Corporate Directory
ABN 30 068 263 098
DIRECTORS
Chairman (Non-Executive)
Stephen Dennis BCom, LL.B., GDipAppFin (Finsia), CFTP
Managing Director (Executive)
Wayne Taylor BE (Min.), MBA, MAusIMM
Director (Executive)
Ian Buchhorn BSc (Hons), DiplGeosci (Min Econ), MAusIMM
Director (Non-Executive)
Borden Putnam III MSc, RPG
Director (Non-Executive)
Fiona Robertson MA (Oxon), MAusIMM, FAICD
Director (Non-Executive)
Mark Sawyer LL.B.
COMPANY SECRETARY
Simon Smith B.Bus, CA
REGISTERED OFFICE
Level 1, 37 Ord Street
West Perth 6005 Western Australia
Telephone: +61 8 6500 9200
Sydney Office
Suite 702, 191 Clarence Street
Sydney 2000 New South Wales
Telephone: +61 2 9119 8111
Woodlawn Site Office
Collector Road, Tarago 2580 New South Wales
Email:
Website:
heron@heronresources.com.au
www.heronresources.com.au
AUDITOR
Butler Settineri (Audit) Pty Ltd
Unit 16, 1st Floor, 100 Railway Road
Subiaco 6008 Western Australia
BANKERS
Westpac Bank
230-236 Hannan Street
Kalgoorlie 6430 Western Australia
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:
TMX Equity Transfer Services Inc.
200 University Avenue, Suite 400
Toronto, Ontario M5H 4H1
Tel: (416) 361-0152
Email: info@tmx.com
registrar@securitytransfer.com.au
SOLICITORS TO THE COMPANY
Allion Legal Pty Ltd
50 Kings Park Road
West Perth 6005 Western Australia
Resources Legal Pty Ltd
1A Rosemead Rd
Hornsby 2077 New South Wales
Peterson & Company, LLP
390 Bay Street, Suite 806
Toronto, Ontario M5H 2Y2
STOCK EXCHANGE
Australian Securities Exchange Limited
2 The Esplanade
Perth 6000 Western Australia
ASX CODE HRR
Toronto Stock Exchange
TMX Group Ltd
The Exchange Tower
130 King Street West
Toronto, Ontario M5X 1J2
TSX CODE HER
SEAT ABBREVIATION
Heron
HOME BRANCH
Perth
INDUSTRY CLASSIFICATION
GICS classification code is 15104020
Diversified Metals and Mining
ISIN AU000 000 HRR6
Highlights for FY2015
The last 12 months have been a busy time for Heron with a significant
resetting of our business. This period was used well to make major inroads
into advancing our newly acquired and key project, the Woodlawn Zinc-
Copper Project.
These efforts have positioned the Company on the pathway to becoming a
near term producer and resulting highlights for the year include:
(cid:129) Finalisation of the merger with TriAusMin and the seamless integration
of the two businesses.
(cid:129) Successful completion of the Woodlawn Preliminary Economic
Assessment (PEA) that delivered a compelling business case for project
development.
(cid:129) Commencement of a fully funded Feasibility Study (FS) for Woodlawn,
due for completion in the second quarter calendar 2016.
(cid:129) Exceptional drilling results received from the Woodlawn Project in the
Phase I (PEA) and follow-up Phase II (FS) drilling programs, underpinning
a new high grade underground resource.
(cid:129) Strong cash position (A$28.1M, 31 August 2015) that has been
supported by the attraction of Greenstone Resources LP as a
cornerstone investor.
(cid:129) Well positioned to take advantage of the strong medium term
commodity market fundamentals for zinc and copper.
Heron Resources Limited - Annual Report 2015 - Page 1
“The Woodlawn Preliminary Economic Assessment (PEA) initiated
and finalised this year, represents the first comprehensive study
focussed on the high grade underground project since mining
operations ceased in 1998. The PEA delivered a robust project that
contemplates the combined development of the underground and
tailings retreatment projects. This work has supported the decision
to embark upon a Feasibility Study (FS)
which is now well underway”
Wayne Taylor
Page 2 - Heron Resources Limited - Annual Report 2015
Heron Resources Limited
ABN 30 068 263 098
Annual Report 30 June 2015
HIGHLIGHTS FOR FY2015 ......................................................................................1
CHAIRMAN’S LETTER............................................................................................5
DIRECTORS AND MANAGEMENT.......................................................................6
1.0 MANAGING DIRECTOR’S REPORT ......................................................................8
2.0
3.0
OPERATIONS REPORT .........................................................................................11
CORPORATE PROFILE ..........................................................................................30
CORPORATE GOVERNANCE STATEMENT...............................................................31
4.0
DIRECTORS’ REPORT ...........................................................................................32
AUDIT INDEPENDENCE DECLARATION ..................................................................41
5.0
CONSOLIDATED FINANCIAL STATEMENTS ....................................................42
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
OTHER COMPREHENSIVE INCOME .......................................................................42
CONSOLIDATED STATEMENT OF FINANCIAL POSITION........................................43
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ........................................44
CONSOLIDATED STATEMENT OF CASHFLOWS......................................................45
NOTES TO AND FORMING PART OF THE ACCOUNTS ...........................................46
DIRECTORS’ DECLARATION ....................................................................................69
6.0
7.0
8.0
INDEPENDENT AUDIT REPORT .........................................................................70
SHAREHOLDER INFORMATION .........................................................................72
APPENDIX 1 - UNAUDITED QUARTERLY
CONSOLIDATED FINANCIAL STATEMENTS ....................................................74
9.0
APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS ................78
10.0
STATEMENT OF MINERAL RESOURCES
& COMPETENT PERSONS’ STATEMENTS .......................................................87
11.0
INTEREST IN MINING TENEMENTS.................................................................93
12.0 GLOSSARY .............................................................................................................95
Heron Resources Limited - Annual Report 2015 - Page 3
“We are confident we will be in a position to announce
positive results from the Woodlawn Feasibility Study in the
first half of next year.” Stephen Dennis
Page 4 - Heron Resources Limited - Annual Report 2015
Chairman’s Letter
Dear Shareholders,
It is with great pleasure that I write to you for the first time in my capacity as Chairman of Heron.
I do this at a very exciting stage for our Company, with our main priority being to develop the Woodlawn Zinc-Copper mine in New South
Wales.
We began the year with the seamless merging of TriAusMin with Heron. The objective of this merger was relatively straightforward – to bring
together into one company TriAusMin’s Woodlawn Project and Heron’s substantial financial resources, with the result that development of
Woodlawn is now able to be rapidly advanced towards production. For Heron, this merger represents the culmination of our considerable
efforts over the last 5 years to find a suitable business development opportunity in which to invest, and in Woodlawn we are confident that
we have a project that we will be able to finance, develop and operate as a profitable mine. I am also delighted to see the two management
teams from TriAusMin and Heron come together and work as one.
Work commenced at Woodlawn immediately following the merger between Heron and TriAusMin. This included drilling and other technical
work to complete a Preliminary Economic Assessment (PEA) for the project. For our Australian shareholders, a PEA is a Canadian term
and refers to a study which is similar in scope to a pre-feasibility study. The PEA represents the first opportunity we have had to undertake
an independent and comprehensive review of the financial and technical parameters for the project.
The PEA was released in April and confirmed that, based upon current economic variables such as commodity prices and foreign exchange,
Woodlawn certainly has the potential to deliver an outstanding result for our shareholders. The details of the PEA are contained within the
Operations Review of this Annual Report, and based on these results the Board was unanimous in supporting the continuation of the PEA into
a Feasibility Study (FS).
We are confident we will be in a position to announce positive results from the FS in the first half of next year.
Although for the foreseeable future Heron’s corporate priority will remain the development of Woodlawn, we are also fortunate to retain 100%
ownership of the Kalgoorlie Nickel Project (KNP). Whilst the market for nickel laterite projects is difficult at the present time, the KNP remains
a valuable asset of the Company, and we will continue to search for ways in which the KNP can deliver value for our shareholders. As a result,
we are presently undertaking further technical studies which have as their objective an improvement in the economics of the KNP.
In a strong vote of confidence for Heron, we recently announced that Greenstone Resources LP had agreed to invest $6.8 million in the
Company via a 15% share placement. There has also been provision made for Greenstone to increase their initial investment in Heron by a
further $13.2 million (or such amount as would take Greenstone’s interest up to 19.9% of Heron shares). Greenstone are a mining specific
private equity fund based in London, and we welcome the appointment to the Board of Mr Mark Sawyer, the co-founder of Greenstone. We
look forward to working with Mark and Greenstone as we advance Woodlawn towards construction and into production.
In addition to Mark’s recent appointment, we have also seen two new Non-Executive Directors join the Board this year, Mr Borden Putnam III
in December and Ms Fiona Robertson in April. Both bring extensive mining and corporate experience to the Board, with the result we now
have a strong Board with an appropriate balance of credentials and skills.
I would also like to take the opportunity to thank the previous Chairman of the Board, Mr Craig Readhead. Craig joined the Board in 2001 and
with the release of the PEA in April 2015, Craig made the decision that it was an appropriate time for him to retire from the Board. We wish
Craig well in his future endeavours and thank him for his stewardship during his 14 years as Chairman of Heron.
My thanks must also go to our Managing Director, Mr Wayne Taylor, and his management team, in whom the Board has placed their
confidence to provide the leadership and drive which is so essential to the successful delivery of a mining project such as Woodlawn.
Finally, thank you to all of our shareholders who continue to support us, both in North America through our Canadian TSX listing and in
Australia. Unfortunately, I do not believe our current share price is reflective of the value of our assets, however I remain hopeful that in time
this situation will correct itself.
The next 12 months will be critical to the longer term success of Heron as we continue to advance Woodlawn, and I look forward to bringing
you further reports of our progress during this period.
Sincerely yours
Stephen Dennis
Chairman
Heron Resources Limited - Annual Report 2015 - Page 5
Directors & Management
STEPHEN DENNIS BCom, LL.B., GDipAppFin (Finsia), CFTP
CHAIRMAN (NON-EXECUTIVE)
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. Until recently, Mr Dennis
was the chief executive officer and managing director of CBH Resources Limited, the Australian subsidiary of Toho Zinc
Co., Ltd of Japan.
WAYNE TAYLOR B.Eng (Mining), MBA
MANAGING DIRECTOR (EXECUTIVE)
Wayne Taylor is a mining engineer with over 25 years experience. He holds a Bachelor of Engineering (Mining) degree
from the University of New South Wales and a Masters of Business Administration from the University of New England.
Mr Taylor has held senior operational management roles with Western Mining Corporation and Glencore International’s
Australian operations. For the six years prior to joining TriAusMin he managed Glencore’s base metal business
development based out of Australia which involved assessing mining projects throughout the world. Mr. Taylor was the
managing director/CEO of TriAusMin for 3 years prior to the merger with Heron.
IAN BUCHHORN BSc (Hons), DiplGeosci (Min Econ), MAusIMM
DIRECTOR (EXECUTIVE)
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. 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.
BORDEN PUTNAM III MSc, RPG
DIRECTOR (NON-EXECUTIVE)
Mr Putnam is a geologist with over 38 years of experience in the mineral industry, with focus on exploration and asset
evaluations. From 1976-1991 he worked as a project geologist and a district manager for AMAX Exploration and
Newmont Exploration Limited respectively. He served as Vice-President and chief geologist for MRDI (now AMEC) from
1991-1996. Mr Putnam was vice-president and principal with Robertson Stephens Investment Management from 1996-
2001, and from 2001-2009 was managing director of Eastbourne Capital Management. In 2009, Mr Putnam, established
his mining industry consultancy business providing technical evaluations, due diligence audits and investment advice.
FIONA ROBERTSON MA (Oxon), M AusIMM, FAICD
DIRECTOR (NON-EXECUTIVE)
Ms Robertson is a finance professional and practicing non-executive director and audit/risk committee chair with a
background of 20 years as a chief financial officer in the emerging and mid-tier resources sector and 14 years as a
corporate banker working in Sydney, New York and London with Chase Manhattan Bank. Current roles include; non-
executive director and chair of the Audit & Risk Committee of Drillsearch Energy Limited; non-executive chair of One
Asia Resources Limited; and National and NSW Committee Member of WIMnet (AusIMM’s Women in Mining Network),
former NSW Chair.
MARK SAWYER LL.B.
DIRECTOR (NON-EXECUTIVE)
Mr Sawyer co-founded Greenstone Resources in 2013 after a 16 year career in the mining sector. Prior to establishing
Greenstone, Mr Sawyer was GM and Co-Head Group Business Development at Xstrata plc where he was responsible
for originating, evaluating and negotiating new business development opportunities for Xstrata. Prior to Xstrata Mr
Sawyer held senior roles at Cutfield Freeman & Co (a boutique corporate advisory firm in the mining industry) and at Rio
Tinto plc. Mr Sawyer is a resident of the United Kingdom.
Page 6 - Heron Resources Limited - Annual Report 2015
DIRECTORS & MANAGEMENT CONTINUED
SIMON SMITH B.Bus, CA.
CHIEF FINANCIAL OFFICER AND COMPANY SECRETARY
Mr Smith has been a chief financial officer of both private and public companies in Australia and the USA. He brings
20 years experience as a Chartered Accountant and holds a Bachelor’s Degree in Business from the University of
Technology Sydney. Mr Smith was the CFO and company secretary for TriAusMin prior to the merger with Heron.
ANDREW LAWRY BAppSc (Metallurgy), FAusIMM, GAICD
CHIEF OPERATING OFFICER
Mr Lawry brings more than 28 years -experience in project management, engineering, construction, commissioning and
operations, both in Australia and overseas. He has worked for several leading resource companies including
Polymetals, Newcrest and engineering firms Bateman, Normet and Q-Proc. Notably, Mr Lawry managed, from
construction through to operation, the successful retreatment of the Hellyer base metal tailings project in 2006 in
western Tasmania. With this experience he is well qualified to lead the successful development of the Woodlawn
Project.
DAVID VON PERGER BSc (Hons) MAusIMM
GENERAL MANAGER EXPLORATION
David von Perger was appointed in 2004. Mr von Perger is a geologist with some 20 years experience in mineral
exploration. 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 for an international mining group. Since
joining Heron, Mr von Perger has been responsible for the identification and acquisition of several new nickel, gold,
iron-ore and base-metal projects.
CHARLIE KEMPSON MEng (Oxon) MBA GAICD
GENERAL MANAGER STRATEGY & BUSINESS DEVELOPMENT
Charlie 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. 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).
“We now have a strong Board with an appropriate balance of
credentials and skills, supported by an executive team with strong
technical and operational experience” Stephen Dennis
Heron Resources Limited - Annual Report 2015 - Page 7
1.0 Managing Director’s Report
The last 12 months have been an exciting time of intense activity for Heron. We have seen the completion of the merger with TriAusMin in
August 2014, the integration of the Heron and TriAusMin operational and corporate teams, the immediate commencement of the drilling
program in support of the Woodlawn Preliminary Economic Assessment (PEA), the completion of the PEA which delivered a robust business
case for the development of the Woodlawn Project and the commencement of the next project development step, the Feasibility Study (FS).
This is exactly what we committed to do at the time of the merger and I am very pleased to say that the Heron team has delivered on its
commitments.
I would like to extend my thanks to the individual members of the Board of Directors for their valuable support throughout the year. There has
been plenty to consider with the resetting of the Heron strategy following the merger with TriAusMin, the establishment and implementation
of plans to advance the Woodlawn Project and a considered view on the recent market place volatility. This has provided essential input into
fine tuning the Company’s activities and reaffirming our direction in the context of the additional external influences coming from global
financial markets.
Next, I would like to express my gratitude to the executive management team, the employees and the other specialist service providers that
have “put rubber to the road” in the implementation of our plans. This focused effort has led to the notable results achieved over the last 12
months including the very successful drilling program, new underground resource, delivery of the PEA and rapid progress on the FS. We started
with two complementary teams, brought together through the merger, that have effectively integrated with a common purpose in mind to see
Woodlawn progress along the path to production as quickly as possible.
Turning to specific achievements, a significant milestone was reached in April this year with the release of the results from the Preliminary
Economic Assessment (PEA) and the subsequent lodging of the final report early in June. This document represents the first full study on the
Woodlawn Zinc-Copper Project, including both the underground and tailings retreatment projects, brought together under a single
development proposal. Prior to the PEA, project study work had largely been limited to considering a standalone tailings retreatment project
and whilst it delivered a sound business case it failed to capture the investment market’s attention. The PEA allowed for the inclusion of the
high grade underground and a development approach that would encompass the construction of a 1.5Mtpa treatment facility that could take
production sourced from underground up to 750ktpa and the remaining available capacity being met by the tailings. The metallurgical test work
completed during the PEA demonstrated the proof of concept for this treatment tack and provides Woodlawn with a unique development
approach with significant operational flexibility derived from the two decoupled production sources. Development costs are also very efficient
with the benefits derived from a single processing facility and outstanding existing infrastructure. The project planning, operating and capital
cost estimates and resulting financial modelling provided very robust results that, with the most recent updates, included a post-tax NPV of
A$291M, a post-tax IRR of 46% and a C1 cost of US$0.00/lb of zinc after by-product credits.
1.0 MANAGING DIRECTOR’S REPORT CONTINUED
The very strong results from the PEA provided the basis for an immediate
progression to the FS. A commitment was made in May 2015 to commence
this A$11 million study and we have made solid progress across all study
areas and it is on track to be delivered in the first half of 2016.
While the Kalgoorlie Nickel Project and the suite of other regional exploration projects held by Heron did not feature highly in the activities
for FY2015, they remain important assets to the Company and the key prospects that sit within these project areas have been maintained. The
Company has had a strategy to reduce the overall tenure costs of the broader tenement package that it holds through rationalisation of non-
core properties and this process will continue into the next year. It is still the Company’s intention to realise value for Heron’s shareholders
from these important projects.
The completion of the merger with TriAusMin has brought a major shift in the Company’s commodity focus with a significant re-weighting to
zinc and copper. This has required some effort to be put into re-branding the Company to ensure that as the pending zinc market story develops
there is a level of awareness of Heron amongst the broader investor base. In support of this we have engaged with numerous brokers and
media personnel with the Company receiving several prominent articles in the major Australian press platforms. In addition, in the last year
we have successfully run day tours from Sydney with the events being very well attended by shareholders, potential investors, brokers, funds
and media. The retail awareness is something that we will continue to work on to ensure the Company and the Woodlawn Project are securely
cemented into the mindset of the investor community.
At the time of writing we have just gone through a period of significant global financial market volatility. This has seen a dramatic reduction
in base metal prices from the levels attained earlier in the year. What is also apparent is that the fundamental supply and demand story that
surrounds our primary commodity, zinc, remains intact. The forecast supply issues present a strong case for future commodity price strength
and generate an environment that will be supportive for the development of new sources of production. Independent benchmarking of the
Woodlawn Project against a number of other potential zinc development projects see this project rate consistently in the top echelons further
supporting the development case for the project.
I believe Woodlawn’s long list of attributes present a project that will make it a profitable producer of zinc and copper in the near term. We
have a committed team that will continue to work hard on completing the requisite tasks to see this goal realised.
With the pathway to production laid out in front of us, we have an exciting year ahead with the completion of the DFS planned for the first
half of 2016, this will provide the platform to seek project development funding and the next step in transforming the Company into being a
producer of highly valued base metal concentrates. I look forward to providing our shareholders with regular updates on our efforts and results
as we pursue this goal.
Heron Resources Limited - Annual Report 2015 - Page 9
Heron Projects
Figure 1: Tenement Holdings
NT
WA
QLD
Kalgoorlie Nickel
Project (Ni)
Yerilla (Ni)
SA
NSW
Overflow
Lewis Pond
Eurow
Kangiara
0
400
800
VIC
Woodlawn
Zinc-Copper Project
(Zn,Cu,Pb,Au,Ag)
Below left: Enlargement of Kalgoorlie Nickel Project
Below right: Key Project Locations, Lachlan Fold Belt, NSW
TAS
Heron Resources Limited
Kalgoorlie Nickel Project
Nickel Laterite Tenements
AUBILS
GHOST ROCKS
Kalgoorlie Nickel Project
Yerilla
Menzies
HIGHWAY
Kalgoorlie
Nickel Project
West
BOYCE CREEK
JUMPUP DAM
SIBERIA NORTH
GOONGARRIE HILL
GOONGARRIE SOUTH
BIG FOUR
SIBERIA SOUTH
Major Road
Railway
Gas pipeline
Cawse Nickel
Laterite Plant
(Under Care
and Maintenance)
Kalgoorlie Nickel Project West
Kalgoorlie Nickel Project East
Kalgoorlie Nickel Project Yerilla
GINDALBIE
KALPINI
Kalgoorlie
Nickel Project
East
Kalgoorlie
BULONG
Nickel Smelter
(BHP Billiton)
Coolgardie
0
20
40
Kambalda
Kilometres
Page 10 - Heron Resources Limited - Annual Report 2015
Elura
Cobar
Hera
148˚
Tritton
Girilambone
150˚
152˚
160 km
Macquarie Arcrc
Overflow
Copper Hill
Peak Hill
Northparkes
Copper Hill
Cowal
Cadia
Eurow
Hill End
Trough
New
England
Orogen
-32˚
Lewis Ponds
Hill End
Kempfield
-34˚
Sydney
Gidginbung
Kangiara
Peelwood
Gundagai
Central
Lachlan
Eastern
Lachlan
Woodlawn
Canberra
ACT
Goulburn Basin
-36˚
Stockman
Captains Flat
T
a
b
b
M
elb
o
e
r
a
Z
o
n
b
b
e
e
r
a
u
r
n
e
Z
o
n
e
Woods
Point
NS
WVICTO
RIA
Cow
wombat Trough
Heron Tenements
VMS (non-Heron owned)
Porphyry copper/gold
Cobar style
Gold
Silurian Basins
Ordovician Arcs
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, contractors, the
communities in which Heron works and to the environment.
HEALTH AND SAFETY
Heron had no Lost Time Injuries (LTI’s) during 2015. The LTI gauge of performance demonstrates an outstanding result for Heron and reinforces
the employees’ and contractors’ commitment to the highest level 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, particularly now that work is focused on the Woodlawn mine site.
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.
Again, in 2015, no negative results were recorded.
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 minimising environmental impacts, but also ensuring that business activities remain within regulatory compliance.
Our activities continue to be reviewed 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 shift in major project location for Heron has provided the Company with a new community interaction platform centred around the
Woodlawn Mine site. The Company has established a Community Consultation Committee comprising members of the local community,
representatives from the Goulburn-Mulwaree Council and also Veolia Environmental Services, the operators of the landfill located at the
Woodlawn site. This group and its routine quarterly meetings provide an effective conduit to discuss matters of interest along with
considering the areas by which Heron can best provide a constructive influence in the local area. Whilst still in its early stages, the Company
is looking forward to developing stronger bonds with the local stakeholders.
DEVELOPMENT PROJECTS (100% HERON)
MERGER WITH TRIAUSMIN
Heron completed the merger with TriAusMin Ltd in August 2014 and since this time the high grade Woodlawn Zinc-Copper Project has become
the major focus of the Company's activities. Work commenced "on the ground" in September 2014 and has continued uninterrupted resulting
in the completion of the milestone Preliminary Economic Assessment study and commencement of the Feasibility Study.
WOODLAWN UNDERGROUND PROJECT
Release of Preliminary Economic Assessment
On 1 June 2015, Heron announced the lodgement of the Woodlawn Preliminary Economic Assessment (PEA) study on the System for Electronic
Document Analysis and Retrieval (SEDAR). SEDAR is the document filing and retrieval system for Canadian public (and listed) companies and
can be accessed at ‘www.sedar.com’. The full study is also available on the Company’s website.
The Company announced the PEA summary results in the release of the 22nd April 2015 titled ‘Preliminary Economic Assessment Delivers
Strong Business Case for the Woodlawn Zinc-Copper Project’. The project continues to demonstrate strong base case economics and we
continue to evaluate and adjust variables as new information comes to hand. The PEA base case results include:
Combined Underground
plus Tailings
“UG Starter Case”
Post-tax NPV8.3*
Post-tax IRR
Initial Capital
Payback Period
A$291 million
46%
A$140 million
2.0 years from commissioning
Net Cash Flow Post-tax
A$577 million
C1 cost (Zn primary)
C3 cost (Zn primary)
US$0.00/lb
US$0.30/lb
*Results reported using an 8.3% post tax real discount
rate (approx. 10% post-tax nominal). All material
assumptions as per the release of 22 April 2015 and in
the PEA document which may be downloaded from
SEDAR, apart from the following adjustments:
(cid:129)AUD/USD FX trending from 0.73 to 0.69 by 2021;
(cid:129)Flat real commodity prices for Cu amended to
US$2.90/lb and Pb to US$0.93/lb (others
unchanged);
(cid:129)Amended modelled treatment of recoverability of tax
losses and updated opening tax loss assumptions
(opening tax losses increased to $77M, opening
capitalised exploration increased to $32.3M); and
(cid:129)Various adjustments to operation cost modelling (no
changes to the underlying assumptions).
Heron Resources Limited - Annual Report 2015 - Page 11
2.0 OPERATIONS REPORT CONTINUED
The PEA highlighted a number of attractive project characteristics:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Initial 11 year mine life based on underground and tailings resources, and including 1.0Mt Indicated and 2.8Mt Inferred Mineral
Resource contribution from underground
Total life-of-mine (LOM) Production Target of 353Kt of zinc, 77Kt of copper, 112Kt of lead, 8.9Moz of silver and 59Koz of gold
Processing rate of 1.5Mtpa through standard sequential flotation, with steady state annual Production Target of 51Kt of zinc, 10Kt of
copper, 16Kt of lead, 1.1Moz of silver and 8.7Koz of gold contained within zinc, lead, and copper concentrates
Utilises existing infrastructure to achieve significant reductions in development costs, with a revised portal location on the west side
of the pit enabling first production from the second quarter after underground works commence
“UG Starter Case” focused on the shallower areas of the deposit reflecting the success of the Phase I drilling programme – high level
of confidence for extensions to the mineralisation at depth and along strike based upon 36% Measured, 35% Indicated and 29%
Inferred Mineral Resources, comprising:
o
o
Woodlawn Underground Project (WUP): 32% Indicated and 68% Inferred
Woodlawn Tailings Retreatment Project (WRP): 46% Measured, 35% Indicated and 19% Inferred
Conservative approach taken to re-modelling of the underground Mineral Resource, with exclusion of all moderate to higher risk areas
– to be reconsidered post mine access and re-assessment from underground
Highly successful Phase I exploration drilling programme – of the total underground plant feed of 1.0Mt Indicated and 2.8Mt Inferred
Mineral Resources, recent exploration has contributed approximately 2.8 million new Inferred tonnes
Low-risk underground resource base: 80% of underground tonnes in the production schedule are from areas away from previous mining
C1 and C3 unit costs that place the Project firmly in the lower half of the cost curve
Significant leverage to zinc, which comprises approximately 47% of total payable metal value
Significant exploration potential remains within the underground including additional shallow, near-surface targets that are being tested
in the Phase II drilling program, with scope to increase the Production Target
Deeper underground extensions that will be targeted with underground drilling post-commissioning – management anticipates that any
such depth extensions discovered have the potential to add significant project value
Funding Options and Commodity Markets
Following the completion of the PEA Heron explored options for the staged development of the Woodlawn Project, which contemplated
accessing bridge-style funding allowing the commencement of construction of the plant whilst the Feasibility Study was being completed.
Heron was pleased to report that the capital markets were highly supportive of this option, with workable non-binding term sheets received
from debt providers, and excellent indications of support from a number of brokers in the Australian, Canadian and European markets.
The cornerstone strategic equity investment by Greenstone Resources LP announced on 23 July 2015, undertaken after lengthy due diligence
and at a significant premium to the prevailing market price of Heron’s shares, ultimately reflects the success of this process.
Despite this market support, the Company has observed the recent volatility and general softening in global commodity markets and which
Heron considered it would likely delay the closing of a suitable project funding arrangement for a staged development. As a result, the
attractiveness of the early start option was reduced relative to undertaking a single financing incorporating both the WRP and WUP once the
Feasibility Study had been completed.
Despite recent market conditions, forecasters and market commentators have retained their positive views around the zinc market
fundamentals, based on a projected deficit supply to demand balance, and in particular supported by the closure of a number of globally
significant operations. These closures, along with growing zinc consumption continue to provide a positive backdrop to this commodity market.
Commencement of the Feasibility Study
Also following the successful completion of the PEA and supported by the strong business case, work commenced on the Feasibility Study for
Woodlawn, with a budget of approximately $11 million that is fully funded from the Company’s existing cash reserves, and which is expected
to be completed within the first half of 2016.
It is anticipated that the Feasibility Study will deliver a maiden Mineral Reserve statement for the WUP and an updated Mineral Reserve
statement for the WRP, together with a combined mine plan, plant and infrastructure designs, capital and operating cost estimates, and
environmental, social, and economic considerations. The Feasibility Study is geared towards achieving a low cost project that will facilitate
an efficient funding structure for the Project via a combination of debt and equity. Further work has commenced in finalising statutory
requirements for project construction and operation.
Page 12 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
Phase I & II Drilling Program
A significant early stage Feasibility Study activity at Woodlawn has been the Phase II drilling program (comprising approximately 19,000m of
diamond drilling) which is now 65% complete, with 12,400 metres having been completed as at 9 September 2015, reflecting on-time and on-
budget progress. The initial part of the Phase II program was designed to test shallow mineralised positions which have potential to provide
readily accessible production in the early part of the future underground operation, as well as undertake the in-fill drilling required to upgrade
parts of the underground Mineral Resource to Indicated status.
A large number of high grade intercepts have been recorded during the Phase I and Phase II drilling programs in the last 12 months and at
time writing the Phase II drill program was still in progress and a number of assay results are outstanding. A selection of drill results from
the various lenses include:
Kate Lens:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
14.4m @ 20.7% ZnEq from 374m, (4.6% Zn, 4.1% Cu, 0.8% Pb, 1.0g/t Au, 57g/t Ag), WNDD0001
8.8m @ 30.1% ZnEq from 374m, (12.6% Zn, 1.6% Cu, 7.5% Pb, 2.3g/t Au, 152g/t Ag), WNDD0002
12.3m @ 33.7% ZnEq from 414m, (20.0% Zn, 2.1% Cu, 6.1% Pb, 0.8g/t Au, 53g/t Ag), WNDD0007
8.1m @ 14.0% ZnEq from 309m, (7.2% Zn, 1.1% Cu, 2.3% Pb, 0.9g/t Au, 28g/t Ag), WNDD0009
7.1m @ 39.4% ZnEq from 340m, (16.9% Zn, 0.9% Cu, 11.3% Pb, 3.5g/t Au, 254g/t Ag), WNDD0029
4.8m @ 11.3% ZnEq from 324m (7.6% Zn, 0.4% Cu, 0.9% Pb, 0.7g/t Au, 37g/t Ag), WNDD0029
20.5m @ 20.7% ZnEq from 383m (8.1% Zn, 2.4% Cu, 2.9% Pb, 0.8g/t Au, 68g/t Ag), WNDD0031
12.1m @ 13.7% ZnEq from 405m (4.7% Zn, 2.2% Cu, 0.8% Pb, 0.8g/t Au, 22g/t Ag), WNDD0032
34.0m @ 20.8% ZnEq from 326m (10.0% Zn, 1.1% Cu, 3.5% Pb, 1.6g/t Au, 97g/t Ag), WNDD0033
18.9m @ 7.8% ZnEq from 390m (0.4% Zn, 2.1% Cu, 0.6g/t Au, 8.0g/t Ag), WNDD0035
35.5m @ 11.2% ZnEq from 348m (5.1% Zn, 0.8% Cu, 1.3% Pb, 0.9g/t Au, 62g/t Ag), WNDD0037
19.8m @ 9.9% ZnEq from 376m (0.7% Zn, 2.6% Cu, 0.2% Pb, 0.7g/t Au, 8g/t Ag), WNDD0038
G Lens:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
I Lens:
(cid:129)
(cid:129)
H Lens:
(cid:129)
(cid:129)
E Lens:
(cid:129)
(cid:129)
8.0m @ 12.7% ZnEq from 37m (3.6% Zn, 1.3% Cu, 2.6% Pb, 1.0g/t Au, 65.4g/t Ag), WNRC0010
14.8m @ 18.0% ZnEq from 198m (5.4% Zn, 2.7% Cu, 2.0% Pb, 1.2g/t Au, 49g/t Ag), WNDD0009
4.4m @ 16.6% ZnEq from 206m (4.1% Zn, 3.2% Cu, 0.9% Pb, 0.5g/t Au, 39g/t Ag), WNDD0010
9.3m @ 20.5% ZnEq from 76m (5.2% Zn, 2.6% Cu, 2.3% Pb, 2.0g/t Au, 122g/t Ag), WNDD0013
2.1m @ 29.8% ZnEq from 61m (3.1% Zn, 6.5% Cu, 1.3% Pb, 1.2g/t Au, 146g/t Ag), WNDD0014
5.7m @ 21.8% ZnEq from 626m (13.3% Zn, 0.7% Cu, 5.4% Pb, 1.2g/t Au, 26g/t Ag), WNDD0006
4.0m @ 7.1% ZnEq from 679m (4.8% Zn, 0.5% Cu, 0.2% Pb, 14g/t Ag), WNDD0006
1.7m @ 38.5% ZnEq from 108.7m (3.5% Zn, 6.8% Cu, 4.9% Pb, 3.9g/t Au, 213g/t Ag), WNDD0026
0.75m @ 51.5% ZnEq from 103.8m (5.6% Zn, 8.1% Cu, 6.8% Pb, 3.6g/t Au, 398g/t Ag), WNDD0027
4.2m @ 28.5% ZnEq from 135m (14.8% Zn, 2.2% Cu, 6.2% Pb, 0.7g/t Au, 37g/t Ag), WNDD0012
2.5m @ 9.2% ZnEq from 151.3m (1.9% Zn, 1.2% Cu, 0.2% Pb, 3.4g/t Au, 16.5g/t Ag), WNDD0025
Lisa Lens:
(cid:129)
4.2m @ 28.5% ZnEq from 241.9m (17.7% Zn, 1.6% Cu, 5.0% Pb, 1.1g/t Au, 28g/t Ag), WNDD0015
*Zn equivalents (ZnEq) in this report are based on the formula: Zn(%) + 0.81 x Pb(%) + 3.12 x Cu(%) + 0.86 x Au(gpt) + 0.03 x Ag(gpt). The factors in the equation, determined by SRK Consulting
(Australasia) Pty Ltd, take into account the plant feed grade together with relative mining recoveries, mining dilution, metallurgical recovery rates, payability and realisation costs, and are expressed as an
equivalent zinc only grade (the effective grade that is delivered to the processing plant). Metal prices used in the calculation are: Zn US$2,300/t, Pb US$ 2,050/t, Cu US$6,600/t, Au US$1,250/oz and Ag
US$18/oz. All these metals are expected to be recoverable. Refer to the announcement of 22 April 2015 entitled “Preliminary Economic Assessment Delivers Strong Business Case for the Woodlawn Zinc-
Copper Project” for further information.
Heron Resources Limited - Annual Report 2015 - Page 13
Page 14 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
The drilling has successfully confirmed the predicted up- and down-plunge extensions to the Kate Lens and, along with a number of contiguous
wide drill intercepts, is expected to increase the volume of the known mineralisation within the Kate Lens from that quantified during the PEA.
Partially offsetting this success, the deeper portion of G Lens has returned lesser volumes than expected.
Overall, the Company believes that the results for the lenses being drilled appear to be globally consistent with the expectations from the PEA.
In-Mine Extensional Exploration
Downhole electromagnetic (DHEM) surveying continues to be used as a tool to develop drill targets and to refine existing drilling programs.
Surveys as part of the PEA and FS programs have provided a large number of new EM plates that have been modelled within both shallow
and deeper areas within the mine.
The shallow targets (<500m) are being tested as part of the ongoing program and have the potential to provide modest size but potentially
high grade additional Mineral Resources to the system. These targets include the E, G, H and Lisa Lenses.
In addition, deeper targets, which have been refined from the surveys of drill hole WNDD0030 (approx. 700m), plus surveys from earlier drilled
holes, provide exciting vectors for potential depth extensions to both the Kate Lens and the C Lens (Figure 2).
The majority of massive sulphide lenses in the Woodlawn system have substantial down-plunge components, and with the tenor of the known
Kate Lens mineralisation, there is a strong possibility that this lens continues at depth. The two EM plates identified, which occur around 60m
in the footwall compared to the upper Kate Lens plane, and the copper rich mineralisation intersected in 2010 in drill hole WLTD010 which
assayed 7m @ 2.1% Cu from 538m downhole, provide strong encouragement for this model.
If proven, the Kate Lens down-plunge extensions could provide for significantly increased tonnes per vertical metre within the 500-700m range
below surface, which is within the existing PEA and FS mine plan design.
The new EM plates which sit directly below the current C Lens position also provide encouragement that this lens may continue at depth. Very
little systematic exploration has been undertaken within the Woodlawn mineralised system to explore for extensions at depth (>700m).
Previous, limited, exploration drilling at the immediate base of the current C Lens suggested that the system could be pinching out. The EM
plates indicate that the lens may swell beyond that expected pinch point, which would be similar to the behaviour of the C Lens in shallower
positions.
Importantly, management holds the view that the “starter underground case” comprising approximately 7 years of underground plant feed
which was presented in the PEA should be able to be significantly extended through continued exploration. The attractive EM targets at-depth
provide evidence in support of this position.
Figure 2: Oblique Cross Section through the Woodlawn system showing the recently modelled DHEM plates and target zones.
W
N
D
D
0
0
3
0
W
L
T
D
0
0
1
0
G Lens
E Lens
H Lens
Open Pit
(Waste disposal site)
WNDD0030
Deep hole designed
to provide DHEM
platform
Lisa Lens
Kate Lens
A Lens
C Lens
I Lens
D Lens
Kate Extension
Target
B Lens
x2 DHEM modelled plates
(90mx120m) in down-plunge
projection of Kate Lens
- offset into footwall positions
J Lens
W
L
T
D
0
0
1
0
A
2,500mRL
WLTD0010 (drilled 2010)
Modest sulphide intercept:
7m @ 2.1% Cu from 538m
in plane of modelled plate.
Limited DHEM data from
this hole used in conjunction
with WNDD0030 DHEM data
W
N
D
D
0
0
2
0
W
1
Series of DHEM modelled
plates in down plunge position
of C Lens - showing potential
for further extensions at depth
2,000mRL
400m
Target Zones
Heron Resources Limited - Annual Report 2015 - Page 15
2.0 OPERATIONS REPORT CONTINUED
Kate/E lens
extension
area up dip
U277
U287
U281
D Lens
U254
W149
0017
U237
U427
U273
2500mRL
5
271
WNDD0060
m
x
m
x
q
q
E
E
n
n
Z
Z
0
1
0
0
0
2
WNDD0029
7/39
x m
q
E
n
Z
0
0
3
WNDD0033
34/21
WNDD0002
9/30
WNDD0039
5/28
WNDD0009
8/14
WNDD0073
WNDD0018
WNDD0074
WNDD0037
WNDD0011
6/21
36/11
W047
W097A
W176
U354
U353
U355
W146
W097
U356
WNDD0075
WNDD0053
WNDD0046
WNDD0001
28/23
14/21
10/16
795 fault
W060
U272
WNDD0031
position uncertain,
limited survey control
20/21
2400mRL
WNDD0034
WNDD0003
Kate
Current
Resource
Outline
50m
W125
Figure 3: Longsection of
Kate Lens showing
ZnEq x Metres
intercepts and contours
WLTD0012
WNDD0038
WNDD0007
20/10
WNDD0010
Kate Lens
WNDD0071
WLTD015
12/34
9/28
WNDD0035
WNDD0032
19/8
WNDD0016
15/6 (Cu only)
WNDD0008
5/18
12/14
W059
position
uncertain,
limited
survey control
WNDD0063
I Lens
D
,
(
E
l
,
o
F
o
k
a
i
n
n
d
g
t
K
o
a
w
t
e
a
r
l
e
d
n
s
s
D Lens
100m
Lisa Lens
B Lens
Existing
underground
access
m
l
i
o
n
n
e
g
H Lens
Kate Lens
J Lens
A Lens
g
s
r
e
i
d
c
t
i
0
o
6
n
0
G Lens
E Lens
p
b
r
e
o
a
j
r
e
i
c
n
t
g
i
)
o
n
C Lens
F Lens
Open Pit
W
N
D
D
0
0
3
3
W
N
D
D
0
0
2
9
Figure 4: Cross section through the Kate Lens
showing recent intercepts
2500m
LEGEND
Dolerite
Woodlawn Volcanics
Stoped areas
Current resource outlines:
Kate Lens
E Lens
D Lens
Fault
No significant assay
Pre 1999 resource
drillholes
W049
Px polymetallic
(Zn/Pb rich) sulphides
Phase 2 drilling
WNDD0021 onwards
ZnEq x Metres Contours:
>300
200 to 300
100 to 200
< 100
34/21 - 34 m @ 21% ZnEq
Please Note:
downhole widths used,
true widths for Kate Lens
are approximately
on average 90% of
downhole widths
WNDD0029 (Projected 25m from sth)
4.8m @ 11.3% ZnEq from 324.3m
(7.6% Zn, 0.4% Cu, 0.9% Pb,
0.7g/t Au, 37.4g/t Ag)
WNDD0033
34.0m @ 20.8% ZnEq from 326m
(10.0% Zn, 1.1% Cu, 3.5% Pb,
1.6g/t Au, 97.5g/t Ag)
W
N
D
D
0
0
1
6
WNDD0002
2.3m @ 22.9% ZnEq from 368m
(12.0% Zn, 0.6% Cu, 5.4% Pb,
1.3g/t Au, 116g/t Ag)
WLTD015
21m @ 7.1% ZnEq from 377m
(1.8% Cu, 0.5g/t Au,
9.8g/t Ag (copper ore zone)
W
0
5
9
WNDD0032
12.1m @ 13.7% ZnEq from 405.2m
(4.7% Zn, 2.2% Cu, 0.8% Pb,
0.8g/t Au, 22g/t Ag)
Page 16 - Heron Resources Limited - Annual Report 2015
WNDD0029 (Projected 25m from sth)
7.1m @ 39.4% ZnEq from 340m
(16.9% Zn, 0.9% Cu, 11.3% Pb,
3.5g/t Au, 254g/t Ag)
427m
W050
3 7 4 m
WNDD0002
8.8m @ 30.1% ZnEq from 374m
(12.6% Zn, 1.6% Cu, 7.5% Pb,
2.3g/t Au, 152g/t Ag)
m
9
0
4
2400m
WLTD015
9m @ 16.1% Zn, 2.0% Cu, 4.0% Pb,
0.8g/t Au, 52g/t Ag from 376m
4 3 5 m
W
N
D
D
0
0
0
2
50m
LEGEND
Px polymetallic (Zn/Pb rich) sulphides
Projected plane
of the 795
Fault Complex
W
1
3
1
6 m
2
4
W
L
T
D
0
1
5
W
N
D
D
0
0
3
2
2.0 OPERATIONS REPORT CONTINUED
Figure 5: G, Lisa, I Lens Long-Section showing a selection of
recent and significant intercepts.
2800m
W041
WNDD0042: 5.7m @ 12.3% ZnEq from 78m
(5.9% Zn, 0.2% Cu, 3.9% Pb, 0.4g/t Au, 73g/t Ag)
WNDD0024
WNRC0010
WNDD0065
WNDD0057
W197
W198
LEGEND
Dolerite
Woodlawn Volcanics
Stoped areas
Current resource outlines:
Lisa Lens
I Lens
H Lens
G Lens
Fault
No significant assay
Sulphides intersected
Significant mineralised intercept
Phase 2 drilling WNDD0021 onwards
Px polymetallic (Zn/Pb rich) sulphides
WNDD0015: 4.2m @ 17.7% Zn,
1.6% Cu, 5.0% Pb, 1.1g/t Au,
28g/t Ag from 246m
W061
WNDD0005
WNDD0004
U453
U450
U449
U451
I Lens extension
WNDD022
Base of Oxidation
WNDD0024: 3m @ 33.9% ZnEq from 30m
(8.5% Zn, 3.5% Cu, 5.2% Pb, 6.3g/t Au, 161g/t Ag)
WNDD0027: 0.75m @ 51.% ZnEq from 103.8m
(5.6% Zn, 8.1% Cu, 6.8% Pb, 3.6g/t Au, 398g/t Ag)
H lens extension
area
WNDD0058
W096
WNDD0014
W142
W096
WNDD0012
WNDD0062
W 063
WNDD0026: 1.7m @ 38.5% ZnEq from 108.7m
(3.5% Zn, 6.8% Cu, 4.9% Pb, 3.9g/t Au, 213g/t Ag)
WNDD0047
WNDD0064
WNRC0009
WNDD0013
WNDD0059
WNDD0025
WNDD0042
WNDD0050: 5.3m @ 10.1% ZnEq from 103m
(1.4% Zn, 1.6% Cu, 0.9% Pb, 1.3g/t Au, 63g/t Ag)
W131
WLTD005
W057
W136
WNDD0044: 1.1m @ 52.2% ZnEq from 117m
(24% Zn, 4.3% Cu, 12.9% Pb, 1.5g/t Au, 97g/t Ag)
WNDD0040
WNDD0049
WNDD0027
WNDD0052
WNDD0026
WNDD0050
W175
WNDD0044
WNDD0046
WNDD0051
W174
WNDD0041
W171
W189
W191
U338
U337
W187
U340
U341
U342
W190
W050
W192
G Lens
U345
WNDD0002
U343
H Lens
WNDD0009
W176
WNDD0029
U344
WNDD0033
WNDD0039
WNDD0056
WNDD0055
U289
W044
U037
W172A
U295
G2 Lens
WNDD0028
2700m
WNDD0045
WNDD0023
W095
U309
U297
W094
W076
W063
U293
U310
U298
U306
W097
W177
W095
U294
WNDD0045: 2.6m @ 7.4% ZnEq from 95m
U296
(3.6% Zn, 0.1% Cu, 2.4% Pb, 0.2g/t Au, 50g/t Ag)
U292
W146
W076A
2600m
W047
WND0010
U354
U335
W149
et
g
r
a
s T
n
e
a L
Lis
WNDD0017
W145
W148
4.0m @ 2.0% Cu from 234m
W089: 4.2m @ 4.9% Zn,
2.8% Cu, 2.3% Pb, 0.8g/t Au,
25g/t Ag from 266m
WLTD010
WNDD0018
WNDD0011
WNDD015
WNDD036
W089
WNDD0037
WLTD015
WNDD0001
WNDD0035
WNDD0007
WNDD0032
WNDD0016
2500m
WNDD0053
WNDD0003
WNDD0008
WNDD0034
WNDD0007
W196A
W196B
WNDD021
WNDD0069
U439
U448
U441
W178
W139
U424
W139
U415
U425
U426
W139
U414
416
U414
I Lens
W180A
W147
U412
U413
U408
U410
017
WLTD017W1
TD014
W121B
W121A
W121
W121C
N
m
0
0
6
9
1
100m
N
m
0
0
5
9
1
N
m
0
0
4
9
1
I Lens
D Lens
100m
Lisa Lens
B Lens
2400m
Existing
underground
access
H Lens
Kate Lens
J Lens
W117
A Lens
G Lens
E Lens
I, H, G and Lisa lens
long section projection
(looking towards mine grid
East 090 bearing)
N
m
0
0
3
9
1
C Lens
F Lens
Open Pit
Heron Resources Limited - Annual Report 2015 - Page 17
2.0 OPERATIONS REPORT CONTINUED
Mineral Resources and Reserves Definition
Work on updated Mineral Resources for the WRP and WUP is under way.
The current Mineral Resources are presented in Section 10. Work on updated Mineral Resources for the WRP and WUP as part of the
Feasibility Study is under way.
For the WRP, a new JORC 2012 / NI 43-101 Mineral Resource is in the final stages of being generated. The Mineral Resource estimation will
incorporate all the historic drilling which was undertaken after the previous Mineral Resource and Mineral Reserve were published. These
results will be published in the near future via a NI 43-101 Technical Report.
An update to the WUP Mineral Resource will be undertaken following the completion of the Phase II drilling programme and will be published,
along with the maiden Mineral Reserve for the WUP and an updated Mineral Reserve for the WRP, in the Feasibility Study.
WOODLAWN RETREATMENT PROJECT
Heron’s focus at Woodlawn is the combined development of the underground and tailings retreatment projects. The lower grade WRP (Figure
6) fully complements the high grade Underground Project, with both amenable to processing through a single flotation plant. The WRP has
the potential to effectively fund the entire processing plant, and additionally going forward acts as a “low grade stockpile” for the WUP.
The key attributes of the WRP are:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Established Mineral Resource at surface, fully
quantified and no further drilling is required.
The Mineral Resource is currently being
updated, and a new Mineral Reserve will
follow as part of the Feasibility Study.
During 2015 the WRP FEED study was updated
providing a strong business case – capital
costs were estimated at A$96 million and
operating
tonne,
costs A$20.29
demonstrating potential improvements over
the PEA assumptions.
per
Proven hydraulic mining method with a
proposal for processing through a standard
sequential sulphide flotation circuit.
Water, power, access and a reprocessed
tailings disposal site are all in place.
Strong community support and
available skilled work force.
locally
As a standalone project, annual production is
estimated to reach 49kt zinc concentrate at
45% zinc, 14kt copper concentrate at 22%
copper and 15kt lead concentrate at 35% lead,
with gold / silver credits.
Figure 6: Woodlawn Retreatment Ponds in lower portion of photo
Page 18 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
Process and Plant Engineering
GR Engineering Services Limited (GRES) recently completed a report to update the 2012 Front End Engineering Design study (“FEED”) capital
and operating cost estimates for the Woodlawn Retreatment Project (the “2015 FEED Update”). This update considered a plant layout that
could incorporate the additional equipment required for the co-treatment of underground ore at a later date and forms the basis for
understanding the project development costs for a staged development option at Woodlawn. All estimates were provided to a +/-20% level
of accuracy.
The capital estimates for the WRP components of the process plant reduced slightly compared to the PEA estimates with the FEED coming in
at A$95.9M compared to the PEA at A$96.7M. It was pleasing to note that the slight reduction in capital was achieved despite a movement
in the base AUD/USD exchange rate basis from 0.80 in the PEA to 0.73 in the 2015 FEED Update.
GRES have also confirmed that the plant operating costs have not materially changed since the 2012 FEED estimate, with a total operating
cost of A$20.29 per tonne of tailings plant feed compared to the 2012 figure of A$19.61/t. For the PEA, an operating cost for the WRP plant
feed of A$24.59/t was assumed, with an allowance made for the impact of lower throughput and for overheads. From a review of these costs,
it does appear that there may be some scope to reduce the tailings processing costs assumed in the Feasibility Study compared to the PEA.
Work is now focused on the plant design for the Feasibility Study as it relates to the underground and the combined treatment options.
EL 8325
WOODLAWN EXPLORATION PROJECT
Heron holds a number of exploration
licenses surrounding the Woodlawn
Mine. The
the
silurian volcanics, the host rocks for
the VMS style deposits in the area.
tenements cover
EL 7468
EL 7468
is
the
A key regional prospect close to the
Woodlawn mine
former
Currawang Mine located 10km to the
(see Figure 7) and where
NW
approximately 0.5Mt of high grade ore
was mined from underground and
trucked to the Woodlawn plant in the
early 1990s.
A fixed loop EM survey was completed
in the second half of the year and a
target has been defined to the south of
the original ore body. Drill approvals
were received and plans for drilling the
target will be finalised once the Phase
II program at Woodlawn is more
advanced.
In addition to Currawang, Cowley Hills
located 2km north east of the mine
was also a historical producer and
remains a high ranking regional
prospect.
Sfw
Sfc
:::::::::::::::::::::::::::::::::::::::::::::::::
::::::::::::::::::::::::::::::::::::::::::::::::
Sfb
Dkq
Sfo
EL 8325
EL 8325
EL 8325
Oa
Northwest Structural Corridor
LAKE
LAKE
BATHURST
BATHURST
0
5
kilometres
Currawang Mine
Historical production
0.5Mt @ 13% Zn, 2.2% Pb,
1.6% Cu, 33g/t Ag
Sfo
Montrose
LAKE GEORGE
Sfw
NW Extensions
NW Extensions
::::::::::::::::::::::::::::::::::::::::::::::::: ::::::::::::::::::::::::::::::::::::::::::::::::
SML20
SML20
Woodlawn Mine
Historical production
13.8Mt @ 9.1% Zn, 3.6% Pb,
1.6% Cu, 74g/t Ag, 0.5g/t Au
::::::::::::::::::::::::::::::::::::::::::::::::
:::::::::::::::::::::::::::::::::::::::::::::::::
Oa
Area A
EL 7257
EL 7257
Cowley Hills Mine
Dmt
Murphy’s
EL 8325
EL 8325
EL 8325
Sfo
Dgo
TARAGO
TARAGO
Hayshed
DEVONIAN
Dsd Bishopthorpe Dolerite
Dpw, Dgo, Dgb, granites
Dmt Tarago Conclomerate
Dkq, Dkl, felsic volcanics
SILURIAN
Sfgk Rhyolite, Sfb Sandstone
Sfo Covan Crk Fm (sandstone)
Sfc Currawang Fm (basalt, dolerite)
Sfd De Drack Fm (sandstone, shale, limestone)
Sfw Woodlawn Volcanics
Ssb Black Shale
Ste Ellenden Granite (Lockhardt Igneous Complex)
ORDOVICIAN
Oa Meta-Sandstone / Siltstone
Oa
EL 8325
EL 8325
Ste
EL 7469
EL 7469
EL 7469
Sfw
Dgb
Dkl
Dk
Figure 7: Woodlawn Key Exploration Targets
Heron Resources Limited - Annual Report 2015 - Page 19
2.0 OPERATIONS REPORT CONTINUED
EXPLORATION PROJECTS
NEW SOUTH WALES – COPPER-GOLD EXPLORATION
Heron maintains a significant tenement holding in the Lachlan Fold Belt with some 3,739km2 under tenure (Figure 8).
The Company is of the view that NSW remains underexplored with significant discovery potential. Heron has sought tenure in areas with a
demonstrated discovery history.
Figure 8: Heron’s tenement holdings and interests in NSW
Girilambone
Great Australian
Basin
Endeavour
Avoca Tank
Canbelego
Girilambone
Tritton
COBAR
Peak
Mt Boppy
NYNGAN
Nymagee
Wonawinta
Wagga Tank
Farm-out
Gilgunnia
Overflow
Tottenham
GILGANDRA
DUBBO
Mineral Hill
Yellow Mountain
Peak Hill
Copper Hill
Northparkes
Ophir
PARKES
Copper Hill
LAKE CARGELLIGO
Calarie
ORANGE
Cadia Ridgeway
Murray Basin
West Wyalong
Farm-out
WEST WYALONG
Cowal
Eurow
BATHURST
Cargo
NEFB
Sydney
Basin
MUDGEE
Lewis Ponds
Sunny Corner
Farm-out
SYDNEY
Lachlan Fold Belt
Temora
YOUNG
Kangiara
Gundagai
GOULBURN
Woodlawn
Cullarin
Farm-in
WAGGA WAGGA
Adelong
CANBERRA
Woodlawn
DENILIQUIN
LEGEND
ALBURY
Heron Tenements
VICTORIA
COOMA
Golden Cross Tenements
(Heron has 18.9% equity holding in Golden Cross)
Silurian-Devonian Volcanics
Ordovician Volcanics
Copper/base-metal
/gold mines and
significant occurrences
0
100
kilometres
Page 20 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
Three regional structural settings have been the focus for Heron’s tenement acquisitions:
1
Woodlawn VMS Belt base metals
Centred on the Woodlawn Project, the exploration target is the world-class VMS systems occurring in the N-S Silurian acid volcanic rift from
south to north being Stockmans, Captains Flat, Woodlawn, Cullarin and Lewis Ponds. All Lachlan VMS centres are characterised by multiple
lenses associated with a discrete exhalative Silurian felsic volcanic/pelite stratigraphy.
2
Lachlan Transverse Zone copper-gold
Centred on the Copper Hill mining centre, world-class porphyry copper-gold occurs within N-S trending Macquarie Arc Ordovician andesite belt
intruded by Silurian monzonite-tonalite in the WNW trending Lachlan Transverse Zone from east to west on the southern bounding fault being
Forest Reefs, Cadia-Ridgeway, Cargo; and from east to west on the northern bounding fault being Sunny Corner, Copper Hill, and Northparkes.
3
Gilmore Suture gold-copper
Centred on the Overflow mining centre, the exploration target is the porphyry/epithermal gold-copper systems occurring in Silurian-Devonian
crustal rift from south to north Gundagai, Adrah, West Wyalong, Temora, Yellow Mountain, Mineral Hill, Overflow, and Mt Boppy.
Outside of the Woodlawn Project, the focus of the exploration in the last year has been on the Lewis Ponds Project, described below. The
other mainly early stage projects are being reviewed with the potential to farm out to suitable partners.
Lewis Ponds Project (100% Heron)
Lewis Ponds is located 15km east of Orange, in central NSW (Figures 9 and 10). The project contains the Lewis Ponds VMS style deposit (6.6
million tonnes grading 2.4% zinc, 0.2% copper, 1.4% lead, 1.5g/t gold and 69g/t silver JORC 2004 Mineral Resource - Refer to Section 10) –
made up of Main Zone and Tom’s Zone which occur in a sequence of deformed Silurian felsic-to intermediate-volcano marine-sedimentary
rocks.
During the quarter a reverse circulation (RC) drilling program was undertaken on two prospects south of the Lewis Ponds deposit (Figure 10)
with five holes for 637m being drilled. The holes targeted mainly copper mineralisation beneath the historic Brown’s Creek workings and broad
un-drilled gossan zone discovered by Heron 500m south-west of the Brown’s Creek workings.
E
m
0
0
0
,
5
9
6
E
m
0
0
0
,
5
0
7
E
m
0
0
0
,
5
1
7
MT SHORTER
EL5583
EL8323
MT BULGA
(excised)
City of
Orange
Figure 9: Lewis Ponds Prospects Map
Legend
Historic gold and base-metal workings
Recent soil samples
VTEM Targets
6,320,000mN
Lewis Ponds
6.6 million tonnes grading
2.4% Zn, 0.2% Cu, 1.4% Pb,
1.5g/t Au and 69g/t Ag
(JORC 2004 Mineral Resource)
ICELY MINE
6,310,000mN
Heron Resources Limited - Annual Report 2015 - Page 21
The drilling intersected a sequence of felsic
tuffaceous shales, and other fine grained
sedimentary units and some black shales.
Highly encouraging zones of strong pyritic
alteration were intersected containing
copper sulphides.
Best assay results for the drilling were:
(cid:129)
(cid:129)
(cid:129)
10m @ 0.6% Cu from 65m
(Brown’s Creek Lode, ICHRC006)
12m @ 0.8% Cu from 68m
(Brown’s Creek Lode, ICHRC012)
2m @ 0.7% Cu from 107m
(Brown’s Creek Lode, ICHRC023)
This constitutes a first-pass drill test of
both historic and untested drill targets.
Future exploration on Brown’s Creek
mineralisation will need to ascertain
whether the stringer sulphides that were
intercepted at shallow depth constitute the
only mineralisation, or represent the
surface expression of deeper but more
significant mineralisation at depth.
2.0 OPERATIONS REPORT CONTINUED
Northern extension
and gossan investigation
2m @ 0.7% Cu from 107m,
multiple alteration zones
Down-plunge test
12m @ 0.8% Cu from 90m
EM plate target and
historic DH investigation
10m @ 0.6% Cu from 65m
ICHR023
ICHR023
7 0 ˚
7 0 ˚
ICHR012
ICHR012
ICHR006
ICHR006
NSA
ICHR003
ICHR003
250m
Gossan test holes
in T5 area
ICHR005
ICHR005
Legend
Historic copper
workings
GPS Gossan Points
and Lithological
boundaries
Drillhole Trace
NSA, but above
background Cu
and Au values
Figure 10: Brown’s Creek Drillhole intercepts Map
Overflow Gold-Base Metal Project (Heron 75.5% on certain blocks and 100% on the remainder)
The Overflow project is located 110km south-east of Nyngan and 50km north-west along strike from the Mineral Hill operation (owned by KBL
Mining Ltd). The project is located along the northern extension of the Gilmore Suture within Ordovician and Devonian aged meta-sediments
and has the potential to host both epithermal and Cobar-style gold and base-metal mineralisation. A report on the project is being prepared
for groups interested in farming into this project.
Other NSW Exploration Projects
Copper Hill Gold-Copper Project (100% Golden Cross Resources, Heron holds 18.9% of GCR)
A revised Mineral Resource estimate and scoping study were released in the March quarter for the Copper Hill Project in central NSW where
Heron retains a 18.9% stake in Golden Cross Resource Ltd (ASX:GCR). The Copper Hill scoping study (refer to GCR release dated 15 April
2015, “Copper Hill Scoping Study”) returned a positive result and provided a framework for the future development of the Project as an open
pit mine and concentrator processing operation. GCR reported an estimated metal-in-concentrate for the two Copper Hill production scenarios
as:
(cid:129)
(cid:129)
2Mtpa, average 7.7Ktpa copper and 20.7Kozpa gold, peak year 10.8Kt copper and 41.8Koz gold.
3Mtpa, average 11.0Ktpa copper and 29.9Kozpa gold, peak year 14.7Kt copper and 54.4Koz gold.
It was also reported that significant mineralisation remains outside the conceptual pit shell defined for the scoping study. This highlighted the
potential to increase the material within the possible mine plan. It has been proposed that these areas will be targeted as a part of the 2015
PFS drilling. Heron continues to monitor its investment in GCR and the advancement of the Copper Hill Project with the aim of maximising the
overall return to Heron Shareholders.
Page 22 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
WESTERN AUSTRALIA – NICKEL SULPHIDE EXPLORATION
Heron retains a substantial portfolio of tenements in the Eastern Goldfields of Western Australia that are prospective for Archean-style nickel
sulphide mineralisation. These prospects are currently being reviewed by a number of parties interested in the nickel sulphide potential. The
key prospects are described in the following.
Emu Lake Project (100% Heron)
The Emu Lake Project is located some 65km north-east of Kalgoorlie and work by previous operators (including Xstrata Nickel Ltd) has
identified a fertile nickel sulphide horizon that extends for some 8km through the Heron tenure. Historical drill results include ELD015: 2m at
6.2% nickel and 1.8% copper from 336m depth and demonstrate the potential for high grade nickel sulphide mineralisation in the area.
Bedonia Project (100% Heron)
The Company’s Bedonia Project is located 75km east of Norseman, Western Australia and 60km west-southwest of the Nova-Bollinger nickel-
copper discovery (by Sirius Resources NL) within the Albany Fraser Mobile Zone. Total tenement holding is now approximately 1,500 km2.
In the south of the project area the Company is seeking Nova-style nickel-copper mineralisation hosted within the interpreted Proterozoic-aged
Mount Andrews Gneiss Complex where there is potential for discrete mineralised mafic intrusive bodies. There is also potential for nickel,
copper and PGE mineralisation along the margins of the Proterozoic Jimberlana Dyke that traverses the area and where a number of significant
geochemical anomalies have been identified. Auger programs early in 2014 identified a number of nickel sulphide targets at the Beaker,
Woodline and Mordicus prospects. Some reduction and rationalisation of the Company’s tenement holding in this area commenced during the
latter part of this year.
Mt Zephyr Gold and Nickel Sulphide Project (100% Heron)
The Mt Zephyr Project is located 80km north-northeast of Leonora and is prospective for Archaean gold mineralisation within high-grade
laminated quartz occurrences identified by a local prospector in the north of the project area (Paul’s Find). In addition, a strong basal contact
anomaly of 500-1,000ppm nickel was generated in 2014 through soil auger sampling north of Paul’s Find where Archaean ultramafic units occur
at a similar stratigraphic level to the Mt Windarra ultramafic units north of Laverton.
JOINT VENTURE PROJECTS WA AND NSW
Bulong Gold Project (Heron 20%, Southern Gold Ltd 80%; Heron 100% nickel laterite rights Bulong East)
The Bulong Gold Project is located 30km east of Kalgoorlie. Drilling of six holes for 582m at Railway South (E25/250) were completed. Key
results were:
(cid:129)
The best intersection obtained was in hole BSRC236 on the NE anomaly, with 1m @ 12.24g/t gold at 29-30m downhole in a basaltic
unit. This interval surrounded a halo of low level gold mineralisation (0.1 - 0.71g/t), anomalous tungsten (up to 80 ppm) and elevated
molybdenum (up to 11 ppm). This offers some encouragement for follow up work and is believed to explain the coincident gold-tungsten
surface anomalism on which the hole was targeted.
(cid:129)
Further details of this drilling including JORC 2012 statements can be found in the Southern Gold Ltd’s ASX releases.
Southern Gold continues to seek potential partners to evaluate the significant nickel sulphide prospectivity in the Heron JV areas as it also
moves towards gold production at its wholly owned Canon deposit located adjacent to the JV ground.
Lake Rebecca Project (100% Heron, Saracen option to enter into a farm in agreement)
Heron has entered into an agreement with Saracen Gold Mines Pty Ltd (Saracen) on the tenements P31/2038-40 located some 5km NE of the
Carosue Dam processing plant in Western Australia. Saracen has an approximately 6 month option to enter into a formal joint venture
agreement with Heron and Saracen has committed to conduct an exploration program in this period.
Rocky Gully Nickel-Copper Prospect (100% Heron, Metalicity Ltd, formerly PLD Corporation Ltd right to
acquire 90%)
Metalicity Ltd (MCT:ASX), formerly PLD Corporation Ltd, elected to exercise their option to acquire a 90% interest in the Rocky Gully Project
comprising the three tenements: E70/2801, E70/4543 and E70/4437. Heron retains a 10% interest in the tenements through to the completion
of pre-feasibility study. In consideration for the 90% interest and subject to regulatory approval MCT will issue Heron 14,375,000 MCT shares.
Calarie Copper-Gold Project (EL7023 and ML739 – Kimberley Diamonds Ltd right to earn 75% interest)
Located 25km south-southwest of Parkes, NSW. The area is prospective for principally gold mineralisation associated with the old Lachlan
Gold Co’s Mine where several encouraging drill intercepts have been returned in recent years. Rehabilitation work has been completed on the
site over the reporting period.
Heron Resources Limited - Annual Report 2015 - Page 23
2.0 OPERATIONS REPORT CONTINUED
KALGOORLIE NICKEL PROJECT (100% Heron)
The concept and implementation of the Kalgoorlie Nickel Project (KNP) by Heron commenced in 1997. The Project consists of 94 tenements
covering approximately 800 square kilometres in a 150 kilometre radius north and north-east of Kalgoorlie, Western Australia (Figure 1).
Resource definition drilling by Heron and others has proved up a JORC 2012 compliant Mineral Resource totalling approximately 784.9 million
tonnes at 0.70% nickel and 0.049% cobalt, making it one of the largest nickel laterite deposits in the world today. A key attribute of the KNP
mineralisation is the ability to screen beneficiate the ore material prior to leaching providing a simple and cost effective method of significantly
increasing the feed grades.
Vale Inco joint ventured into the project between 2005 and 2009 expending some A$34 million and completing a pre-feasibility study, prior to
withdrawing post the Global Financial Crisis.
Since 2010, Heron has been continually reviewing processing refinements, and in 2013 engaged with Simulus Engineers in Perth to test the
applicability of their Carbon Friendly Nickel Production flow-sheet to the KNP. The test-work and subsequent financial modelling has led to a
potential step-change for this project.
Metallurgical Test Work Programs and Scoping Studies
Simulus Engineers completed an initial Scoping Study in April 2014 on treating KNP ore with atmospheric leaching and acid recovery at a
production rate of 10Ktpa nickel in a Mixed Hydroxide Product (MHP) (Figures 11 and 12).
Simulus estimated a processing plant capital cost of A$236 million (+/-30%), with Heron estimating total capital cost including all
infrastructure at A$356 million (+/-30%) for the 10Ktpa nickel production scenario. This equated to a capital intensity of US$14.54 per annual
pound of nickel production, a potential “step-change” improvement for nickel laterite (Table 1).
Based on these encouraging results, the Simulus Scoping Study and Heron’s cost model were revised, through up-scaling of the 10Ktpa to 20Ktpa,
with additional bench-scale acid leach tests, and further consideration of the mining inputs. Additionally, Simulus completed work on an initial
Front End Engineering Design (FEED) study for a 1.5 tonne per hour Demonstration Plant to treat nickel residues and KNP laterite ore (Figure 12).
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.
The 20Ktpa Scoping Study results were released on 31 July 2014 and delivered excellent technical and financial results (Table 1):
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Confirms the potential for the KNP to be developed as a large scale, very long life mine using the Carbon Friendly Nickel Production
sulphuric acid leaching and recycling process.
An initial mining inventory of 123.8M tonnes has been modelled at a Leach Feed Grade (LFG) of 1.16% nickel and 0.06% cobalt, with a
Production Target of 683,600 tonnes of nickel in concentrate over a 35 year mine life.
Significant scope exists to increase the Production Target. Based on the total mining inventory from the 2010 Pre-feasibility Study, the
project could be in production for more than 50 years or alternatively be scaled up further.
Processing rate of 2.0Mtpa for annual production averaging a contained 19,500 tonnes nickel and 900 tonnes cobalt, with an average
production over the first 10 years of 20,200 tonnes of nickel, shipped as Mixed Hydroxide Product.
Capital costs of A$660 million inclusive of a 10% contingency, confirming a low capital intensity of US$13.82 per annual pound of nickel
production compared to a traditional HPAL process route of around US$40/lb.
Total revenue (including by-product credits) of A$12.6 billion and pre-tax net cash flow of A$4.3 billion over the
initial 35 years of operation – based on a nickel price of US$9.00 per pound (A$/US$ 0.90).
Over the first 10 years of operation, C1 cost US$3.71/lb nickel and averaging US$4.27/lb nickel
over the 35 year mine life, comparable to the published C1 cost of the established
Ravensthorpe HPAL project but at a much lower initial capital cost.
C3 cost of US$5.90/lb nickel over the initial 35 year mine life.
The KNP provides significant exposure to long-term, low cost nickel
production in a highly stable and mining-orientated jurisdiction.
Significant leverage to the nickel price, with an increase in
the nickel price assumption of US$1.00/lb
increasing the pre-tax project net cash flow by
approximately A$1.4 billion.
A Demonstration Plant engineering design was completed
Figure 11: Demonstration Plant
Page 24 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
In July 2014 Heron appointed KPMG Corporate Finance as its advisor to coordinate a partnership process for the KNP, following strong in-
bound interest in the project. This interest appeared to be driven by a number of factors including the relatively strong nickel price
environment and outlook at the time, the decline in ore exports from the Indonesian laterite nickel industry and the consequent need to identify
alternative sources of nickel ore or concentrate, and the flowsheet advances made by Heron through its partnership with Simulus.
During the later stages of 2014, the nickel price continued to decline from the year high of US$9.62/lb in the June 2014 quarter to around
US$6.50/lb by December. In addition, during November BHP Billiton withdrew its Nickel West business from sale. The impact of these two
factors was to significantly reduce the interest in the KNP partnership process. Discussions continued with a number of parties to the end of
the financial year, and the Company continues to explore options for realising value from the Project.
Milling
Single stage crushing, beneficiation and scrubbing,
followed by milling.
Leaching
Atmospheric leach (4-6 agitated tanks).
Acid recovery
Two stages of membrane recovery and medium
pressure autoclave for iron removal and supporting
plant.
Trim neutralisation
Neutralisation tanks (SO2 and magnesia based).
MHP production
Precipitation tanks, thickening and filtration, bagging
and storage.
Supporting processes
Raw and process water supply and distribution,
power, acid production, water recovery and magnesia
regeneration, ancillary processes.
Figure 12: Kalgoorlie Nickel Project
Optimised Flowsheet
Mill
Leach
Filtration
Tailings
store/stack
Acid regen
and recovery
Trim
neutralisation
MHP
production
MgO/SO2
production
Acid Plant
Main process
Recovered magnesia
Recovered water
Recovered/regenerated acid
Comparing the July 2014 Simulus 20ktpa Scoping Study to each of the Vale Inco 2009, Heron 2010 and Simulus 10Ktpa study outcomes:
Table 1: Comparison of Simulus Estimates with Previous Heron KNP Studies
Parameter
Vale PFS
January 2009
HRR PFS
Revision
February 2010
10Ktpa Scoping
Study
April 2014
20Ktpa Scoping
Study
July 2014
Capacity Mtpa Leach Feed
Mine Life (years)
Average Ni Production tpa in MHP
Overall Opex US$/lb Ni (C1 cost)
Pre-production Capex A$M
Overall Capex US$/annual lb Ni
2.5
34
22,200
4.54
2,102
40.45
3.75
35
36,700
4.17
2,834
36.10
1.0
22
10,000
3.56
356
14.54
2.0
35
19,500
4.27
660
13.82
Refer to Heron’s announcements of 8, 22 and 23 April 2014 and 31 July 2014 for details of the material assumptions underlying these
outcomes. These assumptions all remain valid between the four studies.
Heron Resources Limited - Annual Report 2015 - Page 25
2.0 OPERATIONS REPORT CONTINUED
During 2014-2015 Simulus conducted further testwork on the screen beneficiation characteristics of the KNP ore. This work confirmed earlier
work that the KNP siliceous ore types returned significant higher nickel grades through a screen beneficiation process. The products from
these tests were then used in further leaching tests which confirmed the results from 2014 as described previously.
KNP Field Programs
Screen Upgrade Testing
In Heron’s 20ktpa KNP Scoping Study, conservative
assumptions were made in respect of the screen
upgrade performance of the ore (assumption of average
1.16% Ni Leach Feed Grade). The project economics
were found to be highly sensitive to screen upgrade
performance. Accordingly, bench-scale programs
commenced at Simulus Engineers to better quantify the
screen upgrade performance of the KNP siliceous ore.
Figure 13 shows screen upgrade of sonic drill core,
Siberia North siliceous ore. At 63 micron, the upgrade
is 200%, representing a doubling of the Leach Feed
Grade compared to Head Grade. This is consistent with
historical plant performance at the Cawse Nickel
Operation when treating “KNP style” siliceous ore.
Mining Operations
Figure 13: KNP Screen upgrade data
Beneficiation Upgrade (O14-SS2)
250
200
150
100
50
0
>3030 >1030 > 415 > 150 > 105 > 77
> 63
> 43
< 43
Ni
Co
Fe
Si
Mass
100
80
60
40
20
0
)
%
(
y
r
e
v
o
c
e
R
s
s
a
M
)
%
(
e
d
a
r
g
p
U
Heron has granted chrysoprase mining rights over various KNP tenements to two separate parties, one of whom has commenced mining
operations at Goongarrie Hill. This excavation is in siliceous style nickel laterite, and is providing useful information on the expected
excavating performance of the KNP ore.
The KNP already combines a premium resource base with excellent
infrastructure, a benign environment and strong community support.
Securing the Carbon Friendly Nickel Production flow-sheet is the project’s
step-change to long-term, low cost nickel production.
2.0 OPERATIONS REPORT CONTINUED
BUSINESS DEVELOPMENT
During the initial part of the 2014 financial year business development was focused on the completion of the merger with TriAusMin
announced on 10 March 2014. The merger, undertaken by way of a Scheme of Arrangement between the companies, was completed on 5
August. On 20 August, Heron completed its dual listing and commenced trading on the Toronto Stock Exchange under the ticker HER.
Following completion of the merger, focus turned towards the fast track development of the Woodlawn Zinc-Copper project as having the best
leverage towards increasing value for shareholders.
During July through to September 2014 the Company completed the tasks associated with the integration of Heron and TriAusMin including
finance and administration functions, and the Woodlawn Project development team. Immediately following the completion of the merger,
Heron commenced execution of the detailed project development plan which had been agreed during the preceding months, which included
the commencement of the Preliminary Economic Assessment, and the continued rationalisation of non-core assets. The Company was able to
have drill rigs on site within weeks of the merger completion, and the PEA itself was finished on time, and within budget, in early 2015.
Also fundamental to the business development efforts during the year was ensuring that the Company’s ongoing financing strategy facilitated
the future development of the Project.
With the change in focus for the Company away from nickel and towards zinc, the Company recognised that there was an opportunity to
facilitate the placement of the major stakes held by BHP Billiton Limited and Vale S.A., both legacies of their involvement in the Kalgoorlie
Nickel Project dating back a number of years, thus helping to rebalance the shareholder register in favour of zinc-aligned investors.
As a result, on 27 August 2014 the Company announced that BHP Billiton had successfully sold its entire holding comprising approximately
10.4% of Heron shares to Sprott Inc and Exploration Capital Partners 2008 LP, a Limited Partnership managed by a subsidiary of Sprott. Sprott
is a leading North American–based asset management firm with a strong track record of identifying and supporting emerging resource
companies.
On 12 September 2014 the Company further announced that Vale S.A. had sold their entire holding comprising approximately 9.0% of Heron
shares via a significantly oversubscribed book-build process conducted by Euroz Securities.
During the second half of the 2015 financial year the Company engaged in detailed discussions and due diligence with a number of equity,
debt and offtake providers considering the opportunity to fast-track the development of the Project through applying a staged funding solution
which would see the WRP components of the Project built first, followed by the WUP components once the Feasibility Study was completed.
This work resulted in the announcement, on on 24 July 2015 of a strategic relationship with Greenstone Resources L.P. (“Greenstone”) under
which Heron would initially raise A$6.8 million through a placement of 54.1 million shares to Greenstone. The initial placement, which was
to be used for the Woodlawn Project development and for general corporate purposes, was undertaken at 12.6 cents per share, representing
a significant premium to Heron’s then share price.
Importantly, the relationship provided for later support by Greenstone of the project financing, with a potential additional investment by
Greenstone of A$13.2 million (or such amount that would take Greenstone’s interest up to 19.9% of Heron shares) available at Greenstone’s
discretion should Heron proceed with the staged development of the Project.
The Company intends that the strategic relationship and associated financial support will provide a cornerstone equity investment position
when the Project reaches the point at which final equity funding for construction and operations is sought. At present the Company anticipates
seeking to fund the Project during 2016 following completion of the Feasibility Study.
Heron Resources Limited - Annual Report 2015 - Page 27
Page 28 - Heron Resources Limited - Annual Report 2015
2.0 OPERATIONS REPORT CONTINUED
Forward Looking Statements
This report contains forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws, which are based
on expectations, estimates and projections as of the date of this report. This forward-looking information includes, or may be based upon, without limitation,
estimates, forecasts and statements as to management’s expectations with respect to, among other things, the timing and amount of funding required to
execute the Company’s exploration, development and business plans, capital and exploration expenditures, the effect on the Company of any changes to
existing legislation or policy, government regulation of mining operations, the length of time required to obtain permits, certifications and approvals, the
success of exploration, development and mining activities, the geology of the Company’s properties, environmental risks, the availability of labour, the focus
of the Company in the future, demand and market outlook for precious metals and the prices thereof, progress in development of mineral properties, the
Company’s ability to raise funding privately or on a public market in the future, the Company’s future growth, results of operations, performance, and business
prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expect”, “intend”, “may” and similar expressions have been used to
identify such forward-looking information.
Forward-looking information is based on the opinions and estimates of management at the date the information is given, and on information available to
management at such time. Forward-looking information involves significant risks, uncertainties, assumptions and other factors that could cause actual results,
performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors, including, but not
limited to, fluctuations in currency markets, fluctuations in commodity prices, the ability of the Company to access sufficient capital on favourable terms or at
all, changes in national and local government legislation, taxation, controls, regulations, political or economic developments in Canada, Australia or other
countries in which the Company does business or may carry on business in the future, operational or technical difficulties in connection with exploration or
development activities, employee relations, the speculative nature of mineral exploration and development, obtaining necessary licenses and permits,
diminishing quantities and grades of mineral reserves, contests over title to properties, especially title to undeveloped properties, the inherent risks involved
in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other geological data, environmental
hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding, limitations of insurance coverage and the possibility of
project cost overruns or unanticipated costs and expenses, and should be considered carefully. Many of these uncertainties and contingencies can affect the
Company’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on
behalf of, the Company. Prospective investors should not place undue reliance on any forward-looking information. Although the forward-looking information
contained in this report is based upon what management believes, or believed at the time, to be reasonable assumptions, the Company cannot assure
prospective purchasers that actual results will be consistent with such forward-looking information, as there may be other factors that cause results not to be
as anticipated, estimated or intended, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of any such
forward-looking information. The Company does not undertake, and assumes no obligation, to update or revise any such forwardlooking statements or forward-
looking information contained herein to reflect new events or circumstances, except as may be required by law.
Heron Resources Limited - Annual Report 2015 - Page 29
3.0 Corporate Profile
HERON RESOURCES LIMITED (“Heron” or “the Company”) is engaged in the exploration and development of base and precious metal
deposits in Australia. Following its merger with TriAusMin in August 2014, the Company is focused on the development of the high grade
Woodlawn Project located 250km southwest of Sydney in New South Wales. Heron also owns the Kalgoorlie Nickel Project located north of
Kalgoorlie in Western Australia, and holds a number of other quality base metal and copper-gold exploration properties located in the Lachlan
Fold Belt of New South Wales.
WOODLAWN ZINC-COPPER PROJECT
Heron holds a direct 100% ownership of the mineral rights at the
Woodlawn Mine site situated 40km south of Goulburn and
250km south-west of Sydney, in southern NSW, Australia (Figure
14). It is Heron’s aim to create a profitable, long life and low cost
mineral processing operation at Woodlawn that produces base
and precious metal concentrates. Heron also holds a portfolio of
advanced stage exploration tenements adjacent to the
Woodlawn site covering the prospective felsic volcanic units that
host the Woodlawn Volcanogenic Massive Sulphide (VMS)
deposit.
Historically, the Woodlawn Mine operated from 1978 to 1998
and processed 13.8 million tonnes of ore from the Woodlawn
open pit, underground and satellite deposits grading 9.1% zinc,
1.6% copper; 3.6% lead, 0.5g/t gold and 74g/t silver.
The mine was closed in March 1998 due to prevailing low metal
prices and external corporate issues. Post mine closure the
mineral rights contained within the Woodlawn Mining Licence
SML20 were purchased by TriAusMin Ltd. Since that time, work
has focused on evaluating the potential to reprocess tailings
from previous mining operations (termed the Woodlawn
Retreatment Project – WRP), and to redevelop the underground
mine (the Woodlawn Underground Project – WUP). Regional
exploration has also been undertaken in the vicinity of
Woodlawn with the objective of discovering high grade satellite
deposits (Woodlawn Exploration Project – WEP).
Figure 14: Woodlawn Project Location Plan
149˚20’E
150˚00’E
EL7954
Goulburn
Gunning
34˚40’S
Marulan
Pop. Centre
Main Road
Road
Railway
State Border
Heron Tenure
Collector
EL7468
Woodlawn
(SML20)
Murrumbateman
Currawang
Lake Bathurst
EL7257
50km
Sutton
Hall
Bywong
Tarago
EL8353
EL8325
Canberra
Bungendore
0
25km
Intl. Airport
Queanbeyan
EL7469
35˚20’S
Australian Capital
Territory
New South Wales
Braidwood
NT
QLD
WA
Woodlawn
Perth
SA
NSW
ACT
Sydney
VIC
TAS
Captains Flat
The brownfields drilling and down-hole Electro-Magnetic (DHEM) exploration undertaken by Heron at the Woodlawn site continues to
generate new and extend existing exploration signatures of VMS style systems in Australia’s second largest historic VMS system (second only
to Rosebery, Tasmania).
Release of Preliminary Economic Assessment
In April 2015, Heron announced the completion of the Woodlawn Preliminary Economic Assessment (PEA) study. This study represents the first
complete study on the Woodlawn project incorporating the combined treatment of both the WUP and WRP through a single processing facility
rated at 1.5Mtpa.
The project continues to demonstrate strong base case economics, and key project inputs and variables continue to be adjusted as new
information comes to hand. The current base case results include:
Combined Underground
plus Tailings
“UG Starter Case”
Post-tax NPV8.3*
A$291 million
Post-tax IRR
Initial Capital
46%
A$140 million
Payback Period
2.0 years from commissioning
Net Cash Flow Post-tax
A$577 million
* Results reported using an 8.3%
post tax real discount rate (approx.
10% post-tax nominal).
C1 cost (Zn primary)
C3 cost (Zn primary)
US$0.00/lb
US$0.30/lb
Page 30 - Heron Resources Limited - Annual Report 2015
3.0 CORPORATE PROFILE CONTINUED
Commencement of the Feasibility Study
Following the completion of the PEA, the Company commenced the Feasibility Study for Woodlawn, with a budget of approximately
$11 million, which is fully funded from the Company’s existing cash reserves, and is expected to be completed within the first half of 2016.
In addition to the Phase II drill program for the feasibility study which has commenced, additional work planned involves updating of the
Woodlawn Retreatment Project Front End Engineering Design (“FEED”) study that was completed in 2012 and a FS level study covering the
combined development of the WUP and WRP.
Further work has commenced in finalising operational work plans required for project construction and operation in consultation with various
government bodies.
Metallurgical test work on recent drill core samples is underway to confirm flowsheet design. A geotechnical program is being planned to
allow for the design of the optimised underground portal access. This work will be undertaken in conjunction with the drilling program.
Equity placement with Strategic Investor, Greenstone Resources LP
On 24 July 2015 Heron announced that it had secured a strategic relationship with Greenstone Resources L.P. (“Greenstone”) under which
Heron will initially raise $6.8 million through a placement of 54.1 million shares to Greenstone. Should Heron proceed with the staged
development of the Woodlawn Project, the arrangements provide for a potential additional investment by Greenstone of $13.2 million (or such
amount that would take Greenstone’s interest up to 19.9% of Heron shares).
The initial placement, which is to be used for the Woodlawn Project development and for general corporate purposes, was undertaken at 12.6
cents per share, representing a significant premium to Heron’s share price. Following completion of the initial Placement, Greenstone has an
interest of approximately 13% of the issued capital of the Company and is now the largest individual shareholder. The Greenstone investment
was completed on 17 August 2015.
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 believes that sound
Corporate Governance practices will assist in the creation of Shareholder wealth and provide accountability.
In accordance with Listing Rule 4.10.3, the Company has elected to disclose its Corporate Governance policies and its compliance with them
on its website, rather than in the Annual Report. Accordingly the following information about the Company's Corporate Governance practices
is set out on the Company's website at www.heronresources.com.au:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
Board Charter;
Audit & Governance Committee Charter;
Remuneration & Nomination Committee Charter;
Policy on securities trading;
Policy on continuous disclosure;
Policy regarding communication with Shareholders;
Policy on the Company’s risk management;
Policy on Employee Diversity;
Policy on HSEC;
Policy on Whistleblowers; and
Code of Conduct.
Heron Resources Limited - Annual Report 2015 - Page 31
4.0 Directors’ Report
The Directors submit their Report on the Company and its controlled entities for the year ended 30 June 2015.
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
Stephen Dennis - BCom BLLB GDipAppFin(Finsia)
05 December 2006
Chairman (Non-Executive) of the Board, Member of Audit & Risk Committee, Chair of Remuneration & Nomination 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.
Until recently, Mr Dennis was the Chief Executive Officer and Managing Director of CBH Resources Limited, the Australian
subsidiary of Toho Zinc Co., Ltd of Japan.
Other current directorships
Non executive Director of Rox Resources Limited from August 2015; and Non-executive Chairman of Cott Oil and Gas Limited
since January 2013.
Former directorships in last 3 years
Managing Director of CBH Resources Limited until July 2015
Director
Appointed
Position
Wayne Taylor - BEng (Mining), MBA
11 August 2014
Managing Director and CEO
Mr. Taylor is a mining engineer with over 25 years experience in the mining industry. He holds a Bachelor of Engineering
(Mining) degree from the University of New South Wales and a Masters of Business Administration from the University of New
England. Mr Taylor has held senior operational management roles with Western Mining Corporation and Glencore
International’s Australian operations. For the six years prior to joining TriAusMin he managed Glencore’s base metal business
development based out of Australia which involved assessing mining projects throughout the world. Mr. Taylor was the
Managing Director and CEO of TriAusMin for the last 3 years prior to the Heron merger.
Other current directorships
None
Former directorships in last 3 years
Managing Director and CEO of TriAusMin Ltd until August 2014.
Director
Appointed
Position
Ian Buchhorn - BSc (Hons), Dip Geosci (Min Econ), MAusIMM.
17 February 1995
Executive Director
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; and Non-executive Director of Golden Cross
Resources Limited since March 2014.
Former directorships in last 3 years
None
Page 32 - Heron Resources Limited - Annual Report 2015
4.0 DIRECTORS’ REPORT CONTINUED
Director
Appointed
Position
Borden Putnam III - MSc, RPG
12 December 2014
Director (Non-Executive), Member of Audit & Risk Committee, Member of Remuneration & Nomination Committee
Mr. Putnam is a professional geologist with over 38 years of experience in the mineral industry, with focus on exploration and
asset evaluations in the mineral investment business. From 1976-1991 he worked as a Project Geologist and a District
Manager for AMAX Exploration and Newmont Exploration Limited respectively. He served as Vice-President and Chief
Geologist for MRDI (now AMEC) an internationally recognised mining consultancy firm from 1991-1996. Mr. Putnam was Vice-
President and Principal with Robertson Stephens Investment Management from 1996-2001, and from 2001-2009 was
Managing Director of Eastbourne Capital Management; both firms which were engaged in mineral investment management
principally as private hedge funds. In 2009, Mr Putnam, established his mining industry consultancy business providing
technical evaluations, due diligence audits and investment advice to clients in the mineral resource industry.
Other current directorships
Non-executive Director Mirasol Resources (TSX:MRZ); and Non-executive Director Meryllion Resources (TSX:MYR).
Former directorships in last 3 years
Non-executive Director Concordia Resources (TSX:CCN); and Non-executive Director Great Bear Resources (TSX:GBR).
Director
Appointed
Position
Fiona Robertson - MA (Oxon) (Geology), M AusIMM, FAICD
9 April 2015
Director (Non-Executive), Chair of Audit & Risk Committee, Member of Remuneration & Nomination Committee
Ms Robertson is a finance professional and practicing non-executive director and audit/risk committee chair with a background
of more than 20 years as a chief financial officer in the emerging and mid-tier resources sector and 14 years as a corporate
banker working in Sydney, New York and London with Chase Manhattan Bank. Ms Robertson’s executive experience includes
CFO roles with Petsec Energy Ltd; Climax Mining Ltd and Delta Gold Ltd; as well as various corporate banking roles with Chase
Manhattan Bank.
Other current directorships
Non-executive Director and Chair of the Audit & Risk Committee of Drillsearch Energy Ltd; Non-executive Chair of One Asia
Resources Ltd; and National Committee Member & Chair NSW of WIMnet (AusIMM’s Women in Mining Network).
Former directorships in last 3 years
None
Director
Appointed
Position
Mark Sawyer - LL.B.
19 August 2015
Director (Non-Executive)
Mr Sawyer co-founded Greenstone Resources in 2013 after a 16 year career in the mining sector. Prior to establishing
Greenstone, Mr Sawyer was GM and Co-Head Group Business Development at Xstrata plc where he was responsible for
originating, evaluating and negotiating new business development opportunities for Xstrata. Prior to Xstrata Mr Sawyer held
senior roles at Cutfield Freeman & Co (a boutique corporate advisory firm in the mining industry) and at Rio Tinto plc. Mr
Sawyer is a resident of the United Kingdom.
Other current directorships
North River Resources Plc
Former directorships in last 3 years
21st Century Legacy
Heron Resources Limited - Annual Report 2015 - Page 33
4.0 DIRECTORS’ REPORT CONTINUED
Director
Appointed
Position
Craig Readhead - B.Juris. LL.B.
23 November 2001 – Resigned 30 April 2015
Chairman (Non-Executive), Member of Audit & Governance Committee, Chairman of Remuneration & Nomination 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 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; Non-executive Director of Western Areas Limited since June 2014.
Former directorships in last 3 years
Chairman of Galaxy Resources Limited 2000-2013; Non-executive Director of India Resources Limited 2007-2012;
Non-executive Director of Mount Gibson Iron Limited 2002-2011; and Non-executive Director of Frankland River Olive Company
Limited 2000-2012.
Director
Appointed
Position
James Gill - BSc, MSc, PhD
11 August 2014 – Resigned 19 August 2014
Deputy Chairman (Non-Executive)
Dr Gill has been involved in the mining business for over 40 years, and his experience ranges from exploration, mine
development and operations, acquisitions to project financing. He founded Aur Resources Inc. in 1981, which grew from an
exploration company into a significant, profitable producing copper mining company under his leadership as its President and
Chief Executive Officer for 26 years until August 2007 when Aur was taken over by Teck Resources. He earned his B.Sc and
M.Sc degrees from McGill University and a Ph.D degree in economic geology from Carleton University.
Other current directorships
Thundermin Resources Inc (TSX:THR)
Former directorships in last 3 years
Orezone Gold (TSX: ORE) until August 2011; and TriAusMin Ltd until August 2014.
SENIOR EXECUTIVE OFFICERS
Chief Operating Officer
The Chief Operating Officer (COO) is Andrew Lawry B App Sc (Metallurgy). Mr Lawry brings more than 28 years experience in project
management, engineering, construction, commissioning and operations, both in Australia and overseas. He has worked for several leading
resource companies including Polymetals, Newcrest and engineering firms Bateman, Normet and Q-Proc. Notably, Mr Lawry managed, from
construction through to operation, the successful retreatment of the Hellyer base metal tailings project in 2006 in western Tasmania. With this
experience he is well qualified to lead the successful development of the Woodlawn Project which comprises the retreatment of tailings in
combination with an underground mining development.
Chief Financial Officer and Company Secretary
The Chief Financial Officer (CFO) and Company Secretary is Simon Smith B.Bus CA. Mr. Smith has been a Chief Financial Officer of both private
and public companies in Australia and the USA. He brings 20 years experience in the business world as a Chartered Accountant and holds a
Bachelor’s Degree in Business from the University of Technology Sydney. Mr. Smith was the CFO and Company Secretary for TriAusMin prior
to the merger with Heron Resources.
General Manager - Exploration and Geology
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.
Page 34 - Heron Resources Limited - Annual Report 2015
4.0 DIRECTORS’ REPORT CONTINUED
General Manager - Strategy & Business Development
Charlie Kempson MEng (Oxon), MBA, GAICD 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 base and precious metal mineral exploration and development through
sole funded and joint venture activities.
OPERATING RESULTS
The loss of the consolidated entity for the 2015 financial year after income tax of nil (2014: nil) was $5,673,844 (2014: $6,389,236).
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 the final printed Annual Report.
Management’s Discussion and Analysis for the three and twelve month period ending 30 June 2015 can be found in Appendix 2 of this report.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
Other than the acquisition of TriAusMin Ltd in August 2014 (refer Note 25), there were no significant changes in the state of affairs of the
Consolidated Entity during the year.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
On 24 July 2015 Heron announced that it had secured a strategic relationship with Greenstone Resources L.P. (“Greenstone”) under which
Heron will initially raise $6.8 million through a placement of 54.1 million shares to Greenstone. Should Heron proceed with the staged
development of the Woodlawn Project, the arrangements provide for a potential additional investment by Greenstone of $13.2 million (or such
amount that would take Greenstone’s interest up to 19.9% of Heron shares). The Greenstone investment was completed on 17 August 2015.
Other than noted at the date of this Report there is no matter or circumstance which has arisen since 30 June 2015 that has significantly
affected or may significantly affect:
(cid:129)
(cid:129)
(cid:129)
The operations of the Consolidated Entity;
The results of those operations; or
The state of affairs of the Consolidated Entity.
OPTIONS
No Options were issued or exercised during the year, other than options previously held by TriAusMin option holders whose options became
Heron options on 5 August 2014.
On 5 August 2014 the following Options were issued as part of the transfer of TriAusMin options to Heron options on the same ratio as the
share issue (1 Heron option for every 2.33 TriAusMin options):
Number Issued
171,674
85,836
21,459
21,459
21,459
214,592
85,837
21,459
21,459
858,369
858,369
21,459
21,459
2,424,890
Expiry Date
23 October 2017
27 June 2016
23 June 2015
13 June 2017
13 March 2018
18 November 2015
21 November 2017
4 February 2017
23 October 2017
19 March 2016
20 November 2018
22 February 2018
31 January 2019
Exercise Price
$0.14
$0.27
$0.58
$0.22
$0.15
$0.23
$0.23
$0.27
$0.14
$0.37
$0.09
$0.17
$0.09
Heron Resources Limited - Annual Report 2015 - Page 35
4.0 DIRECTORS’ REPORT CONTINUED
The following Options expired during the year:
Number Issued
2,500,000
333,333
85,837
21,459
214,592
85,837
42,918
85,837
3,369,813
Expiry Date
23 June 2015
16 January 2015
23 October 2017
23 June 2015
18 November 2015
21 November 2017
27 June 2016
23 October 2017
Exercise Price
$0.27
$0.22
$0.14
$0.58
$0.23
$0.23
$0.27
$0.14
As at the date of this report the Company had the following options on issue:
Date Options Granted
29 November 2006
19 November 2011
5 October 2012
5 October 2012
3 April 2013
3 April 2013
3 April 2013
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
Expiry Date
7 September 2016
23 June 2016
16 January 2016
16 January 2017
5 March 2016
5 March 2017
5 March 2018
27 June 2016
13 June 2017
13 March 2018
4 February 2017
19 March 2016
23 October 2017
20 November 2018
22 February 2018
31 January 2019
Number Issued
5,000,000
2,500,000
333,333
333,334
1,000,000
1,000,000
1,000,000
42,918
21,459
21,459
21,459
858,369
21,459
858,369
21,459
21,459
Exercise Price
$0.6864
$0.31
$0.27
$0.31
$0.22
$0.27
$0.31
$0.27
$0.22
$0.15
$0.27
$0.37
$0.14
$0.09
$0.17
$0.09
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.
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:
Ordinary Shares
Option over Ordinary Shares
Directors
I Buchhorn
S Dennis
W Taylor
B Putnam
F Robertson
M Sawyer
Direct
2,518,241
-
168,619
-
-
-
Key Management Personnel
A Lawry
D von Perger
S Smith
C Kempson
-
478,136
72,961
-
Indirect
44,272,718
1,000,000
1,099,325
-
-
-
50,000
130,000
60,000
3,283,491
Direct
1,000,000
-
1,716,738
-
-
-
-
1,000,000
-
3,000,000
Indirect
5,000,000
-
-
-
-
-
-
-
-
-
Page 36 - Heron Resources Limited - Annual Report 2015
4.0 DIRECTORS’ REPORT CONTINUED
DIRECTORS MEETINGS
During the year the Company held 12 meetings of Directors. The attendance of the Directors at meetings of the Board were:
Director
I Buchhorn
S Dennis
W Taylor
B Putnam
F Robertson
C Readhead
J Gill
Meetings held
while a director
Number of
meetings
attended
Audit
Committee
Meetings
Remuneration
and Nomination
Committee
meetings
12
12
12
6
2
10
1
12
12
12
5
2
10
1
-
4
-
2
1
3
-
-
1
-
-
1
-
-
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 Taylor, Mr Buchhorn, Mr Smith, Mr Lawry, Mr Kempson and Mr von Perger are
formalised in service agreements/work contracts.
The agreement with Mr Taylor 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 $367,000 exclusive of 15% superannuation; and
In the event that the Company terminates Mr Taylor’s employment other than for matters concerning fraud and dishonesty and the like
the Company will pay Mr Taylor 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 Buchhorn requires the provision of his services as Executive Director 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 or dishonesty the
Company will pay Mr Buchhorn the maximum amount lawfully payable (7 years annual salary) in accordance with the provisions of the
Corporations Act at the time the contract was entered into in 2009. The length of notice to be given by both parties on termination is
six months.
The agreement with Mr Smith requires the provision of his services as CFO and Company Secretary of the Company through Mr Smith’s
consultancy company CFO Source Pty Ltd and contains the following major provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Payments are set at a daily rate inclusive of superannuation and ancillary employment costs; and
The Company may terminate the agreement with Mr Smith by giving 30 days’ notice.
The agreement with Mr Lawry requires the provision of his services as Chief Operating Officer of the Company and contains the following
major provisions:
(cid:129)
(cid:129)
(cid:129)
No fixed term;
Current base salary of $310,000 exclusive of superannuation; and
Termination can be made by either Mr Lawry or the Company by giving not less than three months’ notice.
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.
Heron Resources Limited - Annual Report 2015 - Page 37
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, Stephen Dennis, Borden Putnam, Fiona Robertson and Mark Sawyer, receive 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).
On 19 June 2015 bonuses were approved by the remuneration committee for W Taylor ($50,000), D Von Perger ($30,000) and C Kempson
($40,000). These were granted based on an assessment of their performance in the year in achieving key milestones and deliverables. They
are disclosed as ‘Cash, salary & fees’; in the table below.
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
I Buchhorn
S Dennis
W Taylor (2)
B Putnam
F Robertson
C Readhead (resigned on 30 April 2015)
J Gill (resigned on 19 August 2014)
& fees
$
321,101
76,333
356,227
38,298
14,848
91,667
5,463
Key Management Personnel (“KMP”)
D von Perger
A Lawry (1)
C Kempson
S Smith (2)
291,468
3,584
301,468
236,976
$
$
2,589
-
-
-
-
-
-
8,108
-
-
-
30,505
7,252
45,875
-
1,411
-
-
24,839
340
24,839
-
Total
1,737,433
10,697
135,061
(1)
(2)
(3)
Mr Lawry has been a KMP since 22 June 2015.
Mr Smith and Mr Taylor have been KMPs since 5 August 2014
All other KMPs have been KMPs for the full year.
$
-
-
-
-
-
-
-
-
-
-
-
-
$
-
-
-
-
-
-
-
-
-
-
-
-
Share-
based
payment
options
$
244,918
-
78,998
-
-
-
6,597
-
-
50,763
-
Total
$
599,113
83,585
481,100
38,298
16,259
91,667
12,060
324,415
3,924
377,070
236,976
381,276
2,264,467
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 payment included above for Mr Buchhorn is 100% 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.
Page 38 - Heron Resources Limited - Annual Report 2015
4.0 DIRECTORS’ REPORT CONTINUED
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.
Vesting three years after 23 June 2011
Vesting one year after 5 March 2014
Vesting two years after 5 March 2014
Vesting three years after 5 March 2014
Vest immediately
Vesting 0.3 years after 5 August 2014
Vesting 1.3 years after 5 August 2014
Vesting 2.3 years after 5 August 2014
Number Issued
5,000,000
2,000,000
1,000,000
1,000,000
1,000,000
858,369
286,123
286,123
286,123
11,716,738
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
I Buchhorn
29 Nov 2006
19 Nov 2011
n/a
23 Jun 2014
7 Sep 2016
23 Jun 2016
$0.6864
$0.31
D Von Perger
19 Nov 2011
23 Jun 2014
23 Jun 2016
C Kempson
W Taylor
3 Apr 2013
3 Apr 2013
3 Apr 2013
5 Aug 2014
5 Aug 2014
5 Aug 2014
5 Aug 2014
5 Mar 2014
5 Mar 2015
5 Mar 2016
5 Aug 2014
20 Nov 2014
20 Nov 2015
20 Nov 2016
5 Mar 2016
5 Mar 2017
5 Mar 2018
19 Mar 2016
20 Nov 2018
20 Nov 2018
20 Nov 2018
$0.31
$0.22
$0.27
$0.31
$0.37
$0.09
$0.09
$0.09
5,000,000
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
858,369
286,123
286,123
286,123
No
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Option
value at
grant date
%
vested
in year
$0.4791
$0.082
$0.082
$0.066
$0.07
$0.076
$0.0203
$0.1034
$0.1034
$0.1034
0%
0%
0%
0%
100%
0%
100%
100%
0%
0%
EMPLOYEE DIVERSITY
Women currently represent 38% of employees in the Company as a whole. There is currently one woman on the Board.
CORPORATE GOVERNANCE
The Company has undertaken a thorough review of its Corporate Governance practices and policies in accordance with both the TSX and ASX
Corporate Governances Best Practices Recommendations. Following guidance from the ASX the Corporate Governance policy can be found
on our website in line with Listing Rule 4.10.3.
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.
Heron Resources Limited - Annual Report 2015 - Page 39
4.0 DIRECTORS’ REPORT CONTINUED
INDEMNITY AND INSURANCE OF OFFICERS
The Company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for
which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against
a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and
the amount of the premium.
NON-AUDIT SERVICES
The Consolidated Entity has not employed the auditor on any assignments additional to their statutory audit duties.
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; and
would not give rise to a conflict of interest situation (as defined in s324CD)
It is noted that 2015 is the final year in which Ms Gardner will sign the Audit opinion. The Board wishes to formally thank her for her excellent
service.
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.
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.
Signed in accordance with a resolution of Directors
S B Dennis
Chairman
Perth, 27 August 2015
Page 40 - Heron Resources Limited - Annual Report 2015
Heron Resources Limited - Annual Report 2015 - Page 41
5.0 Consolidated Financial Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2015
REVENUES FROM CONTINUING ACTIVITIES
Accountancy fees
Audit fees
Consultants expense
Depreciation expense
Directors fees
Employee benefits expense
Insurance expense
Legal fees
Equity settled share based payments
Other expenses from ordinary activities
Exploration expenditure expensed as incurred
Exploration expenditure written off
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
Changes in market value of financial assets
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Notes
2
3(a)
14(b)
3(b)
9
9
6(a) & (b)
4
Consolidated Entity
2014
$'000
2015
$'000
1,137
1,389
(12)
(40)
(99)
(55)
(232)
(993)
(139)
(129)
(418)
(1,112)
(2,092)
-
(1,490)
(5,674)
-
(5,674)
(5,674)
-
(5,674)
(26)
(38)
(155)
(54)
(173)
(309)
(57)
(183)
(449)
(598)
(3,497)
(405)
(1,834)
(6,389)
-
(6,389)
(6,389)
-
(6,389)
Basic earnings per Share
Diluted earnings per Share
21
21
$
(0.01620)
(0.01620)
$
(0.02526)
(0.02526)
The accompanying notes form part of these financial statements
Page 42 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2015
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
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Option reserve
Accumulated losses
TOTAL EQUITY
Notes
15(c)
5
6(a)
7
6(b)
8
9
10
11
12
14(b)
14(a)
Consolidated Entity
2014
$'000
2015
$'000
24,015
362
-
24,377
35
2,328
493
27,119
29,975
54,352
1,461
740
2,201
2,201
32,915
337
1,359
34,611
35
3,321
58
4,578
7,992
42,603
281
560
841
841
52,151
41,762
131,680
2,626
(82,155)
52,151
116,035
2,441
(76,714)
41,762
The accompanying notes form part of these financial statements
Heron Resources Limited - Annual Report 2015 - Page 43
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2015
Notes
Issued
Capital
$’000
Accumulated
Losses
$’000
Option
Reserve
$’000
As at 30 June 2014
Total comprehensive income for the year
Issue of share capital
Option reserve write back
Cost of share based payments
As at 30 June 2015
As at 30 June 2013
Total comprehensive income for the year
Issue of share capital
Option reserve write back
Cost of share based payments
As at 30 June 2014
12
14(b)
14(b)
14(b)
14(b)
116,035
-
15,645
-
-
(76,714)
(5,674)
-
233
-
131,680
(82,155)
116,035
-
-
-
-
116,035
(73,924)
(6,389)
-
3,599
-
(76,714)
2,441
-
-
(233)
418
2,626
5,591
-
-
(3,599)
449
2,441
Total
$’000
41,762
(5,674)
15,645
-
418
52,151
47,702
(6,389)
-
-
449
41,762
The accompanying notes form part of these financial statements
Page 44 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2015
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 investments
Sale of investments
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 acquired via TriAusMin acquisition
Cash at the beginning of the reporting period
CASH AT THE END OF THE REPORTING PERIOD
Notes
15(a)
6(b)
15(c)
Consolidated Entity
2014
$'000
2015
$'000
1,005
(2,930)
(1,925)
(6,882)
(427)
128
(122)
13
(7,290)
-
-
(9,215)
315
32,915
24,015
1,419
(1,516)
(97)
(3,402)
(3,180)
3
(15)
9
(6,585)
-
-
(6,682)
-
39,597
32,915
The accompanying notes form part of these financial statements
Heron Resources Limited - Annual Report 2015 - Page 45
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
NOTES TO AND FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2015
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 International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
In the application of IFRS, 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 judgment. 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.
New, revised or amending Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or
position of the consolidated entity.
The following Accounting Standards and Interpretations are most relevant to the consolidated entity, however none of these standards
or interpretations have a material impact on the presentation of the financial statements:
AASB 2012-3 Amendments to Australian Accounting Standards - Offsetting Financial Assets and Financial Liabilities
The consolidated entity has applied AASB 2012-3 from 1 July 2014. The amendments add application guidance to address
inconsistencies in the application of the offsetting criteria in AASB 132 'Financial Instruments: Presentation', by clarifying the meaning
of 'currently has a legally enforceable right of set-off'; and clarifies that some gross settlement systems may be considered to be
equivalent to net settlement.
AASB 2013-3 Amendments to AASB 136 - Recoverable Amount Disclosures for Non-Financial Assets
The consolidated entity has applied AASB 2013-3 from 1 July 2014. The disclosure requirements of AASB 136 'Impairment of Assets'
have been enhanced to require additional information about the fair value measurement when the recoverable amount of impaired
assets is based on fair value less costs of disposals. Additionally, if measured using a present value technique, the discount rate is
required to be disclosed.
AASB 2014-1 Amendments to Australian Accounting Standards (Parts A to C)
The consolidated entity has applied Parts A to C of AASB 2014-1 from 1 July 2014. These amendments affect the following standards:
AASB 2 'Share-based Payment': clarifies the definition of 'vesting condition' by separately defining a 'performance condition' and a
'service condition' and amends the definition of 'market condition'; AASB 3 'Business Combinations': clarifies that contingent
consideration in a business combination is subsequently measured at fair value with changes in fair value recognised in profit or loss
irrespective of whether the contingent consideration is within the scope of AASB 9; AASB 8 'Operating Segments': amended to require
disclosures of judgements made in applying the aggregation criteria and clarifies that a reconciliation of the total reportable segment
assets to the entity's assets is required only if segment assets are reported regularly to the chief operating decision maker; AASB 13
'Fair Value Measurement': clarifies that the portfolio exemption applies to the valuation of contracts within the scope of AASB 9 and
AASB 139; AASB 116 'Property, Plant and Equipment' and AASB 138 'Intangible Assets': clarifies that on revaluation, restatement of
accumulated depreciation will not necessarily be in the same proportion to the change in the gross carrying value of the asset; AASB
Page 46 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
124 'Related Party Disclosures': extends the definition of 'related party' to include a management entity that provides KMP services to
the entity or its parent and requires disclosure of the fees paid to the management entity; AASB 140 'Investment Property': clarifies that
the acquisition of an investment property may constitute a business combination.
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.
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 five main categories and this information is presented on the same basis as the internal reports provided to
the Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and
assessing their performance. The CODM reviews segmental information on a monthly basis vs budget. The accounting policies adopted
for internal reporting are consistent with those adopted in the financial statements.
Woodlawn – Tenements related to the Woodlawn Underground Project (WUP) and Woodlawn Retreatment Project (WRP)
Lewis Ponds – Tenements relating to the Lewis Ponds Project.
KNP – Tenements related to the Kalgoorlie Nickel Project.
Exploration – Tenements not Woodlawn, Lewis Ponds or KNP related.
Corporate – Corporate activity.
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 using the effective interest rate
method.
Heron Resources Limited - Annual Report 2015 - Page 47
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
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.
The land at Lewis Ponds (refer Note 8) of $325,000 represents the market value of the land as at the date of acquiring TriAusMin Ltd in
August 2014.
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
Fixtures and Fittings
Plant and Equipment
3-5 years
5-15 years
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 statement of profit or loss and other comprehensive income 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.
During 2015 all expenses capitalised relate to the Woodlawn project.
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 statement of profit or loss, 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
statement of profit or loss and other comprehensive income.
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
statement of financial position.
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).
Page 48 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
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").
An Employee Share Option Plan ("ESOP") 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.
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.
Heron Resources Limited - Annual Report 2015 - Page 49
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
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.
Impairment of non-financial assets other than goodwill and other indefinite life intangible assets
The consolidated entity assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at
each reporting date by evaluating conditions specific to the consolidated entity and to the particular asset that may lead to impairment.
If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or
value-in-use calculations, which incorporate a number of key estimates and assumptions.
New accounting standards and interpretations
The Australian Accounting Standards Board has published various pronouncements that are not mandatory for the 30 June 2015
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 Company’s current activities the expected impact of
those relevant to the Company are set out below:
AASB 9 Financial Instruments and its consequential amendments. The consolidated entity will adopt this standard and the amendments
from 1 January 2018 and it is unlikely to affect the Company.
IFRS 15 Revenue from Contracts with Customers. The consolidated entity will adopt this standard from 1 January 2017 but the impact
of its adoption is yet to be assessed by the consolidated entity.
IAS 27 Equity method in separate financial statements. The consolidated entity will adopt this standard from 1 January 2016 and it is
unlikely to affect the Company.
w)
Capital risk management
The Group's and the parent entity'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 and the parent entity monitor capital on the basis of working capital requirements.
During 2015 the Group's strategy, which was unchanged from 2014, was to maintain a current account balance sufficient to meet the
Company's day to day expenses with the balance held in term deposits.
Page 50 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 1. STATEMENT OF ACCOUNTING POLICIES CONTINUED
x)
Business combinations
The acquisition method of accounting is used to account for business combinations regardless of whether equity instruments or other
assets are acquired.
The consideration transferred is the sum of the acquisition-date fair values of the assets transferred, equity instruments issued or
liabilities incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For
each business combination, the non-controlling interest in the acquiree is measured at either fair value or at the proportionate share of
the acquiree's identifiable net assets. All acquisition costs are expensed as incurred to profit or loss.
On the acquisition of a business, the consolidated entity assesses the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic conditions, the consolidated entity's operating or
accounting policies and other pertinent conditions in existence at the acquisition-date.
Business combinations are initially accounted for on a provisional basis. The acquirer retrospectively adjusts the provisional amounts
recognised and also recognises additional assets or liabilities during the measurement period, based on new information obtained about
the facts and circumstances that existed at the acquisition-date. The measurement period ends on either the earlier of (i) 12 months
from the date of the acquisition or (ii) when the acquirer receives all the information possible to determine fair value.
Consolidated Entity
2014
$'000
2015
$'000
NOTE 2.
REVENUE FROM ORDINARY ACTIVITIES
Revenues from continuing activities
Disposal of fixed assets
Profit / (loss) on sale of investments
Interest received - other persons/corporations
Bonus issue of AYC options
Sundry Income
Total revenues from continuing activities
5
30
945
110
47
1,137
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 (ASX and TSX)
Travel & accommodation
Office expenses and supplies
Computer support services
Report expenses and printing
Conferences and seminars
Donations
Investor research and relations
Miscellaneous expenses
Total other expenses
(16)
(36)
(3)
(55)
(21)
(323)
(229)
(137)
(98)
(81)
(34)
(38)
-
(96)
(55)
(1,112)
8
-
1,331
-
50
1,389
(17)
(20)
(17)
(54)
(7)
(264)
(46)
(52)
(79)
(48)
(25)
(10)
(20)
-
(47)
(598)
Heron Resources Limited - Annual Report 2015 - Page 51
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 4.
INCOME TAX
a)
Temporary differences carried forward
Current Tax
Deferred tax
Consolidated Entity
2014
$'000
2015
$'000
-
-
-
-
-
-
The Heron Resources Limited group of companies was tax consolidated on 1 July 2003 - there are no tax sharing and/or tax funding
agreements in place. During the year TriAusMin Ltd, Tarago Operations Pty Ltd and Tri Origin Mining Pty Ltd joined the Tax Consolidated
Group.
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.
Consolidated Entity
2014
$'000
2015
$'000
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% (2014 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
(5,674)
(1,702)
557
-
-
1,145
-
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 as a DTA
adjusted for non temporary differences
Potential tax benefit at 30%
e)
Unrecognised temporary differences
Non deductible amounts as temporary differences
Accelerated deductions for book compared to tax
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
Prepayments
Accrued interest
Goods & services tax paid
Sundry Debtors
Page 52 - Heron Resources Limited - Annual Report 2015
(6,389)
(1,917)
203
-
-
1,714
-
77,535
23,261
(7,130)
(493)
(7,623)
(2,287)
31
157
24
125
337
89,721
26,916
(7,183)
7,555
372
112
13
96
86
167
362
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 6(a). INVESTMENTS IN ENTITIES - CURRENT
Black Oak Minerals Ltd (BOK) (formerly Southern Cross Goldfields Limited (SXG) is an Australian listed public exploration company with
887,450,815 fully paid ordinary shares on issue during the period in which the company owned shares (shares consolidated on a 20:1 ratio
in June 2015). Heron held 5,875,528 fully paid shares all of which were sold during the year realising a net profit of $29,896.
TriAusMin Lld was an Australian listed public exploration company prior to merging with Heron Resources Limited on 5 August 2014.
Heron purchased 1.3 million $1 convertible notes in March 2014 which are eliminated on consolidation following the merger.
Black Oak Minerals Ltd
TriAusMin Ltd
30 June 2015
$'000
30 June 2014
$'000
-
-
-
59
1,300
1,359
NOTE 6(b). INVESTMENTS IN ENTITIES - NON CURRENT
A1 Consolidated Gold Limited (AYC) is an Australian listed public exploration company with 446,356,265 fully paid ordinary shares on
issue. Heron holds 31,931,661 fully paid shares at 30 June 2015, which have been valued at the closing price of $0.03 on that day. Heron
also holds 10,955,556 options exercisable for $0.03 expiring 30 November 2019 which have been valued at the initial market price of $0.01
per option and then marked to market at the closing price of $0.015 per option as at 30 June 2015 (refer Note 2).
Golden Cross Resources Limited (GCR) is an Australian listed public exploration company with 101,078,493 fully paid ordinary shares on
issue. Heron holds 19,048,529 fully paid shares at 30 June 2015, which have been valued at the closing price of $0.05 on that day.
Metalicity Limited (MCT) (formerly known as PLD Corporation Limited (PLD)) is an Australian listed public exploration company with
696,539,557 fully paid ordinary shares on issue. Heron holds 3,750,000 fully paid shares at 30 June 2015, which have been valued at the
closing price of $0.02 on that day.
See Subsequent Event note 23 for more information on the issue of MCT Shares – Rocky Gully option.
Newamu IP Holdings Pty Ltd is a subsidiary of The Simulus Group Pty Ltd in which Kalgoorlie Nickel Project Pty Ltd (a wholly owned
subsidiary of Heron) has invested $178,000. The investment is carried at cost.
Investments in other entities at fair value
A1 Consolidated Gold Limited
Golden Cross Resources Limited
Metalicity Limited
Newamu Pty Ltd
30 June 2015
$'000
30 June 2014
$'000
1,122
953
75
178
2,328
1,441
1,880
-
-
3,321
Heron Resources Limited - Annual Report 2015 - Page 53
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 6(b). INVESTMENTS IN ENTITIES - NON CURRENT CONTINUED
Movement in investments
A1 Consolidated Gold Limited
Opening carrying value 30 June
Investment - Shares
Impairment - Shares
Sold on market - Shares
Bonus issue of Options – initial valuation @ $0.01
Gain - Options
Closing carrying value 30 June
Golden Cross Resources Limited
Opening carrying value 30 June
Investment – Shares
Impairment
Closing carrying value 30 June
Metalicity Limited
Opening carrying value 30 June
Investment
Gain
Closing carrying value 30 June
Newamu Pty Ltd
Opening carrying value 30 June
Investment
Closing carrying value 30 June
Summary
Opening carrying value 30 June
Investment
Bonus issue of options
Sold – Shares
Net impairment (1)
Closing carrying value 30 June
(1)
Rounding
NOTE 7.
TRADE AND OTHER RECEIVABLES - NON CURRENT
Employee share option plan – non-recourse loan
Page 54 - Heron Resources Limited - Annual Report 2015
2015
$'000
1,441
200
(644)
(39)
110
54
1,122
1,880
15
(942)
953
-
34
41
75
-
178
178
3,321
427
110
(39)
(1,491)
2,328
2014
$'000
3,275
-
(1,834)
-
-
-
1,441
-
1,880
-
1,880
-
-
-
-
-
-
-
3,275
1,880
-
-
(1,834)
3,321
Consolidated Entity
2014
$'000
2015
$'000
35
35
35
35
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 8.
PROPERTY, PLANT AND EQUIPMENT
2015
$'000
2014
$'000
Plant and equipment at cost
Accumulated depreciation
Office equipment & furniture at cost
Accumulated depreciation
Motor vehicles at cost
Accumulated depreciation
Land and buildings 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 (1)
Disposals
Depreciation Expense
Carrying value at 30 June
Motor vehicles:
Carrying amount at 1 July
Additions (2)
Disposals
Depreciation Expense
Carrying value at 30 June
Land and buildings:
Carrying amount at 1 July
Additions (3)
Disposals
Depreciation Expense
Carrying value at 30 June
327
(305)
22
901
(795)
106
229
(205)
24
341
-
341
493
24
14
-
(16)
22
34
110
(2)
(36)
106
-
34
(7)
(3)
24
-
341
-
-
341
259
(235)
24
530
(496)
34
180
(180)
-
-
-
-
58
31
12
(2)
(17)
24
49
5
-
(20)
34
17
-
-
(17)
-
-
-
-
-
-
(1)
(2)
(3)
$38K of Office Equipment additions acquired upon acquisition of TriAusMin Ltd
$14K of Motor Vehicles acquired upon acquisition of TriAusMin Ltd
$325K of Freehold Land at Lewis Ponds, acquired upon acquisition of TriAusMin Ltd
Heron Resources Limited - Annual Report 2015 - Page 55
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 9.
EXPLORATION, EVALUATION AND DEVELOPMENT COSTS CARRIED FORWARD
Balance brought forward
Acquisition costs
Exploration and evaluation costs incurred
Exploration and evaluation expensed as incurred
Exploration and evaluation costs from TriAusMin merger (1)
Exploration and evaluation impairment
Balance carried forward
30 June 2015
$'000
30 June 2014
$'000
4,578
29
7,874
(2,092)
16,730
-
27,119
5,070
53
3,357
(3,497)
-
(405)
4,578
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.
(1) Capitalised exploration and evaluation costs from TriAusMin merger relate to Woodlawn ($11,827) and Lewis Ponds ($4,903)
Balance brought forward
Transfer from TriAusMin
Exploration expenditure
Capitalised Exploration expenditure
Exploration and evaluation expensed as incurred
Balance carried forward
Woodlawn
$'000
-
11,827
-
5,811
-
17,638
Lewis
Ponds
$'000
-
4,903
205
-
(205)
4,903
KNP
Exploration
Total
$'000
4,578
-
586
-
(586)
4,578
$'000
-
-
1,301
-
(1,301)
-
$'000
4,578
16,730
2,092
5,811
(2,092)
27,119
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
Provision for rehabilitation
NOTE 12.
CONTRIBUTED EQUITY
Consolidated Entity
2014
$'000
2015
$'000
1,187
274
1,461
710
30
740
166
115
281
560
-
560
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.
Issue of ordinary shares
Opening balance
Issue of shares (1)
Closing balance
30 June 2015
Shares
252,985,787
107,891,936
360,877,723
30 June 2014
Shares
252,985,787
-
252,985,787
30 June 2015
$’000
30 June 2014
$’000
116,035
15,645
131,680
116,035
-
116,035
(1)
Issue of new Heron shares to complete the 100% acquisition of TriAusMin Ltd on 5 August 2014 on the basis of 1 Heron share for every
2.33 TriAusMin shares. Immediately prior to the acquisition, TriAusMin had 251,389,050 shares on issue.
Page 56 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 12. CONTRIBUTED EQUITY CONTINUED
Option reconciliation to 30 June 2015
Opening balance at 1 July 2014
Options issued
Options transferred as part of TriAusMin merger
Options expired/lapsed
Closing balance at 30 June 2015
Number of options
14,000,000
-
2,424,890
(3,369,813)
13,055,077
The weighted average remaining contractual life of options on issue at 30 June 2015 is 505 days.
Options
The following options expired/lapsed during the year:
Number
2,500,000
333,333
85,837
21,459
214,592
85,837
42,918
85,837
Expiry date
23 June 2015
16 January 2015
23 October 2017
23 June 2015
18 November 2015
21 November 2017
27 June 2016
23 October 2017
As at 30 June 2015 the Company had the following options on issue:
Number
5,000,000
2,500,000
333,333
333,334
1,000,000
1,000,000
1,000,000
42,918
21,459
21,459
21,459
21,459
858,369
858,369
21,459
21,459
13,055,077
Expiry date
07 September 2016
23 June 2016
16 January 2016
16 January 2017
05 March 2016
05 March 2017
05 March 2018
27 June 2016
13 June 2017
13 March 2018
04 February 2017
23 October 2017
19 March 2016
20 November 2018
22 February 2018
31 January 2019
Exercise price
$0.27
$0.22
$0.14
$0.58
$0.23
$0.23
$0.27
$0.14
Exercise price
$0.6864
$0.31
$0.27
$0.31
$0.22
$0.27
$0.31
$0.27
$0.22
$0.15
$0.27
$0.14
$0.37
$0.09
$0.17
$0.09
Heron Resources Limited - Annual Report 2015 - Page 57
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 12. CONTRIBUTED EQUITY CONTINUED
Details of options as at the beginning and end of the reporting period and movements during the year are set out below:
Grant date
Expiry date
price
Exercise Number of
Options at
the beginning
of the year
Options
expired /
lapsed this
year
Options
transferred
in the
year
Number
of Options
at the end
of the year
Options
exercisable
at the end
of the year
2015 Consolidated and parent entity
29 November 2006
19 November 2011
19 November 2011
05 October 2012
05 October 2012
05 October 2012
03 April 2013
03 April 2013
03 April 2013
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
07 September 2016
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
05 March 2016
05 March 2017
05 March 2018
27 June 2016
13 June 2017
13 March 2018
04 February 2017
23 October 2017
19 March 2016
20 November 2018
22 February 2018
31 January 2019
23 October 2017
23 June 2015
18 November 2015
21 November 2017
27 June 2016
23 October 2017
Weighted average exercise price
$0.6864
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.27
$0.22
$0.15
$0.27
$0.14
$0.37
$0.09
$0.17
$0.09
$0.14
$0.58
$0.23
$0.23
$0.27
$0.14
5,000,000
2,500,000
2,500,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,000,000
0.42
-
(2,500,000)
(333,333)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(85,837)
(21,459)
(214,592)
(85,837)
(42,918)
(85,837)
(3,369,813)
0.26
-
-
-
-
-
-
-
-
-
42,918
21,459
21,459
21,459
21,459
858,369
858,369
21,459
21,459
85,837
21,459
214,592
85,837
42,918
85,837
2,424,890
0.23
5,000,000
-
2,500,000
-
333,333
333,334
1,000,000
1,000,000
1,000,000
42,918
21,459
21,459
21,459
21,459
858,369
858,369
21,459
21,459
-
-
-
-
-
-
13,055,077
0.43
-
-
2,500,000
-
333,333
333,334
1,000,000
1,000,000
-
42,918
21,459
21,459
21,459
14,306
858,369
286,123
21,459
21,459
-
-
-
-
-
-
6,475,678
0.28
NOTE 13.
SEGMENT REPORTING
Segmental information for consolidated statement of comprehensive income
Year ended June 2015
Corporate Woodlawn Lewis Ponds
Sale of fixed assets
Sale of investments
Interest received - other persons/corporations
Option fee
Sundry Income
Total revenues
Depreciation
Exploration expenditure expensed as incurred
Exploration expenditure written off
Other expenses
Profit / (loss)
$'000
-
30
945
110
41
1,126
(30)
-
-
(4,664)
(3,568)
$'000
5
-
-
-
5
(11)
-
-
-
(6)
$'000
-
-
-
-
-
-
-
(205)
-
-
(205)
KNP
$'000
-
-
-
-
6
6
-
(586)
-
-
(580)
Exploration
$'000
-
-
-
-
-
-
(14)
(1,301)
-
-
(1,315)
Total
$'000
5
30
945
110
47
1,137
(55)
(2,092)
-
(4,664)
(5,674)
Page 58 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 13. SEGMENT REPORTING CONTINUED
Year ended June 2014
Corporate Woodlawn Lewis Ponds
Sale of fixed assets
Interest received - other persons/corporations
Option fee
Total revenues
Depreciation
Exploration expenditure expensed as incurred
Exploration expenditure written off
Other expenses
Profit / (loss)
$'000
-
1,331
-
1,331
(20)
-
-
(3,822)
(2,511)
$'000
-
-
-
-
-
-
-
-
-
$'000
-
-
-
-
-
-
-
-
-
Segmental information for consolidated statement of comprehensive income
Balance at June 2015
Corporate Woodlawn Lewis Ponds
Total current assets
Property, plant and equipment
Exploration and evaluation costs carried forward
Other non-current assets
Total non-current assets
$'000
24,377
95
-
2,363
2,458
$'000
-
44
17,638
-
17,682
$'000
-
325
4,903
-
5,228
KNP
$'000
-
-
-
-
-
(2,011)
(405)
-
(2,416)
KNP
$'000
-
-
4,578
-
4,578
Total assets
Total liabilities
26,835
17,682
5,228
4,578
1,014
1,039
61
-
Exploration
$'000
8
-
50
58
Total
$'000
8
1,331
50
1,389
(34)
(1,486)
-
-
(1,462)
(54)
(3,497)
(405)
(3,822)
(6,389)
Exploration
$'000
-
Total
$'000
24,377
29
-
-
29
29
87
493
27,119
2,363
29,975
54,352
2,201
Movement for the year to June 2015
Corporate Woodlawn Lewis Ponds
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
Balance at June 2014
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
$'000
(10,234)
61
-
(993)
(932)
$'000
-
44
17,638
-
17,682
$'000
-
325
4,903
-
5,228
(11,166)
17,682
5,228
819
1,039
61
Corporate Woodlawn Lewis Ponds
$'000
34,611
$'000
-
$'000
-
34
-
3,356
3,390
38,001
195
-
-
-
-
-
-
-
-
-
-
-
-
KNP
$'000
-
Exploration
$'000
-
Total
$'000
(10,234)
-
-
-
-
-
-
KNP
$'000
-
-
4,578
-
4,578
4,578
5
-
-
5
5
435
22,541
(993)
21,983
11,749
(559)
1,360
Exploration
$'000
-
Total
$'000
34,611
24
-
-
24
24
58
4,578
3,356
7,992
42,603
-
646
841
Heron Resources Limited - Annual Report 2015 - Page 59
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 13. SEGMENT REPORTING CONTINUED
Movement for the year to June 2014
Corporate Woodlawn Lewis Ponds
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
$'000
(5,418)
$'000
-
$'000
-
(15)
-
46
31
(5,387)
23
-
-
-
-
-
-
-
-
-
-
-
-
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
The Company has retained a loss as at 30 June 2015.
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
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.
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 fixed assets
(Profit)/loss on option fee
Investment Impairment
Increase/(decrease) in prepayments and debtors
(Increase)/decrease in accrued interest and GST
Increase/(decrease) in creditors, accruals and provisions
Page 60 - Heron Resources Limited - Annual Report 2015
KNP
$'000
-
-
(492)
-
(492)
(492)
Exploration
$'000
-
Total
$'000
(5,418)
(24)
-
-
(24)
(39)
(492)
46
(485)
(24)
(5,903)
-
14
37
Consolidated Entity
2014
$'000
2015
$'000
(76,714)
233
(5,674)
(82,155)
2,441
418
(233)
2,626
(73,924)
3,599
(6,389)
(76,714)
5,591
449
(3,599)
2,441
(5,674)
(6,389)
2,092
55
418
(30)
(5)
(110)
1,490
24
1
(186)
(1,925)
3,902
54
447
-
(8)
(50)
1,834
6
85
22
(97)
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 15. CASH FLOW STATEMENTS CONTINUED
b)
c)
During the year there were no non cash transactions.
Reconciliation of Cash
Cash on hand and at bank
Closing cash balance
Consolidated Entity
2014
$'000
2015
$'000
24,015
24,015
32,915
32,915
Cash security for environmental bonds of $114,000 (2014 : $477,000) is included in cash on hand and at bank.
This is not available to the Company for ordinary activities.
Property bonds of $48,865 (2014 : $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 Readhead (resigned on 30 April 2015)
Stephen Dennis
Jim Gill (appointed on 5 August 2014 - resigned on 19 August 2014)
Fiona Robertson (appointed on 9 April 2015)
Borden Putnam III (appointed on 12 December 2014)
Executive Directors
Wayne Taylor (appointed on 5 August 2014)
Ian Buchhorn
The Key Management Personnel other than Executive Directors for the financial year were (for full year unless stated):
Chief Operating Officer
Andrew Lawry (appointed on 22 June 2015)
Chief Financial Officer and Company Secretary
Simon Smith (appointed on 5 August 2014)
General Manager - Exploration
David von Perger
General Manager - Strategy and Business Development
Charlie Kempson
Detailed remuneration disclosures are provided in the remuneration report on pages 37-39 of the Directors report.
Shares
Directors
I Buchhorn
S Dennis
W Taylor
B Putnam
F Robertson
Key Management Personnel
A Lawry
D von Perger
C Kempson
S Smith
Held at Purchased
on market
1 July 2014
46,590,959
550,000
-
-
-
-
296,692
2,383,491
-
200,000
450,000
472,031
-
-
50,000
311,444
900,000
60,000
Shares
previously
owned in
TriAusMin
-
-
795,913
-
-
-
-
-
72,961
Sold
-
-
-
-
-
-
-
-
-
Held at
30
June
2015
46,790,959
1,000,000
1,267,944
-
-
50,000
608,136
3,283,491
132,961
Heron Resources Limited - Annual Report 2015 - Page 61
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 16. RELATED PARTY TRANSACTIONS CONTINUED
Options
Expiry Date
Exercise
Price
Held at
1 July 2014
Issued
Directors
I Buchhorn
W Taylor
7 September 2016
23 June 2015
23 June 2016
19 March 2016
20 November 2018
Key Management Personnel
D von Perger
C Kempson
23 June 2015
23 June 2016
5 March 2016
5 March 2017
5 March 2018
$0.70
$0.27
$0.31
$0.37
$0.09
$0.27
$0.31
$0.22
$0.27
$0.31
5,000,000
1,000,000
1,000,000
-
-
1,000,000
1,000,000
1,000,000
1,000,000
1,000,000
12,000,000
Expired
/lapsed
Options
previously
owned in
TriAusMin
-
-
-
-
(1,000,000)
-
858,369
858,369
-
-
-
-
-
-
-
(1,000,000)
-
-
-
-
Held at
30
June
2015
5,000,000
-
1,000,000
858,369
858,369
-
1,000,000
1,000,000
1,000,000
1,000,000
1,716,738
(2,000,000)
11,716,738
-
-
-
-
-
-
-
-
-
-
-
S Dennis, F Robertson, B Putnam III, S Smith and A Lawry do not hold any share options in the Company.
Other related party transactions during the financial year were:
(cid:129)
(cid:129)
payment of $69,364 (2014 : $73,800) to an entity related to Mr I Buchhorn for the provision of office accommodation on normal
commercial terms and conditions;
payment of $114,135 (2014 : $123,856) to Allion Legal of which Mr C Readhead is a partner for legal services on normal commercial
terms and conditions up to the date Mr Readhead resigned as a Director of the Company on 30 April 2015;
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.
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
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
5
5
10
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 0.5% (2014 : 1.75%)
Term Deposits are secured with a 3 month term with
an interest rate of 2.9% (2014 : 3.52%)
Environmental bonds are security
term deposits with a 6 month term with an interest
rate of 3.0% (2014 : 3.39%)
Property bonds are security term deposits
with a 6 month term with an interest rate of
3.1% (2014 : 3.54%)
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 consolidated entity.
Trade liabilities are normally settled
on 30 day terms.
Property bonds
Property bonds are carried at cost.
Page 62 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 17. FINANCIAL INSTRUMENTS CONTINUED
Recognised Financial Statement
of Financial
Instruments
Position
Notes
iii) Equity
Ordinary Shares
12
Accounting Policies
Terms and Conditions
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 statement
of financial position either as available-for-sale or at fair value through profit or loss. The Company is not directly exposed to commodity
price risk although the potential economics of projects it is exploring and evaluating are affected by commodity prices.
(ii)
Foreign exchange risk
The Company has a limited number of suppliers that invoice in foreign currencies and therefore foreign exchange risk is minimal.
(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 Company 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.
NOTE 18. AUDITORS' REMUNERATION
Amounts received or due and receivable for:
Butler Settineri (Audit) Pty Ltd - Audit services
NOTE 19.
COMMITMENTS FOR EXPENDITURE
a)
Exploration Commitments
Consolidated Entity
2014
$'000
2015
$'000
40
38
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
2,920
3,668
If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the statement of
financial position 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.
Heron Resources Limited - Annual Report 2015 - Page 63
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 19. COMMITMENTS FOR EXPENDITURE CONTINUED
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.
Consolidated Entity
2014
$'000
2015
$'000
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 2015.
NOTE 20.
INVESTMENTS IN CONTROLLED ENTITIES
294
13
-
389
358
-
Name of
Entity
Country of
Registration
Class of
Shares
Cost of Consolidated
Entity’s Investment
2014
2015
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
TriAusMin Pty Ltd
Tarago Operations Pty Ltd
Tri Origin Mining Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
Cost of Parent
Entity’s Investment
2015
$
2014
$
10
100
10
100
100
100
15,644,000
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.
TriAusMin Ltd was acquired on 5 August 2014 along with its 100% owned subsidiaries, Tarago Operations Pty Ltd and Tri Origin Mining Pty
Ltd. These entities hold the tenements owned by TriAusMin Ltd prior to the merger with Heron on 5 August 2014, in particular the
Woodlawn Underground Project and the Woodlawn Retreatment Project.
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.
Consolidated Entity
2014
$
2015
$
(0.01620)
(0.02526)
350,207,092
252,985,787
(0.01620)
(0.02526)
350,207,092
252,985,787
Earnings profit/(loss) used in calculating basic and diluted earnings profit/(loss) per share
(5,673,844)
(6,389,236)
The 13,055,077 (2014: 14,000,000) options are not considered to be dilutive.
Page 64 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 22.
EMPLOYEE ENTITLEMENTS
a)
Employee Entitlements
The aggregate employee entitlement is comprised of:
Provisions (Current)
b)
Employee Share Scheme
Consolidated Entity
2014
$'000
2015
$'000
710
560
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.
The options cannot be transferred and will not be quoted on the ASX.
During the year 3,369,813 options expired under the Employee Options Plan.
Details of options as at the beginning and end of the reporting date and movements during the year are set out in the table below:
Grant date
Expiry date
price
Exercise Number of
Options at
the beginning
of the year
Options
expired /
lapsed this
year
Options
transferred
in the
year
Number
of Options
at the end
of the year
Options
exercisable
at the end
of the year
2015 Consolidated and parent entity
29 November 2006
19 November 2011
19 November 2011
05 October 2012
05 October 2012
05 October 2012
03 April 2013
03 April 2013
03 April 2013
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
5 August 2014
07 September 2016
23 June 2015
23 June 2016
16 January 2015
16 January 2016
16 January 2017
05 March 2016
05 March 2017
05 March 2018
27 June 2016
13 June 2017
13 March 2018
04 February 2017
23 October 2017
19 March 2016
20 November 218
22 February 2018
31 January 2019
23 October 2017
23 June 2015
18 November 2015
21 November 2017
27 June 2016
23 October 2017
Weighted average exercise price
$0.70
$0.27
$0.31
$0.22
$0.27
$0.31
$0.22
$0.27
$0.31
$0.27
$0.22
$0.15
$0.27
$0.14
$0.37
$0.09
$0.17
$0.09
$0.14
$0.58
$0.23
$0.23
$0.27
$0.14
5,000,000
2,500,000
2,500,000
333,333
333,333
333,334
1,000,000
1,000,000
1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
14,000,000
0.42
-
(2,500,000)
(333,333)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(85,837)
(21,459)
(214,592)
(85,837)
(42,918)
(85,837)
(3,369,813)
0.26
-
-
-
-
-
-
-
-
-
42,918
21,459
21,459
21,459
21,459
858,369
858,369
21,459
21,459
85,837
21,459
214,592
85,837
42,918
85,837
2,424,890
0.23
5,000,000
-
2,500,000
-
333,333
333,334
1,000,000
1,000,000
1,000,000
42,918
21,459
21,459
21,459
21,459
858,369
858,369
21,459
21,459
-
-
-
-
-
-
13,055,077
0.43
-
-
2,500,000
-
333,333
333,334
1,000,000
1,000,000
-
42,918
21,459
21,459
21,459
14,306
858,369
286,123
21,459
21,459
-
-
-
-
-
-
6,475,678
0.28
Heron Resources Limited - Annual Report 2015 - Page 65
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 23.
SUBSEQUENT EVENTS
Other than noted below there is no matter or circumstance which has arisen since 30 June 2015 that has significantly affected or may
significantly affect:
a)
b)
The operations of the Company; or
The results of those operations.
On 2 July 2015, the shareholders of Metalicity (formerly PLD Corporation Ltd) voted in favour of the company acquiring 90% of Heron’s
Rocky Gully Project. In consideration, Heron have been issued with 14,375,000 Metalicity Shares. These were issued to the Company on 24
July 2015 and are escrowed for 1 year. Furthermore, Metalicity performed a 1 for 2 share consolidation effective as of 2 July 2015 resulting
in the number of shares being held by the Company at that date (refer note 6) being reduced to 1,875,000. Heron’s fully paid shareholding
in Metalicity at the date of this report is 16,250,000 shares.
On 24 July 2015 Heron announced that it had secured a strategic relationship with Greenstone Resources L.P. (“Greenstone”) under which
Heron will initially raise $6.8 million through a placement of 54.1 million shares to Greenstone. Should Heron proceed with the staged
development of the Woodlawn Project, the arrangements provide for a potential additional investment by Greenstone of $13.2 million (or
such amount that would take Greenstone’s interest up to 19.9% of Heron shares). The Greenstone investment was completed on 17 August
2015.
NOTE 24.
CONTINGENT LIABILITIES
a)
Performance bonds and rental bond commitment
The Company has entered into performance bonds with the National Australia Bank Limited in relation to environmental rehabilitation
of the previous TriAusMin NSW tenements (30 June 2015: $153,000) and a rental bond commitment ($12,969) over its office in Sydney.
The performance bonds and rental bond commitment are secured by a way of mortgage against the Company’s Lewis Ponds freehold
land. The Company also has performance bonds with Westpac Banking Corporation in relation to environmental rehabilitation of the
WA tenements (30 June 2015: $114,000) and a rental bond commitment ($46,545) over its Perth office. The Westpac bonds are secured
by term deposits.
b)
Agreement with Veolia Environmental Services (Australia) Pty Ltd (“Veolia”)
In 2011, the Company and Tarago Operations Pty Ltd (“TOP”), a wholly owned subsidiary of the Company, entered into an agreement
with Veolia, under which the Company agreed:
(i)
(ii)
(iii)
To assume the environmental liabilities associated with the Woodlawn site, excluding Veolia’s area of operation. The Company
will be required to provide a performance bond with the NSW Division of Resources and Energy (DRE) as surety against
completion of environmental rehabilitation once mining on the site is complete. The amount of the bond is $3,577,000.
Subject to certain approvals being received by Veolia and the Company, the Company will receive “free-on-board” compost from
Veolia to be utilised in the rehabilitation of the site.
To fully indemnify Veolia for all direct and / or consequential loss and damage suffered by Veolia as a result of, or caused by, or
contributed to, by any act or omission or default of the Company, or TOP, connected with its operations at the Woodlawn site.
c)
Other contingent liabilities
Native title claims have been made with respect to areas which include tenements in which the Company has interests. The Company
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.
Rehabilitation of the Jump Up Dam tenements would cost up to $1 million if the Company were to surrender the tenements.
None of these contingent liabilities has been provided for in the financial report.
Page 66 - Heron Resources Limited - Annual Report 2015
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 25. ACQUISITION OF TRIAUSMIN
Effective on 5 August 2014 (“date of acquisition”), Heron acquired 100% of TriAusMin Ltd (“TriAusMin”). In consideration for acquiring the
net assets of TriAusMin, shareholders of TriAusMin were issued 107,891,936 new Heron shares. On the date of acquisition, Heron acquired
the following assets and liabilities of TriAusMin.
Current Assets
Cash
Receivables
Other Assets
Non-Current Assets
Fixed Assets
Land (Lewis Ponds)
Capitalised Exploration costs
TOTAL ASSETS
Current Liabilities
Accounts Payable
Provisions
Convertible Note
TOTAL LIABILITIES
EQUITY
Issued Capital
TOTAL EQUITY/NET ASSETS
$’000
315
16
8
52
325
16,730
17,446
414
88
1,300
1,802
15,644
15,644
NOTE 26.
PARENT ENTITY INFORMATION
The following information relates to the parent entity, Heron Resources Limited, at 30 June 2015. The information presented here has been
prepared using accounting policies consistent with those presented in Note 1.
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
2015
$’000
24,077
28,226
52,303
1,183
1,183
131,680
-
2,626
(83,186)
51,120
(3,914)
-
(3,914)
2014
$’000
34,339
5,471
39,810
838
838
116,035
-
2,441
(79,504)
38,972
(5,723)
-
(5,723)
Heron Resources Limited - Annual Report 2015 - Page 67
5.0 CONSOLIDATED FINANCIAL STATEMENTS CONTINUED
NOTE 26. PARENT ENTITY INFORMATION CONTINUED
b)
c)
d)
Guarantees entered into by the Parent
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.
Page 68 - Heron Resources Limited - Annual Report 2015
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 Company's and the Consolidated Entity's financial position as at 30 June 2015 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 Company 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
S B Dennis
Chairman
Perth, 27 August 2015
Heron Resources Limited - Annual Report 2015 - Page 69
Page 70 - Heron Resources Limited - Annual Report 2015
Heron Resources Limited - Annual Report 2015 - Page 71
7.0 Shareholder Information
AT 21 AUGUST 2015
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
321
809
539
1,126
274
3,069
Shares Held
179,486
2,495,366
4,337,603
39,439,751
368,557,175
415,009,381
b)
c)
d)
e)
The twenty largest shareholders hold 66.3% of the issued fully paid capital of the Company.
Substantial Shareholders including related parties who have notified the Company:
Holder
Greenstone Management (Delaware) LLC
I Buchhorn & related parties
Sprott Inc & related parties
Number of Shares
54,131,658
46,590,959
37,577,126
%
13.04
11.20
9.05
There were 990 shareholders who held less than a marketable parcel.
No securities have been classified by ASX as restricted.
VOTING RIGHTS
In accordance with the Company's constitution, voting rights are on the basis of a show of hands, one vote for every registered holder and
on a poll, one vote for each share held by registered holders.
Twenty largest shareholders as at 21 August 2015
CANADIAN REGISTER
GREENSTONE HHR HLDGS LP
HAZURN PL
KURANA PL
CITICORP NOM PL
MBM CORP PL
NATIONAL NOM LTD
JETOSEA PL
HSBC CUSTODY NOM AUST LTD
CHAOS INV PL
FREMONT CAT PL
1
2
3
4
5
6
7
8
9
10
11
12 WARDLE DAVID JAMES + J L
J P MORGAN NOM AUST LTD
13
KEMPSON TRUDI ANN
14
DUPUY OLIVIER R + J E
15
SHEERWATER PL
16
KOLTAI HLDGS PL
17
BUCHHORN IAN JAMES
18
BGK INV PL
19
20
KIMLEX INV PL
TOTAL
Number of Shares
97,554,458
54,131,658
23,732,480
16,576,556
13,809,176
9,999,830
8,822,554
6,850,000
6,564,437
5,972,854
4,205,476
4,070,000
3,335,825
3,283,491
3,175,107
3,071,500
2,973,179
2,518,241
2,412,445
2,227,683
275,286,950
Page 72 - Heron Resources Limited - Annual Report 2015
%
23.51%
13.04%
5.72%
3.99%
3.33%
2.41%
2.13%
1.65%
1.58%
1.44%
1.01%
0.98%
0.80%
0.79%
0.77%
0.74%
0.72%
0.61%
0.58%
0.54%
66.30%
7.0 SHAREHOLDER INFORMATION CONTINUED
f)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Distribution of Option holders
5,000,000
exercisable on or before 7 September 2016 for a payment of $0.6864 per option
2,500,000
exercisable on or before 23 June 2016 for a payment of $0.31 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
42,918
exercisable on or before 27 June 2016 for a payment of $0.27 per option
21,459
exercisable on or before 13 June 2017 for a payment of $0.22 per option
21,459
exercisable on or before 13 March 2018 for a payment of $0.15 per option
21,459
exercisable on or before 4 February 2017 for a payment of $0.27 per option
21,459
exercisable on or before 23 October 2017 for a payment of $0.14 per option
858,369
exercisable on or before 19 March 2016 for a payment of $0.37 per option
858,369
exercisable on or before 20 November 2018 for a payment of $0.09 per option
21,459
exercisable on or before 22 February 2018 for a payment of $0.17 per option
21,459
exercisable on or before 31 January 2019 for a payment of $0.09 per option
Size of Holding
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
10,000
100,000
Number of Holders
-
-
-
4
6
10
Options Held
-
-
-
171,672
12,883,405
13,055,077
Summary of option holders as at 21 August 2015
1
Employees & directors
TOTAL
Number of Options
13,055,077
13,055,077
% of Issued Options
100
100
Heron Resources Limited - Annual Report 2015 - Page 73
8.0 Appendix 1
UNAUDITED QUARTERLY FINANCIAL STATEMENTS
FOR THE 3 MONTH PERIOD ENDED 30 JUNE 2015
Management Comments on Unaudited Consolidated Financial Statements
27 August 2015
To the Shareholders of Heron Resources Limited,
The accompanying unaudited Financial Statements of Heron Resources Limited for the 3 month period ended 30 June 2015 have been prepared
by management and have been approved by the Board of Directors of the Company as an appendix to the Financial Report for the year ended
30 June 2015.
The attached appendix relates to the 3 months ended 30 June 2015 and the corresponding comparative period ended 30 June 2014.
The financial statements relating to the year ended 30 June 2015 and the comparative period have been subject to Audit by Butler Settineri.
The financial statements for the 3 month period ended 30 June 2015 and the comparative period have been approved by the Board of Directors
of the Company and have not been subject to Audit or Audit Review and no opinion has been provided on those statements.
For further commentary on the operations of Heron during the quarter ended 30 June 2015, please refer to the Management Discussion and
Analysis report and to the Quarterly Activities report lodged on the ASX and TSX on 31 July 2015 and posted on the Heron website at
www.heronresources.com.au.
Heron Resources Limited
S Dennis
Chairman
F Robertson
Chairman- Audit Committee
Page 74 - Heron Resources Limited - Annual Report 2015
8.0 APPENDIX 1 – UNAUDITED QUARTERLY FINANCIAL STATEMENTS
FOR THE 3 MONTH PERIOD ENDED 30 JUNE 2015 CONTINUED
UNAUDITED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED 30 JUNE 2015
All amounts shown are expressed in Australian dollars
Three Months ended 30 June
Continuing operations
Revenue from Continuing Activities
Audit and accounting fees
Consultants expense
Depreciation expense
Directors fees
Employee benefits expense
Insurance expense
Legal fees
Equity settled share based payments
Other expenses from ordinary activities
Exploration expenditure expensed as incurred (2)
Exploration expenditure written off
Impairment of investment
Loss from ordinary activities before income tax expense
Income tax expense
Loss from ordinary activities after income tax expense for the period
Other comprehensive income
Changes in market value of financial assets
2015
$'000
191
(27)
-
(17)
(63)
(175)
(25)
(5)
(163)
(223)
118
-
(390)
(779)
-
-
2014
$'000
293
(47)
(9)
(10)
(43)
(85)
(14)
(49)
61
(136)
(788)
(405)
(1,834)
(3,066)
-
-
Total comprehensive loss for the period attributable to members
(779)
(3,066)
Loss per share attributable to the ordinary equity of the company
(on a weighted average equity basis)
Basic loss per share (in dollars)
Diluted loss per share (in dollars)
$
(0.0022)
(0.0022)
$
(0.0085)
(0.0085)
(1)
(2)
Figures prior to 5 August 2014 do not contain the financial results of TriAusMin Ltd as this was prior to the merger with Heron Resources Limited.
The 2015 exploration expenditure incurred includes $525k R&D refund.
Heron Resources Limited - Annual Report 2015 - Page 75
8.0 APPENDIX 1 – UNAUDITED QUARTERLY FINANCIAL STATEMENTS
FOR THE 3 MONTH PERIOD ENDED 30 JUNE 2015 CONTINUED
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE THREE MONTHS ENDED 30 JUNE 2015
All amounts shown are expressed in Australian dollars
Balance at 1 April 2015
Option reserve write back
Cost of share based payments
Total comprehensive loss for the quarter
Balance at 30 June 2015
Contributed
Equity
$’000
131,680
-
131,680
Option
Reserve
$’000
2,696
(233)
163
-
2,626
Accumulated
Losses
$’000
(81,609)
233
-
(779)
Total
Equity
$’000
52,767
-
163
(779)
(82,155)
52,151
Page 76 - Heron Resources Limited - Annual Report 2015
8.0 APPENDIX 1 – UNAUDITED QUARTERLY FINANCIAL STATEMENTS
FOR THE 3 MONTH PERIOD ENDED 30 JUNE 2015 CONTINUED
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED 30 JUNE 2015
All amounts shown are expressed in Australian dollars
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees
Interest received
Net cash used in operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Exploration and development expenditure
Proceeds from sale of shares
Purchase of shares
Purchase of plant and equipment
Proceeds from sale of plant and equipment
Three Months ended 30 June
2015
$'000
(483)
221
(262)
2014
$'000
(439)
293
(146)
(1,597)
(593)
39
(34)
(39)
13
-
-
-
6
Net cash used in investing activities
(1,618)
(587)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares
Net cash provided by financing activities
-
-
-
-
Net increase/(decrease) in cash & cash equivalents held
(1,880)
(733)
Cash & cash equivalents at the beginning of the reporting period
25,895
33,648
Cash acquired from TriAusMin acquisition
-
-
Cash & cash equivalents at the end of the reporting period
24,015
32,915
(1)
Figures prior to 5 August 2014 do not contain the financial results of TriAusMin Ltd as this was prior to the merger with Heron Resources Limited.
Heron Resources Limited - Annual Report 2015 - Page 77
9.0 Appendix 2
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015
INTRODUCTION
The following is management’s discussion and analysis of the financial condition and the results of operations of Heron Resources Limited,
(“Heron” or the “Company”) for the three month period and year ended 30 June 2015, and its financial position as at 30 June 2015 and should
be read in conjunction with the Company’s audited financial statements as at 30 June 2015 and half yearly financial statements as at 31
December 2014 which have been subject to audit review, including the accompanying notes thereto.
The Company’s audited Financial Statements and Notes to the Financial Statements have been prepared in accordance with Australian
Accounting Standards, as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as
issued by the International Accounting Standards Board. Additional information relating to the Company, including press releases, has been
filed electronically with the Australian Securities Exchange (“ASX”) and through the System for Electronic Document Analysis and Retrieval
(“SEDAR”) and is available online at www.sedar.com.
The date of this management’s discussion and analysis is 27 August, 2015. Unless otherwise indicated all amounts discussed herein are
denominated in Australian dollars. The relevant exchange rates applicable to the three and twelve month periods ended 30 June 2015 are as
follows.
AUD/CDN $ Closing Rate
Average Rate
Three Months ended
Year ended
30 June 2015
30 June 2015
.946
.956
.946
.977
The Company’s common shares trade on the Australian Stock Exchange (the “ASX”) under the trading symbol “HRR”, and on the Toronto Stock
Exchange (the “TSX”) under the trading symbol “HER”.
Cautionary Note Regarding Forward-Looking Information
Certain information included in this management’s discussion and analysis may constitute forward-looking information within the meaning of
securities laws. In some cases, forward-looking information can be identified by the use of terms such as “may”, “will”, “should”, “expect”,
“believe”, “plan”, “scheduled”, “intend”, “estimate”, “forecast”, “predict”, “potential”, “continue”, “anticipate” or other similar expressions
concerning matters that are not historical facts. Forward-looking information may relate to management’s future outlook and anticipated
events or results, and may include statements or information regarding the future plans or prospects of the Company. Without limitation,
statements about the Company’s planned activities related to exploration or development activities carried out in Australia, constitute forward-
looking information. Actual results may vary. See “Risk Factors and Uncertainties”.
Forward-looking information is based on certain factors and assumptions regarding, among other things, the estimation of mineral reserves
and resources, the realization of mineral reserve and resource estimates, metal prices, the timing and amount of future exploration
expenditures, the estimation of initial and sustaining capital requirements, the estimation of labour and operating costs, the availability of
necessary financing and materials, including financing to conduct any future drilling program and the other activities necessary to continue to
explore and develop the Company’s properties in the short and long term, the receipt of necessary regulatory approvals, and assumptions with
respect to environmental risks, title disputes or claims, weather conditions, climate change and other similar matters. While the Company
considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
Without limitation, in estimating expenditures the Company has assumed, among other things, that metal prices will not change materially
from the prices used in its current financial forecasts or those of its affiliate, that it will obtain in a timely fashion all of the financing, regulatory
approvals and other authorizations required to enable the continued exploration and development of its properties, and that such activities
will proceed in the ordinary course without undue disruption. See “Risk Factors and Uncertainties”.
Forward-looking information is subject to certain factors, including risks and uncertainties, which could cause actual results to differ materially
from what management currently expects. These factors include risks inherent in the exploration and development of mineral deposits, risks
Page 78 - Heron Resources Limited - Annual Report 2015
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
relating to changes in metal prices and the worldwide demand for and supply of metal, uncertainties inherent in the estimation of mineral
reserves and resources, risks relating to the remoteness of the Company’s properties including access and supply risks, reliance on key
personnel, construction and operational risks inherent in the conduct of mining activities, including the risk of increases in capital and
operating costs and the risk of delays or increased costs that might be encountered during the construction and development process, the risk
of fluctuations in the Canadian/Australian and U.S./Australian dollar exchange rates, regulatory risks, including risks relating to the acquisition
of the necessary licences and permits, financing, capitalization and liquidity risks, including the risk that the financing necessary to fund the
exploration and development activities of the Company may not be available on satisfactory terms, or at all, environmental risks, including
risks relating to climate change and the potential impact of global warming on project timelines and on construction and operating costs, and
insurance risks. See “Risk Factors and Uncertainties”.
You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While
the Company may elect to, the Company is under no obligation and does not undertake to update this information at any particular time, except
as required by law.
Disclosure Controls and Procedures and Internal Controls over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting and disclosure
controls. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Management has completed an evaluation of the design effectiveness of the Company’s internal control over financial reporting. Based on this
assessment, management has concluded that as at 30 June 2015, the Company’s design for internal control over financial reporting was
effective. Management has also evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures
as of 30 June 2015. Based on this evaluation, management has concluded that the Company’s disclosure controls and procedures are effective
in ensuring that information required to be disclosed in reports filed or submitted by the Company under Australian and Canadian securities
legislation is recorded, processed, summarized and reported within the time periods specified in those rules.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting during the three month period ended 30 June 2015 that
has materially affected or is reasonably likely to materially affect, its internal control over financial reporting.
OVERVIEW
HERON RESOURCES LIMITED (“Heron” or “the Company”) is engaged in the exploration and development of base and precious metal
deposits in Australia. Following the merger with TriAusMin in August 2014, the Company is focused on the development of the high grade
Woodlawn Project located 250km southwest of Sydney in New South Wales. Heron also owns the Kalgoorlie Nickel Project located north of
Kalgoorlie in Western Australia, and holds a number of other quality base metal and copper-gold exploration properties located in the Lachlan
Fold Belt of New South Wales.
Selected Annual Financial Information
Set forth below is certain selected financial information expressed in Australian dollars in respect of the six most recently completed financial
years of the Company. This audited data is derived from the Company’s full year financial statements which are prepared in accordance with
Australian Accounting Standards, as issued by the Australian Accounting Standards Board and International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board. All numbers below are in ‘000s except for the number of shares
outstanding and Net Loss per Share information.
Financial Year Ended:
Working
Capital (1)
Total Shareholders
Assets (2)
Equity
June 30, 2015
June 30, 2014
June 30, 2013
June 30, 2012
June 30, 2011
June 30, 2010
24,015
32,915
39,597
43,171
46,973
56,663
54,352
42,603
48,506
57,910
61,292
75,123
52,151
41,762
47,702
56,863
60,162
72,730
(1)
(2)
See Capital Resources and Liquidity for a further discussion of working capital.
See Critical Accounting Policies and Estimates.
Common
Shares
Outstanding
360,877,723
252,985,787
252,985,787
252,985,787
252,985,787
252,985,787
Net Gain
(Loss)
Net Gain (Loss) per
Common Share
(in dollars)
(5,674)
(6,389)
(10,483)
(5,356)
(14,056)
(7,442)
(0.016)
(0.025)
(0.039)
(0.022)
(0.055)
(0.029)
Heron Resources Limited - Annual Report 2015 - Page 79
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
Quarterly Financial Information
Set forth below is certain selected financial information expressed in Australian dollars in respect of the most recently completed quarter and
previous two quarters of the Company. This unaudited data is derived from the Company’s interim financial statements which are prepared in
accordance with Australian Accounting Standards, as issued by the Australian Accounting Standards Board and International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. All numbers below are in ‘000s except for the number
of shares outstanding and Net Loss per Share information.
Quarter Ended::
Working
Capital (1)
Total Shareholders
Assets (2)
Equity
June 30, 2015
March 31, 2015
December 31, 2014
24,015
25,895
28,316
54,352
53,993
55,560
52,151
52,767
53,882
(1)
(2)
See Capital Resources and Liquidity for a further discussion of working capital.
See Critical Accounting Policies and Estimates.
Common
Shares
Outstanding
360,877,723
360,877,723
360,877,723
Net Gain
(Loss)
(779)
(1,114)
(2,036)
Net Gain (Loss) per
Common Share
(in dollars)
(0.0022)
(0.0031)
(0.0055)
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED 30 JUNE 2015
(all financial numbers in ‘000s)
The Company is principally involved in the exploration and evaluation of mineral properties. It had no revenues from operations in either the
last quarter or twelve month period to 30 June 2015. Exploration expenditures on mineral properties are expensed as incurred in the Income
Statement, unless there is a reasonable probability that the mineral property may become a productive mine, in which case the expenditure
is capitalised onto the Balance Sheet. During the three month period the Company incurred $2,532 in exploration expenditure of which $2,124
was capitalised onto the Balance Sheet. All of the capitalised expenditure was incurred on the Woodlawn property.
Corporate and administrative expenses are charged to the Income Statement as incurred. Interest income consists of interest on short-term
invested funds. The Company reported a loss from operations in the three month period and year ended 30 June 2015. Retained earnings are
in a deficit position. The Company has not paid any dividends since inception.
The Company recorded a loss for the year ended 30 June 2015 of $5,674 ($0.016 per share) compared to a net loss of $6,389 ($0.025 per share)
for the corresponding year ended 30 June 2014. The Company recorded a loss for the three months ended 30 June 2015 of $779 ($0.0022 per
share) compared to a net loss of $3,066 ($0.0085 per share) for the corresponding period ended 30 June 2014. The significant variance in the
three month figures is predominantly due to investment impairment in the 2014 quarter of $1,834.
The Company’s general and administration expenses (including share based payments) of $3,229 in the year to 30 June 2015 compared with
the $2,042 in year to 30 June 2014. The increase in the current period is due to the merger with TriAusMin in August 2014 which has led to
a significant increase in business activity and staff headcount.
The Company recorded an impairment on its listed investments of $390 in the three months to 30 June 2015 ($1,834 in the corresponding three
months to 30 June 2014) and $1,490 for the year ended 30 June 2015 ($1,834 for the corresponding year to 30 June 2014).
Page 80 - Heron Resources Limited - Annual Report 2015
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
EXPLORATION EXPENDITURES (all financial numbers in ‘000s)
Expenditures on exploration and evaluation in the three month period ended 30 June 2015 of $2,532 (of which $2,124 was capitalised) were
higher when compared to expenditures in the three month period ended 30 June 2014 of $701. This increase was due to the Woodlawn drilling
program as part of the Woodlawn Feasibility Study which was ongoing during the quarter ended 30 June 2015.
Exploration expenditure requirements to maintain all the Companies exploration licences in good standing total $2,920 per annum.
Below is a summary table of the exploration expenditures by tenement group for the three months ended 30 June 2015 (all numbers in ‘000s).
Quarter ended 30 June 2015
Woodlawn
KNP
Project (1)
Lewis
Ponds (1)
Other
WA (1)
Other
NSW (1)
$918
$1,206
$2,124
-
$228
$228
$65
$65
$130
-
$15
$15
-
$35
$35
Drilling
Other exploration
TOTAL
(1)
Expenditure expensed as incurred
Exploration Properties in Australia
Total
$983
$1,549
$2,532
The Company’s main exploration properties are located in the Kalgoorlie region of Western Australia and in the Lachlan Fold Belt of New South
Wales. The projects on these land holdings are more fully described in the Company’s Annual Report which is available from the Company on
request or which may be accessed from the Company’s website, www.heronresources.com.au
CAPITAL STOCK AND DEFICIT (all financial numbers in ‘000s)
The authorised capital of the Company consists of an unlimited number of common shares without par value. The increase in shares during
the year is due to the issue of 107,891,936 shares to complete the acquisition of TriAusMin in August 2014.
At 30 June 2015 the Company had 360,877,723 issued and outstanding common shares (30 June 2014: 252,985,787).
As at 30 June 2015 there were 13,055,077 stock options outstanding (30 June 2014: 14,000,000), bringing the fully diluted share position of
the Company to 373,932,800.
The Company’s accumulated deficit at 30 June 2015 is $82,155 compared to $76,714 at 30 June 2014. See “Results of Operations”.
FINANCIAL CONDITION (all financial numbers in ‘000s)
The Company’s total assets at 30 June 2015 increased to $54,352 from $42,603 at 30 June 2014. This increase is primarily due to the
acquisition of TriAusMin for $15,644 in new Heron equity in 5 August 2014.
Assets at 30 June 2015 include cash and cash equivalents of $24,015 (30 June 2014: $32,915). Cash not on account at a bank has been
invested in bank guaranteed, term deposits.
Cash of $1,597 was spent on exploration and evaluation during the three month period ended 30 June 2015 compared to $593 during the
corresponding period ended 30 June 2014. This increased outflow was due to the Woodlawn drilling program which was ongoing during the
June 2015 quarter.
The Company had current liabilities including trade payables and employee provisions of $2,201 at 30 June 2015 ($841 at 30 June 2014). The
Company has no off balance sheet financing arrangements or material contingent liabilities or contractual obligations other than that disclosed
in the financial statements for the year ended 30 June 2015.
Heron Resources Limited - Annual Report 2015 - Page 81
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
CAPITAL RESOURCES AND LIQUIDITY
The Company’s mineral properties are at the exploration and pre-development stage. At this time the Company has no operating revenue and
does not anticipate earning any operating profits until the Company is able to place a project into production, or acquire a mining asset with
operating cash flow. Until such time, the Company will be required to raise funds through equity financing, possibly supplemented by the
exercise of options and warrants, or by other means in order to continue its exploration and development activities.
In the past, the Company has successfully raised capital through issuance of equity or sale of assets. There can be no assurance that the
Company will be able to raise more capital or obtain adequate financing in the future or that the terms of such financing will be favourable.
Failure to raise capital or obtain financing could result in the postponement of further exploration or project development activities. Any
additional financing or capital raised by the Company could result in substantial dilution to the shareholders of the Company. See “Risk Factors
and Uncertainties”.
TRENDS (all numbers in ‘000s)
Due to the nature of its projects, the Company has a history of incurring operating losses. These losses will continue until a profitable project
is developed and operating or a cash generating operating asset is acquired.
The net loss in the three month period ended 30 June 2015, of $779 was lower than the loss incurred in the three month period ended 30 June
2014 of $3,066, primarily due to significant investment impairment of $1,834 in 2014.
The Company’s current staff headcount is 23 compared to 8 at the beginning of the financial year. The increase in headcount is due to
TriAusMin staff joining Heron and new hires for the Woodlawn drilling program.
CAPITAL MANAGEMENT
The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the
acquisition, exploration and development of properties for minerals.
The properties in which the Company currently has an interest are at the exploration stage and as such the Company is dependent on external
financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its
existing working capital and raise additional amounts as needed. In some circumstances, the Company may enter into farm in /joint venture
agreements whereby a third party earns an interest in a specific property by incurring an agreed amount of exploration expenditures. The
Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geological
or economic potential and if it has adequate financial resources to do so.
Management reviews its capital management approach on an ongoing basis and believes that given the relative size of the Company this
approach is reasonable.
COMMITMENTS
The Company is required to undertake expenditures of $2,920,000 per year to keep exploration properties in good standing in the normal course
of business. These obligations are subject to renegotiation when application for a mining lease is made and at other times.
The Company is contracted to non-cancellable operating leases in relation to its office premises at Level 1, 37 Ord Street, West Perth and at
Suite 702, 191 Clarence Street, Sydney. The lease in Perth expires in July 2016 and the lease in Sydney expires in September 2016. A
performance bond of $46,545 for the Perth office and a bank guarantee of $22,000 for the Sydney office have been lodged as surety against
performance of the leases.
RELATED PARTY TRANSACTIONS
Transactions between related parties are on normal commercial terms and conditions unless otherwise stated.
During the quarter, the Company paid $555 for the provision of office accommodation on normal terms and conditions from an entity related
to Mr. I J Buchhorn.
Page 82 - Heron Resources Limited - Annual Report 2015
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
New Accounting Policies and Accounting Standards and Interpretations issued, but some not yet applicable at 30 June 2015.
The Australian Accounting Standards Board has published various pronouncements that are not mandatory for the 30 June 2015 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 Company’s current activities the expected impact of those relevant to
the Company are set out below:
AASB 9 Financial Instruments and its consequential amendments. The consolidated entity will adopt this standard and the amendments from
1 January 2018 but the impact of its adoption is yet to be assessed by the consolidated entity.
IFRS 15 Revenue from Contracts with Customers. The consolidated entity will adopt this standard from 1 January 2017 but the impact of its
adoption is yet to be assessed by the consolidated entity.
The Company continues to assess the impact of these new accounting standards on its consolidated financial statements.
Future Accounting Changes
Other than those noted above, the Company is unaware at this time of any future changes to accounting standards that are contemplated by
the Australian Accounting Standards Board and are relevant to the Company and which might impact future accounting reporting periods.
Summary of Significant Accounting Policies
The following is a summary of significant accounting policies used by the Company in the preparation of its financial statements. For a
complete description of the significant accounting policies used by the Company in the preparation of its financial statements, please review
the notes to the June 30, 2015 audited financial statements included in the Company’s Annual Report. This Management’s Discussion and
Analysis should also be read in conjunction with the Company’s quarterly financial statements and the notes thereto.
Going concern basis of accounting (all numbers in ‘000s)
The interim financial statements for the three month period ended 30 June 2015 have been prepared on the basis of a Going Concern,
notwithstanding the fact that the Company incurred a loss for the 3 month period. The Company incurred a loss for the 3 month period after
tax of $779 (2014: $3,066) and a net cash out flow from operating and investing activities of $1,880 (2014: out flow $733).
The Financial Report has been prepared on the basis of a going concern, as the Directors believe that the Company has adequate funding to
pay its debts as and when they become due for a period of twelve months from the date of approving this report.
Remuneration of Directors and Key Management Personnel Including Share Based Payments
The cost to the Company of share options granted to Directors and Key Management Personnel is included at fair value as part of the Directors’
and Key Management Personnel’s aggregate remuneration in the financial year the options are granted.
The fair value of the share option is calculated using the Black Scholes option pricing model, which takes into account the exercise price, the
term of the option, the vesting and performance criteria, the impact of dilution, the non-tradeable nature of the option, the current price and
expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option. The cost
of these options is expensed in the Income Statement on a pro rata basis to the vesting dates. Unvested options are cancelled upon
termination of service with the Company.
Income tax
The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is
calculated using the tax rates that have been enacted or are substantially enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet method in respect of temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognized from the initial recognition of an
asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax is calculated
at the tax rates that are expected to apply to the period when the asset is realized or liability is settled. Deferred tax is credited in the income
statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against
equity. Deferred income tax assets are recognized to the extent that there is convincing evidence that it is probable that future tax profits will
be available against which deductible temporary differences can be utilized.
The amount of benefits brought to account or which may be realized in the future is based on the assumption that no adverse change will
occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the
benefit to be realized and comply with the conditions of deductibility imposed by the law.
Heron Resources Limited - Annual Report 2015 - Page 83
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
Earnings per share
Basic earnings per share are determined by dividing the operating loss after income tax by the weighted average number of ordinary shares
outstanding during the period.
Diluted earnings per share adjusts the figures used in determining earnings per share by taking into account non anti-dilutive options
outstanding during the quarter. The diluted earnings per share are capped at the basic earnings per share in circumstances of losses and anti-
dilutive options.
Exploration expenditure and mineral leases
Exploration expenditures on mineral properties are expensed as incurred in the Income Statement, unless there is a reasonable probability
that the mineral property may become a productive mine, in which case the expenditure is capitalised onto the Balance Sheet These
capitalised costs are only carried forward if the rights to the area of interest are current and to the extent that they are expected to be recouped
through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable
assessment of the existence of economically recoverable reserves, and active and significant operations in, or in relation to, the area of
interest are continuing.
Accumulated costs in relation to an abandoned area are written off in full against the results in the year in which the decision to abandon the
area is made.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to
that area of interest.
Restoration, rehabilitation and environmental expenditure
Restoration, rehabilitation and environmental expenditure to be incurred during the production phase of operations is accrued when the need
for such expenditure is established, and then written off as part of the costs of production of the mine property concerned. Significant
restoration, rehabilitation and environmental expenditures to be incurred subsequent to the cessation of production at each mine property are
accrued, in proportion to production, when its extent can be reasonably estimated.
Business undertakings – joint ventures
The Company has certain exploration activities conducted through joint ventures with other parties. Where relevant, the Company’s interest
in these joint ventures is shown in the notes to the financial statements under the appropriate heading.
RISK FACTORS AFFECTING FINANCIAL INSTRUMENTS
The Company’s major mineral properties are the KNP project in WA and the Woodlawn and Lewis Ponds Properties in NSW (the "Properties").
Unless the Company acquires or develops additional material properties, the Company will be mainly dependent upon its existing Properties.
If no additional major mineral properties are acquired by the Company, any adverse development affecting the Company's Properties would
have a material adverse effect on the Company’s financial condition and results of operations.
Other risk factors and the impact on the Company's financial instruments are summarized below:
Credit risk
Credit risk is the risk of loss associated with counterparty’s inability to fulfil its payment obligations. The Company's credit risk is primarily
attributable to cash and accounts receivable. Cash consists of cash on hand with reputable financial institutions. Financial instruments
included in accounts receivable consist of sales tax receivable from government authorities in Australia and deposits held with vendors.
Management believes that credit risk with respect to financial instruments included in cash and accounts receivable is low.
Liquidity risk (all financial numbers in ‘000s)
The Company's approach to managing liquidity risk is to ensure that it will have sufficient liquidity to meet liabilities when due. As at 30 June
2015, the Company had cash of $24,015 (30 June 2014: $32,915) to settle current liabilities of $2,201 (30 June 2014: $841). Apart from
provision for employee entitlements (e.g. Annual Leave), most of the Company's financial liabilities have contractual maturities of less than
30 days and are subject to normal trade terms.
Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity
prices. The Company continues to monitor the long term assets and assesses the value of the asset on a regular basis.
Page 84 - Heron Resources Limited - Annual Report 2015
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
Interest rate risk
The Company has cash balances. The Company's current policy is to invest excess cash in term deposits with banks.
Foreign currency risk
The Company's functional reporting currency is the Australian dollar and major purchases are transacted in Australian dollars. The Company
funds its exploration and administrative expenses using Australian dollars.
In addition, management believes the foreign currency risk derived from currency conversions related to its operations is negligible and
therefore does not hedge its foreign exchange risk.
Commodity price risk
The Company is exposed to price risk with respect to commodity prices. Commodity price risk is defined as the potential adverse impact on
earnings and economic value due to commodity price movements and volatilities. The Company closely monitors commodity prices as it relates
to valuable minerals to determine the appropriate course of action to be taken by the Company. The ability of the Company to develop its
properties and the future profitability of the Company is directly related to the market price of nickel, zinc, lead and copper and certain other
metals.
Fair value
AIFRS accounting principles require that the Company disclose information about the fair value of its financial assets and liabilities. Fair value
estimates are made at the balance sheet date based on relevant market information and information about the financial instrument. These
estimates are subjective in nature and involve uncertainties in significant matters of judgment and therefore cannot be determined with
precision. Changes in assumptions could significantly affect these estimates.
The carrying values for short-term investment, sundry receivables and prepaid expenses, subscription receivable, and accounts payable and
accrued liabilities on the balance sheet approximate fair value because of the limited term of these instruments.
The Company has designated its cash as held-for-trading, which is measured at fair value. Accounts receivable are classified as loans and
receivables, which are measured at amortized cost. Accounts payable and accrued liabilities are classified as other financial liabilities, which
are measured at amortized cost.
Sensitivity analysis
Based on management's knowledge and experience of the financial markets, the Company believes the following movements are "reasonably
possible" over the next year:
(i)
(ii)
(iii)
Interest rate risk is immaterial.
The Company holds all of its cash in low risk, secure Australian dollar term deposits at Australian banks. Foreign exchange risk related
to required payments is perceived as negligible.
Commodity price risk could adversely affect the Company. In particular, the Company’s future profitability and viability from mineral
exploration depends upon the world market price of valuable minerals. Commodity prices have fluctuated significantly in recent years.
There is no assurance that, even as commercial quantities of valuable minerals may be produced in the future, a profitable market will
exist for them.
As of 30 June 2015, the Company is not a producer of valuable minerals. As a result, commodity price risk may affect the completion of future
equity transactions such as equity offerings and the exercise of stock options and warrants. This may also affect the Company's liquidity and
its ability to meet its ongoing obligations.
Heron Resources Limited - Annual Report 2015 - Page 85
9.0 APPENDIX 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE THREE MONTH PERIOD AND YEAR ENDED 30 JUNE 2015 CONTINUED
RISK FACTORS AND UNCERTAINTIES
The Company is in the business of acquiring, exploring and developing mineral properties and is exposed to a number of risks and uncertainties
that are common to other exploration companies in the same business. The industry is capital intensive at all stages and must rely on equity
financing to fund exploration and development activities.
The ability of the Company to realize and profit from a property development is dependent upon its ability to define and delineate an ore body,
to finance development costs, adhere to government and environmental regulations, and/or be able to realize the costs incurred on disposition
of a property.
The future prospects of the Company are subject to a variety of risks that may cause actual results to differ materially from projected outcomes.
Factors that could cause such differences include: world commodities markets, foreign exchange markets, equity markets, access to sufficient
working capital, the ability to attract mining partners, the loss of or inability to hire key personnel, as well as government and environmental
restrictions. Most of these factors are beyond the control of the Company which consequently cannot guarantee future results, levels of
activity or ensure that a mineral discovery can be developed into a profitable mining operation. In addition, prices for the commodities
contained in the Company’s mineral resources at its exploration properties have fluctuated significantly over the last few years and may
continue to do so. Such volatility may affect the timing and magnitude of funds which the Company may seek to raise to support further
exploration and development.
The Company has taken steps to verify the title to its mineral properties, in accordance with industry standards for the current stage of
exploration of such properties but these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior
agreements or transfers and title may be affected by undetected defects.
ADDITIONAL INFORMATION
Additional information relating to the Company can be found at www.heronresources.com.au or on the SEDAR website at
www.sedar.com, or on the website of the ASX, www.asx.com.au.
APPROVAL
The Board of Directors of Heron Resources Limited has approved the disclosure contained in this Management Discussion and Analysis dated
27 August 2015.
Page 86 - Heron Resources Limited - Annual Report 2015
10.0 Statement of Mineral Resources
Table 10.1: Underground Mineral Resource - Woodlawn Underground Project (WUP)
Type
Resource
Category
Million
tonnes
Polymetallic
Polymetallic
Indicated
Inferred
Copper
Copper
Indicated
Inferred
1.6
3.0
0.8
1.1
ZnEq
%
21
19
10
11
Zn
%
10.7
8.1
1.0
1.1
Cu
%
1.5
1.6
2.8
2.8
Pb
%
4.0
3.2
0.3
0.2
Au
g/t
0.46
0.88
0.07
0.14
Ag
g/t
78
70
16
15
Notes to accompany Mineral Resource Table: ZnEq% refers to a calculated Zn equivalent grade the formula for which is stated in the General Development
of the Business section of this report; Polymetallic Type refers to polymetallic massive sulphide mineralisation with high-grade Zn and Pb; Copper Type refers
to Cu dominated massive and stringer sulphide mineralisation; Values are rounded to two significant numbers and some rounding related discrepancies may
occur in the totals; the Mineral Resource is reported in accordance with the guidelines set out in the JORC (2012) and NI 43-101 Codes; further details of the
Mineral Resources estimation can be found in the market release of 22nd April 2015 entitled “Preliminary Economic Assessment Delivers Strong Business Case
for the Woodlawn Zinc-Copper Project” (available from ASX or SEDAR).
Table 10.2: Mineral Resource Estimate - Woodlawn Retreatment Project (WRP)
Resource
Category
Million
tonnes
ZnEq
%
Zn
%
Cu
%
Pb
%
Au
g/t
Ag
g/t
0.83
1.38
2.21
Measured + Indicated Mineral Resource
North Dam
Measured
Indicated
Sub-Total
South Dam
Measured
Indicated
Sub-Total
West Dam
Measured
Indicated
Sub-Total
All Dams
Measured
Indicated
2.05
1.54
3.59
2.43
1.17
3.60
5.31
4.09
Total Measured +
Indicated Mineral Resource
Inferred Mineral Resources
North Dam
South Dam
West Dam
9.40
0.87
0.90
0.48
Total Inferred Mineral Resource
2.25
6.2
6.7
6.5
6.0
5.8
5.9
6.5
6.5
6.5
6.2
6.4
6.3
5.5
5.7
6.3
5.7
2.35
2.68
2.56
2.60
2.44
2.55
2.00
1.93
1.97
2.33
2.33
2.33
2.03
2.32
1.83
2.10
0.43
0.45
0.44
0.48
0.48
0.48
0.60
0.60
0.60
0.52
0.52
0.52
0.33
0.47
0.61
0.44
1.43
1.44
1.44
1.19
1.19
1.19
1.46
1.51
1.48
1.33
1.40
1.36
1.33
1.19
1.47
1.30
0.29
0.29
0.29
0.22
0.22
0.22
0.39
0.39
0.39
0.30
0.31
0.30
0.25
0.23
0.38
0.27
35
40
38
25
23
24
36
37
36
31
34
32
37
24
34
31
Notes to accompany Mineral Resource Table: 1) ZnEq% refers to a calculated Zn equivalent grade the formula for which is stated in the General
Development of the Business section of this report and these are different to the originally reported (May 2008) ZnEq grades which were based on a
different formula; 2) Values are rounded to two significant numbers and some rounded related discrepancies may occur in the totals; 3) The Mineral
Resource is reported in a manner compliant with the JORC 2004 and NI 43-101 Codes. This information was prepared and first disclosed under the JORC
Code (2004) in May 2008. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed
since it was last reported. 4) TriAusMin acquired more drill hole data in 2008, subsequent to the Mineral Resource estimation. That data however does not
materially alter the Mineral Resource estimate. Nevertheless, statistics of the later assays confirm the reported estimated grades; 5) further details of the
Mineral Resources estimation can be found in the market release of 22nd April 2015 entitled “Preliminary Economic Assessment Delivers Strong Business
Case for the Woodlawn Zinc-Copper Project” (available from ASX or SEDAR) including the Competent Person Statement
Heron Resources Limited - Annual Report 2015 - Page 87
10.0 STATEMENT OF MINERAL RESOURCES CONTINUED
Woodlawn Retreatment Project - Mineral Resource
The independently estimated JORC-compliant Mineral Resources contained in the North, South and West Tailings Dams at Woodlawn includes 9.4 Mt in the
Measured and Indicated categories and 2.3 Mt of Inferred Mineral Resources. No cut-off grade was applied to the calculation of the Mineral Resources as it
was assumed that all tailings would be re-processed as part of the Woodlawn Retreatment Project. .
This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis
that the information has not materially changed since it was last reported.
10.3 Lewis Ponds Project - Mineral Resource
Classification
Indicated Mineral Resource
Main Zone
Tom’s Zone
Total Indicated Mineral Resource
Inferred Mineral Resources
Main Zone
Tom’s Zone
Total Inferred Mineral Resource
Total Mineral Resource
Million
tonnes
5.82
0.54
6.35
0.17
0.10
0.27
6.62
Zn
%
2.1
5.5
2.4
1.7
5.0
3.0
2.4
Cu
%
0.1
0.3
0.2
0.1
0.2
0.1
0.2
Pb
%
1.1
3.8
1.4
0.8
3.6
1.9
1.4
Au
g/t
1.5
1.7
1.5
0.9
1.4
1.1
1.5
Ag
g/t
59
172
68
47
174
96
69
Refer to TriAusMin press release 6 October 2005.
Lewis Ponds Project
The independently estimated JORC-compliant Mineral Resource at Lewis Ponds is divided into resources from two zones, Main Zone and Tom’s Zone.
The cut-off grade applied to the calculation of Lewis Ponds Mineral Resources was 3.0% zinc equivalent. The following metal prices were used to calculate
zinc equivalent values applied to the kriged Mineral Resource estimate.
Zinc
Copper
Lead
Gold
Silver
1240
2860
900
430
6.75
USD/t
USD/t
USD/t
USD/oz
USD/oz
or
or
or
56.2
129.7
40.8
US Cents/lb
US Cents/lb
US Cents/lb
This information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis
that the information has not materially changed since it was last reported.
Page 88 - Heron Resources Limited - Annual Report 2015
10.0 STATEMENT OF MINERAL RESOURCES CONTINUED
SUMMARY OF HERON’S MINERAL RESOURCE, KALGOORLIE NICKEL PROJECT, WA
10.4 Kalgoorlie Nickel Project Mineral Resource
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
34.1
24.8
53.6
42.6
12.4
11.2
325.9
104.4
10.8
53.1
20.4
189.0
514.9
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
0.64
0.67
0.60
0.69
0.62
0.77
0.68
0.65
0.64
0.67
0.75
0.66
0.67
0.83
0.89
0.78
0.83
0.73
0.73
0.77
0.94
0.79
0.64
0.77
0.70
0.74
Co
%
0.102
0.065
0.042
0.042
0.038
0.047
0.037
0.052
0.054
0.080
0.049
0.034
0.051
0.041
0.102
0.044
0.044
0.051
0.046
0.053
0.050
0.044
0.044
0.047
0.048
0.044
0.035
0.058
0.066
0.053
Company Total ^
784.9
0.70
0.049
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
* 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.
^ The total Mineral Resource has been reduced marginally from 30 June 2014 estimate as a result of tenement rationalisation in the Highway and Siberia
North areas
Heron Resources Limited - Annual Report 2015 - Page 89
10.0 STATEMENT OF MINERAL RESOURCES CONTINUED
Heron Resources Limited
Kalgoorlie Nickel Project
Nickel Laterite Tenements
GHOST ROCKS
AUBILS
Kalgoorlie Nickel Project
Yerilla
Menzies
HIGHWAY
Kalgoorlie
Nickel Project
West
BOYCE CREEK
JUMPUP DAM
SIBERIA NORTH
GOONGARRIE HILL
GOONGARRIE SOUTH
BIG FOUR
SIBERIA SOUTH
Major Road
Railway
Gas pipeline
Cawse Nickel
Laterite Plant
(Under Care
and Maintenance)
Kalgoorlie Nickel Project West
Kalgoorlie Nickel Project East
Kalgoorlie Nickel Project Yerilla
GINDALBIE
KALPINI
Kalgoorlie
Nickel Project
East
Kalgoorlie
BULONG
Coolgardie
Nickel Smelter
(BHP Billiton)
WESTERN AUSTRALIA
Project Area
KALGOORLIE
PERTH
Kalgoorlie Nickel Project Notes:
KNP Mineral Resources by Category - 2013
Resource Deposit
Category
Measured Goongarrie South
Indicated
Inferred
Jump Up Dam
Subtotal
Big Four
Bulong East
Goongarrie South
Highway
Jump Up Dam
Siberia North
Subtotal
Aubils
Big Four
Black Range
Boyce Creek
Bulong East
Ghost Rocks
Goongarrie Hill
Goongarrie South
Highway
Jump Up Dam
Kalpini
Scotia
Siberia North
Siberia South
Taurus
Subtotal
Combined Total
Tonnes Nickel Cobalt
(%)
1.08
0.94
1.02
0.69
0.89
0.79
0.66
0.79
0.64
0.74
0.70
0.62
0.75
0.77
0.78
0.67
0.60
0.63
0.64
0.64
0.73
0.77
0.67
0.65
0.83
0.68
0.70
(Mt)
5.8
3.8
9.6
42.6
15.9
54.2
52.9
41.7
10.8
218.1
49.4
12.4
20.4
26.8
24.3
24.8
53.6
34.4
34.1
18.5
75.4
11.2
53.1
104.4
14.2
557.3
784.9
(%)
0.102
0.048
0.081
0.052
0.046
0.065
0.042
0.044
0.051
0.051
0.066
0.054
0.102
0.058
0.053
0.047
0.037
0.042
0.038
0.035
0.044
0.080
0.041
0.034
0.051
0.047
0.049
Kambalda
0
20
40
Kilometres
Note: Resources based on a 0.5% Ni Cutoff. Rounding errors occur.
See full ASX announcement 18 Oct 2013.
1.
2.
3.
4.
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-optimised 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-optimised by
Shanshan under joint venture between May 2009 and May 2011. The Shanshan joint venture expired in May 2011. Shanshan currently has no retained
rights in respect of the Yerilla tenements.
The total Mineral Resource has been reduced marginally from 30 June 2014 estimate as a result of tenement rationalisation in the Highway and Siberia
North areas
Page 90 - Heron Resources Limited - Annual Report 2015
10.0 STATEMENT OF MINERAL RESOURCES CONTINUED
10.5 Competent Persons Statements
Declaration and JORC and NI 43-101 Compliance
1.
2.
3.
4.
5.
6.
The information in this report that relates to Mineral Resources for the Woodlawn Underground Project has been compiled by Rodney
Brown and Daniel Guibal, who are both full time employees of SRK Consulting (Australasia). Rodney Brown, who is a member of the
AIG, takes responsibility for the integrity of Data that have been used to prepare the resource estimates, and for the Geological Model.
Daniel Guibal, who is a Fellow of the AusIMM, takes responsibility for the Mineral Resource Estimate. Both Mr Brown and Mr Guibal
have sufficient experience that is relevant to the style of mineralisation 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” and “qualified person” as this term is defined in Canadian National Instrument 43-101 (“NI 43-101”).
Mr Brown and Mr Guibal consent to the inclusion in this report of the matters based on his information in the form and context that it
appears.
The information in this report that relates to the Preliminary Economic Assessment of the Woodlawn Project, dated 29 May 2015, was
prepared by Anne-Marie Ebbels, who is a full time employee of SRK Consulting (Australasia) Pty Ltd, who is a member of the AusIMM,
and has sufficient experience that is relevant to the type of deposit under consideration to qualify as a “qualified person” as this term
is defined in Canadian National Instrument 43-101 (“NI 43-101”). Anne-Marie Ebbles consents to the written disclosure of the
Preliminary Economic Assessment of the Woodlawn Project and the inclusion of extracts therefrom or summaries thereof, either directly
or as incorporated by reference in the form and context that they appear in this report.
The information relating to the Woodlawn Tailings Mineral Resource contained in this report has been reviewed and is based on
information compiled by Mr Robin Rankin, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy
(AusIMM) and accredited by the AusIMM since 2000 as a Chartered Professional (CP) in the geology discipline. Mr Rankin consults to
Heron (and previously TriAusMin Ltd) as Principal Consulting Geologist of independent geological consultancy GeoRes. He has sufficient
experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is
undertaking to qualify as a Competent Person as defined in the JORC Code (2012 edition) and “qualified person” as this term is defined
in Canadian National Instrument 43- 101. Mr Rankin consents to the inclusion in this release of the matters based on his information
in the form and context in which it appears. This information was prepared and first disclosed under the JORC Code 2004. It has not
been updated since to comply with the JORC Code (2012 edition) on the basis that the information has not materially changed since it
was last reported.
The technical information in this report relating to the exploration results and forward program at the Woodlawn Project is based on
information compiled by Mr David von Perger, who is a Member of the Australian Institute of Mining and Metallurgy (Chartered
Professional – Geology). Mr von Perger is a full time employee of Heron Resources Limited and has sufficient experience, which is
relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as
a Competent Person as defined in the JORC Code (2012 edition) and “qualified person” as this term is defined in Canadian National
Instrument 43-101 (“NI 43-101”). Mr von Perger has reviewed this press release and consents to the inclusion in this news release of
the information in the form and context in which it appears.
The information in this report relates to the mineral resource for Lewis Ponds is based on information compiled by Mr Robert Cotton,
who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Cotton is a full time employee of Mineral Appraisals Pty Ltd,
consultant to TriAusMin (now Heron). Mr Cotton has sufficient experience, which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition
of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” and “qualified person” as this
term is defined in Canadian National Instrument 43-101 (“NI 43-101”). Mr Cotton consents to the inclusion in this report of the
information in the form and context in which it appears.
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 mineralisation 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.
Heron Resources Limited - Annual Report 2015 - Page 91
10.0 STATEMENT OF MINERAL RESOURCES CONTINUED
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
mineralisation 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.
7.
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 mineralisation 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.
The information in this report is derived from Heron and TriAusMin announcements variously released on ASX and TSX during the course
of FY 2014/2015 which contain material details of assumptions which assumptions continue to remain valid as at the date of this report.
Page 92 - Heron Resources Limited - Annual Report 2015
11.0 Interest in Mining Tenements
Tenement
Location
Heron Interest Status Note
Tenement
Location
Heron Interest Status Note
WA Tenements
E16/00332
E27/00524
E27/00529
E28/01224
E28/02311
E29/00889
E29/00934
E29/00941
E31/01092
E39/01706
E39/01757
E39/01872
E39/1854
E63/01518
E63/01737
E63/01748
E70/02801
E70/04543
M24/00541
M24/00634
M24/00658
M24/00660
M24/00663
M24/00664
M24/00665
M24/00683
M24/00686
M24/00731
M24/00732
M24/00744
M24/00757
M24/00772
M24/00778
M24/00797
M24/00845
M24/00846
M24/00847
M24/00848
M24/00915
M24/00916
M25/00059
M25/00134
M25/00145
M25/00151
M25/00161
62km NW of Kalgoorlie
67km NE of Kalgoorlie
72km NE of Kalgoorlie
63km NE of Kalgoorlie
70km E of Norseman
78km NW of Kalgoorlie
67km NNW of Kalgoorlie
140km NNW of Kalgoorlie
140km NNE of Kalgoorlie
70km NW of Leonora
70km NW of Leonora
170km NNE of Kalgoorlie
70km NNW of Leonora
70km E of Norseman
68km ENE of Norseman
68km ENE of Norseman
85km NW of Albany
105km NW of Albany
67km NNW 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
75km NW of Kalgoorlie
70km NNW of Kalgoorlie
70km NNW of Kalgoorlie
75km NNW of Kalgoorlie
63km NW of Kalgoorlie
71km NW of Kalgoorlie
70km NNW of Kalgoorlie
78km NW of Kalgoorlie
71km NW of Kalgoorlie
71km NW of Kalgoorlie
71km NW of Kalgoorlie
71km NW of Kalgoorlie
78km NW of Kalgoorlie
78km NW of Kalgoorlie
34km E of Kalgoorlie
40km E of Kalgoorlie
40km E of Kalgoorlie
38km E of Kalgoorlie
40km E of Kalgoorlie
(%)
100 of Ni only
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100 of Ni only
100 of Ni only
100 of Ni only
100 of Ni only
100
100
100 Ni Lat
100 Ni Lat
100 Ni Lat
100
100 Ni Lat
Live
Pending
Live
Live
Pending
Pending
Pending
Live
Pending
Pending
Pending
Pending
Pending
Live
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
3
2
4
4
4
3
3
3
3
6
6
6
6
M25/00162
M25/00171
M25/00187
M25/00207
M25/00209
M25/00210
M25/00220
M25/00234
M27/00395
M28/00199
M28/00201
M28/00205
M29/00167
M29/00202
M29/00214
M29/00272
M29/00278
M29/00312
M29/00423
M31/00475
M31/00477
M31/00479
M31/00483
P16/02811
P24/04395
P24/04396
P24/04400
P24/04401
P24/04402
P24/04403
P24/04653
P25/02062
P25/02251
P25/02252
P25/02253
P25/02254
P25/02255
P25/02256
P25/02257
P25/02258
P29/02265
P31/02038
P31/02039
P31/02040
P31/02040
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
68km NE of Kalgoorlie
65km NE of Kalgoorlie
65km NE of Kalgoorlie
66km NE of Kalgoorlie
87km NNW of Kalgoorlie
86km NNW of Kalgoorlie
100km NNW of Kalgoorlie
77km NNW of Kalgoorlie
74km NNW of Kalgoorlie
78km NW of Kalgoorlie
76km NNW of Kalgoorlie
129km NE of Kalgoorlie
129km NE of Kalgoorlie
129km NE of Kalgoorlie
146km NNE of Kalgoorlie
100km NNW 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
75km NW 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
90km NNW of Kalgoorlie
113km NE of Kalgoorlie
113km NE of Kalgoorlie
113km NE of Kalgoorlie
113km NE of Kalgoorlie
(%)
100 Ni Lat
100 Ni Lat
100
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100 Ni Lat
100
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100 Ni Lat
100
100
100
100
100
6
6
6
6
6
6
6
5
5
5
5
1
6
6
6
6
6
6
6
6
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
Live
Live
Live
Live
Live
Pending
Pending
Pending
Pending
Heron Resources Limited - Annual Report 2015 - Page 93
11.0 INTEREST IN MINING TENEMENTS CONTINUED
Tenement
Location
Heron Interest Status Note
Tenement
Location
Heron Interest Status Note
(%)
(%)
100
100
100
100
100
100
100
100
100
100
100
100
7
7
7
7
7
7
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
100
100
100
100
100
100
100
100
78.9
100
100
100
P24/04212
P24/04215
P24/04216
P24/04217
P24/04218
P24/04222
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
EL8313
EL8318
EL8323
EL8325
EL8337
EL8353
EL8356
ELA5119
ELA5167
ELA5202
ML 739
S(C&PL)L 20
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
23km SE of Parkes
15km E of Orange
100km NW of Condobolin
10km N of Forbes
40km SSW of Goulburn
5km E of Collector
15km E of Bugendore
100km NW of Condobolin
25km W of Goulburn
Gundagai
15km SE of Gundagai
70km SE of Cobar
27km NNE of Yass
27km NW of Nyngan
10km NE of Orange
60km ENE of Canberra
Woodlawn
7.5km SE of Woodlawn
59km WSW of Tottenham
27km NNE of Yass
27km NNE of Yass
74km NW of Orange
10km N of Forbes
40km SSW of Goulburn
NSW Tenements
EL8192
EL5583
EL5878
EL7023
EL7257
EL7468
EL7469
EL7941
EL7954
EL8061
EL8221
EL8267
HERON RETAINED RIGHTS WA
Metaliko: Heron Retains Nickel Rights
M24/00919
P24/04198
P24/04199
P24/04200
P24/04201
P24/04210
Pioneer: Heron Retains Nickel Rights
Live
E27/00273
E27/00278
Live
Ramelius: Heron Pre-Emptive right to Nickel Laterite
Live
E27/00300
Live
M15/01101
M15/01263
Live
St Ives Gold Mining: Heron retains royalty on gold production and right to explore and mine base metals
E15/00927
E15/01005
Yarri Battery and Resources: Heron retains royalty on gold production
E31/00859
E31/00887
P31/01788
P31/01789
P31/01790
Southern Gold Ltd: Heron retains 20% free carried to BFS
E25/00250
KCGM: Heron retains royalty on gold production
E26/00124
P26/03481
P26/03493
Cliff Asia Pacific: Heron retains royalty on iron ore production
M27/00272
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
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
6km NNE of Kalgoorlie
14km N of Kalgoorlie
14km N of Kalgoorlie
6km NNE of Kalgoorlie
48km N of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
65km S of Kalgoorlie
preempt Ni Lat
preempt Ni Lat
preempt Ni Lat
P31/01791
P31/01792
P31/01793
P31/01794
60km SSE of Kalgoorlie
68km SE of Kalgoorlie
62m NE of Kalgoorlie
62km NE of Kalgoorlie
66km NE of Kalgoorlie
61km NE of Kalgoorlie
68km SE of Kalgoorlie
70km SE of Kalgoorlie
Royalty
Royalty
Royalty
Royalty
Royalty
M15/01264
M15/01323
M15/01338
P26/03494
P26/03495
P26/03496
Royalty
Royalty
Royalty
Live
Live
Live
Live
Live
E15/01010
E15/01040
E28/01746
P28/01120
Ni Lat 100
Ni Lat 100
20km NW of Kalgoorlie
32km ESE of Kalgoorlie
30km E of Kalgoorlie
Royalty
Royalty
Live
Live
Live
100% to Ni
E25/00361
Live
Live
Live
Live
20
Royalty
Royalty
Royalty
Royalty
Royalty
Royalty
20
Royalty
Royalty
Royalty
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
100% to Ni
Ni Lat 100
Ni Lat 100
Live
Live
Live
Live
Pending
Pending
Pending
Live
Pending
Pending
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
7
7
7
7
7
7
Live
Live
Live
Live
Live
Live
Live
Live
Live
Live
preempt Ni Lat Live
preempt Ni Lat Live
preempt Ni Lat Live
Notes:
1.
2.
3.
4.
5.
6.
7.
Britannia Gold Ltd retained precious metal rights.
Impress Ventures Ltd has a 10% equity free-carried interest to a decision to mine.
Swan Gold Limited holds the tenement, Heron retains nickel rights.
Placer Dome Australia Limited (Norton Goldfields) retains certain gold rights.
Heron previously entered a binding framework agreement with Ningbo Shanshan Co Ltd, Shanshan had the right to earn a 70% interest
in the Yerilla Nickel-Cobalt Project. The JV ended in May 2011.
Subject to Farm In agreement with Southern Gold Ltd (who have earned an 80% interest). Heron retains 100% of nickel laterite.
Metalliko holds the tenement, Heron retains nickel rights.
Page 94 - Heron Resources Limited - Annual Report 2015
12.0 Glossary
12.1 Corporate / General Definitions
ASIC means Australian Securities and Investments Commission
ASX means ASX Limited (ABN 98 008 624 691) or the Australian Securities Exchange, as appropriate
Australian Registry means Security Transfer Registrars Pty Ltd of 770 Canning Highway, Applecross WA
Canadian Registry means TMX Equity Transfer Services Inc. of 200 University Avenue, Suite 300, Toronto ON M5H 4H1
CIM Standards means Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves,
adopted by the CIM Council on 20 August 2000
Heron or HRR means Heron Resources Limited (ABN 30 068 263 098)
HRR : ASX is the Heron code on ASX
HER : TSX is the Heron code on TSX
IFRS means International Financial Reporting Standards
OSC means Ontario Securities Commission
SML 20 Transaction Documents means
(a)
(b)
(c)
Deed to Assign Special Mining Lease dated 30 November 2011 made between Veolia Environmental Services (Australia) Pty Ltd
(ACN 051 316 584) (Veolia), Tarago Operations Pty Ltd (ACN 127 810 413) (Tarago) and TriAusMin;
Deed of Option dated 30 November 2011 made between Veolia and Tarago; and
Co-operation Deed dated 30 November 2011 made between Veolia, Tri Origin Mining Pty Ltd (ACN 115 529 112), Tarago and
TriAusMin
Subsidiary has the meaning given to that term in section 9 of the Corporations Act
TriAusMin or TRO means TriAusMin Limited (ABN 22 062 002 475)
TSX means the Toronto Stock Exchange
VWAP means Volume weighted average price
WEP means Woodlawn Exploration Project
WRP Woodlawn Retreatment Project
WUP Woodlawn Underground Project
12.2 Technical Definitions
Ag means Silver
Au means Gold
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
Cu means Copper
Decline means a declined tunnel accessing an ore body
Feasibility Study means a study with three progressively more detailed stages:
Scoping Study is an Australian term and 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 ± 30%.
PEA means Preliminary Economic Assessment, and is a Canadian term for a TSX-based mineral project evaluation which has two key
elements that distinguish it from other studies, firstly, it cannot be a PFS or FS, and secondly, a PEA can only demonstrate the potential
viability of mineral resources. PFS and FS are more comprehensive studies and, therefore, are sufficient to demonstrate the technical
and economic viability of a mineral project (section 2.3(1)(b) of NI 43-101 does not allow issuers to include inferred mineral resources in
a PFS-level economic analysis, whereas section 2.3(3) of NI 43-101 allows issuers to include inferred mineral resources in a PEA). PEA
is more advanced than an ASX “Scoping Study”.
Pre-feasibility Study (PFS) is an Australian term and means an engineering and cost study 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 Pre-feasibility Study. Operating and capital cost estimates are to an accuracy of ± 25%.
Feasibility Study (FS) is an Australian term and 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.
Typically operating and capital cost estimates are to an accuracy of +/- 15-20%. A FS is the standard of report required by primary debt
funders to demonstrate the technical and commercial viability of a project.
KNP means Kalgoorlie Nickel Project, a nickel laterite project located through an arc 30 to 150km north-north west to east of Kalgoorlie
Level means Horizontal series of developments all at the same distance measured from the surface
Heron Resources Limited - Annual Report 2015 - Page 95
12.0 GLOSSARY CONTINUED
m means metre and km means kilometres
Mt means Million tonnes
Mineralisation means in economic geology, the introduction of valuable elements into a rock body
Ni means Nickel
Nickel Laterite means Nickel occurring as an oxidised hydrated iron oxide, ferruginous clay, smectite clay, chlorite and serpentine
assemblage overlying weathered ultramafic rock
Saprolite Ore means nickel laterite mineralisation consisting of hydrated magnesium silicate minerals with nickel and cobalt occurring
in association with the silicate phases. The ore is a weathered clay-rich rock which retains original rock textures, and is significantly
more competent than Nontronite, Manganiferous, Goethite or Siliceous Ore
Nickel Sulphide means nickel and copper occurring as an un-oxidised sulphide assemblage associated with fresh ultramafic rock
Pb means Lead
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
Province means a grouping of projects within a geological district defined by a major mineralised crustal structure
RAB means 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 means 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
Reserves or Ore Reserves or Mineral Reserves as defined by JORC Code, NI43-101 or CIM Standards.
Proven or Proved Ore Reserve means 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.
Probable Ore Reserve is the economically mineable part of an Indicated Mineral Resource.
Resource or Mineral Resource means a Mineral Resource as defined by JORC Code, NI43-101 or CIM Standards and is a concentration or
occurrence of material of intrinsic economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable
prospects for eventual economic extraction. Mineral Resources are further sub-divided, in order of increasing geological confidence, into
Inferred, Indicated and Measured categories.
Measured Resource means a ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality),
densities, shape and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to
support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed
and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits,
workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where
data and samples are gathered. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated
Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve or under certain circumstances to a
Probable Ore Reserve
Indicated Resource means an ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality),
densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in
sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from
adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as
outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points
of observation where data and samples are gathered. An Indicated Mineral Resource has a lower level of confidence than that applying
to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve.
Inferred Resource means an ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade (or quality) are
estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological
and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques
from locations such as outcrops, trenches, pits, workings and drill holes. An Inferred Mineral Resource has a lower level of confidence
than that applying to an Indicated Mineral Resource and must not be converted to an Ore Reserve. It is reasonably expected that the
majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continue exploration.
Resource Categories:
JORC (2012 edition) means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves and is a
professional code of practice that sets minimum standards for Public Reporting of minerals Exploration Results, Mineral Resources and
Ore Reserves. The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and
Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in Public Reports.
NI 43-101 means National Instrument 43-101 and is a national instrument for the Standards of Disclosure for Mineral Projects within
Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties
owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining
entities who trade on stock exchanges overseen by the Canadian Securities Administrators, even if they only trade on Over The Counter
(OTC) derivatives or other instrumented securities.
Page 96 - Heron Resources Limited - Annual Report 2015
ASX:HRR (cid:129) TSX:HER
www.heronresources.com.au