Heron has a multi-disciplinary strategy to match
various extractive technologies to specific ore types within the KNP, with the ultimate aim of enhancing and
crystallising value from the KNP through innovative technology.
There is an increased focus world-wide on new nickel laterite extractive technologies which, in part, reflects the
tightening situation of traditional sources of supply from nickel sulphides.
Goethite-rich nickel laterite
within old chrysoprase pit south
of Goongarrie South
Iron-Nickel Study
This testwork was undertaken at SGS Lakefield Oretest in Perth, utilising bulk samples collected at Goongarrie
South:
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Mineralogy by XRD to determine geo-metallurgical classification.
Reductive roast tests followed by magnetic separation.
Agitated acid leaching of roast products.
Segregation roast tests followed magnetic separation.
The iron-nickel mineral resource for Goongarrie South was estimated as 48.5 million tonnes at 41% iron and
0.65% nickel (see Company announcement 26 October 2011) and formed the basis for initial testwork and studies
looking at the potential to produce a viable iron-nickel product. From the testwork this goethite-rich material
generated an upgraded iron-nickel sinter product which assayed up to 73.4% Fe and 3.71% Ni with a 49.5% mass
recovery.
While providing encouragement that this approach can produce an iron-nickel product from the goethite-rich nickel
laterite ore, considerably more testwork is required to prove the commercial viability of this option.
Direct Nickel Metallurgical Study
The Company’s most active program has been with Direct Nickel, where testwork has continued, with up to 98% nickel recoveries using nitric
acid leaching.
The test programs conducted by Direct Nickel over the last twelve months on samples supplied by Heron from the KNP Highway deposit
demonstrate that the key steps of the Direct Nickel Process may be successfully applied to the KNP nickel laterite material.
The results show rapid leach kinetics from run-of-mine KNP goethite samples at atmospheric pressure and moderate temperatures of around
100°C.
Based on these results, studies have commenced to further assess the impacts on project economics of using saline process water.
Heron’s first KNP nickel production, from left to
right, green nickel MHP assaying 40% nickel, dark
red hematite assaying 56.6% iron and grey-yellow
aluminium hydroxide assaying 20.6 % aluminium.
The intermediate process steps of iron hydrolysis
and aluminium removal were very satisfactory,
producing an iron by-product and an aluminium by-
product. Only minor nickel losses were experienced
in these refining steps.
16
Heron Resources Limited
2.0 OPERATIONS REPORT CONTINUED
Under the Direct Nickel Process the refined solution was then treated with magnesia to produce a saleable Mixed
Hydroxide Product (MHP) assaying 40.1% nickel and 1.7% cobalt, a marketable nickel intermediate product.
Prior to the current studies, chloride levels were felt to be a potential issue in using the Direct Nickel Process to
treat the saline KNP materials.
During the test work it became clear that over 80% of the chloride in solution could be isolated in a small fraction
of the process streams, offering the opportunity to develop a cost effective flow sheet. Further study has now
commenced to optimize the chloride removing process steps.
If it is possible to isolate the chlorides and separate them from any accompanying nitrates, then the potentially
superior economics of the Direct Nickel Process may be able to be applied even to the KNP laterites that occur in
a saline environment.
Heron will further review the energy balance for the Direct Nickel Process in treating KNP ore in Western Australia
plant locations.
The results demonstrate the Direct Nickel Process may be
able to be successfully applied to the KNP nickel laterites.
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Simulus Engineers Metallurgical Study
Heron has negotiated an agreement with Simulus Engineers (Simulus) to undertake sulphuric acid-based metallurgical testwork on various
KNP ore-types and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery technology to the KNP.
Simulus is a Perth-based metallurgical engineering firm specialising in developing innovative and cost effective solutions to complex
metallurgical processes. Simulus has a team of some 20 engineers and has a proven track record of innovative design and cost-effective
execution.
Within its subsidiary Carbon Friendly Nickel Processing (CFNP), Simulus has developed a new process technology able to be applied towards
the extraction and refining of nickel and cobalt from nickel laterite ore.
The essence of the process is the recovery and re-use of the key reagents used in leaching and purification. The Simulus reagent recovery
process can be matched up with any front-end leach process such as high pressure acid leach, atmospheric tank leach, or heap leach. A range
of intermediate products or refined metal can also be produced as required.
CFNP has the potential to offer substantial benefits compared to existing processes including reduction in all of reagent costs, tailings
production and water consumption, leading to the potential for significant improvements in operating costs.
Three bulk samples of nickel laterite ore have been delivered to Simulus in Kewdale, Western Australia. The samples represent the three
main ore types within the KNP:
Part of equip
Simulus at their Kewdale facility
ment being used by
(cid:129)
(cid:129)
(cid:129)
Goethite ore from composites of sonic drill core drilled at Siberia North
Saprolite ore mined by Heron from Heron’s Boulder Block pit at Bulong
Nontronite ore from Heron’s ore stockpiles at the Jump Up Dam trial pit (Yerilla Project)
These samples are designed to represent the three end members of the dominant material types recovered from
the Heron KNP nickel laterite resource inventory and will demonstrate the viability of the Simulus process over the
spectrum of KNP metallurgical variability.
Heron believes that the technology Simulus is seeking to apply to the KNP sulphuric acid processing flowsheet has
significant potential to catalyse a “step change” in the project economics of the KNP.
If successful, this initial testwork 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.
Heron believes that the technology Simulus is seeking to
apply to the KNP nickel laterite processing flowsheet has
significant potential to catalyse a “step change” in the
project economics of the KNP.
Annual Report 2013
17
2.0 OPERATIONS REPORT CONTINUED
KNP GOLD INITIATIVES (100% Heron)
Big Four Gold Project, Western Australia
Figure 9: Kalgoorlie
Gold Prospects
The Big Four Gold Project is located 65km north of
Kalgoorlie where high grade gold mineralization has been
found within an intermediate porphyry unit in the lower
part of the Siberia Komatiite.
Reverse Circulation Drilling
Bulk grade intercepts of the porphyry are as follows:
(cid:129) BFRC001 17 metres at 4.41g/t gold from 47 metres
(cid:129) BFRC004 26 metres at 1.18g/t gold from 8 metres
(cid:129) BFRC006 26 metres at 3.46g/t gold from 87 metres
(cid:129) BFRC017 19 metres at 3.21g/t gold from 22 metres
(cid:129) BFRC021 10 metres at 8.94g/t gold from 102 metres
(cid:129) BRFC030 24 metres at 4.58g/t gold from 61 metres
Rotary Air-Blast Drilling
A RAB drilling program was completed with 26 holes for
673 metres to test the south-west extension of the Big Four
mineralization beneath a strong gold-in-soil anomaly
generated by Heron auger sampling. Significant results:
(cid:129) BFRB202 12 metres at 1.12g/t gold from 20 metres
(cid:129) BFRB204 12 metres at 0.76g/t gold from surface
The Company has recently received an expression of interest from a local mining group to develop a small-scale
open pit to open up the ore zone prior to further deeper drilling.
Siberia South Gold Project, Western Australia
Big Four gold nuggets in R
C chips
A 480 metre RAB drilling program for 33 holes was completed at the Siberia South Gold Project located 70km northwest of Kalgoorlie, Western
Australia within the KNP. The drilling is targeting Archaean gold mineralization along the contact between ultramafic rocks (Siberia Komatiite)
and a range of mafic volcanic and intrusive rocks.
The targeted soil anomalies are up to 49ppb gold and covered a strike length of up to 1 kilometre. They are partially associated with shallow
old workings, however the anomalism extended beyond the workings into an area of deeper soil cover and these extensional areas are the
key targets for the drilling. Best RAB result was 8 metres at 1.90g/t gold.
KNP NICKEL SULPHIDE INITIATIVES (100% Heron)
As part of Heron’s regional soil auger gold sampling, several positions have been identified which are prospective for nickel sulphide
mineralization. These programs help to maintain the KNP nickel laterite tenure in good standing.
Kalpini Nickel Project, Western Australia (100% Heron)
The Kalpini ultramafic belt which hosts KNP nickel laterite resources additionally has several documented fertile nickel sulphide ultramafic
contacts. Heron’s project generation studies through the belt have generated several nickel sulphide targets. The Company geophysical
consultants have commenced a review of these targets, with several good opportunities already identified.
JOINT VENTURE PROJECTS, WESTERN AUSTRALIA
Heron has farmed out various of the KNP nickel laterite tenure for gold exploration, again as a means to assist in keeping the KNP in good
standing with the WA Department of Mines and Petroleum (DMP).
Bulong Gold Project (Heron 20%, Southern Gold Limited 80%; Heron retains 100% of nickel laterite rights at Bulong East)
Southern Gold Limited has earned its 80% interest in the two joint venture areas at Bulong (30km east of Kalgoorlie) through meeting the
required expenditure commitments. At Bulong East, Heron is free carried at 20% interest until a pre-feasibility study is completed and
$8 million has been expended. At Bulong South, Heron is free carried at 20% interest until the completion of Bankable Feasibility Study.
Southern Gold has completed several field programs within the Heron tenure over the last two years with several encouraging results being
received including 4 metres at 6.8g/t gold and 4 metres at 4.5g/t gold at the Turnpike prospect.
Work completed in the last year included a Sub-audio Magnetics (SAM) survey that has highlighted and delineated a number of shear zone
targets coincident with previously reported gold-in-soil anomalies.
18
Heron Resources Limited
Heron Resources Limited
ABN 30 068 263 098
Annual Report 30 June 2013
Statutory Information
3.0
CORPORATE PROFILE ..........................................................................................20
CORPORATE GOVERNANCE STATEMENT...............................................................20
4.0
DIRECTORS’ REPORT ...........................................................................................26
AUDIT INDEPENDENCE DECLARATION...................................................................33
5.0
FINANCIAL STATEMENTS ..................................................................................34
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ..............................34
CONSOLIDATED BALANCE SHEET ..........................................................................35
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY......................................36
CONSOLIDATED CASH FLOW STATEMENT ............................................................37
NOTES TO AND FORMING PART OF THE ACCOUNTS ...........................................38
DIRECTORS’ DECLARATION ....................................................................................57
6.0
7.0
8.0
9.0
INDEPENDENT AUDIT REPORT .........................................................................58
SHAREHOLDER INFORMATION .........................................................................60
STATEMENT OF MINERAL RESOURCES ..........................................................62
INTEREST IN MINING TENEMENTS.................................................................64
10.0 GLOSSARY .............................................................................................................71
Siberia RAB
Annual Report 2013
19
3.0 Corporate Profile
HERON RESOURCES LIMITED (“Heron” or “the Company”) is an exploration and mineral development company with
interests in a range of commodities including gold, copper, nickel and other base metals. The Company is focused on
becoming a mineral producing company through the development of exploration discoveries and by pursuing corporate
opportunities in the minerals sector.
KEY DEVELOPMENTS
Ian Buchhorn resumed the Managing Director role he previously held from 1996 to 2007. Charlie Kempson was appointed to the position of
General Manager Strategy and Business Development in March 2013.
The Company signed an agreement with Simulus Engineers (Simulus) to undertake metallurgical testwork on the Kalgoorlie Nickel Project
(KNP) nickel laterite ores and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery technology to the KNP.
(cid:129)
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(cid:129)
Simulus will trial its patented process 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 laterite samples for the initial testwork to Simulus in Kewdale, Western Australia.
The testwork will generate inputs for a Scoping Study to estimate the size of the potential benefits which may be achieved through
applying the technology to the KNP at a commercial scale.
The Company announced the results of exploration being carried out at its wholly owned copper-gold projects in the Lachlan Fold Belt of New
South Wales.
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At the Gundagai Copper-Gold Project, a 15 hole RC drilling program for 1,613 metres was completed. Drilling targeted gold stockworks
systems below the historic Big Ben lode workings. Better results included 20 metres at 1.58g/t gold from 27 metres and 8 metres at
1.07g/t gold from 25 metres.
At the Osterley Downs Copper-Gold Project, a ground Electro-Magnetic (EM) survey has identified a subtle conductor directly to the
south-east of a mapped gossan zone.
The Company announced an update on the results of exploration being carried out at its wholly owned Bedonia Nickel-Copper Project and
Siberia South Gold Project in Western Australia.
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(cid:129)
At Bedonia, drill testing of EM conductors adjacent to a copper-nickel soil anomaly was completed. The drill targets were intrusive-
related nickel-copper sulphides of the Nova-Bollinger style.
At Siberia South, a RAB drilling program was completed following up soil auger and rock chip gold anomalies identified by Heron.
The Company strategy is to systematically evaluate merger/acquisition and joint venture opportunities to acquire an advanced stage
development project with an associated “up-side” exploration portfolio. Heron is fortunate to have a strong balance sheet with $43 million in
cash and investments which places the Company in a very good position to take advantage of any opportunities as they arise.
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 seeks to communicate extensively with Shareholders.
The Board is focused on:
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Developing strategies in consultation with the Executive Team;
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.
This Statement outlines the main corporate governance practices which are in place at Heron, noting where practices depart from the Revised
Edition of the ASX Corporate Governance Council Recommendations and the Board's reasons for an alternate approach. Where the Board
supports a particular recommendation, but is yet to fully implement it, a complementary policy or practice has also been identified.
20
Heron Resources Limited
3.0 CORPORATE PROFILE CONTINUED
The following additional information about the Company's Corporate Governance practices is set out on the Company's website at
www.heronresources.com.au:
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(cid:129)
(cid:129)
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(cid:129)
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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;
Code of Conduct;
The Company’s Audit Committee Charter; and
HSEC Policy.
EXPLANATIONS FOR DEPARTURES FROM BEST PRACTICE GOVERNANCE RECOMMENDATIONS
Principle 1. Lay Solid Foundations for Management and Oversight
Council Recommendation 1.1: Companies should establish the functions reserved to the board and those delegated to senior executives
and disclose those functions.
The Company complies with this recommendation.
The Company has established the functions reserved to the Board and Senior Executives or Management by the adoption of a formal written
Board Charter that details those functions and responsibilities. Section 2 of the Charter details the functions and responsibilities of the Board
and Section 6 of the Charter details the functions and responsibilities of the Management or Senior Executives. A copy of this Charter is
publicly available for review in the Corporate Governance section of the Company’s website.
Council Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior executives.
Senior Executives are evaluated informally on an ongoing process as well as formally on an annual basis. The formal evaluation comprises
the Executive and his or her immediate supervisor separately completing a detailed evaluation form covering performance compared to job
description, areas requiring improvement, areas being performed to expectation, areas being performed in excess of expectations and goals
for the next 12 months. The Executive and his or her supervisor then exchange forms and meet to discuss them before signing off on an agreed
evaluation.
Council Recommendation 1.3:Companies should provide the information indicated in the Guide to reporting on Principle 1
(cid:129)
(cid:129)
Each member of the Senior Executive team completed their performance evaluations during the financial year in accordance with the
process described immediately above in the Company’s compliance commentary relating to Council Recommendation 1.2;
As indicated above, the matters reserved to the Board and to Senior Management are particularised in the Board’s Charter which is
available for review on the Company’s website in the Corporate Governance Section.
Principle 2. Structure the Board to Add Value
Council Recommendation 2.1:A majority of the board should be independent directors.
The Company complies with this recommendation.
Currently two of the three Directors comprising the Board are considered independent within ASX Corporate Governance Guidelines. Messrs
Readhead and Dennis are considered independent because they are not significant shareholders in the Company.
The Company believes that Messrs Readhead, Buchhorn and Dennis have the skills and experience to properly and effectively discharge the
Board’s duties.
Details of the members of the Board, their experience, expertise, qualifications and time in office are set out in the Directors’ Report in Section
4.0 of the Annual Report.
The Company does not have a formal procedure agreed by the Board of Directors for the Directors to take independent professional advice at
the expense of the Company. The informal procedure is that each Director is entitled to seek independent advice for significant issues or
matters at the expense of the Company after first notifying the Chairman.
Council Recommendation 2.2: The chair should be an independent director.
The Company complies with this recommendation as it considers Mr Readhead is an independent director.
Council Recommendation 2.3:The roles of chair and chief executive officer should not be exercised by the same individual.
The Company complies with this recommendation. Mr Buchhorn is the Chief Executive Officer and Managing Director and Mr Readhead is the
Chairman.
Annual Report 2013
21
3.0 CORPORATE PROFILE CONTINUED
Council Recommendation 2.4:The board should establish a nominations 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 nominations committee. The Board as a whole
undertakes the process of reviewing the skill base and experience of existing Directors and senior management to enable identification or
attributes required in new Directors and senior management.
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 nominations committee will be reviewed by the Board
and implemented if appropriate.
Council Recommendation 2.5: Companies should disclose the process for evaluating the performance of the board, its committees and
individual directors.
The Company does not comply with this recommendation.
The Company does not have a formal process for evaluation of the performance of the Board. At present the Board’s performance is evaluated
on an ongoing basis by the Chairman and the Managing Director. The Managing Director’s performance is formally evaluated by the Chairman
and Non-Executive Directors on an annual basis at 30 June.
Council Recommendation 2.6: Companies should provide the information indicated in the Guide to reporting on Principle 2.
All of the information indicated in the Guide to reporting on Principle 2 is set out in the commentary above relating to the relevant
Recommendation.
Principle 3. Promote Ethical and Responsible Decision-Making
Council Recommendation 3.1:Companies should establish a code of conduct and disclose the code or a summary of the code as to:
(cid:129)
(cid:129)
(cid:129)
the practices necessary to maintain confidence in the Company’s integrity;
the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders; and
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.
The Code of Conduct requires that all Directors and Officers:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
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.
The Code of Conduct is publicly available in the Corporate Governance section on the Company’s website.
Council Recommendation 3.2: Companies should disclose in each annual report the measurable objectives for achieving gender diversity
set by the board in accordance with the diversity policy and progress towards achieving them.
The Company does not comply with this recommendation.
The Company is in the process of establishing a policy concerning diversity.
Council Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for achieving gender diversity
set by the board in accordance with the diversity policy and progress towards achieving them.
The Company does not comply with this recommendation because it is yet to establish a formal policy concerning gender diversity.
Council Recommendation 3.4: Companies should disclose in each annual report the proportion of women employees in the whole
organisation, women in senior executive positions and women on the board.
The Company complies with this recommendation, the information is included in the remuneration report.
22
Heron Resources Limited
3.0 CORPORATE PROFILE CONTINUED
Council Recommendation 3.5:Companies should provide the information indicated in the guide to reporting on Principal 3.
The information indicated in the guide to reporting on Principal 3 is disclosed in relation to Council Recommendations 3.1, 3.2, 3.3, 3.4 and 3.5
above.
Principle 4. Safeguard Integrity in Financial Reporting
Council Recommendation 4.1:The board should establish an audit committee.
The Company complies with this recommendation. It established an audit committee and audit committee charter in March 2007 with Mr
Stephen Dennis as Chairman of that committee. Because the Company presently has a small board comprising three Directors, all Directors
of the Company are members of the audit committee.The audit committee met three times during the financial year and all members attended
all meetings.
Council Recommendation 4.2:The audit committee should be structured so that it:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
consists only of non-executive directors;
consists of a majority of independent directors;
is chaired by an independent chair, who is not the chair of the board; and
has at least three members.
The Company does not comply with this recommendation. The Company can’t comply with this recommendation because it only has three
directors, one of which is executive and not independent.. Because the Company presently has a small board comprising three Directors, all
Directors of the Company are members of the audit committee.
Council Recommendation 4.3:The audit committee should have a formal charter.
The audit committee operates under a formal charter, a copy of which is publicly available for review in the Corporate Governance section of
the Company’s website.
Council Recommendation 4.4: Companies should provide the information indicated in the Guide to reporting on Principle 4.
The Company’s external auditor is selected by the audit committee and the auditor’s performance is reviewed by the audit committee.
Although Heron’s external audit engagement partner is usually rotated in accordance with the requirements of Section 324DA of the
Corporations Act 2001 the tenure of the current external auditor has been extended by a period of 2 years to 2015 following application made
to ASIC in accordance with the requirements of Section 324DAB(4) of the Corporations Act 2001.
The remainder of the information indicated in the Guide to reporting on Principle 4 is disclosed in the commentary relating to Council
Recommendations 4.1, 4.2 and 4.3 above.
Principle 5. Make Timely and Balanced Disclosure
Council Recommendation 5.1: Companies should establish written policies designed to ensure compliance with ASX Listing Rule
requirements such that:
(cid:129)
(cid:129)
All investors have equal and timely access to material information concerning the Company - including its financial position,
performance, ownership and governance; and
Company announcements are factual and presented in a clear and balanced way. “Balance” requires disclosure of both positive and
negative information.
The Company complies with this recommendation.
The Company has adopted a continuous disclosure policy that requires all Directors, Officers and employees to inform the Managing Director,
or in his absence the Company Secretary, of any potentially price sensitive information as soon as practicable after they become aware of that
information. The policy is designed to ensure compliance by the Company with ASX Listing Rules and accountability by all Senior Executives
for that disclosure.
Information is potentially price sensitive 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.
The Managing Director has been nominated as the person responsible for communications with ASX, with the 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 2013
23
3.0 CORPORATE PROFILE CONTINUED
The continuous disclosure policy is publicly available for review in the Corporate Governance Section of the Company’s website.
Council Recommendation 5.2:Companies should provide the information indicated in the Guide to reporting on Principle 5.
The information indicated in the Guide to reporting on Principle 5 is disclosed in the commentary relating to Council Recommendation 5.1
above.
Principle 6. Respect the Rights of Shareholders
Council Recommendation 6.1: Companies should design a communications strategy for promoting effective communication with
shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.
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 has also
adopted a policy concerning communication with Shareholders which is publicly available for review in the Corporate Governance section of
the Company’s website.
The Company’s website is an important 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, Western Australia. Additionally, the
Managing Director and senior management make tours elsewhere in Australia and overseas whenever possible to meet with Shareholders,
media, financial institutions and representatives of the sharebroking sector.
Since its public listing, it has been the Company’s practice to require the external auditor 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.
Council Recommendation 6.2:Companies should provide the information indicated in the Guide to reporting on Principle 6.
The information indicated in the Guide to reporting on Principle 6 is disclosed in the commentary relating to Council Recommendation 6.1
above.
Principle 7. Recognise and Manage Risk
Council Recommendation 7.1: Companies should establish policies for the oversight and management of material business risks and
disclose a summary of those policies.
The Company does not strictly comply with this recommendation in that it does not yet have formal policies for the oversight and management
of material business risks because it believes the internal controls it has in place as disclosed below are sufficient for a company of Heron’s
size and operations.
The Board takes the recognition and management of risk extremely seriously, and examines and considers areas of significant business risk
on an ongoing basis and implement actions to minimise exposure to these risks. The Board is assisted in their review of risk management by
the management team who must report to the Board on all areas of risk in their respective area on a routine monthly basis and sooner if the
matter is urgent.
Arrangements put in place by the Board to oversee and manage the Company’s material business include:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Detailed strategic plans compiled by the Managing Director as part of annual programs and budgets which document the plan and areas
of risk to those plans;
Detailed monthly reporting by the Managing Director and management team in respect of the Company’s operations;
Weekly management meetings designed to monitor each business area within the Company including material business risks within
those areas;
Completion of monthly statements of financial performance, financial position and cash flows compared to budget; and
Periodic formal risk reviews facilitated by a specialist risk consultancy.
The risk management policy of the Company will continue to be developed as its operations and areas of potential risk continue to evolve.
The Managing Director has been nominated as the person responsible for Health, Safety, Environment and Community matters, and the
Managing Director reports to the Board as a specific agenda item at its monthly meeting.
Council Recommendation 7.2: The board should require management to design and implement an internal control system to manage the
Company’s material business risks and report to it on whether those business risks are being managed effectively. The Board should disclose
that management has reported to it as to the effectiveness of the Company’s management of its material business risks.
The Company complies with this recommendation.
24
Heron Resources Limited
3.0 CORPORATE PROFILE CONTINUED
The Board requires management to provide a monthly report to the Board which details the activities of the Company. Within this report
management is expected to provide a report on the management of material risks within the Company and how those risks are being handled.
This is especially so for the area of Health, Safety, Environment and Community. The Board will then raise any queries or questions it has in
relation to those risks directly with the responsible manager. Senior management attend the monthly Board meetings by invitation to present
on those agenda items within their area of responsibility. Further, the audit committee reviews risk management as part of its charter and
reports to the Board with any issues that it identifies.
Council Recommendation 7.3:The Board should disclose whether it has received assurances from the chief executive officer (or equivalent)
and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded
on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to
financial reporting risks.
The Company complies with this recommendation as it has received a written assurance from both the Managing Director and the Company
Secretary/Financial Controller that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound
system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial
reporting risks.
Council Recommendation 7.4:Companies should provide the information indicated in the Guide to reporting on Principle 7.
The information indicated in the Guide to reporting on Principle 7 is disclosed in the commentary relating to Council Recommendations 7.1,
7.2 and 7.3 above.
Principle 8. Remunerate Fairly and Responsibly
Council Recommendation 8.1:The board should establish a remuneration committee.
The Company does not comply with this recommendation. The Board does not believe the Company is of sufficient size both in terms of
number of employees and diversity of operations to warrant a remuneration committee. The Board believes it has sufficient expertise, acting
as the full Board, to establish responsible and competitive employee remuneration. The Board utilises external consultants where appropriate
in remuneration matters. The remuneration of Directors and managers is included in the Directors’ Report.
Council Recommendation 8.2: The remuneration committee should be structured so that it:
(cid:129)
(cid:129)
(cid:129)
consists of a majority of independent directors
is chaired by an independent chair
has at least three members
The Company does not comply with this recommendation. The Company does not comply with this recommendation because it does not have
a formal remuneration committee.
Council Recommendation 8.3: Companies should clearly distinguish the structure of the non-executive directors’ remuneration from that of
executive directors and senior executives.
The Company does not comply with this Recommendation because it has issued its Non-Executive Directors a small number of options in the
Company as part of their remuneration when they joined the Company. The Company believes it is necessary for a company of Heron’s size
to offer options as part of the Non-Executive’s remuneration in order to attract high calibre candidates. The Company does not believe that
the issue of a small number of options to Non-Executive Directors compromises their respective independence in any way. No options have
been issued to Non-Executive Directors since 2007.
Council Recommendation 8.4:Companies should provide the information indicated in the Guide to reporting on Principle 8.
The information indicated in the Guide to reporting on Principle 8 is disclosed in the commentary relating to Council Recommendations 8.1,
8.2 and 8.3 above.
Annual Report 2013
25
4.0 Directors’ Report
The Directors submit their Report on the Company and its controlled entities for the year ended 30 June 2013.
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
Appointed
Position
Craig Leslie Readhead - B.Juris. LL.B.
23 November 2001
Chairman (Non-Executive), Member of Audit Committee
Craig Readhead is a lawyer with over 30 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 a Partner of specialist mining and corporate law firm
Allion Legal.
Other current directorships
Chairman of Galaxy Resources Limited since 2000
Chairman of Beadell Resources Limited since 2010
Non-executive Director of General Mining Corporation since 2009
Non-executive Director of Redbank Copper Limited since April 2013
Non-executive Director of Swan Gold Mining Limited since March 2013
Former directorships in last 3 years
Non-executive Director of India Resources Limited 2007-2012
Non-executive Director of Mount Gibson Iron Limited 2002-2011
Non-executive Director of Frankland River Olive Company Limited 2000-2012
Director
Appointed
Position
Ian James Buchhorn - BSc (Hons), Dip Geosci (Min Econ), MAusIMM.
17 February 1995
Managing Director and CEO, Member of Audit Committee
Ian Buchhorn is a Mineral Economist and Geologist with over 35 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 25 years Mr Buchhorn has acquired and developed mining
projects throughout the Eastern Goldfields of Western Australia and operated as a Registered Mine Manager.
Other current directorships
Non-executive Director of Rubicon Resources Limited since August 2005
Former directorships in last 3 years
None
Director
Appointed
Position
Stephen Bruce Dennis - BCom LL.B. GDipAppFin(Finsia) CFTP.
05 December 2006
Director (Non-Executive), Chairman of Audit Committee
Stephen Dennis has been actively involved in the mining industry for 30 years. He has held senior management positions at
MIM Holdings Limited, Minara Resources Limited, and Brambles Australia Limited.
Mr Dennis is currently the Chief Executive Officer and Managing Director of CBH Resources Limited, the Australian subsidiary
of Toho Zinc Co., Ltd of Japan.
Other current directorships
Managing Director of CBH Resources Limited since November 2007
Non-executive Chairman of Cott Oil and Gas Limited since January 2013
Former directorships in last 3 years
None
Director
Appointed
Position
Kenneth John Hellsten - BSc (Hons) FAIMM MAICD.
19 December 2006 – resigned 16 November 2012
Director (Non-Executive), Member of Audit Committee
Kenneth Hellsten is a Geologist with over 30 years resources industry experience. He has been employed in senior executive
roles ranging from exploration to development and operations with BHP Billiton, Billiton Australia and several smaller groups.
During the past 20 years Mr Hellsten has led teams responsible for the completion of feasibility and project development of
the Cawse and Ravensthorpe HPAL nickel operations and several smaller resource projects. Mr Hellsten was Managing
Director of Polaris Metals NL where he successfully negotiated the acquisition of Polaris by Mineral Resources Limited.
26
Heron Resources Limited
4.0 DIRECTORS’ REPORT CONTINUED
Other current directorships
Non-executive Director of Brierty Limited since February 2010
Former directorships in last 3 years
Managing Director of Strike Resources Limited from March 2010 to January 2013.
Director
Appointed
Position
Jonathan Nicholas Shellabear – BSc (Hons), MBA.
1 August 2011 – resigned 9 October 2012
Managing Director and CEO
Mr Shellabear is a senior executive with extensive experience in the Australian and international mining industries having held
senior corporate and investment banking roles with NM Rothschild & Sons (Australia) Limited and Deutsche Bank. Most
recently he was the Managing Director and Chief Executive Officer of Dominion Mining Limited, a position he held until
February 2011 following the completion of the agreed takeover of Dominion by Kingsgate Consolidated Limited.
Other current directorships
None
Former directorships in last 3 years
Managing Director of Dominion Mining Limited from February 2008 to February 2011.
EXPLORATION MANAGER
The Exploration Manager, David von Perger BSc (Hons) MAusIMM was appointed to this position in February 2006. Mr von Perger is a
geologist with some 20 years experience in mineral exploration having worked in several locations around Australia. Mr von Perger has
worked on various styles of mineral deposits including Archaean gold and nickel, and Proterozoic base-metals and iron-ore. His experience
includes four years as a business analyst for a major mining group involving analysis of mining operations, project development and
assessment of new opportunities. Since his appointment with Heron in February 2004, Mr von Perger has been responsible for the
identification and acquisition of several new nickel, gold, iron-ore and base-metal projects.
FINANCIAL CONTROLLER AND COMPANY SECRETARY
The Financial Controller and Company Secretary is Bryan Horan FCCA. Mr Horan was appointed to the position of Financial Controller in
February 2008 and Company Secretary in November 2010. Mr Horan joined the Company in March 2007 as a management accountant. Mr
Horan’s career includes 10 years working in various accounting positions in London in industries such as media, warehousing & distribution
and pharmaceutical. Since living in Perth Mr Horan has also held accounting positions with Australian Mines Ltd and Perilya Ltd.
GENERAL MANAGER STRATEGY & BUSINESS DEVELOPMENT
Mr Kempson is a senior corporate finance executive who was most recently an equity partner and Director of Azure Capital Limited, a mining
focused leading independent Perth-based corporate advisor, where he worked for nine years advising boards and senior executives across a
range of industries including mining, oil & gas and related services on business development, corporate strategy, finance, and mergers and
acquisitions. Prior to his arrival in Australia in 2002 Mr Kempson spent five years with investment banks Commerzbank AG and Barclays Capital
in London and Germany, and four years working in technical roles for Logica (now part of CGI Group).
PRINCIPAL ACTIVITIES
The principal activities of the Consolidated Entity during the year were:
(cid:129)
(cid:129)
Minerals exploration and project development through sole funded and joint venture activities; and
Evaluation of various corporate opportunities in the resources industry.
OPERATING RESULTS
The loss of the consolidated entity for the 2013 financial year after income tax of nil (2012: nil) was $10,483,306 (2012: $5,356,368).
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.
Annual Report 2013
27
4.0 DIRECTORS’ REPORT CONTINUED
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.
Mr Shellabear resigned from the role of CEO and Managing Director on 9 October 2012 and was replaced by Mr Buchhorn.
Mr Kempson was appointed to the role of General Manager Strategy and Business Development on 5 March 2013.
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 2013 that has significantly
affected or may significantly affect:
(cid:129)
(cid:129)
(cid:129)
The operations, in the financial years subsequent to 30 June 2013, of the Consolidated Entity;
The results of those operations; or
The state of affairs, in the financial years subsequent to 30 June 2013, of the Consolidated Entity.
OPTIONS
No Options were exercised during the year.
The following Options were issued during the year:
Number Issued
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
Expiry Date
16 January 2015
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
Exercise Price
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
Subsequent to 30 June 2013 no Options were issued or exercised.
The following Options expired/lapsed during the year:
Number Issued
2,500,000
3,500,000
2,000,000
2,000,000
750,000
Expiry Date
5 June 2013
5 June 2013
23 June 2015
23 June 2016
5 June 2014
Exercise Price
$1.50
$2.00
$0.27
$0.31
$2.50
As at the date of this report the Company had the following Options on issue:
Date Options Granted
5 June 2007
29 November 2006
9 June 2009
25 June 2009
19 November 2011
19 November 2011
19 November 2011
5 October 2012
5 October 2012
5 October 2012
3 April 2013
3 April 2013
3 April 2013
Expiry Date
5 June 2014
7 September 2016
9 June 2014
25 June 2014
23 June 2014
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
Number Issued
4,500,000
5,000,000
4,818,776
2,600,000
4,750,000
2,750,000
2,750,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
Exercise Price
$2.50
$0.6864
$0.30
$0.425
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
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
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.
28
Heron Resources Limited
4.0 DIRECTORS’ REPORT CONTINUED
DIRECTORS AND KEY MANAGEMENT PERSONNEL SHAREHOLDINGS IN THE COMPANY
As at the date of this Report the interests of the Directors in the shares of the Company were:
Directors
C L Readhead
I J Buchhorn
S B Dennis
Direct
-
2,518,241
-
Key Management Personnel
D von Perger
B P Horan
C Kempson
131,692
-
-
DIRECTORS MEETINGS
Ordinary Shares
Option over Ordinary Shares
Indirect
844,709
42,967,999
450,000
80,000
-
300,000
Direct
-
3,000,000
750,000
3,500,000
2,100,000
-
Indirect
750,000
8,000,000
-
500,000
-
3,000,000
During the year the Company held 13 meetings of Directors. The attendance of the Directors at meetings of the Board were:
Director
C L Readhead
I J Buchhorn1
S B Dennis
K J Hellsten
J N Shellabear
Meetings held
while a director
13
13
13
5
3
Number of
meetings
attended
13
13
13
5
3
Audit
Committee
Meetings
3
2
3
1
-
1
Mr Buchhorn was appointed to the audit committee on 1 March 2013.
REMUNERATION REPORT
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, other than the performance conditions attaching to options.
Remuneration levels and other terms of employment for Mr Buchhorn, Mr Horan, Mr Kempson and Mr von Perger are formalised in service
agreements/work contracts.
The agreement with Mr Buchhorn requires the provision of his services as Managing Director and CEO of the Company and contains the
following major provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Current base salary of $321,000 exclusive of superannuation; and
In the event that the Company terminates Mr Buchhorn’s employment other than for matters concerning fraud and dishonesty and the
like the Company will pay Mr Buchhorn the maximum amount payable in accordance with the formula prescribed by section 200G of
the Corporations Act. The length of notice to be given by both parties on termination is six months.
The agreement with Mr von Perger requires the provision of his services as Exploration Manager of the Company and contains the following
major provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Current base salary of $261,000 exclusive of superannuation plus car; and
Termination can be made by either Mr Von Perger or the Company by giving not less than three months notice.
The agreement with Mr Horan requires the provision of his services as Financial Controller of the Company and contains the following major
provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Current base salary of $202,000 exclusive of superannuation; and
Termination can be made by either Mr Horan or the Company by giving not less than three months notice.
Annual Report 2013
29
4.0 DIRECTORS’ REPORT CONTINUED
The agreement with Mr Kempson requires the provision of his services as General Manager Strategy and business Development of the
Company and contains the following major provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Current base salary of $261,000 exclusive of superannuation; and
Termination can be made by either Mr Kempson or the Company by giving not less than three months notice.
Non-executive Directors, Mr Craig Readhead and Mr Stephen Dennis, received a fixed fee for their services as directors. Non-executive
Directors fees not exceeding an aggregate of $500,000 per annum have been approved by the Company in a general meeting on the 5 June
2007. 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).
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.
Short-term
---------benefits--------
Cash Salary Non-Cash
Post-employment
--------benefits-------
Retirement
Super
Termination
payments
Directors
C L Readhead
I J Buchhorn
S B Dennis
K J Hellsten2
J N Shellabear1
Key Management Personnel
D von Perger
B Horan
C Kempson
& fees
$
100,000
321,101
73,000
29,167
129,808
261,468
201,835
74,057
$
$
-
3,904
-
-
-
10,041
-
-
-
28,899
6,570
2,625
20,806
23,532
18,165
6,665
Total
1,190,436
13,945
107,262
1 Resigned 9 October 2012
2 Resigned 16 November 2012
$
-
-
-
-
-
-
-
-
-
Share-
based
payment
Options
$
67,843
593,566
67,843
-
-
77,274
38,637
32,341
Total
$
167,843
947,470
147,413
31,792
381,155
372,315
258,637
113,063
$
-
-
-
-
230,541
-
-
-
230,541
877,504
2,419,688
Fair values for the options at grant date, as included in the previous table, were determined using Black and Scholes and/or Binomial 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.
Share based payments included above for Mr Readhead and Mr Dennis are performance related, for Mr Buchhorn it is 87% performance
related. Share based payments for key management personnel are not performance related. The share based payment remuneration not
performance related is based on 1, 2 or 3 year vesting period.
The share based payment options included as remuneration of the Directors and Key Management Personnel, vest upon the following
conditions:
Conditions
The Company must achieve Full Ramp Up (production rate of equal to or greater than the
design capacity for at least one quarter) for the KNP laterite project within ten years.
Upon production achieving a level of 10,000 tonnes of nickel in intermediate product
annualised production rate over a three calendar month period.
Six months from the date of issue
One year after 23 June 2011
Two years after 23 June 2011
Three years after 23 June 2011
One year after 5 March 2013
Two years after 5 March 2013
Three years after 5 March 2013
Number Issued
5,000,000
4,500,000
1,600,000
2,500,000
2,500,000
2,500,000
1,000,000
1,000,000
1,000,000
21,600,000
30
Heron Resources Limited
4.0 DIRECTORS’ REPORT CONTINUED
Details of options held by Directors and key management personnel affecting their remuneration are as follows:
Name
Number
Grant
date
Vesting
date
Expiry
date
Exercise
price
Performance
achieved
Bryan Horan
Craig Readhead
Stephen Dennis
Ian Buchhorn
5-Jun-07
5-Jun-07
29-Nov-06
5-Jun-07
19-Nov-11
19-Nov-11
19-Nov-11
25-Jun-09
19-Nov-11
19-Nov-11
19-Nov-11
Dave Von Perger 25-Jun-09
19-Nov-11
19-Nov-11
19-Nov-11
3-Apr-13
3-Apr-13
3-Apr-13
Charlie Kempson
n/a
n/a
n/a
n/a
23-Jun-12
23-Jun-13
23-Jun-14
25-Dec-09
23-Jun-12
23-Jun-13
23-Jun-14
25-Dec-09
23-Jun-12
23-Jun-13
23-Jun-14
5-Mar-14
5-Mar-15
5-Mar-16
5-Jun-14
5-Jun-14
7-Sep-16
5-Jun-14
23-Jun-14
23-Jun-15
23-Jun-16
25-Jun-14
23-Jun-14
23-Jun-15
23-Jun-16
25-Jun-14
23-Jun-14
23-Jun-15
23-Jun-16
5-Mar-16
5-Mar-17
5-Mar-18
$2.50
$2.50
$0.6864
$2.50
$0.22
$0.27
$0.31
$0.425
$0.22
$0.27
$0.31
$0.425
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
750,000
750,000
5,000,000
3,000,000
1,000,000
1,000,000
1,000,000
600,000
500,000
500,000
500,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
No
No
No
No
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Option
value at
grant date
$0.6337
$0.6337
$0.4791
$0.6337
$0.07
$0.075
$0.082
$0.0967
$0.07
$0.075
$0.082
$0.0967
$0.07
$0.075
$0.082
$0.066
$0.07
$0.076
%
vested
in year
0%
0%
0%
0%
0%
100%
0%
0%
0%
100%
0%
0%
0%
100%
0%
0%
0%
0%
Employee Diversity – women currently represent 18% of employees in the Company as a whole. There are currently no women represented
in senior management positions or on the Board.
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 Officers of the Company.
The contract of insurance prohibits the disclosure of the nature of the liabilities and the amount of premium.
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 in undertaking business activities of the Company.
NON-AUDIT SERVICES
The Consolidated Entity has not employed the auditor on any assignments additional to their statutory audit duties.
Annual Report 2013
31
4.0 DIRECTORS’ REPORT CONTINUED
AUDITOR
The Audit Committee of the Company recommended the approval of Ms Lucy Gardner of Butler Settineri (Audit) Pty Ltd as auditor of the
Company for two successive financial years in addition to the five successive years mentioned in s324DA(1) of the Corporations Act.
The Audit Committee is satisfied that the approval:
i)
ii)
Is consistent with maintaining the quality of the audit provided to the company
Would not give rise to a conflict of interest situation (as defined in s324CD)
ROUNDING OFF
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the
financial report and directors' report have been rounded off to the nearest thousand dollars, unless otherwise stated.
Signed in accordance with a resolution of Directors
C L READHEAD
Chairman
Perth, 26 September 2013
32
Heron Resources Limited
Annual Report 2013
33
5.0 Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013
REVENUES FROM CONTINUING ACTIVITIES
Accountancy fees
Audit
Consultants
Depreciation expense
Directors fees
Wages, salaries & employee benefits
Insurance
Legal
Equity settled share based payments
Other expenses from ordinary activities
Exploration expenditure expensed as incurred
Exploration expenditure written off
Exploration & evaluation impairment
Investment impairment
PROFIT (LOSS) FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE
INCOME TAX EXPENSE
PROFIT (LOSS) FROM ORDINARY ACTIVITIES AFTER INCOME TAX EXPENSE
NET PROFIT (LOSS) ATTRIBUTABLE TO MEMBERS OF THE PARENT ENTITY
OTHER COMPREHENSIVE INCOME
Available-for-sale financial assets
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Basic earnings per Share
Diluted earnings per Share
Notes
2
3(a)
14(b)
3(b)
9
9
9
6(a) & (b)
4
14(c)
21
21
Consolidated Entity
2012
$'000
2013
$'000
1,869
2,082
(4)
(43)
(339)
(110)
(202)
(571)
(61)
(457)
(1,322)
(726)
(2,971)
(108)
(1,600)
(3,450)
(10,095)
-
(10,095)
(10,095)
(388)
(10,483)
(4)
(45)
(646)
(177)
(244)
(414)
(53)
(121)
(2,057)
(708)
(2,079)
(910)
-
(397)
(5,773)
-
(5,773)
(5,773)
417
(5,356)
$
(0.03990)
(0.03990)
$
(0.02282)
(0.02282)
The accompanying notes form part of these financial statements
34
Heron Resources Limited
CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2013
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Investments
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Trade and other receivables
Investments
Property, plant and equipment
Exploration and evaluation costs carried forward
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Trade and other payables
Provisions - employee entitlements
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Revaluation reserve
Option reserve
Accumulated losses
TOTAL EQUITY
5.0 FINANCIAL STATEMENTS CONTINUED
Notes
15(c)
5
6(a)
7
6(b)
8
9
10
11
12
14(c)
14(b)
14(a)
Consolidated Entity
2012
$’000
2013
$’000
39,597
371
61
40,029
35
3,275
97
5,070
8,477
48,506
347
457
804
804
43,171
491
355
44,017
35
6,943
199
6,716
13,893
57,910
645
402
1,047
1,047
47,702
56,863
116,035
-
5,591
(73,924)
47,702
116,035
388
8,239
(67,799)
56,863
The accompanying notes form part of these financial statements
Annual Report 2013
35
5.0 FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2013
Notes
As at 30 June 2012
Total comprehensive income for the year
Issue of share capital
Option reserve transfer on exercise
Option reserve write back
Cost of share based payments
As at 30 June 2013
12
12
14(b)
14(b)
Retained
Earnings
$’000
Revaluation
Reserve
$’000
Issued
Capital
$’000
116,035
-
-
-
-
-
(67,799)
(10,095)
-
-
3,970
-
116,035
(73,924)
As at 30 June 2011
116,035
Total comprehensive income for the year
Issue of share capital
Option reserve transfer on exercise
Option reserve write back
Cost of share based payments
As at 30 June 2012
14(b)
14(b)
-
-
-
-
-
116,035
(63,262)
(5,773)
-
-
1,236
-
(67,799)
Option
Reserve
$’000
8,239
-
-
-
(3,970)
1,322
5,591
7,418
-
-
-
(1,236)
2,057
8,239
Total
$’000
56,863
(10,483)
-
-
-
1,322
47,702
60,162
(5,356)
-
-
-
2,057
56,863
388
(388)
-
-
-
-
-
(29)
417
-
-
-
-
388
The accompanying notes form part of these financial statements
36
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received
Payments to suppliers
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration expenditure
Purchase of shares
Sale of shares
Acquisition of plant and equipment
Proceeds from sale of plant and equipment
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
NET CASH PROVIDED BY FINANCING ACTIVITIES
NET INCREASE / (DECREASE) IN CASH HELD
Cash at the beginning of the reporting period
CASH AT THE END OF THE REPORTING PERIOD
Notes
15(a)
6(a)
15(c)
Consolidated Entity
2012
$’000
2013
$’000
1,796
(2,342)
(546)
(3,168)
-
146
(10)
4
(3,028)
-
-
(3,574)
43,171
39,597
2,445
(2,453)
(8)
(4,112)
(163)
475
(12)
18
(3,794)
-
-
(3,802)
46,973
43,171
The accompanying notes form part of these financial statements
Annual Report 2013
37
5.0 FINANCIAL STATEMENTS CONTINUED
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2013
NOTE 1.
STATEMENT OF ACCOUNTING POLICIES
The Company is a public company limited by shares. The Company was incorporated in Western Australia.
The Company is a for profit entity for the purpose of preparing the financial statements.
The following is a summary of the material accounting policies adopted by Heron Resources Limited and its controlled entities (the Company)
in the preparation of the financial statements.
a)
Basis of preparation
The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards
(AASB's) (including Australian interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act
2001.
The financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial
Reporting Standards (AIFRS).
In the application of AIFRS, management is required to make judgments, estimates and assumptions about carrying values of assets
and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical
experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of
making judgments. Actual results may differ from these estimates.
These financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale
financial assets, financial assets and liabilities (including derivative instruments) at fair value through profit and loss, certain classes of
property, plant and equipment and investment property.
The consolidated financial statements are presented in Australian Dollars which is the consolidated entity's functional and presentation
currency.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts
in the financial report and directors' report have been rounded off to the nearest thousand dollars, unless otherwise stated.
b)
Basis of consolidation
Subsidiaries are entities controlled by the Company. Control exists when the Company has power, directly or indirectly, to govern the
financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are
included in the consolidated financial statements from the date that control commences until the date that control ceases.
Investments in subsidiaries are carried at their cost of acquisition in the Company's financial statements.
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 Company, including any unrealised profits or losses, have been
eliminated on consolidation.
c)
Income tax
The income tax expense or revenue for the period is the tax payable on the current period's taxable income based on the notional income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between
the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The
relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax
asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability.
No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a
business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity
has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability at the
same time.
The resulting deferred tax assets of the Company are currently not recognised and included as an asset because recovery is considered
not probable in the next five years.
Heron Resources Limited and its wholly owned Australian controlled entities have implemented the tax consolidated legislation as of
1 July 2003.
38
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
d)
Segment reporting
A segment is a distinguishable component of the Company that is engaged in the minerals industry in Australia. The Company's
activities are divided into three main categories:
KNP - Tenements related to the Kalgoorlie Nickel Project.
Yerilla - Tenements related to Jump-up Dam, Boyce Creek and Aubils.
Exploration - Tenements not KNP or Yerilla related.
e)
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
duties and taxes paid. The main revenue is interest received, which is recognised on an accrual basis.
f)
Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses where
applicable.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation and amortisation on assets is calculated using the straight-line method to allocate their cost or revalued amounts, net of
their residual values, over their estimated useful lives, are as follows:
Motor Vehicles 3-5 years
Fixtures and Fittings 5-15 years
Plant and Equipment 5-15 years
Land and Buildings 15-25 years
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All
other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
g)
Exploration, evaluation, development and restoration costs
Exploration, evaluation and development expenditure incurred is expensed immediately unless it relates to a specific project in which
case it is carried forward to the extent that it is expected to be recouped through the successful development of the area, or by its sale.
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.
h)
Investments
Investments held by the Company are classified as being available-for-sale financial assets and are stated at fair value, being the
market value of the shares held at balance date. Where a reduction in value is significant or prolonged it is recognised as impairment
in the consolidated statement of comprehensive income, with any other resultant gain or loss recognised in equity and included in other
comprehensive income. Where these investments are derecognised, the cumulative gain and loss previously recognised directly in
equity is recognised in profit and loss. Where these investments are interest bearing, interest calculated using the effective interest
method is recognised in the income statement.
Financial instruments classified as held for trading or available-for-sale investments are recognised/derecognised by the Company on
the date it commits to purchase/sell the investment. Securities held to maturity are recognised/derecognised on the day they are
transferred to/by the Company.
i)
j)
Investments in associated entities
Interests in associated entities are accounted for under the equity accounting method.
Trade and other receivables
Trade and other receivables are stated at their cost and are due for settlement no more than 30 days from the date of invoicing.
k)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with the banks, other short term liquid investments with original
maturities of three months or less, and bank overdrafts. Bank overdrafts, if any, are shown within short-term borrowings on the balance
sheet.
Annual Report 2013
39
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
l)
Impairment
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. Assets that are subject
to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of an asset's fair value less cost to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units).
m)
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transactions costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in
the income statement over the period of the borrowings on an effective interest basis.
n)
Employee benefits
(i)
Wages and salaries, annual leave
Liabilities for wages and salaries and annual leave are recognised as employee benefits in respect of employee’s services up to the
reporting date and are measured at the amounts to be paid when the liabilities are settled.
(ii)
Long service leave
The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected
future wage and salary levels, experience of employee departures and periods of service and final average salary.
o)
Share-based payment transactions
The Company provides benefits to the Directors, employees and consultants of the Company in the form of share based payment
transactions, whereby services are rendered in exchange for shares or rights over shares ("Equity-settled transactions").
There is currently one plan in place to provide these benefits being an Employee Share Option Plan ("ESOP") which provides benefits to
Directors, employees and consultants.
The cost of these equity-settled transactions is measured by reference to fair value at the date at which they are granted. The fair value
is determined by using either the Black-Scholes or Binomial model.
In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of
the shares of Heron Resources Limited ("market conditions").
The cost of equity-settled securities is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfilled, ending on the date on which the relevant individual becomes fully entitled to the award ("vesting
date").
Where the Company acquires some form of interest in an exploration tenement or an exploration area of interest and the consideration
comprises share-based payment transactions, the fair value of the equity instruments granted is measured at grant date. The cost of
equity securities is recognised within capitalised mineral exploration and evaluation expenditure, together with a corresponding
increase in equity.
p)
Provisions
Provisions for legal claims and service warranties are recognised when: the Group has a present legal or constructive obligation as a
result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been
reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one
item included in the same class of obligations may be small.
q)
Trade and other payables
Trade and other payables are stated at cost. The amounts are unsecured and are usually paid on 30 days.
r)
Dividends
No dividends have been paid or proposed during or since the end of the year.
s)
Goods and services tax
Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST
incurred is not recoverable from the taxation authority. In these circumstances, the GST is recognised as part of the cost of acquisition
of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to the ATO
is included as a current asset or liability in the statement of financial position.
40
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and
financing activities which are recoverable from, or payable to the ATO are classified as operating cash flows.
t)
Contributed equity
Incremental costs directly attributed to the issue of new shares or options are shown in the equity as a deduction, net of tax, from the
proceeds. Incremental costs directly attributable to the issue of new shares or options, or for the acquisition of a business, are included
in the cost of the acquisition as part of the purchase consideration.
(i)
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares on issue during the year.
(ii)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
u)
Critical accounting estimates and assumptions
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results.
v)
Significant accounting judgments, estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The
key estimates and assumptions that have a significant risk of causing material adjustment to the carrying amounts of certain assets and
liabilities within the next annual reporting period are:
Capitalisation of exploration and evaluation expenditure
Under AASB 6 Exploration for and Evaluation of Mineral Resources the Group has the option to either expense exploration and
evaluation expenditure as incurred or to capitalise such expenditure provided that certain conditions are satisfied. The Group's policy is
closer to the former as outlined in note 1 (g).
Impairment of property, plant and equipment
Property, plant and equipment is reviewed for impairment if there is any indication that the carrying amount may not be recoverable.
Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of 'value in use' (being net
present value of expected future cash flows of the relevant cash generating unit) and 'fair value less costs to sell'.
Share based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at
the date at which they are granted. The fair value is determined by using either the Black-Scholes or Binomial methodology.
w) New accounting standards and interpretations
The Australian Accounting Standards Board has published various pronouncements that are not mandatory for the 30 June 2013
reporting period. The Company has reviewed all these pronouncements and assessed their applicability and the likely impact on the
Company’s accounting policies. While several pronouncements do not apply to the Companys’s current activities the expected impact
of those relevant to the Company are set out below:
AASB9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9 (effective from
1 January 2015)
AASB 9 Financial Instruments addresses the classification and measurement of financial assets and is not likely to affect the Company’s
accounting for its financial assets.
AASB10 Consolidated Financial Statements (effective from 1 January 2013)
AASB10 Consolidated Financial Statements establishes principals for the preparation and presentation of financial statements for an
entity that controls one or more other entities and is not likely to affect the Company’s accounting for its controlled entities.
AASB11 Joint Arrangements (effective from 1 January 2013)
AASB11 Joint Arrangements establishes principals for entities that have an interest in arrangements that are controlled jointly. The
Company currently has no jointly controlled arrangements.
AASB12 Disclosure of Interest in Other Entities (effective from 1 January 2013)
AASB12 Disclosure of Interests in Other Entities requires an entity to disclose information that enables users of financial statements to
evaluate the risks associated with its interests in other entities and the effect of those risks on its own financial statements. The
Company discloses the information about its controlled entities in the notes to the accounts.
Annual Report 2013
41
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
AASB13 Fair Value Measurement (effective from 1 January 2013)
AASB13 Fair Value Measurement defines fair value, sets out a framework for measuring fair value and requires disclosure about fair
value measurements. The Company discloses information about fair value measurement in the notes to the accounts.
x)
Capital risk management
The Group's objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue
to fund exploration activities and develop or secure access to a cash producing asset.
Consistent with others in the industry, the Group monitors capital on the basis of working capital requirements.
During 2013 the Group's strategy, which was unchanged from 2012, was to maintain a current account balance sufficient to meet the
Group's day to day expenses with the balance held in term deposits.
NOTE 2.
REVENUE FROM CONTINUING ACTIVITIES
Revenues from continuing activities
Sale of tenements
Sale of fixed assets
Profit / (loss) on sale of investments
Interest received - other persons/corporations
Sundry income
Sale of data
Total revenues from continuing activities
NOTE 3. PROFIT / (LOSS) FROM ORDINARY ACTIVITIES
The profit / (loss) before income tax expense has been determined after charging a number of items including the following:
a)
Depreciation expense
Plant & equipment
Office equipment & furniture
Motor vehicles
b)
Other expenses includes the following:
Payroll tax
Rental expenses
Stock exchange
Travel & accommodation
Office expenses and supplies
Computer support services
Report expenses and printing
Conferences and seminars
Donations
Miscellaneous expenses
Total other expenses
42
Heron Resources Limited
(61)
(25)
(24)
(110)
(29)
(243)
(50)
(89)
(102)
(72)
(52)
(8)
(21)
(60)
(726)
Consolidated Entity
2012
$’000
2013
$’000
34
3
9
1,818
5
-
1,869
50
(12)
(363)
2,377
10
20
2,082
(100)
(53)
(24)
(177)
(26)
(238)
(51)
(31)
(106)
(73)
(29)
(8)
(20)
(126)
(708)
NOTE 4. INCOME TAX
a)
Temporary differences carried forward
Current Tax
Deferred tax
5.0 FINANCIAL STATEMENTS CONTINUED
Consolidated Entity
2012
$’000
2013
$’000
-
-
-
-
-
-
The Heron Resources Limited group of companies tax was consolidated on 1 July 2003 - there are no tax sharing and/or tax funding
agreements in place.
The parent entity made a tax loss and on consolidation the group made a tax loss. The parent and the subsidiaries have substantial tax
losses carried forward.
The Directors are of the view that there is insufficient probability that the parent entity and its subsidiaries will derive sufficient income in
the foreseeable future to justify recognising the tax losses and temporary differences as deferred tax assets and deferred tax liabilities.
Heron Resources Limited is the head entity for the group.
b)
Numerical reconciliation of income tax expense to prima facie tax payable is as follows:
Profit (loss) from operations before income tax expense
Tax at Australian tax rates of 30% (2012 also 30%)
Tax effect of non-temporary differences
Tax effect of equity raising costs debited to equity
Over or under provision from previous years
Tax effect of tax losses and temporary differences not recognised
Income tax expense
(10,095)
(3,029)
557
-
-
2,472
-
There is no amount of tax benefit recognised in equity as the tax effect of temporary differences has not been booked
c)
d)
Tax Losses - Revenue
Unused tax losses for which no tax loss has been booked deferred
tax asset adjusted for non-temporary differences
Potential tax benefit at 30%
e)
Unrecognised temporary differences
Non deductible amounts as temporary differences
Accelerated deductions for tax compared to book
Total at 100%
Potential effect on future tax expense for temporary differences at 30%
f)
There are no franking credits available for future years
NOTE 5. TRADE AND OTHER RECEIVABLES – CURRENT
Prepayment - rent
Prepayment - software
Prepayment - subscriptions
Accrued interest
Goods & services tax paid
Expenses to be reimbursed
Sundry Debtors
(5,773)
(1,732)
768
-
-
964
-
70,433
21,130
(2,444)
1,776
(668)
(200)
21
3
6
224
15
200
22
491
73,801
22,140
(5,924)
282
(5,642)
(1,693)
23
7
7
245
21
-
68
371
Annual Report 2013
43
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 6(a). INVESTMENTS IN ENTITIES - CURRENT
Southern Cross Goldfields Limited (SXG) is an Australian listed public exploration company with 408,912,834 fully paid ordinary shares
on issue. Heron sold 2,896,115 shares in January 2013 and now holds 5,875,528 fully paid shares at 30 June 2013, which have been valued
at the closing price on that day.
Niuminco Limited (NIU) is an Australian listed public company with 187,754,508 fully paid ordinary shares on issue. Heron held 750,000
shares which were sold in January 2013.
Radar Iron Limited (RAD) is an Australian listed public exploration company with 81,340,070 fully paid ordinary shares on issue. Heron
holds 75,000 fully paid shares (received as part of a tenement sale) at 30 June 2013, which have been valued at the closing price on that
day.
Investments in other entities at fair value
Southern Cross Goldfields Limited:
Cost
Impairment
Carrying value
Niuminco Limited:
Cost
Impairment
Carrying value
Radar Iron Limited:
Cost
Impairment
Carrying value
Summary
Total cost of investments
Impairment brought forward
Impairment for year ended June 2013
Total carrying value
Consolidated Entity
2012
$’000
2013
$’000
1,092
(1,033)
59
-
-
-
14
(12)
2
1,106
(875)
(170)
61
1,631
(1,306)
325
150
(120)
30
-
-
-
1,781
(1,029)
(397)
355
NOTE 6 (b). INVESTMENTS IN ENTITIES - NON CURRENT
A1 Consolidated Gold Limited (AYC) is an Australian listed public exploration company with 138,208,291 fully paid ordinary shares on
issue. Heron holds 26,200,000 fully paid shares at 30 June 2013, which have been valued at the closing price on that day.
44
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 6B. INVESTMENTS IN ENTITIES - NON CURRENT CONTINUED
Investments in other entities at fair value
A1 Consolidated Gold:
Cost
Impairment
Revaluation
Carrying value
NOTE 7.
TRADE AND OTHER RECEIVABLES - NON CURRENT
Employee share option plan – non-recourse loan
NOTE 8.
PROPERTY, PLANT AND EQUIPMENT
Plant and equipment at cost
Accumulated depreciation
Office equipment & furniture at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Total property, plant and equipment
Reconciliation
Plant and equipment:
Carrying amount at 1 July
Additions
Disposals
Depreciation Expense
Carrying value at 30 June
Office equipment and furniture:
Carrying amount at 1 July
Additions
Disposals
Depreciation Expense
Carrying value at 30 June
Motor vehicles:
Carrying amount at 1 July
Additions
Disposals
Depreciation Expense
Carrying value at 30 June
Consolidated Entity
2012
$’000
2013
$’000
6,555
(3,280)
-
3,275
6,555
-
388
6,943
35
35
620
(589)
31
579
(530)
49
180
(163)
17
97
92
1
(1)
(61)
31
65
9
-
(25)
49
42
-
(1)
(24)
17
35
35
633
(541)
92
570
(505)
65
184
(142)
42
199
192
-
-
(100)
92
105
12
-
(52)
65
96
-
(30)
(24)
42
Annual Report 2013
45
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 9.
EXPLORATION, EVALUATION AND DEVELOPMENT COSTS CARRIED FORWARD
Balance at beginning of year
Acquisition costs
Exploration and evaluation costs incurred during the year
Exploration and evaluation costs expensed as incurred
Exploration and evaluation impairment
Exploration and evaluation costs written off
Balance at end of year
Consolidated Entity
2012
$’000
2013
$’000
6,716
62
2,971
(2,971)
(1,600)
(108)
5,070
5,535
71
4,099
(2,079)
-
(910)
6,716
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. TRADE AND OTHER PAYABLES – CURRENT
Trade creditors and accruals - Exploration activities
Trade creditors and accruals - Other
Trade creditors are non-interest bearing and are normally settled on 30 day terms.
NOTE 11. PROVISIONS – CURRENT
Employee entitlements
NOTE 12. CONTRIBUTED EQUITY
229
118
347
457
457
377
268
645
402
402
Ordinary shares are fully paid and have no par value. They entitle the holder to participate in dividends and the proceeds on winding up of
the Company in proportion to the number of and amounts paid on the shares. On a show of hands every holder of ordinary shares present at
a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Shares
Issued and paid up capital 252,985,787 (2012: 252,985,787)
Ordinary shares fully paid
Prior years In specie share distributions
Option reserve transfer on exercise
Less: prior years capital raising expenses
Movements in issued and paid up capital of the parent entity during the year are as follows:
Contributed equity balance at beginning of year
Shares issued during the year
Transfer from option reserve
Contributed equity balance at end of year
46
Heron Resources Limited
Consolidated Entity
2012
$’000
2013
$’000
121,782
(3,845)
514
(2,416)
116,035
2013
No. of Shares
252,985,787
-
-
121,782
(3,845)
514
(2,416)
116,035
2013
$’000
116,035
-
-
252,985,787
116,035
Option reconciliation to 30 June 2013
Opening balance at 1 July 2012
Options issued
Options expired/lapsed
Closing balance at 30 June 2013
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 12. CONTRIBUTED EQUITY CONTINUED
No. of Options
37,918,776
4,000,000
(10,750,000)
31,168,776
Expiry date
5 June 2013
5 June 2013
5 June 2014
23 June 2015
23 June 2016
Exercise price
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
The weighted average remaining contractual life of options on issue at 30 June 2013 is 693 days.
Options
The following Options were issued during the year:
Expiry date
Number
16 January 2015
333,333
16 January 2016
333,333
16 January 2017
333,334
5 March 2016
1,000,000
5 March 2017
1,000,000
1,000,000
5 March 2018
The following options expired/lapsed during the year:
Number
2,500,000
3,500,000
750,000
2,000,000
2,000,000
As at 30 June 2013 the Company had the following options on issue:
Number
4,500,000
5,000,000
4,818,776
2,600,000
4,750,000
2,750,000
2,750,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
31,168,776
Expiry date
5 June 2014
7 September 2016
9 June 2014
25 June 2014
23 June 2014
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
Exercise price
$2.5000
$0.6864
$0.3000
$0.4250
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
Exercise price
$1.50
$2.00
$2.50
$0.27
$0.31
The following table lists the inputs used to value the options issued for the year ended 30 June 2013
Number of options
Method adopted
Average volatility (%)
Average risk free interest rate (%)
Average expected life of option (years)
Average exercise price
Average deemed share price at grant date
Average value per option
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
Black Scholes
Black Scholes
Black Scholes
Black Scholes
Black Scholes Black Scholes
75
3.25
2.25
$0.22
$0.14
$0.044
75
3.25
3.25
$0.27
$0.14
$0.05
75
3.25
4.25
$0.31
$0.14
$0.057
75
3.00
2.92
$0.22
$0.16
$0.066
75
3.00
3.92
$0.27
$0.16
$0.07
75
3.00
4.92
$0.31
$0.16
$0.076
Annual Report 2013
47
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 12. CONTRIBUTED EQUITY CONTINUED
Details of Options as at the beginning and end of the reporting date and movements during the year are set out below:
Grant date
Expiry date
2013 Consolidated and parent entity
29 November 2006
5 June 2007
5 June 2007
5 June 2007
25 June 2009
9 June 2009
19 November 2011
19 November 2011
19 November 2011
5 October 2012
5 October 2012
5 October 2012
3 April 2013
3 April 2013
3 April 2013
7 September 2016
5 June 2013
5 June 2013
5 June 2014
25 June 2014
9 June 2014
23 June 2014
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
Weighted average exercise price
NOTE 13.
SEGMENT REPORTING
price
Exercise Number of
Options at
the beginning
of the year
Options
expired /
lapsed this
year
Options
Issued
this
year
Number
of Options
at the end
of the year
Options
Exercisable
at the end
of the year
$0.6864
$1.50
$2.00
$2.50
$0.425
$0.30
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
5,000,000
2,500,000
3,500,000
5,250,000
2,600,000
4,818,776
4,750,000
4,750,000
4,750,000
-
-
-
-
-
-
37,918,776
0.89
-
(2,500,000)
(3,500,000)
(750,000)
-
-
-
(2,000,000)
(2,000,000)
-
-
-
-
-
-
(10,750,000)
1.28
-
-
-
-
-
-
-
-
-
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
4,000,000
0.27
5,000,000
-
-
4,500,000
2,600,000
4,818,776
4,750,000
2,750,000
2,750,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
31,168,776
0.67
-
-
-
-
2,600,000
-
4,750,000
2,750,000
-
-
-
-
-
-
10,100,000
0.29
Segmental information for consolidated statement of comprehensive income
Year ended June 2013
Corporate
-
Sale of tenements
-
Sale of fixed assets
Sale of investments
9
Interest received - other persons/corporations 1,818
5
Sundry income
1,832
Total revenues
Depreciation
Exploration expenditure expensed as incurred
Exploration expenditure written off
Exploration expenditure impairment
Other expenses
Profit / (loss)
(26)
-
-
-
(7,175)
(5,369)
Year ended June 2012
-
Sale of tenements
(12)
Sale of fixed assets
Sale of investments
(363)
Interest received - other persons/corporations 2,377
-
Sale of data
10
Sundry income
2,012
Total revenues
Depreciation
Exploration expenditure written off
Other expenses
Profit / (loss)
(53)
-
(4,689)
(2,730)
KNP
Project
-
-
-
-
-
-
-
(964)
(105)
(1,600)
-
(2,669)
-
-
-
-
-
-
-
-
(910)
-
(910)
Yerilla
Project
-
3
-
-
-
3
(38)
(227)
(3)
-
-
(265)
-
-
-
-
-
-
-
(73)
-
-
(73)
48
Heron Resources Limited
Exploration
A1
Total
34
-
-
-
-
34
(46)
(1,780)
-
-
-
(1,792)
50
-
-
-
20
-
70
(51)
(2,079)
-
(2,060)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34
3
9
1,818
5
1,869
(110)
(2,971)
(108)
(1,600)
(7,175)
(10,095)
50
(12)
(363)
2,377
20
10
2,082
(177)
(2,989)
(4,689)
(5,773)
Segmental information for consolidated balance sheet
Balance at June 2013
Corporate
Total current assets
Property, plant and equipment
Exploration and evaluation costs carried forward
Other non-current assets
Total non-current assets
Total assets
Total liabilities
40,029
49
-
3,310
3,359
43,388
172
Movement for the year to June 2013
Corporate
Total current assets
Property, plant and equipment
Exploration and evaluation
costs carried forward
Other non-current assets
Total non-current assets
Total assets
Total liabilities
(3,988)
(17)
-
(3,668)
(3,685)
(7,673)
(147)
Balance at June 2012
Corporate
Total current assets
Property, plant and equipment
Exploration and evaluation
costs carried forward
Other non-current assets
Total non-current assets
Total assets
Total liabilities
44,017
66
-
6,978
7,044
51,061
319
Movement for the year to June 2012
Corporate
Held for sale assets
Other current assets
Total current assets
-
(3,358)
(3,358)
Property, plant and equipment
Exploration and evaluation costs carried forward
Other non-current assets
Total non-current assets
Total assets
Total liabilities
(69)
-
5,199
5,130
1,772
(117)
KNP
Project
-
-
5,070
-
5,070
5,070
-
KNP
Project
-
-
(1,646)
-
(1,646)
(1,646)
-
KNP
Project
-
-
6,716
-
6,716
6,716
-
KNP
Project
-
-
-
-
1,181
-
1,181
1,181
(1)
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 13. SEGMENT REPORTING CONTINUED
Yerilla
Project
-
7
-
-
7
7
-
Yerilla
Project
-
(39)
-
-
(39)
(39)
-
Yerilla
Project
-
46
-
-
46
46
-
Yerilla
Project
-
-
-
(73)
-
-
(73)
(73)
(53)
Exploration
A1
Total
-
41
-
-
41
41
632
Exploration
A1
-
(46)
-
-
(46)
(46)
(96)
Exploration
A1
-
87
-
-
87
87
728
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
40,029
97
5,070
3,310
8,477
48,506
804
Total
(3,988)
(102)
(1,646)
(3,668)
(5,416)
(9,404)
(243)
Total
44,017
199
6,716
6,978
13,893
57,910
1,047
Exploration
A1
Total
-
-
-
(52)
-
-
(52)
(52)
215
(6,210)
-
(6,210)
-
-
-
-
(6,210)
(127)
(6,210)
(3,358)
(9,568)
(194)
1,181
5,199
6,186
(3,382)
(83)
Annual Report 2013
49
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 14. ACCUMULATED LOSSES AND RESERVES
a)
Accumulated Losses
Balance at the beginning of the year
Write back of expense for expired/lapsed options
Net profit/(loss)
Balance at end of the year
b)
Option Reserve
Balance at the beginning of the year
Cost of share based payments
Write back lapsed options expense
Balance at end of the year
Consolidated Entity
2012
$’000
2013
$’000
(67,799)
3,970
(10,095)
(73,924)
8,239
1,322
(3,970)
5,591
(63,262)
1,236
(5,773)
(67,799)
7,418
2,057
(1,236)
8,239
The option reserve is used to recognise the fair value of options issued and expensed over the vesting period and credited to this reserve.
The shares will reverse against the share capital when the underlying options are exercised.
c)
Revaluation Reserve
Balance at the beginning of the year
Southern Cross Goldfields shares
Niuminco shares
A1 Consolidated Gold shares
Movement for the year
Balance at end of the year
388
-
-
(388)
(388)
-
(29)
44
(15)
388
417
388
The revaluation reserve is used to recognise the fair value of financial assets classified as available-for-sale assets.
Amounts are recognised in the income statements when the associated assets are sold.
NOTE 15. CASH FLOW STATEMENTS
a)
Reconciliation of operating loss after income tax to the net cash flows from operations:
Operating loss after income tax
Add/(less)
Exploration and evaluation costs written off
Depreciation
Share based payments
(Profit)/loss on sale of shares
(Profit)/loss on sale of tenements
(Profit)/loss on sale of fixed assets
Profit on sale of data
Investment Impairment
Exploration & Evaluation Impairment
Increase/(decrease) in prepayments and debtors
(Increase)/decrease in accrued interest and GST
Increase/(decrease) in creditors, accruals and provisions
50
Heron Resources Limited
(10,095)
(5,773)
3,079
110
1,322
(9)
(34)
(3)
-
3,450
1,600
(8)
(160)
202
(546)
2,989
177
2,057
363
(50)
12
(20)
397
-
5
215
(380)
(8)
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 15. CASH FLOW STATEMENTS CONTINUED
b)
During the year the following non cash transactions occurred in the Company:
The Company received 75,000 fully paid shares in Radar Iron Limited from the sale of a tenement.
c)
Reconciliation of Cash
Cash on hand and at bank
Closing cash balance
Consolidated Entity
2012
$’000
2013
$’000
39,597
39,597
43,171
43,171
Cash security for environmental bonds of $477,000 (2012 : $485,000) is included in cash on hand and at bank. This is not available to the
Company for ordinary activities.
Property bonds of $46,545 (2012 : $46,545) are included in cash on hand and at bank. This amount is held as a security term deposit and is
not available to the Company for ordinary activities.
NOTE 16. RELATED PARTY TRANSACTIONS
The Directors of the Company during the financial year were:
Non-Executive Directors
Craig Leslie Readhead
Stephen Bruce Dennis
Kenneth John Hellsten (resigned 16 November 2012)
Executive Directors
Ian James Buchhorn
Jonathan Nicholas Shellabear (resigned 9 October 2012)
The Key Management Personnel other than Executive Directors for the financial year were:
Exploration Manager
David von Perger
Financial Controller and Company Secretary
Bryan Horan
General Manager Strategy and Business Development
Charlie Kempson (appointed 5 March 2013)
Detailed remuneration disclosures are provided in the remuneration report on pages 29-31 of the Directors report.
Shares
Directors
CL Readhead
IJ Buchhorn
SB Dennis
KJ Hellsten (resigned 16/11/12)
JN Shellabear (resigned 9/10/12)
Key Management Personnel
BP Horan
D von Perger
C Kempson
Held at Purchased
on market
1 July 2012
Sold
Held at
30 June 2013
844,709
45,436,240
450,000
65,000
-
-
211,692
-
-
50,000
-
-
-
-
-
250,000
-
-
-
-
-
-
-
-
844,709
45,486,240
450,000
65,000
-
-
211,692
250,000
Annual Report 2013
51
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 16. RELATED PARTY TRANSACTIONS CONTINUED
Options
Expiry Date
Exercise
Price
Held at
1 July 2012
Issued
Expired
Held at
30 June 2013
Directors
C L Readhead
I J Buchhorn
S B Dennis
K J Hellsten
(resigned 16/11/12)
J N Shellabear
(resigned 9/10/12)
5 June 2013
5 June 2013
5 June 2014
7 September 2016
5 June 2013
5 June 2013
5 June 2014
23 June 2014
23 June 2015
23 June 2016
5 June 2013
5 June 2013
5 June 2014
5 June 2013
5 June 2013
5 June 2014
23 June 2014
23 June 2015
23 June 2016
Key Management Personnel
D von Perger
B P Horan
C Kempson
25 June 2014
23 June 2014
23 June 2015
23 June 2016
25 June 2014
23 June 2014
23 June 2015
23 June 2016
5 March 2016
5 March 2017
5 March 2018
$1.50
$2.00
$2.50
$0.6864
$1.50
$2.00
$2.50
$0.22
$0.27
$0.31
$1.50
$2.00
$2.50
$1.50
$2.00
$2.50
$0.22
$0.27
$0.31
$0.425
$0.22
$0.27
$0.31
$0.425
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
500,000
500,000
750,000
5,000,000
1,000,000
2,000,000
3,000,000
1,000,000
1,000,000
1,000,000
500,000
500,000
750,000
500,000
500,000
750,000
2,000,000
2,000,000
2,000,000
1,000,000
1,000,000
1,000,000
1,000,000
600,000
500,000
500,000
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,000,000
1,000,000
1,000,000
(500,000)
(500,000)
-
-
(1,000,000)
(2,000,000)
-
-
-
-
(500,000)
(500,000)
-
(500,000)
(500,000)
(750,000)
(2,000,000)
(2,000,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
5,000,000
-
-
3,000,000
1,000,000
1,000,000
1,000,000
-
-
750,000
-
-
-
2,000,000
-
-
1,000,000
1,000,000
1,000,000
1,000,000
600,000
500,000
500,000
500,000
1,000,000
1,000,000
1,000,000
31,350,000
3,000,000
(10,750,000)
23,600,000
Other related party transactions during the financial year were:
(cid:129)
(cid:129)
payment of $72,450 (2012 : $72,000) to an entity related to Mr IJ Buchhorn for the provision of office accommodation on normal
commercial terms and conditions;
payment of $238,914 (2012 : $16,580) to Allion Legal of which Mr CL Readhead is a partner for legal services on normal commercial
terms and conditions;
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 20.
52
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 17.
FINANCIAL INSTRUMENTS
a)
Terms, conditions and accounting policies
The Company'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 sheet date, are as follows:
Accounting Policies
Terms and Conditions
Property Bonds
Property Bonds are carried at cost.
Recognised Financial Statement
of Financial
Instruments
Position
Notes
i) Financial assets
11am Call Accounts
Term Deposits
Environmental Bonds
Accrued Interest
Goods & Services
Tax Paid
ii) Financial liabilities
Trade creditors
and accruals
iii) Equity
Ordinary Shares
5
5
10
12
11am Call Accounts are carried
at cost.
Term Deposits are carried at cost.
Environmental Bonds are carried
at cost.
Recognised on an accruals basis.
Recognised on an accruals basis.
The 11am Call Accounts are at call
with an interest rate of 0.37% (2012 : 4.11%)
Term Deposits are secured with a 3 month term with
an interest rate of 4.06% (2012 : 5.05%)
Environmental Bonds are security
term deposits with a 6 month term with an interest
rate of 3.95% (2012 : 4.92%)
Property Bonds are security term deposits
with an 6 month term with an interest rate of
4.13% (2012 : 4.9%)
Interest is credited periodically.
Business Activity Statements are lodged
on a monthly basis.
Liabilities are recognised for amounts
to be paid in the future for goods and
services received, whether or not
billed to the Company.
Trade liabilities are normally settled
on 30 day terms.
Ordinary share capital is recognised
at the fair value of the consideration
received by the Company.
Details of the shares issued and the terms and
conditions of the options outstanding over ordinary
shares at balance sheet date are set out in Note 12
b)
c)
The carrying value of financial assets and liabilities approximates fair value.
Financial risk management
The Company's activities expose it to a variety of financial risks; market risk (fair value interest rate risk and price risk), credit risk,
liquidity risk and cash flow interest rate risk. The Company's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse effects on the financial performance of the Company.
(i) Market risk
Price risk
The Company is exposed to equity securities price risk. This arises from investments held by the Group and classified on the balance
sheet either as available-for-sale or at fair value through profit or loss. The Company is not exposed to commodity price risk.
Foreign exchange risk
The Company is not exposed to foreign exchange risk.
(ii)
Credit risk
The maximum credit risk is total current assets of which the vast majority is cash which is all A1+ rated. The largest part of trade and
other receivables is interest.
(iii)
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an
adequate amount of committed credit facilities and the ability to close-out market positions.
(iv)
Cash flow and fair value interest rate risk
As the Group has no interest-bearing liabilities, the Group's cash out flows are not exposed to changes in market interest rates. The
Group maintains a current account balance sufficient to meet day to day expenses with the balance held in A1+ rated commercial paper
investments or term deposits.
Annual Report 2013
53
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 18. AUDITORS' REMUNERATION
Amounts paid or due and payable for:
Butler Settineri (Audit) Pty Ltd - Audit services
NOTE 19.
COMMITMENTS FOR EXPENDITURE
a)
Exploration Commitments
Consolidated Entity
2012
$’000
2013
$’000
45
45
In order to maintain current rights of tenure to exploration and mining tenements, the Company estimates the following annual
discretionary exploration expenditure requirements up until expiry or relinquishment of the mining tenure. Due to the Company's
operation in exploring and evaluating areas of interest, exploration expenditure beyond twelve months cannot be reliably determined.
These obligations are not provided for in the financial statements and are payable based on granted tenements:
Not later than 1 year
3,489
3,000
If the Company 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 include expenditure commitments which are the
responsibility of earn-in / joint venture partners. If those joint venture partners continue to meet the expenditure commitments under
respective joint venture / earn-in agreements, the estimates detailed above will reduce.
b)
Operating Lease Commitments
The Company has leased two office premises under non-cancellable operating leases for periods of five years and one year. Lease
amounts include a base amount, plus variable outgoings and car parking and are subject to an annual rent review by way of the
consumer price index at the time of review.
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
c)
Capital Commitments
The Company has no capital commitments at 30 June 2013.
NOTE 20.
Name of
Entity
INVESTMENTS IN CONTROLLED ENTITIES
Country of
Registration
Class of
Shares
332
582
-
329
852
-
Cost of Consolidated
Entity’s Investment
2012
2013
Cost of Parent
Entity’s Investment
2013
$
2012
$
Hampton Nickel Pty Limited
Ochre Resources Pty Limited
Atriplex Pty Limited
Yerilla Nickel Pty Limited
Kalgoorlie Nickel Project Pty Limited
Woods Point Gold Mines Pty Limited
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
10
100
10
100
100
100
10
100
10
100
100
100
Regent Resources Pty 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 Pty Limited ("Ochre") was registered on 7 February 2005 to seek and acquire iron ore properties in the course of the
Company's base metal exploration activities.
Atriplex Pty Limited ("Atriplex") was registered on 7 April 2005 to seek and acquire nickel-copper sulphide properties (outside the Eastern
Goldfields) in the course of the Company's exploration activities.
Yerilla Nickel Pty Limited ("Yerilla") was registered on 22 December 2006 as a potential holding company for the Jump-up Dam heap leach
Project north east of Kalgoorlie.
Kalgoorlie Nickel Project Pty Limited ("KNP") was registered on 24 June 2009 as a holding company for the KNP properties.
Woods Point Gold Mines Pty Limited was registered on 24 June 2009 as a holding company for the Woods Point Gold Mine.
54
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
Consolidated Entity
2012
$’000
2013
$’000
(0.03990)
(0.02282)
252,985,787
252,985,787
(0.03990)
(0.02282)
252,985,787
252,985,787
(10,483,306)
(5,773,226)
457
402
NOTE 21.
EARNINGS PER SHARE
Basic earnings per share
Weighted average number of ordinary shares outstanding during the year
used in the calculation of basic earnings per share
Diluted earnings per share
Weighted average number of ordinary shares outstanding during the year
used in the calculation of diluted earnings per share.
Earnings profit/(loss) used in calculating basic and diluted earnings
profit/(loss) per share
The 31,168,776 (2012: 37,918,776) options are not considered to be dilutive.
NOTE 22.
EMPLOYEE ENTITLEMENTS
a)
Employee Entitlements
The aggregate employee entitlement is comprised of:
Provisions (Current)
b)
Employee Share Scheme
An Employee Share Option Plan has been established for Heron Resources Limited, where employees, Directors and Officers of the
Company are issued with options over ordinary shares of Heron Resources Limited. At the General Meeting on 5 June 2007 approval
by shareholders for adoption of Employee Share Option Plan 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 8 employees, directors and officers eligible for this scheme.
The Options cannot be transferred and will not be quoted on the ASX.
During the year 10,750,000 options expired/lapsed and 4,000,000 options were issued under the Employee Options Plan Number 3.
Details of options as at the beginning and end of the reporting date and movements during the year are set out below:
Grant date
Expiry date
2013 Consolidated and parent entity
29 November 2006
5 June 2007
5 June 2007
5 June 2007
25 June 2009
9 June 2009
19 November 2011
19 November 2011
19 November 2011
5 October 2012
5 October 2012
5 October 2012
3 April 2013
3 April 2013
3 April 2013
7 September 2016
5 June 2013
5 June 2013
5 June 2014
25 June 2014
9 June 2014
23 June 2014
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
Weighted average exercise price
price
Exercise Number of
Options at
the beginning
of the year
Options
expired /
lapsed this
year
$0.6864
$1.50
$2.00
$2.50
$0.425
$0.30
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
5,000,000
2,500,000
3,500,000
5,250,000
2,600,000
4,818,776
4,750,000
4,750,000
4,750,000
-
-
-
-
-
-
37,918,776
0.89
-
(2,500,000)
(3,500,000)
(750,000)
-
-
-
(2,000,000)
(2,000,000)
-
-
-
-
-
-
(10,750,000)
1.28
Options
Issued
this
year
-
-
-
-
-
-
-
-
-
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
4,000,000
0.27
Number
of Options
at the end
of the year
Options
Exercisable
at the end
of the year
5,000,000
-
-
4,500,000
2,600,000
4,818,776
4,750,000
2,750,000
2,750,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
31,168,776
0.67
-
-
-
-
2,600,000
-
4,750,000
2,750,000
-
-
-
-
-
-
10,100,000
0.29
Annual Report 2013
55
5.0 FINANCIAL STATEMENTS CONTINUED
NOTE 23.
SUBSEQUENT EVENTS
There is no matter or circumstance which has arisen since 30 June 2013 that has significantly affected or may significantly affect:
a)
b)
c)
The operations, in the financial years subsequent to 30 June 2013, of the Company;
The results of those operations; or
The state of affairs, in the financial years subsequent to 30 June 2013, of the Company.
NOTE 24.
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.
The Company received a claim for $92,882, being for legal costs associated with a terminated due diligence review undertaken by Heron
during the reporting period. Heron’s termination was based on its discovery of due diligence information in respect of certain technical
matters, and as having regard to the terms of the agreement under which the due diligence review was undertaken, Heron considers it does
not have any obligation to reimburse the claimed costs.
NOTE 25.
PARENT ENTITY INFORMATION
The following information relates to the parent entity, Heron Resources Limited, at 30 June 2013. The information presented here has been
prepared using accounting policies consistent with those presented in Note 1.
2013
$’000
39,834
17,364
57,198
680
680
116,035
-
5,591
(65,108)
56,518
(7,886)
(388)
(8,274)
2012
$’000
43,872
21,561
65,433
1,009
1,009
116,035
388
8,239
(60,238)
64,424
(4,556)
417
(4,139)
a)
Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Contributed equity
Fair value reserve
Option reserve
Accumulated losses
Total equity
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Guarantees entered into by the Parent
b)
c)
d)
Heron Resources Limited has not entered into a deed of cross guarantee with its wholly owned subsidiaries.
Contingent liabilities of the Parent
Heron Resources Limited’s contingent liabilities are consistent with those disclosed in note 24.
Capital commitments of the Parent
Heron Resources Limited’s capital commitments are disclosed in note 19c.
56
Heron Resources Limited
5.0 FINANCIAL STATEMENTS CONTINUED
Directors’ Declaration
In accordance with a resolution of the Directors of Heron Resources Limited it is declared that:
a)
b)
The financial statements and notes comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory
professional reporting requirements; and
Give a true and fair view of the Group's financial position as at 30 June 2013 and of their performance, as represented by the results
of their operations, for the financial year ended on that date.
In the Directors' opinion:
a)
b)
c)
The financial statements and notes are in accordance with the Corporations Act 2001; and
At the date of this declaration there are reasonable grounds to believe that the Group will be able to pay its debts when they become
due and payable; and
The Directors have been given the declarations by the Chief Financial Officer and Chief Executive Officer required by section 295A of
the Corporations Act 2001.
On behalf of the Board
C L READHEAD
Chairman
Perth, 26 September 2013
Annual Report 2013
57
58
Heron Resources Limited
6.0 AUDIT REPORT CONTINUED
Annual Report 2013
59
7.0 Shareholder Information
AT 9 SEPTEMBER 2013
1.
a)
Issued Shares and Options
Distribution of Shareholders:
Size of Holding
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
Number of Holders
249
687
482
955
168
2,541
Shares Held
153,804
2,197,470
3,932,315
30,812,255
215,889,943
252,985,787
b)
c)
d)
e)
The twenty largest shareholders hold 65.7% of the issued fully paid capital of the Company.
Substantial Shareholders including related parties who have notified the Company:
Holder
I Buchhorn & related parties
BHP Minerals Holdings Pty Ltd
& related parties
Vale Inco Ltd
MBM Corporation Pty Ltd &
Chaos Investments Pty Ltd & related parties
Number of Shares
45,486,240
37,577,126
32,440,651
20,797,052
There were 547 shareholders who held less than a marketable parcel.
No securities have been classified by ASX as restricted.
%
17.96
14.85
12.82
8.22
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 9 September 2013
Kurana Pty Ltd
1
BHP Minerals Holdings Pty Ltd
2
Vale Inco Limited
3
Citicorp Nominees Pty Limited
4
MBM Corporation Pty Ltd
5
Chaos Investments Pty Limited
6
Hazurn Pty Ltd
7
Fremont Cat Pty Ltd
8
Mr David James Wardle
9
Koltai Holdings Pty Ltd
10
11
Sheerwater Pty Ltd
12 Mr Ian James Buchhorn
13
14 Mr Olivier Robert Dupuy
15
16
17 Mrs Pamela Jean Buchhorn
BGK Investments Pty Limited
18
19 Manorina Mining Pty Ltd
20
Tierra De Suenos SA
TOTAL
Kimlex Investments Pty Ltd
BHP Minerals Holdings Pty Ltd
BHP Minerals Holdings Pty Ltd
Number of Shares
34,162,763
32,937,960
32,440,651
12,840,514
9,600,000
5,952,308
4,841,554
4,205,476
4,070,000
2,973,179
2,671,500
2,518,241
2,489,166
2,438,151
2,200,000
2,150,000
2,137,690
2,000,000
1,825,992
1,802,000
166,257,145
%
13.50
13.02
12.82
5.08
3.79
2.35
1.91
1.66
1.61
1.18
1.06
1.00
0.98
0.96
0.87
0.85
0.84
0.79
0.72
0.71
65.70
60
Heron Resources Limited
7.0 SHAREHOLDER INFORMATION CONTINUED
f)
1
2
3
4
5
6
7
8
9
10
11
12
13
Distribution of Option holders
5,000,000
exercisable on or before 7 September 2016 for a payment of $0.6864 per option
4,500,000
exercisable on or before 5 June 2014 for a payment of $2.50 per option
4,818,776
exercisable on or before 9 June 2014 for a payment of $0.30 per option
2,600,000
exercisable on or before 25 June 2014 for a payment of $0.425 per option
4,750,000
exercisable on or before 23 June 2014 for a payment of $0.22 per option
2,750,000
exercisable on or before 23 June 2015 for a payment of $0.27 per option
2,750,000
exercisable on or before 23 June 2016 for a payment of $0.31 per option
333,333
exercisable on or before 16 January 2015 for a payment of $0.22 per option
333,333
exercisable on or before 16 January 2016 for a payment of $0.27 per option
333,334
exercisable on or before 16 January 2017 for a payment of $0.31 per option
1,000,000
exercisable on or before 5 March 2016 for a payment of $0.22 per option
1,000,000
exercisable on or before 5 March 2017 for a payment of $0.27 per option
1,000,000
exercisable on or before 5 March 2018 for a payment of $0.31 per option
Size of Holding
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
Summary of option holders as at 9 September 2013
1
2
3
4
Employees & directors
Huashan Capital
Jonathan Shellabear
Robert George Klug
TOTAL
Number of Holders
-
-
-
-
11
11
Number of Options
23,350,000
4,818,776
2,000,000
1,000,000
31,168,776
Options Held
-
-
-
-
31,168,776
31,168,776
% of Issued Options
74.91%
15.46%
6.42%
3.21%
100.00%
Annual Report 2013
61
8.0 Statement of Mineral Resources
Region
Prospect
Goongarrie Goongarrie South*
Goongarrie South*
Goongarrie South*
Highway
Highway
Ghost Rocks
Goongarrie Hill
Big Four
Big Four
Scotia
Sub-Total Goongarrie
Siberia
Siberia South
Siberia North
Siberia North
Black Range
Sub-Total Siberia
Total KNP West
Bulong
Taurus
East
East
Sub-Total Bulong
Hampton
Kalpini
Sub-Total Hampton
Total KNP East
Yerilla
Jump Up Dam‡
Jump Up Dam
Jump Up Dam
Boyce Creek
Aubils**
Sub-Total KNP Yerilla
Million
tonnes1
5.8
54.2
34.4
52.9
38.4
24.8
53.6
42.6
12.4
11.2
330.3
104.4
10.8
60.0
20.1
195.3
525.6
14.2
15.9
24.3
54.4
75.4
75.4
129.8
3.8
41.7
18.5
26.8
49.4
140.2
Ni
%
1.08
0.79
0.63
0.66
0.63
0.67
0.60
0.69
0.54
0.77
0.68
0.66
0.64
0.66
0.75
0.66
0.67
0.83
0.89
0.78
0.87
0.73
0.73
0.79
0.94
0.79
0.64
0.77
0.70
0.73
Co
%
0.105
0.066
0.042
0.042
0.040
0.047
0.037
0.052
0.054
0.080
0.049
0.035
0.051
0.040
0.103
0.043
0.047
0.051
0.046
0.053
0.054
0.044
0.044
0.048
0.048
0.044
0.035
0.058
0.066
0.052
Resource
Category
Estimation
Method
Estimate
Source
Measured
Indicated
Inferred
Indicated
Inferred
Inferred
Inferred
Indicated
Inferred
Inferred
Inferred
Indicated
Inferred
Inferred
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Krige
Study
Period
Post PFS
Post PFS
Post PFS
Post PFS
Post PFS
Pre PFS
Post PFS
Post PFS
Post PFS
Pre PFS
Heron
Heron
Heron
Heron
Heron
Snowden
Heron
Heron
Heron
Snowden
Snowden
Snowden
Snowden
Snowden
Pre PFS
Post PFS
Post PFS
Pre PFS
Inferred
Indicated
Inferred
Krige
Krige
Krige
Snowden
Snowden
Snowden
Pre PFS
Pre PFS
Pre PFS
Inferred
Krige
Snowden
Pre PFS
Measured
Indicated
Inferred
Inferred
Inferred
Krige
Krige
Krige
Krige
Krige
Snowden
Snowden
Snowden
Heron
Heron
PFS
PFS
PFS
PFS
PFS
Company Total
795.6
0.70
0.048
* Includes 33.4 million tonnes at 0.70% nickel and 0.040% cobalt located on a pending mining lease.
** Includes 49.4 million tonnes at 0.70% nickel and 0.066% cobalt located on a pending mining lease.
‡ Includes approximately 20,000 tonnes at 1.3% nickel and 0.050% cobalt in stockpiles from the 2006 trial.
Notes:
1.
2.
3.
Tonnage (dry) and grade estimates have been rounded to reflect the estimation precision.
Economic parameters for the KNP are based on a Pre-feasibility Study completed by Vale Inco under farm-in arrangements between April 2005 and
July 2009, and re-optimized by Heron between August 2009 and May 2010. The Vale Inco farm-in ended in July 2009 and Vale Inco has no retained
rights in respect of the KNP tenements.
Economic parameters for Yerilla are based on a Pre-feasibility Study completed by Heron between June 2006 and April 2009, and re-optimized by
Shanshan under joint venture between May 2009 and May 2011. The Shanshan joint venture expired in May 2011 and has been the subject of re-
negotiation. Shanshan currently has no retained rights in respect of the Yerilla tenements.
62
Heron Resources Limited
8.0 STATEMENT OF MINERAL RESOURCES CONTINUED
Attribution Statement
The information in this report that relates to Mineral
Resources for the Highway, Goongarrie Hill, Goongarrie
South, Big Four, Aubils and Boyce Creek Prospects is
based on information originally compiled by a former
Heron Resources Limited resource geologist and validated
by Steve Jones in 2013. Both are Members of the
Australasian Institute of Mining and Metallurgy. Steve
Jones is a full time employee of Heron Resources Limited
and has sufficient experience that is relevant to the style
of mineralization and type of deposit under consideration
and to the resource estimation activity that he is
undertaking to qualify as a 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 report of the
matters based on his information in the form and context
that it appears. Note that Mineral Resources that are not
Ore Reserves do not have demonstrated viability.
The information in this report that relates to Mineral
Resources for the Siberia North, Bulong East, Siberia,
Black Range, Taurus and Jump Up Dam Prospects is based
on information compiled by Snowden Mining Industry
Consultants by members of the Australian Institute of
Mining and Metallurgy. Snowden Mining Industry
Consultants had sufficient experience that is relevant to
the style of mineralization and type of deposit under
consideration and to the resource estimation activity. All
resources were internally audited by Snowden and signed
off by a person of sufficient experience to qualify as a
Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves’. Steve Jones
validated the Snowden Mining Siberia North estimate in
2013. Note that Mineral Resources that are not Ore
Reserves do not have demonstrated viability.
The information in this report that relates to exploration
and resource data (including drilling data, database quality,
geological interpretation and density modelling) is based
on information originally compiled by Steve Jones and
other previous full time employees of Heron Resources
Limited. Steve Jones has sufficient experience that is
relevant to the style of mineralization and type of deposit
under consideration and to the exploration activities
undertaken to qualify as a Competent Person as defined in
the 2012 Edition of the ‘Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves’.
Steve Jones has validated the original estimates during
2013. Steve Jones consents to the inclusion in this report
of the matters based on his information in the form and
context that it appears.
Annual Report 2013
63
9.0 Interest in Mining Tenements
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
KALGOORLIE NICKEL PROJECT
Siberia Project
Siberia North
Wongi Hill
Siberia
Riches Find
Riches Find
Siberia
Siberia
Siberia
Wongi Bore
Siberia North
Siberia South Cave Hill
Siberia
Siberia
Siberia
Siberia
Siberia
Siberia
Theil Well
Theil Well
Siberia East
Siberia East
Siberia
Siberia
Siberia South
Riches Find South
78km NW of Kalgoorlie
78km NW of Kalgoorlie
78km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
78km NW of Kalgoorlie
78km NW of Kalgoorlie
75km NW of Kalgoorlie
78km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
75km NW of Kalgoorlie
25
SMC Siberia Project
Siberia North
Broad Arrow
Siberia North
3
Black Range Project
Black Range
Mt Carnage
Mt Carnage
Mt Carnage
Mt Carnage
Mt Carnage
Mt Carnage
Mt Carnage
8
Siberia Tank Project
Siberia Tank
1
78km NW of Kalgoorlie
71km NW of Kalgoorlie
78km NW of Kalgoorlie
63km NW of Kalgoorlie
63km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
E24/00158
E29/00889
M24/00634
M24/00658
M24/00660
M24/00663
M24/00664
M24/00686
M24/00915
M24/00916
M24/00917
M29/00312
P24/04202
P24/04203
P24/04204
P24/04205
P24/04206
P24/04207
P24/04208
P24/04219
P24/04220
P24/04221
P24/04243
P24/04652
P24/04653
M24/00683
M24/00772
M24/00797
M24/00757
M24/00912
P24/04395
P24/04396
P24/04400
P24/04401
P24/04402
P24/04403
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
75km NW of Kalgoorlie
M24/00665
90.0
Monarch Siberia Project
Siberia South
Siberia South
Siberia South
Siberia South
71km NW of Kalgoorlie
71km NW of Kalgoorlie
71km NW of Kalgoorlie
71km NW of Kalgoorlie
M24/00845
M24/00846
M24/00847
M24/00848
100 of Ni only
100 of Ni only
100 of Ni only
100 of Ni only
4
64
Heron Resources Limited
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
1
2
3
3
3
2.80
2.80
1.85
3.75
1.74
3.06
1.43
2.15
0.70
5.44
1.50
4.78
1.98
1.65
1.61
1.93
1.81
1.42
2.00
1.70
1.34
0.12
1.17
0.07
0.52
49.32
0.56
1.98
8.06
10.60
5.91
2.84
1.92
1.64
2.00
1.90
1.72
1.92
19.85
8.25
8.25
8.97
6.07
8.12
7.89
31.05
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
KALGOORLIE NICKEL PROJECT continued
Frances Lesley Project
Carbine North
62km NW of Kalgoorlie
E16/00332
100 of Ni only
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
70km NW of Kalgoorlie
P24/04434
P24/04435
P24/04436
P24/04437
P24/04438
100.0
100.0
100.0
100.0
100.0
140km NNW of Kalgoorlie
E29/00873
100.0
1
Theil Well Project
Theil Well
Theil Well
Theil Well
Theil Well
Theil Well
5
Ghost Rocks Project
Ghost Rocks
1
Goongarrie Project
Scotia Dam
Scotia North
Goongarrie West
Goongarrie West
Goongarrie South
Canegrass
Goongarrie South
Goongarrie South
Goongarrie
Scotia Dam
Goongarrie
Goongarrie Hill
Goongarrie Hill
Goongarrie Hill
Goongarrie Hill
15
67km NNW of Kalgoorlie
75km NNW of Kalgoorlie
87km NNW of Kalgoorlie
86km NNW of Kalgoorlie
77km NNW of Kalgoorlie
74km NNW of Kalgoorlie
75km NNW of Kalgoorlie
76km NNW of Kalgoorlie
76km NNW of Kalgoorlie
67km NNW of Kalgoorlie
82km NNW of Kalgoorlie
90km NNW of Kalgoorlie
90km NNW of Kalgoorlie
90km NNW of Kalgoorlie
90km NNW of Kalgoorlie
M24/00541
M24/00744
M29/00167
M29/00202
M29/00272
M29/00278
M29/00283
M29/00413
M29/00423
P24/04531
P29/01960
P29/02264
P29/02265
P29/02266
P29/02267
M24/00731
M24/00732
M24/00778
M29/00169
Placer Big Four Project
Placer Big Four
Placer Big Four
Placer Big Four
Placer Big Four
70km NNW of Kalgoorlie
70km NNW of Kalgoorlie
70km NNW of Kalgoorlie
70km NNW of Kalgoorlie
4
Highway Project
Highway West
Highway
Highway Extended
3
105km NNW of Kalgoorlie
100km NNW of Kalgoorlie
90km NNW of Kalgoorlie
E29/00850
M29/00214
M29/00416
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
87.5
Live
3
Live
Live
Live
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
4
4
4
4
42.00
42.00
1.63
1.75
1.79
1.71
2.00
8.88
14.00
14.00
5.20
0.06
0.80
5.94
6.03
8.03
5.53
8.22
8.22
1.83
0.24
1.03
2.00
1.22
0.85
55.19
6.03
5.09
8.90
9.74
29.76
28.00
9.50
4.50
42.00
Annual Report 2013
65
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
KALGOORLIE NICKEL PROJECT continued
Bulong Project
Bulong
Gumbulgera Hill
Bulong
Bulong
Bulong
South West Taurus Dam
Bulong
Bulong
Bulong
Bulong
Gumbulgera Hill
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Bulong
Lake Rebecca
Lake Rebecca
Lake Rebecca
38km E of Kalgoorlie
34km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
38km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
34km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
113km NE of Kalgoorlie
113km NE of Kalgoorlie
113km NE of Kalgoorlie
E25/00476
M25/00059
M25/00111
M25/00134
M25/00145
M25/00151
M25/00161
M25/00162
M25/00165
M25/00171
M25/00187
M25/00191
M25/00206
M25/00207
M25/00208
M25/00209
M25/00210
M25/00220
M25/00234
M25/00260
M25/00341
P25/02050
P25/02062
P25/02170
P25/02171
P31/02038
P31/02039
P31/02040
28
Kalpini Project
Emu Lake
Wellington East
Wellington North
Acra North
Acra North
Betsy Bore
6
67km NE of Kalgoorlie
63km NE of Kalgoorlie
68km NE of Kalgoorlie
65km NE of Kalgoorlie
65km NE of Kalgoorlie
66km NE of Kalgoorlie
E27/00524
E28/01224
M27/00395
M28/00199
M28/00201
M28/00205
100.0
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100.0
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100.0
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
14.00
0.84
1.19
8.16
1.72
3.66
6.40
3.66
{4.45}
1.01
0.50
{3.63}
2.14
1.82
1.21
9.60
9.58
1.21
6.06
0.04
0.02
1.20
1.20
1.21
1.21
1.21
1.16
1.99
82.00
16.80
47.60
2.53
9.76
8.96
8.50
94.14
Total KNP Tenements: 104
Total KNP Area: 487.05
YERILLA NICKEL PROJECT
Yerilla SE
Boyce Creek
Aubils
Jump Up Dam
Jump Up Dam
Jump Up Dam
Boyce Creek North
Aubils
140km NNE of Kalgoorlie
140km NNE of Kalgoorlie
170km NNE of Kalgoorlie
129km NE of Kalgoorlie
129km NE of Kalgoorlie
129km NE of Kalgoorlie
146km NNE of Kalgoorlie
170km NNE of Kalgoorlie
E31/00684
E31/00797
E39/01736
M31/00475
M31/00477
M31/00479
M31/00483
M39/01085
8
66
Heron Resources Limited
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
14.00
19.60
126.00
1.21
1.47
7.70
2.02
18.05
190.05
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Pending
Live
Live
Live
Live
Pending
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
6
5
5
5
5
5
5
5
5
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
COOLGARDIE GOLD PROJECT
Horse Rocks
Horse Rocks
Mandilla
25km SE of Coolgardie
30km SE of Coolgardie
80km SW of Kambalda
3
E15/01119
E15/01344
E15/01157
MT ZEPHYR GOLD AND BASE-METAL PROJECT
E37/01045
72km NE of Leonora
Zephyr West
E39/00940
72km NE of Leonora
Mt Zephyr
E39/01465
70km NW of Laverton
Nambi
E39/01466
70km NW of Laverton
Zephyr South
E39/01574
70km NW of Laverton
Mt Zephyr
E39/01575
70km NW of Laverton
Mt Zephyr
E39/01706
70km NW of Laverton
Mt Zephyr
E39/01757
70km NW of Laverton
Mt Zephyr
8
KIMBERLEYS GOLD AND BASE-METAL PROJECT
Margaret River
114km SW of Fitzroy Crossing
E80/04262
1
ALBANY FRASER NICKEL AND COPPER PROJECT
Bedonia Project
Lake Cowan East
Bedonia
Bedonia
Eyre Highway
Eyre Highway
Woodline
Wolgerina Rock
70km E of Norseman
70km E of Norseman
70km E of Norseman
70km E of Norseman
70km E of Norseman
70km E of Norseman
70km E of Norseman
E63/01518
E63/01632
E63/01633
E63/01565
E63/01643
E28/02311
E28/02324
7
Rocky Gully Project
Rocky Gully West
Rocky Gully
2
105km NW of Albany
85km NW of Albany
E70/04457
E70/02801
PILBARA IRON ORE PROJECT
Shay Gap West
Black Hill
150km E of Pt Hedland
150km ESE of Pt Hedland
E45/03657
E45/03478
2
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
Live
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Pending
22.40
2.80
22.40
47.60
75.60
30.80
8.40
25.20
8.40
30.80
67.20
9.60
256.00
Live
33.60
33.60
Live
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Live
156.80
22.40
8.40
182.00
196.00
140.00
159.60
865.20
434.00
64.40
64.40
Live
Live
154.00
145.60
299.60
Annual Report 2013
67
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
QUEENSLAND GOLD AND BASE-METAL PROJECTS
81km NE of Gunpowder
Kamileroi
46km SE of Gunpowder
Mt Fox
97km SE of Cloncurry
McKinlay
58km NE of Cloncurry
Mt Margaret
30km N of Cloncurry
Mt Fort Constantine
86km SE of Cloncurry
Boat Creek
16km E of Gunpowder
Gunpowder
86km E of Gunpowder
Black Mountain
105km E of Gunpowder
Black Mountain
10km SE of Gunpowder
Gunpowder
29km NE of Cloncurry
Mt Fort Constantine
46km SW of McKinlay
Nettle Creek
EPM19042
EPM19043
EPM19051
EPM19053
EPM19054
EPM19055
EPM19122
EPM19135
EPM19136
EPM19168
EPM19191
EPM19192
12
100
100
100
100
100
100
100
100
100
100
100
100
NEW SOUTH WALES GOLD AND BASE-METAL PROJECTS
Coolabah
South Girilambone
Mt Boppy East
Canbelego
McKinnons South
Mt Allen
Gundagai South
Yarara
Gundagai North
Kimo
Gundagai East
Sussex North Pole
Rosevale
The Overflow
Basin Creek
Tarago
Eurow
Junee Reefs
72km NW of Nyngan
27km NW of Nyngan
50km E of Cobar
57km E of Cobar
41km S of Cobar
10km N of Mount Hope
Gundagai
25km E of Holbrook
3km NW of Gundagai
Kimo
Gundagai
43km ENE of Cobar
63km SE of Cobar
79km W of Tottenham
9kn E of Adelong
38km ENE of Queanbeyan
23km SE of Parkes
13km NE of Junee
EL7951
EL7955
EL8057
EL8086
EL8087
EL8088
EL8061
EL8105
ELA4701
ELA4776
ELA4797
ELA4817
ELA4828
ELA4829
ELA4836
ELA4837
ELA4838
ELA4856
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
17
81.20
315.00
70.00
132.30
135.00
102.60
75.60
24.30
170.10
24.30
8.10
8.10
1,147.00
238.00
249.20
280.00
280.00
280.00
280.00
277.20
280.00
25.20
28.00
11.20
196.00
280.00
280.00
187.60
204.40
168.00
168.00
3,713.00
Pending
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Live
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Pending
Total Tenements: 164
Total Area: 7,076
68
Heron Resources Limited
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
RETAINED INTEREST TENEMENTS
METALIKO: HERON RETAINS NICKEL RIGHTS
Scotia Dam South
Baden Powell
Baden Powell
Vetters North
Vetters North
Placer Big Four
Vettersberg
Blue Reef
Blue Reef
Windanya
Windanya
Windanya
Bardoc West
63km NNW of Kalgoorlie
55km NNW of Kalgoorlie
55km NNW of Kalgoorlie
62km NNW of Kalgoorlie
62km NNW of Kalgoorlie
70km NNW of Kalgoorlie
62km NNW of Kalgoorlie
60km NNW of Kalgoorlie
60km NNW of Kalgoorlie
55km NNW of Kalgoorlie
55km NNW of Kalgoorlie
55km NNW of Kalgoorlie
71km NW of Kalgoorlie
M24/00919
P24/04198
P24/04199
P24/04200
P24/04201
P24/04210
P24/04212
P24/04215
P24/04216
P24/04217
P24/04218
P24/04222
P24/04488
13
PIONEER: HERON RETAINS NICKEL LATERITE
Sampson
Kalpini
Jubilee
Jubilee
Jubilee
66km NE of Kalgoorlie
61km NE of Kalgoorlie
62m NE of Kalgoorlie
62m NE of Kalgoorlie
62km NE of Kalgoorlie
E27/00273
E27/00278
E27/00520
E28/01746
P28/01120
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
Ni Lat 100
Ni Lat 100
Ni Lat 100
Ni Lat 100
Ni Lat 100
5
RAMELIUS: HERON PRE-EMPTIVE RIGHT TO NICKEL LATERITE
preempt Ni Lat
Mt Jewell
preempt Ni Lat
Wattle Dam
preempt Ni Lat
Wattle Dam
preempt Ni Lat
Wattle Dam
preempt Ni Lat
Wattle Dam
preempt Ni Lat
Wattle Dam
48km N of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
E27/00300
M15/01101
M15/01263
M15/01264
M15/01323
M15/01338
6
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Pending
Live
Live
Live
Live
Live
Live
Live
Live
7.52
1.30
1.93
1.55
0.59
0.81
2.00
1.27
2.00
1.37
1.86
1.16
1.46
24.82
44.80
28.00
42.00
56.00
1.25
172.05
2.80
5.19
2.17
0.85
0.50
0.88
12.39
ST IVES GOLD MINING, HERON RETAINS ROYALTY ON GOLD PRODUCTION AND
RIGHT TO EXPLORE AND MINE BASE METALS
E15/00927
Lake Lefroy
E15/01005
Marloo Dam North
E15/01010
Lake Lefroy
E15/01040
Lake Lefroy
E15/01083
Yacca Hill
P15/05265
Marloo Dam
68km SE of Kalgoorlie
70km SE of Kalgoorlie
60km SSE of Kalgoorlie
68km SE of Kalgoorlie
70km SE of Kalgoorlie
70km SE of Kalgoorlie
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
5.60
67.20
53.20
14.00
2.80
0.54
Live
Live
Live
Live
Live
Live
6
143.34
Annual Report 2013
69
9.0 INTEREST IN MINING TENEMENTS CONTINUED
Prospect
Geographic Location
Tenement ID
Heron %
Beneficial Interest
Area km2
Actual
Status
Notes
YARRI BATTERY AND RESOURCES:
HERON RETAINS A ROYALTY ON GOLD PRODUCTION
Yarri South
Horse Rock Bore
Yarri
Yarri
Yarri
Yarri
Banjo Well
Banjo Well
Banjo Well
170km NE of Kalgoorlie
160km NE of Kalgoorlie
136km NE of Kalgoorlie
136km NE of Kalgoorlie
136km NE of Kalgoorlie
137km NE of Kalgoorlie
141km NE of Kalgoorlie
141km NE of Kalgoorlie
141km NE of Kalgoorlie
E31/00859
E31/00887
P31/01788
P31/01789
P31/01790
P31/01791
P31/01792
P31/01793
P31/01794
9
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
58.80
39.20
1.66
1.64
1.12
0.19
1.80
1.80
1.10
107.31
SOUTHERN GOLD LTD: HERON RETAINS 20% FREE CARRIED TO BFS
Clinker Hill
Boorara Hill East
Bodgie Dam
32km ESE of Kalgoorlie
25km ESE of Kalgoorlie
30km E of Kalgoorlie
E25/00250
E25/00321
E25/00361
20.0
20.0
20.0
16.80
2.80
8.40
3
KCGM: HERON RETAINS A ROYALTY ON GOLD PRODUCTION
Royalty
Gidji
Royalty
Gidji
Royalty
Five Mile Hill South
Royalty
Five Mile Hill North
Royalty
Five Mill Hill
Royalty
Five Mill Hill
Royalty
Five Mill Hill
Royalty
Five Mill Hill
Royalty
Five Mill Hill
Royalty
Five Mill Hill
Royalty
Five Mill Hill
14km N of Kalgoorlie
14km N of Kalgoorlie
10km NE of Kalgoorlie
10km NE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
E26/00124
P26/03481
P26/03757
P26/03758
P26/03360
P26/03361
P26/03362
P26/03493
P26/03494
P26/03495
P26/03496
11
28.00
58.80
1.56
1.78
1.86
0.89
0.18
1.40
1.55
1.51
2.00
2.00
60.36
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
CLIFF ASIA PACIFIC: HERON RETAINS A ROYALTY ON IRON ORE PRODUCTION
Metzke
Lake Barlee
Riverina
104km WNW of Menzies
130km N of Southern Cross
104km WNW of Menzies
E29/00710
E30/00368
E29/00736
Royalty
Royalty
Royalty
47.60
117.60
22.40
live
live
Live
3
165.20
NOTES
1 Britannia Gold Ltd retained precious metal rights
2 Impress Ventures Ltd has a 10% equity free-carried interest to a decision to mine.
3 Swan Gold Limited holds the tenement, Heron retains nickel rights
4 Placer Dome Australia Limited retains certain gold rights.
5 Heron entered a binding framework agreement with Ningbo Shanshan Co Ltd, Shanshan had a right to earn a 70% interest in the Yerilla
Nickel-Cobalt Project up until May 2011. That right has expired.
6 Subject to Farm In agreement with Southern Gold Ltd.
Areas in brackets are not included in the total areas due to overlying tenure
70
Heron Resources Limited
10.0 Glossary
"Acid Leaching" means:
"HPAL" means High Pressure Acid Leach, a nickel laterite hydro-metallurgical processing technique in which Goethite Ore and Nontronite
Ore are 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.
"Adit" means a horizontal tunnel from surface accessing an orebody.
"Anomaly" means a value higher or lower than expected, which outlines a zone of potential exploration interest but not necessarily of
commercial significance.
"Archaean" means a period of geological time spanning 3.8 to 2.5 billion years before present.
"Beneficiation" means physical process by which mined ore can be improved in grade by screening or gravity.
"Decline" means an declined tunnel accessing an orebody.
"Deleterious elements" means elements contained in the saleable product, above a predetermined level may attract a penalty from refiners.
"Diamond Drilling” means a drilling method that used diamond impregnated cutting bit to cut a core of rock from the area being drilled.
"Feasibility Study" has three progressively more detailed stages, and means:
"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 test-work 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 ± 35%.
A "Pre-feasibility Study" (PFS) is 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 test-work 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 "Definitive Feasibility Study" (DFS) means a feasibility study undertaken to a high degree of accuracy which may be used as a basis
for raising finance for the construction of a project.
"km" means kilometres.
"KNP" means Kalgoorlie Nickel Project, a nickel laterite project located through an arc 30-150km north-north west to east of Kalgoorlie.
"Level" means a horizontal series of developments all at the same distance measured from the surface.
"Limonitic" means iron oxide.
"m" means metres.
"Mt" means million tonnes.
"Mineralization" 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, ferruginous clay, smectite clay, chlorite and
serpentine assemblage overlying weathered ultramafic rock.
"Nickel Sulphide" means nickel and copper occurring as an un-oxidised sulphide assemblage associated with fresh ultramafic rock.
"Nickeliferous" means nickel bearing rock, mineral ore or sample.
"Nontronitic" means a green clay developed from weathering some ultramafic rocks.
"Option" means a Share Option to subscribe for fully paid ordinary shares in Heron.
"Project" means a grouping of prospects within a specific geographic location, often with a common geological setting.
"Prospect" means a target upon which exploration programs are planned or have commenced.
"Protolith" means an original rock type prior to weathering, alteration or metamorphism.
"Province" means a grouping of projects within a geological district defined by a major mineralized crustal structure.
Annual Report 2013
71
10.0 GLOSSARY CONTINUED
"RAB drilling" means the Rotary Air Blast 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 Reverse Circulation 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 80x40m.
"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.
"Saprolite Ore" means nickel laterite mineralization 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 Nontronite, Manganiferous, Goethite or Siliceous Ore.
"Siliceous Ore" means nickel laterite mineralization 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%.
"VMS" means Volcanogenic Massive Sulphide ore deposit where massive iron sulphides formed associated with volcanic rocks commonly
enriched in copper, zinc, lead, silver and gold.
"WWF" means Walter Williams Formation, an ultramafic rock occurring north of Kalgoorlie within the KNP, 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 mineralization.
"XRF" means an assay technique using X-ray fluorescence spectroscopy on a fused glass button of powdered rock sample, which is an
analytical method used in nickel laterite grade estimation.
72
Heron Resources Limited
Heron Resources Limited
ABN 30 068 263 098
Heron has three principal spheres of operation; Business Development led by
General Manager Strategy and Business Development Charlie Kempson,
Exploration led by General Manager Exploration Dave von Perger, and
Projects which are coordinated by Managing Director Ian Buchhorn.
All three spheres are attuned to prevailing market circumstances and the
opportunities that arise.
Acknowledgements:
To Charlie, Liz, Bryan, Dave, Lorne, KP, Steve,
Joseph and Emine, your work is brilliant.
To the team at Reynolds Graphics, thanks for
your excellent graphic design work.