8337 Annual F/A - Heron Resources Limited · Heron’s 1998 exploration and nickel laterite project...

Corporate DirectoryHeron Resources NL

Cover piece

and below:

“They Came and

They Stayed” by

leading Goldfields

artist Talia Delaney.

Heron, as a Goldfields

resident, supports

Goldfields art and is

proud to feature

Talia’s work.

Company Secretary

Ross James Arancini BBus, ACA - Company Secretary

110 Hensman Street, South Perth, Western Australia 6151

Registered And Principal Office

21 Close Way, PO Box 1280, Kalgoorlie, Western Australia 6430

Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256 Email: [email protected]

Auditors

Butler Settineri Chartered Accountants

35-37 Havelock Street, West Perth, Western Australia 6005

Solicitor To The Company

McKenzie Lalor

74 Egan Street, Kalgoorlie, Western Australia 6430

Bankers

Challenge Bank

230-236 Hannan Street, Kalgoorlie, Western Australia 6430

Share Registry

Security Transfer Registrars Pty Ltd

Level 1, 168 Adelaide Terrace, Perth, Western Australia 6000

Telephone: (08) 9221 4200 Facsimile: (08) 9221 1581

Email: [email protected]

Stock Exchange

Australian Stock Exchange Limited

2 The Esplanade, Perth, Western Australia 6000

ASX Code

HRR

SEAT Abbreviation

Heron

Home Branch

Perth

Industry Classification

013 GOLD

(Gold, Other Mining)

Research Service Index No.

Mining H50

ISIN

AU000 000 HRR6

ContentsAnnual Report 1998

Contents

1.0 Chairman’s Review .........................................................................3

2.0 Operations Review..........................................................................5

3.0 Corporate Profile ...........................................................................34

4.0 Directors’ Report...........................................................................36

5.0 Financial Statements ..................................................................40

Profit and Loss Account............................................................40

Balance Sheet .................................................................................41

Statement of Cash Flows .........................................................42

Notes to and Forming Part of the Accounts .................43

Directors’ Statement ...................................................................54

6.0 Independent Audit Report........................................................55

7.0 Shareholder Information ...........................................................56

8.0 Interest in Mining Tenements ................................................59

Glossary of Terms.........................................................................72

Directors

Rodney Michael Evans FCA, FCIS, FCIM, AIArbA - Chairman (Non Executive)

Level 4, 5 Mill Street, Perth, Western Australia 6000

Ian James Buchhorn BSc (Hons), Dipl Geosci, MAusIMM - Managing Director (Executive)

21 Close Way, Kalgoorlie, Western Australia 6430

Robert George Colville AssocRMIT, MAusIMM - Director (Non Executive)

Third Avenue, Applecross, Western Australia 6153

Above:

Ore settling and

viscosity tests at

the metallurgical

laboratory -

Oretest Pty Ltd,

Perth.

Top Right:

Bob Colville,

Rod Evans and

Ian Buchhorn.

Granitoids

Greenstone belts

32˚00’S

30˚00’S

28˚00’S

N

121˚00’E 123˚00’E

Kanowna Belle

Coolgardie

Leinster

Bannockburn

Tarmoola

Gwalia

Menzies

Davyhurst

Paddington

St Ives

Junction

Bullabulling

Kambalda

Granny Smith

Redross

Kalgoorlie

Leonora

Laverton

Major fault / lineament

0

Gold Mine / Prospect

Nickel Mine / Resource

Recent Discovery

Karonie

Patricia

Porphyry

Niagara

Chalice

IdaFault

Lineament

Keith Kilkenny

Heron Project Areas

SilverSwan

Old PloughDam

Norseman

Mulgabbie

Edjudina

Mt Morgans

Agnew/Lawlers

Scale

50 km

(Union Jack Well)

Victory

Malcolm

Dundas

French Kiss

KaronieSouth

Binduli East JV

Bullabulling

(Lawrence Find)

MenziesEast JV

MountMorgans JV

SnakeHill JV

MungariNorthwest JV

FederalGolden Cities

WhiteFoil

Emu Fault

ScotiaKanowna

Scotia

FrancesLesley

Yilmia Hill

Cowan

Transline

Mt. Martin

W. A.

Perth

MapArea

Bungalbin

LawrenceFind

MaggieHays Hill

Laverton Nickel

Blister Dam JV

Lancefield

Laverton JV

Laverton Nickel

Merolia NickelMenzies Leonora

Menzies Leonora

Kanowna East

Lake Rebecca Nickel

GindalbieEast

KalpiniNickel

Yerilla Nickel

Heron Resources NL Annual Report 1998 page 2

Heron Resources NL

Eastern Goldfields Project Locations


1.0 Chairman’s Review

It is with pleasure that I present the third Annual Report of Heron Resources NL. In this, the second year since listing,

you can look with pride upon the Company’s achievement of moving towards a lateritic nickel mining and processing

operation at the Kalpini Nickel Project. This discovery has resulted from 10,000 soil geochemical

samples, 8,000m of RAB drilling, 6,000m of Aircore drilling and 30,000m of RC drilling, all completed in

the two years since listing.

At Kalpini, formerly termed the Gindalbie East Project, a komatiite with a 1,000ppb Ni soil anomaly in

January 1998 has been progressed to an Inferred Mineral Resource of 64 million tonne at 1.07% Ni

and 0.07% Co by June 1998. From March to June 1998, Heron drilled 488 vertical RC drillholes for

a 22,476m advance.

• A Pre-Feasibility Study for a $0.6 billion development is current for the Kalpini Nickel Project. Bulk drill

samples have been processed to evaluate metallurgical leaching and pulp characteristics, screen

beneficiation and acid consumption. A significant screen beneficiation increase of nickel grades by

10-24% is confirmed.

• The Heron tenement portfolio continues to expand, with tenements held increased from 261 to 394, active projects

increased from 24 to 32, and active provinces unchanged at 11. The acquisitions are restricted to ultramafic belts

with demonstrated nickel laterite occurrences, and reflect the large land holdings required to generate economically

viable nickel laterite resources for development. Total Eastern Goldfields land holding is 7,440 km2.

• Acquisitions completed or agreed to during the reporting year to consolidate the resource base have included:

· Kalpini Nickel Project; tenement consolidation was effected along strike of the Heron Wellington East nickel

discovery through the purchase of tenements from Mining Project Investors (“MPI”), Outokumpu Exploration

Ventures (“OEV”), Rio Tinto Exploration (“RTE”) and private prospectors. The total project area is now 848km2.

· Lake Rebecca Nickel Project; purchased from Voyager Gold NL. Heron has discovered an Inferred Mineral

Resource of 13.0 million tonne at 1.09% Ni, representing high grade satellite ore feed for the Kalpini Nickel Project.

The total project area is 18km2.

· Raeside Nickel Project; assignment of Joint Venture rights from MPI-Pittson Mineral Ventures Australia (“PMVA”)

was agreed to. Heron has the right to earn a 70% interest from RTE in a 290km2 project area at Raeside.

· Aubils Nickel Project; assignment of Option rights from MPI-PMVA was agreed to. Heron has the right to complete

outright purchase from Mavia Pty Ltd of a 34km2 project area at Lake Raeside. Ore grade lateritic nickel intercepts

are present at Aubils adjoining the Heron Yerilla Prospect.

· Scotia Kanowna Project; adjoining and along the mineralised corridor of the Golden Cities-Federal 1 million ounce

gold mining camp, Joint Venture rights were purchased back from MPI-OEV. Ore grade lateritic nickel intercepts

are to be evaluated as ore feed for Kalpini. The total project area is now 291km2.

· Laverton Nickel Project; pegging of open ground at Merolia along strike of the Coglia Well - Irwin Hills nickel laterite

occurrences. The total project area is 552km2.

Your Board’s continuing objective for the Company is to maximise returns to shareholders through the acquisition and

development of high quality exploration and mining projects. It is a Board priority to establish a cash flow mining

operation. To this end, your Company evaluated several acquisition opportunities during the last year, resulting in the

consolidation of the Kalpini Nickel Project as a potential cash flow project for the Company.

Your Board looks forward to the continued support of all shareholders. The Board acknowledges the enthusiastic

efforts and technical professionalism of management and staff, and takes this opportunity to express its sincere thanks.

Their achievement in acquiring a non-drilled project at Kalpini in March 1998, completing detailed drilling, announcing a

major ore discovery, and commencing a Pre-Feasibility Study, all before June 1998, is remarkable.

RM Evans, Chairman

Chairman’s ReviewR M Evans

Photo right:

Rod Evans,

Chairman.

Highlights

■ Discovery of a

world-class nickel

resource of

64 mt at 1.07% Ni

centred on Kalpini.

■ The Kalpini

nickel resource

is of sufficient

tonnage to warrant

stand-alone

development, with

comparable high

grades to the three

“first generation”

Eastern Goldfields

lateritic nickel

mines.

■ Acquisition of five

new projects all

with nickel laterite

resource potential.

■ Development of a

management team

with the drive and

technical expertise

to acquire and

develop high

quality resources.


Kalpini NickelProject

Transline

Scotia Kanowna

Gindalbie East

121º30'

122º

-30º30'

KALGOORLIE

"Kanowna Belle"

"Bulong"

GA

S P

IPE

LINE

WELLINGTONEAST

WELLINGTONNORTH

WELLINGTONFOLD

ACRA NORTHGindalbie East

"Silver Swan"

Scotia Kanowna

Gold Mine

Nickel Mine

LEGEND

Gazetted Road

Secondary Road

0 25

KILOMETRES

Heron Resources NL

Geology and Project Locations


2.0 Introduction

As outlined in the Chairman’s Review, the second year following listing has proven to be a period of

intense activity for the Company. With the development of the Kalpini Nickel Project, the evaluation

emphasis of the Company is directed towards nickel laterite. These projects require substantial

land holdings in terms of resource areas, and earthmoving and infrastructure provision.

Any available ground which is identified within an existing project or adjoins a project area is

acquired. This has led to the Company substantially increasing its nickel tenement portfolio.

Heron’s 1998 exploration and nickel laterite project acquisition budget was $3.0 million. This

expenditure has seen the Company develop a major asset structured around the Kalpini Nickel

Project. The Kalpini asset is indeed substantial for a “junior explorer”, and firmly establishes Heron in the position of a

“second generation” Eastern Goldfields nickel laterite company, immediately behind the “first generation” producers at

the Murrin Murrin, Cawse and Bulong nickel mines.

The Kalpini Nickel Project has entered a phase where a major effort is being directed towards project feasibility and

financing. For the purpose of the Pre-Feasibility Study scheduling, the Mining Ore Reserve is assumed

to be 54mt at 1.10% Ni and 0.08% Co, scheduled for processing as follows:

Year 1-10 24.0 mt 1.20% Ni 0.10% Co Low magnesia siliceous to ferruginous ore.

Year 11-20 30.0 mt 1.02% Ni 0.06% Co Higher magnesia nontronitic ore.

Feed-rate to the crusher for Year 1-10 is proposed to be 2.4 million tonnes per annum (mtpa) at 1.20% Ni. With screen

beneficiation, current metallurgical testwork indicates a potential autoclave slurry feed of 1.8 mtpa at 1.50% Ni and

0.13% Co. Initial ore feed is dominantly high grade siliceous ore from Pits 1-6. Electrowinning metal production with

95% recovery would be 25,000 tpa nickel metal and 2,100 tpa cobalt metal equivalent.

Feed-rate to the crusher for Year 11-20 is proposed to increase to 3.0 mtpa at a lower grade of 1.02% Ni, with minor

beneficiation generating a leach feed of 2.4 mtpa at 1.10% Ni and 0.06% Co. As head grades drop in Year 11-20,

an additional autoclave would be required to maintain the “back-end” metal production. Due to Heron’s extensive Keith

Kilkenny Tectonic Zone exploration holdings, good potential will in fact exist to maintain the Year 11-20 ore feed at

1.20% Ni. High grade ore is envisaged to be trucked from satellite pits at Lake Rebecca, Yerilla and Raeside.

Sufficient tonnage for a 2.4 - 3.0 mtpa, 20 year mine life is currently demonstrated at Kalpini. The ultimate target is to

delineate an 80 mt resource from Kalpini, Lake Rebecca, Yerilla and Raeside, which will support a 4 mtpa operation with

a 20 year mine life. Screen nickel upgrade of up to 40% for low grade siliceous ore is confirmed in current metallurgical

testwork, suggesting a 4 mtpa operation may already be achievable with the current Kalpini and satellite resources of

127 mt at 0.8% Ni. Nickel production potential would be 37,000 tpa.

The commodity emphasis for Heron is unequivocally nickel laterite, and the project emphasis is Kalpini. However,

through forming various joint ventures, Heron is being free-carried for up to $5.6 million in gold exploration expenditure.

Drilling completed by joint venture partners in 1998 totalled 12,000m of RAB and 13,000m of Aircore. This greatly

improves Heron’s probability of being involved in an ore discovery. The active farm-out policy for non-strategic gold

properties allows the Company to control the large tenement holdings required for the lateritic nickel projects, and

provides the opportunity for free-carried participation in a number of non-nickel exploration projects.

Heron, as with all Australian mineral explorers, continues to work within the framework of Native Title. The Company is

committed to a policy of cultural respect and negotiation with the Aboriginal custodians of our exploration land. To the

claimants of this land and the National Native Title Tribunal, we express our sincere appreciation for their continuing

patient negotiation and mediation, and ongoing site clearance field work.

Having drilled 22,476m of RC at Kalpini in four months, the Company very much appreciates the assistance provided

by the Gindalbie and Hampton Hill pastoral stations in terms of drill site preparation and rehabilitation. These stations

have a very strong landcare ethic, under which Heron works at all times.

The following review is presented in terms of exploration provinces, and does not necessarily reflect the perceived

prospectivity of a given area. Emphasis is on the Kalpini Nickel Project, due to its Pre-Feasibility status. Any references

to “NiCo” in the text are in terms of the industry accepted “Ni%+4 multiply Co%”, to reflect the cobalt value of ore

intercepts.

Operations Review2.0 Introduction

Photo right:

Ian Buchhorn,

Managing Director.

Highlights

■ Pre-Feasibility

Studies for the

Kalpini Nickel

Project confirm

positive

metallurgical

performance and

cash flow potential.

■ Technical

advancement is

such that all survey,

drill supervision,

plan plotting,

resource estimation,

environmental work

and financial

modelling is done

in-house by Heron’s

technical team,

ensuring cost-

effective project

management.

■ Heron has sought to

achieve best

practice standards

in safety, respect for

indigenous culture,

and landcare.

Kalgoorlie - 5

0km

General Access

Road (goods a

nd servi

ces)

To Yerilla-Raeside satellite pitsTo Lake Rebecca satellite pits and borefield

Haul road/process water

6645000 mN

410000 mE390000 mE 395000 mE 400000 mE 405000 mE

6625000 mN

6630000 mN

6635000 mN

6650000 mN

6640000 mN

ZONE 10

ZONE 9

ZONE 8

ZONE 7

ZONE 6b

ZONE 5

ZONE 4

ZONE 3

ZONE 2aZONE 2b

ZONE 2c

ZONE 1d

ZONE 1c

ZONE 1bZONE 1a

ZONE 10

ZONE 9

ZONE 8

ZONE 7

ZONE 6cZONE 6c

ZONE 6b

ZONE 5

ZONE 4

ZONE 3

ZONE 2c

ZONE 2a

ZONE 1d

ZONE 1aZONE 1b

ZONE 1c

ZONE 2b

Drill hole 0.50 - 0.99 % NiDrill hole >1.0 % Ni

Fault

Proposed haul road

Ultramafics (prospective)

Ultramafics (unprospective)

Mineralised zones

Legend

Mining Lease applications

0 5km

M28/199

M28/202

M28/200

M28/201

M27/364

M27/349

M28/206

M28/205

M28/169

M27/365

M27/362

M27/361

Waste Dump

Waste Dump

Waste Dump

Waste Dump

Waste Dump

Waste Dump

PlantSite

Camp

Ore Stockpile

OreStockpile

WELLINGTONNORTH

WELLINGTONFOLD

WELLINGTONEAST

ACRA


Photo right:

Sample racks, metallurgical laboratory. Clay material settling into trays as part of the screen beneficiation testwork.

Heron Resources NL

Kalpini Nickel Project General Arrangement Plan


2.1 Emu Fault Province

2.1.1 Kalpini Nickel Project

Heron 100%.

Nickel (- gold).

The Kalpini Nickel Project has been confirmed as the Company’s development focus. Heron has a 100% ownership

of a 30km strike length komatiite belt which contains pervasive lateritic nickel mineralisation. The 848km2 project area

is located 45-90km NE of Kalgoorlie, and is associated with the Emu Fault.

The Company completed a program of 488 vertical RC drill holes for an advance of 22,476m.

At the Kalpini Nickel Project and associated satellite deposits, there occurs at a 0.5% Ni cut-off, a low grade Inferred

Mineral Resource of 127 million tonne at 0.82% Ni and 0.05% Co.

Within the above low grade envelope, there occurs at a 0.75% Ni cut-off, a medium grade Inferred Mineral

Resource of 64 million tonne at 1.07% Ni and 0.07% Co.

The excellent continuity of mineralisation suggests the current resource in part will conform to an Indicated Mineral

Resource status. The ore zone continuity was confirmed with 80 x 40m drilling patterns in selected areas early in the

evaluation drilling, and ultra-detailed aeromagnetic interpretation has since validated the continuity interpretations.

The total strike length of the mineralised zone is now subject to Mining Lease applications by Heron.

Of particular significance for future project cash flow, consistently high grade intercepts in Zones 1-6, being the starter

pits, have been returned in the 1998 drilling, including:

Detailed multi-element geochemical studies were completed and ore styles categorised. Metallurgical evaluation has

commenced, with the eight bulk samples selected which reflect mining start-up ore types.

Operations Review2.0 Continued

Zone Hole No. North East From To Interval Ni Co Ni4Com m m m m % % %

1d ANRC041 6627201.1 407921.6 3 26 23 1.07 0.048 1.26

1d ANRC036 6627595.9 407840.9 8 23 15 1.20 0.036 1.35

2a ANRC030 6628008.1 407679.2 17 40 23 2.10 0.171 2.79

2a ANRC026 6629200.4 407042.5 2 22 20 1.17 0.021 1.25

2a ANRC079 6629196.7 407081.0 11 26 15 1.33 0.073 1.62

3 WERC336 6634414.9 405860.6 16 37 21 0.95 0.028 1.06

3 WERC349 6635202.6 405960.1 10 22 12 1.50 0.125 2.00

4 WERC167 6638158.8 405719.5 11 39 28 1.11 0.050 1.31

4 WERC182 6637597.6 405800.8 16 37 21 1.44 0.046 1.62

4 WERC225 6638805.3 405526.4 31 55 24 1.23 0.077 1.54

4 WERC165 6638156.1 405639.4 21 41 20 1.29 0.089 1.65

4 WERC148 6638800.0 405566.2 28 43 15 1.65 0.177 2.36

4 WERC254 6637599.2 405761.1 13 34 21 1.13 0.066 1.40

4 WERC166 6638158.7 405679.3 26 42 16 1.44 0.024 1.53

4 WERC153 6638402.3 405696.7 24 39 15 1.31 0.125 1.81

5 WERC133 6640803.2 405243.4 31 46 15 1.60 0.176 2.31

6a WERC049 6642877.7 404500.3 15 44 29 0.95 0.035 1.09

6a WERC332 6642401.3 404627.3 21 37 16 1.12 0.084 1.46

6c WERC013 6646794.2 403520.2 24 41 17 1.14 0.043 1.31

Kalpini NIckel Project Significant Nickel Intersections, 0.75% Ni Lower Cut-off and >20 metre x % Ni4Co


Photo above:

Geologists Simon

Gobbett and

Alan Rudd

correlating Kalpini

chip trays.

Photo right:

Rehabilitated drill

hole, Kalpini Nickel

Project.

Holes are plugged

at the completion of

drilling. The black

polypipe and pin

marker protruding

from the ground is

to facilitate later

surveys of the drill

hole collar.

E27/185

P27

/144

9

P27/1448

P27/1450

P27/1452P27/1453

E27/129

E27/185

E27/129

P27/1451

M28/199

M28/202

M28/200

M28/201

M27/364

M27/349

M28/206

M28/205

M28/169

M27/365

M27/362

M27/361

0 5

KILOMETRES

M28/201

M28/202

M28/200

M28/199

M28/205

E27/129

M28/206

M27/349

M27/364

M28/169E27/129

M27/365

P27/1453P27/1452P27/1451

E27/185

M27/362

P27/1450P27/

1448P

27/1

449M27/361

Legend

Drill hole 0.5 - 0.99 % Ni

Drill hole >1.0 % Ni

Mining Lease application

Exploration Licence

Heron Resources NL

Kalpini Nickel Project Aeromagnetic Image With Tenements

Twenty separate pits have been identified, with Inferred Mineral Resource potential as follows:


Pit Strike Width Million Ni Co Ni4Cokm km Tonnes % % %

Acra North K1a 1.6 0.12 1.846 1.02 0.087 1.37

Acra North K1b 0.4 0.20 0.730 1.06 0.096 1.44

Acra North K1c 0.4 0.12 0.717 1.00 0.092 1.37

Acra North K1d 1.9 0.20 3.584 1.00 0.064 1.26

Acra North K2a 1.7 0.16 4.915 1.33 0.067 1.60

Acra North K2b 0.5 0.08 0.077 1.08 0.012 1.13

Acra North K2c 0.5 0.08 0.384 1.13 0.056 1.35

Wellington East K3 2.5 0.20 3.072 1.04 0.079 1.36



Wellington East K6a 1.0 0.16 2.637 1.04 0.097 1.43

Wellington East K6b 0.4 0.16 0.205 0.92 0.092 1.29

Wellington East K6c 3.0 0.20 6.509 1.04 0.060 1.28


Wellington Fold K9 1.1 0.20 2.102 0.88 0.067 1.15

Wellington North K10 0.8 0.20 1.510 1.04 0.059 1.28

Total Kalpini 41.849 1.08 0.074 1.38

Boyce Creek Y1 1.2 0.40 6.016 0.95 0.092 1.32

Lady Byron Y2 0.8 0.16 2.816 1.06 0.049 1.26

Total Yerilla 8.832 0.98 0.079 1.30

Rebecca South R1 1.8 0.25 10.752 1.12 0.069 1.40

Rebecca North R2 0.6 0.25 2.200 0.96 0.030 1.08

Total Lake Rebecca 12.952 1.09 0.062 1.34

TOTAL 63.633 1.07 0.072 1.36

Some 25% of the resource is on granted Mining Leases.

The Specific Gravity (SG) of mineralisation is interpreted to range from 1.3 to 2.5. For current resource estimation,

an SG of 1.6 has been used, reflecting the low moisture and high limonite content of the ore. The SG will be quantified

when bulk metallurgical sampling is carried out during Feasibility Studies.

In view of the likely availability of a cobalt refinery in the Eastern Goldfields, it is opportunistic to

evaluate the potential contribution of cobalt to the resource inventory. A market for unrefined

cobalt product also exists in Eastern Australia, confirming the marketability of cobalt. Very high

grade cobalt lenses occur immediately overlying the 0.5% Ni hangingwall mineralisation, in

material not included in the resource base. If this ore is included, the nickel-cobalt Inferred

Mineral Resource estimate for all projects in terms of Ni%+4Co% (“NiCo”) is:

0.50% NiCo cut-off 173.033 million tonne 0.91% NiCo0.75% NiCo cut-off 86.704 million tonne 1.22% NiCo1.00% NiCo cut-off 49.206 million tonne 1.49% NiCo

Company policy is to do all economic evaluations on Ni ore blocks only, with the Co grade then

allocated to these blocks for the purpose of cash flow modelling.

Inferred Mineral Resource Inventory (0.75% Ni Cut-Off)



6 645 200mN

6 638 160mN

6 637 600mN

6 629 200mN

6 628 000mN

PIT K6C

PIT K4

PIT K4

PIT K2A

PIT K2A

403800E 403900E 404000E 404100E

405500E 405600E 405700E 405800E

405600E 405700E 405800E

406800E 406900E 407000E 407100E

407500E 407600E 407700E

400mRL

375mRL

350mRL

400mRL

375mRL

350mRL

375mRL

350mRL

375mRL

350mRL

325mRL

400mRL

375mRL

350mRL

WERC279

WERC278

WERC280

WERC079

WERC083

WERC080

WERC082

WERC081

WERC281

WERC162

WERC163

WERC164

WERC165

WERC166

WERC167

WERC168 WERC

169

WERC251

WERC252

WERC180

WERC253

WERC181

WERC254

WERC182

WERC255

WERC183

ANRC025

ANRC078

ANRC026

ANRC079

ANRC027

ANRC080

ANRC028

ANRC033 ANRC

029ANRC

032ANRC

030ANRC

031

2/1.15 16/1.10 18/0.94

2/0.78

11/1.07

3/0.85

4/0.919/1.03

3/1.00

12/0.7728/1.1135/ 1.0420/1.29

14/0.96

19/0.76

22/0.978/1.18

32/0.89

21/1.13

30/1.20

6/0.88 20/1.17

14/1.26

32/1.72

11/1.044/0.9710/0.89

32/1.72

LEGEND

INTERCEPT METRES / %NiMEDIUM AND HIGH GRADEORE BLOCKS > 0.75% Ni

LOW GRADE ORE BLOCKS0.50 - 0.74% Ni

Heron Resources NL

Kalpini Nickel Project Cross Sections


Metallurgical Testwork

Bulk RC drill chip samples from the Kalpini Nickel Project have been used to generate eight composite samples covering a

range of different ore types and mineral compositions. These composite samples have been subjected to batch screen

beneficiation testwork, and are currently undergoing settling, viscosity and pressure acid leaching (PAL) testwork.

Screening at -1mm returned the following upgrades:

a) Siliceous to ferruginous ore has an average upgrade of 24.1% for nickel and 21.6% for cobalt.

b) Nontronitic ore has an average upgrade of 10.2% for nickel and 9.5% for cobalt.

Results to date from the beneficiation testwork indicate reasonable to good upgrading for all ore samples by screening.

Six siliceous to ferruginous composites show excellent upgrading of nickel grades by up to 41% (with 80% metal

recovery) using a -1mm screening. At a -0.2mm screening, the nickel grade increases by up to 78% (with 70% metal

recovery). The most significant observation for these composites is the low grades of 0.3% to 0.5% Ni occurring in the

coarse reject material. These results compare favourably with published data for the Cawse nickel project, which

indicated in some ore types a nickel upgrading of up to 50% with 80% metal recovery. The settling and viscosity

characteristics of the Kalpini ores are also similar to limonite ores as found at the Cawse and Ravensthorpe nickel

projects, where settled densities of up to 35% solids were obtained. As expected, the nontronitic ore types indicate

minor upgrading of approximately 10% for nickel and cobalt (with 70-80% metal recovery). The coarse reject material

however still contains significant Ni grades. These “non-beneficiating” ore types are similar to “run of mine ore” at Bulong

and Murrin Murrin, although the Kalpini variants tend to show better upgrading characteristics than Bulong and Murrin

Murrin. Settling and viscosity are acceptable and as expected for these “non-beneficiating” ore types.

On the basis of the preliminary metallurgical data, the proposed Kalpini Nickel Project flow sheet is likely to be

comparable to that of the Cawse nickel project. Further metallurgical work will be carried out once large diameter drill

hole samples are available, as part of a proposed Feasibility Study. The current Pre-Feasibility Study testwork was

entirely on -1mm material. Significantly improved upgrades are expected from testing -0.2mm material, this being more

typical of actual process plant screening sizes.

Capital and Operating Costs

It is anticipated that the capital and operating costs for the Kalpini operation are likely to fall within the range of similar

lateritic nickel projects currently under construction in the Eastern Goldfields.

With metal production imminent for the three “first generation” Eastern Goldfields laterite nickel operations, the new

technologies available to “second generation” laterite nickel developers such as Heron will be quantified. Both capital

and operating costs should reduce with time, precisely as happened for CIP gold technology in the early 1980s. The

successful commissioning of Eastern Goldfields laterite nickel operations in late 1998 should also lead to a market re-

rating of the “second generation” laterite nickel developers such as Heron.

Flowsheet Selection

A flowsheet featuring the following process areas has been adopted for the Pre-Feasibility Study:

• Beneficiation by log washing, milling and screen rejection of oversize.

• Thickening of autoclave feed.

• Pressure acid leaching of beneficiated slurry.

• Two stage iron precipitation.

• CCD liquid-solid separation.

• Ni-Co hydroxide precipitation and filtration.

• Ammonia leaching of Ni-Co filter cake.

• Nickel solvent extraction.

• Cobalt hydroxide or carbonate precipitation.

• Nickel electrowinning and spent electrolyte purification.

• Neutralisation of acid tailings using carbonate or calcrete sourced from Heron tenements.

Nickel product will be full face cathode whilst cobalt will be sold ascobalt carbonate filter cake.

Photo Below:

Screening samples,

Oretest Pty Ltd

metallurgical

laboratory.

The separation of

samples into a

coarse and fine

fraction is an

essential pre-

requisite for screen

beneficiation, such

as that carried out

at the Cawse

lateritic nickel mine.



Gold - Base Metal Targets

All nickel exploration by Heron utilises both base and precious metal multi-element geochemistry, with the result that

nickel sulphide and non-nickel targets are also identified. The Wellington East soil anomaly which led to the

discovery of the Kalpini Nickel Project is a 2.8 x 0.8km NW trending nickel-cobalt soil anomaly with 1,000-1,935ppb

Ni and 100-262ppb Co. Of great interest, the zone has a precious metal association, being marked by elevated Ag

values of 4-13ppb with a spike to 2,510ppb, against a background of 0.75ppb. Better silver values usually occur

peripheral and parallel to higher nickel and cobalt values, indicating a “stratigraphic” anomaly source. Gold in soils is

anomalous at 5-23ppb. Streams in the project area have highly anomalous copper values.

Potential for “Nimbus-style” silver-gold-zinc volcanogenic massive sulphide (“VMS”) mineralisation is felt to exist within

felsic volcaniclastics at Kalpini.

In terms of nickel sulphide targets, Heron’s RC drilling at Wellington East identified a 0.8km strike length

500 - 773ppm Cu anomaly in lower saprolite. This target requires follow up for Kambalda-style nickel sulphide

mineralisation.

Kalpini Hill Prospect

Kalpini Hill is a coincident 0.8 x 0.8km NW trending nickel-cobalt-palladium soil anomaly with nickel values of 5,000-

12,400ppb, cobalt values to 442ppb and palladium to 2.9ppb. Host rock is a discrete magnetic komatiite unit.

Geological interpretations confirm the exploration target at Kalpini Hill is predominantly a basal contact komatiite

channel nickel sulphide deposit, rather than lateritic nickel. Subvolcanic felsic intrusives uniquely occur in the Kalpini

Hill footwall, further upgrading the volcanogenic nickel sulphide prospectivity. MMI soil geochemistry indicates a

coincident Ni-Cu anomaly.

SIROTEM electro-magnetic surveying will be required to advance the nickel sulphide prospect to a drilling stage.

Kurnalpi South Prospect

The prospect is located on Lake Yindarlgooda between the Kalpini-Kurnalpi and Rising Sun-Gessners Find gold

mining centres. The prospect is considered highly prospective for gold, with the principal exploration target being

palaeochannel gold.

The area is being assessed as a potential bore field for the Kalpini Nickel Project.

These types of tenements are referred to in Section 8.0 “Interest in Mining Tenements” as “Nickel Infrastructure”

tenements, but generally have good gold potential. The various regional data bases acquired for nickel laterite

exploration are also utilised for gold and hydrological exploration.

Photo below: Michael Young - metallurgical technician, Oretest Pty Ltd, preparing Kalpini samples for screen beneficiation testing.

Photo right: Gold nuggets recovered from the Gindalbie East Project, with Central Australia chrysoprase in the background.


2.1.2 Gindalbie East Project

Heron 100%.

Gold.

The 86km2 project area is located 45-70km NE of Kalgoorlie, straddling the Emu Fault. This project covers the non-

nickel prospects immediately west of the Kalpini Nickel Project.

Garibaldi Prospect

Mineralisation is hosted by an intensely carbonate-altered mafic suite with zones of strong quartz veining. Previous

shallow RAB drilling of the target areas returned intersections of 4m at 2.4g/t Au, 3m at 2.1g/t Au, 4m at 2.7g/t Au and

4m at 4.4g/t Au, generally from near surface.

Heron completed a 6,573m regional bedrock RAB program in July 1997, with the maximum RAB drill intercept further

tested in January 1998 with two RC holes totalling 160 metres.

The RC holes (GRC1 and 2) were completed to test down dip extensions of mineralisation intersected in GBR109 (16m

at 6.4g/t Au from 16m) and GBR110 (8m at 0.8g/t Au from 52m). Best result was 2m at 1.12g/t Au, duplicating the

GBR110 intercept rather than GBR109.

The drilling confirmed intense carbonate alteration. This material is currently being metallurgically evaluated as a potential

acid neutralising agent for the Kalpini Nickel Project.

Calcrete is conventionally used for acid neutralisation. From Heron soil sample logs, it is apparent that large areas of the

Gindalbie East Project have potential for surficial calcrete occurrences. These and recently pegged Exploration Licences

east of the Kalpini Nickel Project are being evaluated for occurrences of calcrete neutraliser (see Section 8.0, “Nickel

Infrastructure” tenements).

Hole North East From To Interval GradeNo. m m m m m g/t Au

GRC1 4770 1725 43 44 1 0.57

50 53 3 0.84

GRC2 4770 1745 61 64 3 0.64

71 73 2 1.12

Garibaldi Prospect RC Intersection Summary



Kalpini West Prospect

Soil sampling on a 200 x 50m pattern was completed across the GMQ (“Gindalbie-Mayday-Queen Lapage”) Shear

Zone. Although gold assays were generally of a low ratio to background, several spot highs were recorded, with a best

result of 37ppb Au. Follow up work is required.

Mayday North Prospect

MMI soil values to 5.7ppb Au were returned from the GMQ Shear Zone, being immediately north along strike from the

Mayday gold resource. Further work is required.

Lindsays Find Prospect

A maximum value of 29ppb Au was recorded in soil sampling of the tenement which adjoins the Lindsays Find open cut.

Follow up work is required.

2.1.3 Transline Project

Heron 100%

Nickel-gold

Exploration Licence applications covering 286km2 have been lodged 60km ESE of Kalgoorlie targeting Bulong-style

lateritic nickel, as a source of potential satellite ore feed for Kalpini. Scope also exists for Golden Cities style granitoid

gold mineralisation.

Lateritic nickel targets have been identified from literature studies, associated with strike extensions of the Bulong

Ultramafic Complex. These targets are in the southern project area, in the eastern Mount Monger district. Grant of

tenement applications is awaited.

The project area is located on the south-plunging Bulong Anticline at the southern extremity of the Yindarlgooda Dome.

The flanks of the structure are defined by interbedded mafic and ultramafic rocks, with felsic volcanics in the core. The

majority of the project area occurs within a granitoid body termed the Juglah Monzogranite which intrudes the core of the

Bulong Anticline. Significant gold mineralisation has been defined at Titan Resources’ Trojan Deposit, located along the

eastern flank of the Juglah Monzogranite. The Trojan Deposit has a gold resource estimate of 173,000 ounces.

Open file research indicates that the previous drilling of 194 RAB holes for 7,501m was completed on Heron’s tenement

applications. Intersections include 4m at 1.21g/t Au from 31m within a 1.2 x 0.5km, 0.1-0.25g/t Au anomalous

envelope at the saprock-bedrock interface.

Photo left:

Wild flowers, Kalpini West.


2.2 Scotia Kanowna Province

2.2.1 Scotia Kanowna Project

Heron 100%.

Nickel (- gold).

The project area covers 291km2 and is located 25 - 75km NNE of Kalgoorlie, on the eastern flank of the Scotia

Kanowna Dome.

The Company has purchased back the equity previously earned by MPI-Outokumpu at Scotia Kanowna, to revert to

a 100% Heron ownership. Heron has commenced a detailed lateritic nickel evaluation. MPI-Outokumpu drill hole

GNA124 had returned 4m at 1.39% Ni and 0.07% Co from 48m, associated with goethitic clays. This result confirmed

the regional lateritic nickel potential of the Scotia Kanowna ultramafic belt.

The exploration objective for the Scotia Kanowna Project is to delineate a stand-alone lateritic nickel operation. The fall-

back position however would be to use the currently defined resources as satellite ore feed to Kalpini, which is located

40km to the east.

Apart from lateritic nickel, the Scotia Kanowna Project adjoins the Golden Cities-Federal granitoid gold province.

A program of wide spaced reconnaissance BLEG gold soil sampling over the project area returned a peak value of

19.8ppb Au. A more detailed soil geochemical survey by a previous explorer defined an anomaly of 10 - 72ppb Au

against a 2ppb Au background localised on granitoid at East Scotia. Gold targets in the project area are likely to be

offered for farm-out. All nickel rights are to be retained by Heron.

At the Gindalbie Prospect, a program of reconnaissance Aircore drilling totalling 4,775m in 129 holes was completed.

Ultramafic flows with well-developed orthocumulate textures were identified. Digital aeromagnetic data is being

processed and interpreted, prior to drill testing lateritic nickel targets. Large areas

prospective for nickel laterite are indicated on the aeromagnetics.

At the East Scotia Prospect, gridding totalled 45 line km and 1,860m of Aircore drilling

in 66 holes was completed. Drilling encountered mainly thin flow komatiites and a

single channel structure. This channel has previously been tested for nickel sulphides

by diamond and deep percussion drill holes in the 1970s, and by Aircore drilling in

1996 with only weakly anomalous results. Nickel assays from the 1997 MPI-

Outokumpu drilling range up to 0.68% Ni, and are attributed to lateritic enrichment. The

Scotia East aeromagnetic anomalies require drill assessment for lateritic nickel.

At Silver Swan North, previous Heron Aircore drilling returned a peak 4m gold value

of 0.2g/t, with 0.29% As. Based on current structural interpretations, the Silver Swan

North prospect appears to be a favourable gold target. Follow up drilling is planned

once higher priority nickel laterite drilling programs elsewhere are completed.

At the Black Swan North Prospect, previous joint venture operator MPI-Outokumpu

tested an aeromagnetic anomaly north of the Silver Swan nickel mine. No ultramafic

lithologies were intersected in the Aircore drilling, downgrading the potential for nickel

mineralisation. Alteration zones were

intersected in the Aircore drilling, but were

not anomalous for gold. No further

exploration of the prospect is planned.

Agreement has been reached to purchase

further nickel laterite targets within the

Scotia Kanowna Project area. Two well

defined areas with drill indicated resources

are present within the acquisition.


E27/169East Scotia

E27/145Gindalbie

Heron Resources NL

Scotia Kanowna Project Aeromagnetic Image and Prospect Locations


2.2.2 Menzies East Joint Venture Project

Heron 100%. Golden State Resources right to earn 60% through spending $0.25m.

Gold - nickel.

The 8.4km2 project area is located 112km NNW of Kalgoorlie, on the western flank of the Scotia Kanowna Dome.

Targets were generated by Heron 9km SSE along strike from the Granny Venn gold discovery.

Gold and arsenic anomalism was confirmed in Joint Venture operator Golden State's soil sampling, with maximum

values of up to 225 ppb Au in the NW part of the project area.

A 13 hole 588m reconnaissance RAB drilling traverse of 50m spaced holes was completed across part of the soil gold

anomaly. Altered fuchsite-carbonate-arsenopyrite-quartz rocks were intersected in the RAB drilling. Gold at 0.1g/t and

arsenic anomalism increases towards the western end of the drilled traverse.

Golden State is evaluating the results of the drilling program and compiling a detailed regional evaluation.

2.2.3 Kanowna East

Heron 100%.

Gold - nickel.

The project area is located 2km E of Kanowna, in an area of intense gold mining activity.

The tenements are subject to an Option for Sale Agreement. Being a non-strategic asset in terms of the Company’s

nickel laterite focus, divestment of this 2km2 gold project area was sought.

Photo below left: RC drill rig, Yarri. The old gold battery is pictured in the background.

Right: Chip trays, Edjudina Project drilling.

Below Right: Geologist Narelle Gardiner calculating ore reserves for the Lady Byron Prospect.


2.3 Keith Kilkenny Province

2.3.1 Edjudina Project

Heron 100%.

Nickel - gold.

The 1,270km2 project area is located 125 - 175km NNE of Kalgoorlie, centred on the Keith Kilkenny and Laverton

Tectonic Zones.

The exploration objective for the Edjudina Project is to delineate a stand-alone lateritic nickel operation at

Yerilla-Raeside-Aubils. The fall-back position would be to use the currently defined resources as satellite ore feed for

Kalpini. Yerilla is located 80km N of Kalpini on well maintained Shire roads, so ore haulage is entirely feasible.

Yerilla-Boyce Creek Nickel Prospect

The Boyce Creek prospect area covers part of the mafic-ultramafic sequence marginal to the Keith Kilkenny Rift. These

margins to the rift are considered highly prospective for ultramafic-hosted lateritic and sulphidic nickel deposits, and

Archaean gold deposits.

A detailed geological study was completed. Using multi-element lithogeochemistry, a geological cross section through

the Boyce Creek ultramafic sequence was generated. The ultramafic is composed of a thick fractionated komatiite flow.

The lower to middle section contains demonstrated nickel laterite mineralisation. There may also be potential for

disseminated nickel sulphides towards the base of the flow.

MMI soil geochemistry on an 800 x 100m pattern was completed. Anomalous nickel values map the komatiite regolith.

Peak values were 4,079ppb Ni and 9.31ppb Au. Soil geochemistry by a previous explorer also delineated anomalous

Cu and PGE, suggesting nickel sulphide potential. On field inspection, previous drill holes were located within the

anomalous soil zone. The drill holes are 400m apart and confirm good resource potential, with drill hole 94MAR064

returning 12m at 1.10% Ni, and 94MAR069 returning 28m at 0.83% Ni and 8m at 0.65g/t Au.

RC drilling was attempted by Heron on a 400 x 80m pattern to quantify previously identified nickel laterite resources of

6.0 million tonnes at 0.95% Ni. Wet weather restricting access has however delayed Heron’s drilling.

Yerilla-Lady Byron - McAuliffe West Nickel Prospect

Two lines of drilling at a 400 x 80m spacing for a 571m advance were completed at the McAuliffe West Prospect

targeting a komatiite aeromagnetic feature. Holes intersected a stripped orthocumulate ultramafic profile, with best

results of 5m at 0.80% Ni and 10m at 0.61% Ni in adjoining holes. The anomalous results correspond to a dark grey,

siliceous clay unit.

Due to wet ground conditions, only one line of drilling with 80m hole spacing could be completed at the Lady Byron

Prospect. Advance was 351m. The drilling was to the southeast of previous drilling completed by Seltrust in the 1970s,

which had returned a best result of 20m at 0.84% Ni, with coincident cobalt enrichment. Two Heron holes intersected

dark brown and dark grey clays overlying olivine adcumulate, with a best result of 51m at 0.98% Ni from surface. A

significant “grass roots” nickel laterite discovery with current resource estimate of 2.8 million tonnes at 1.06% Ni is

indicated, enhancing the potential for a stand-alone nickel laterite operation at Yerilla.

Yerilla-Aubils Nickel Prospect

The Aubils Prospect has been acquired in principle through the assignment of Option rights from MPI-PMVA to Heron.

Heron will have the right to complete outright purchase from Mavia Pty Ltd of a 34km2 project area at Lake Raeside.

Ore grade lateritic nickel intercepts exceeding 1% Ni over economic thicknesses are present in 1970s drilling. Aubils

adjoins the Heron Boyce Creek and Lady Byron Prospects, which together represent high priority nickel laterite

exploration targets.


COCK OF THE NORTH

BURTVILLE

JUPITER GROUP

PUZZLE

YERILLA RAESIDE AUBILS

MALCOLM

WALLBROOK HILL

YARRI

BANJO

OUTCAMPBORE

YERILLALADY BYRON

YERILLABOYCE CREEK

LAVERTON JV

LAVERTONNICKEL - MEROLIA

COCK OF THE NORTH

LAVERTON JV

LAVERTONNICKEL - MEROLIA

BURTVILLE

JUPITER GROUP

MT MORGANS JV

YERILLA RAESIDE AUBILS

OUTCAMPBORE

YERILLALADY BYRON

YERILLABOYCE CREEK

MALCOLM

PUZZLE

BANJO

YARRI

WALLBROOK HILL

MURRIN MURRIN NTHMURRIN MURRIN NTH

0 25

KILOMETRES

MT MORGANS GROUPMT MORGANS GROUP

MT MORGANS JV

Gold Mine Nickel Mine

KING OF CREATIONKING OF CREATION

CORK TREE WELLCORK TREE WELL

HAWKS NESTHAWKS NEST

MT KORONGMT KORONG

MT REMARKABLEMT REMARKABLE

McAULIFFEMcAULIFFE

PATRICIAPATRICIA

EDJUDINAEDJUDINAPORPHYRYPORPHYRY

PORPHYRY NTHPORPHYRY NTH

YILGANGIYILGANGI

WEBBS FINDWEBBS FIND

WALLBROOKWALLBROOK

IRWIN HILLSIRWIN HILLS

WINDARRAWINDARRA

MURRIN MURRIN STHMURRIN MURRIN STH


Photo below right:

RC drill rig, Yarri.

Heron Resources NL

Laverton - Edjudina Projects Aeromagnetic Image and Tenement Locations

Imag

e re

prod

uced

with

per

mis

sion

of t

he A

ustra

lian

Geo

logi

cal S

urve

y O

rgan

isat

ion


Regional

On the basis of its aeromagnetic interpretations, the Company acquired extensive tenement holdings north of Banjo and

Yarri, within the Keith Kilkenny Tectonic Zone. Although exploration of this belt has taken on a nickel laterite emphasis,

the project area still represents a quality gold portfolio. Farm-out of these gold targets is currently under discussion.

Yarri Prospect

Based on old gold workings, the Yarri mineralised zone has a strike length of 2.5km. Multiple gold lodes are present

within this zone of intensely sheared granitoid. Old workings occur on sheeted quartz veins over a horizontal width of

10 - 50m.

During 1997 Heron targeted supergene gold mineralisation, formed over highly sheared and fractured granitoid. The

target occurs at shallow depths of 10-30m. A total of six RC holes (YRC15-20) were completed for a 321m advance.

Drill holes YRC15-17 targeted a potential parallel lode system indicated by soil geochemistry to the west of the main

Yarri lode. Results however were disappointing and downgraded the possibility of parallel lodes on the western flank of

the main lode.

Drill holes YRC18-20 targeted an area of shallow supergene mineralisation associated with the main Yarri lode. The aim

was to define the lateral extent of the supergene mineralisation. YRC18 returned low grade gold mineralisation with 9m

at 0.95g/t Au.

The Yarri resource warrants further drilling. However, with the Company drilling emphasis now on lateritic nickel, follow

up drilling at Yarri has been deferred, and farm-out discussions are current.


YRC17 5095 1070 14 15 1 1.02

18 19 1 0.52

YRC18 5840 1138 26 28 2 2.18

33 42 9 0.95

Yarri Prospect RC Intersection Summary



Banjo Prospect

The Company exercised an Option to Purchase a 100% equity in the Banjo gold property, adding to the gold resources

of the Edjudina Project. The tenement is located approximately 3km N of Heron’s Yarri Prospect and covers a 6km

strike length of prospective shear zone which incorporates the historic Great Banjo, Aeerie and Gibberts Well gold

workings.

Gold mineralisation at Great Banjo in the north of the tenement has been mined from north-south striking shear zones

hosting quartz (-tourmaline) veining and stockworks. Bulk tonnage potential is indicated, with a reported inferred mineral

resource of approximately 55,000 tonne at 2g/t Au at the Great Banjo.

The initial Heron target is the old Aeerie line of lode, south along strike from Great Banjo. Previous RC drill intercepts at

Aeerie included RCA01, 11m at 1.78g/t Au from 13m, RCA02, 19m at 1.68g/t Au from 10m, and RCA04, 5m at

2.34g/t Au from 11m. The intercepts at Aeerie cover a 100m strike length, and are open to the north and south and at

depth. The width and continuity of the known mineralisation is favourable for a bulk tonnage system.

A total of nine angled Reverse Circulation holes (RCA08-16) were drilled by Heron at the Aeerie Prospect. The holes

were all hammer drilled, for an advance of 644m. Drilling intersected a broad zone of intense quartz-carbonate-pyrite

alteration with assays including 28m at 1.41g/t Au and 17m at 1.17g/t Au. The best gold grades occur within the upper

15-50m of the profile and are associated with supergene enrichment.

No resource will be calculated for Aeerie until further drilling is completed.

Soil geochemistry from north to south across the Banjo-Aeerie-Gibberts Well workings was completed by Heron,

defining two follow up targets with peaks of 51 and 61ppb Au. These represent new targets away from known

mineralisation, and have not yet been drill tested. Anomaly levels exceed those of the drilled Aeerie workings.

Photo above:

Old workings,

Aeerie line of lode,

Banjo Prospect.

Right:

Ian Buchhorn

(Managing Director),

Alan Rudd

(Senior Geologist)

and David Crook

(Exploration

Manager).

500 mRL

1000mE

450 mRL

475 mRL

1025mE

0.1

0.06

0.03

0.07

0.06-0.010.020.090.140.140.050.080.240.352.281.130.491.280.851.260.351.891.050.210.150.430.78

1.09

1.02.40.261.211.511.5

7.73.792.160.940.6

0.741.00.370.210.28

0.33

0.190.02

0.080.270.09

0.010.02

0.59

0.010.2

0.06

0.04

-0.01

2.43

0.090.24.491.570.90.110.01

0.020.01

0.06

0.00.36

-0.01

0.21

0.010.15

0.010.01

0.0

0.010.0

0.02

0.00.00.050.01

0.080.05

0.39

0.170.15

0.14

0.140.481.290.46

0.95

0.05

0.06

80.0m

27.0m

18.0m

RC

A10

RC

A4

RC

A3


RCA08 1010 980 21 29 8 1.1842 50 (EOH) 8 0.90

RCA09 1010 1040 83 88 5 0.7392 93 1 0.56

RCA10 1030 1020 29 57 28 1.41inc 50 53 3 4.63

RCA11 990 1000 17 20 3 1.7624 25 1 0.88

RCA12 990 1020 36 53 17 1.17inc 36 43 7 2.00

RCA13 970 1000 18 21 3 0.92RCA14 970 1040 56 75 19 0.67

inc 63 70 7 1.08RCA16 1050 1040 82 89 7 1.04

Aeerie Prospect RC Intersection Summary

Heron Resources NL

Aeerie Prospect Drill Cross Section1030 mNGold Assays(g/t)


Mount Catherine Prospect

Follow up soil geochemistry by Heron confirmed peak anomalies of up to 94ppb Au against a 2ppb Au background.

Anomaly trend is NW, within a zone of N-S trending old workings. The tenement has been converted to a Mining Lease

application.

Gairdiners Find Prospect

Blanket 400 x 100m soil geochemistry was completed. Two anomalous gold trends warranting follow up were

indicated. The first is a 10-15ppb Au anomaly which extends 1.6km along the western length of the tenement,

encompassing two groups of old workings. Mullock samples from these workings returned peak grades of 6.46g/t Au,

with all samples being anomalous.

The second anomalous trend is most pronounced in the central north of the tenement. Anomaly area is 0.7 x 0.15km,

with a peak of 25ppb Au. Additional Exploration Licences have been lodged at Gairdiners Find, to secure along strike

extensions of the anomalous soil geochemical trend.

Outcamp Bore Prospect

The prospect is located immediately north of the Pacific Mining Corporation Porphyry North gold deposit (104,000

tonnes at 2.1g/t Au). The main Heron target area is the Hadrian Prospect, where up to 5,700ppb Au is recorded in

previous soil sampling, and 46.8g/t Au in rock chips. Previous RAB drilling has been inconclusive, due to the deep

weathering of the highly altered country rock. The alteration style and magnetic signature is comparable to the Old

Plough Dam gold discoveries.

Regional soil geochemistry on a 400 x 100m pattern was completed to the east of the Hadrian Prospect. The maximum

value was 14ppb Au against a background of less than 1ppb. Further work is planned, once regional evaluations are

completed.

Wallbrook Hill Prospect

The Wallbrook Hill target is 20km N of the Lake Rebecca nickel resource, within the same structural setting.

A blanket BLEG soil sampling program on a 400 x 100m grid was completed. Values for gold were generally low.

One spot value of 166ppb Au requires further investigation, and a low order anomaly of 3 to 11ppb Au over a 0.8km

strike will require in-fill sampling.

Of interest, alteration styles at Wallbrook Hill are analogous to the host rocks at Old Plough Dam. Detailed follow-up of

alteration zones, magnetic anomalies and soil gold anomalies is required.

Hobble Gap Prospect

The Hobble Gap Prospect represents the southern structural continuation of the Laverton Tectonic Zone, and as such,

is prospective for Sunrise Dam and Granny Smith style gold mineralisation.

An expression of farm-out interest has been received and negotiations are being finalised (Note 2, see Section 8.0

“Interest in Mining Tenements”).



2.3.2 Mulgabbie Project

Heron 100%.

Nickel - gold.

The 738km2 project area is located 100 – 140km ENE of Kalgoorlie, at the intersection of the Keith Kilkenny and

Laverton Tectonic Zones. The project area has satellite resources of nickel laterite ore for the Kalpini Nickel Project,

which it adjoins to the immediate east.

Lake Rebecca Lateritic Nickel Prospect

The prospect area covers mafic to ultramafic units of the Mulgabbie Formation striking NNW along the southwest shores

of Lake Rebecca. This sequence is the eastern margin of the Keith Kilkenny Rift.

Literature reviews were completed. The ultramafic sequence at Lake Rebecca is prospective for both lateritic and

sulphidic nickel mineralisation. The ultramafic rocks have formed in a regional-scale lava flow channel, with marginal

rocks to the channel being spinifex-textured komatiite thin flow rocks.

Such channels may host nickel sulphide mineralisation, either as massive sulphides along the basal channel contact or

as disseminated sulphides within the olivine-rich cumulates. The Silver Swan and related sulphide deposits are hosted

in ultramafic sequences geologically similar to the Lake Rebecca komatiite channel. An assessment of the basal

channel for nickel sulphides utilised multi-element geochemistry to determine the facing direction of the komatiite

sequence.

The northern nickel laterite prospect area consists of a silica and iron rich laterite capping, overlying saprolitic ultramafic.

Nickel mineralisation occurs as flat lying sheets in both laterite and saprolite settings. Previous RC drill intercepts include

34m at 1.42% Ni, 50m at 0.95% Ni, 50m at 0.86% Ni and 26m at 1.00% Ni, suggesting potential for high grade pods.

The southern project area is entirely concealed by aeolian and alluvial cover proximal to the Lake Rebecca playa lake

system. Aeromagnetic data and current drilling confirms the northern outcropping ore hosting ultramafic suite continues

into the southern playa covered area.

Heron has completed an initial RC drilling program of 31 holes for an advance 1,428m. Preliminary assays include

intercepts of 13m at 1.44% Ni, 20m at 1.21% Ni, 15m at 1.25% Ni and 20m at 1.45% Ni. The mineralised laterite zone

from Heron’s initial drilling has a strike length of 2.4km and a width of 0.2 - 0.3km. The resource estimate based on

preliminary assay results is 13.0 million tonnes at 1.09% Ni and 0.062% Co.

Lake Rebecca is 40km E of Kalpini, with direct access available through a network of existing station tracks. Excellent

borefield targets are also present, which are being evaluated as a source of process water for the Kalpini Nickel Project.

437200 mE 437250 mE 437300 mE 437350 mE

375 mRL

350mRL

300mRL

325mRL

15900

9880111001180013700

11200

1400011400818013600

12400

15100

12700

9600

9970

175002230011000967014200

10700

16300

14400

12800

10300

16500

11200

17300

15000

17700

17400

61606270

10700

1270066707060

5640

5690

53206450

5730

7940

73505560

5540

15700

8000

7380

11300

14200

12500

9700

7070

12500

20500

13400

10600

11200

6690

7930

11900

12600

11100

9800

15300

7440

5780

10900

10200

5580767011400

12300

16300

9670968060005380

9840

812080607170803010200115009730

7210

60807140

70008660

6660

5020

7580

139009800

7330

7010572078606430

5820

8920

5360

5230

56506480

6200

5330

5230

6190

5850

95007280

675071208530

LRB80LRB81 LR

C15

LRB82

LRC14

LRC

20LR

C13

LRC

21

LRB83

LRD

2

80.0m80.0m

LRB84

nickelsulphidetarget

80.0m

Photo right: Ian Buchhorn and David Crook interpreting soil anomalies.

Below right: Lake Rebecca lateritic nickel resource. Drilling access has been difficult due to seasonal flooding of the lake.

Heron Resources NL

Lake Rebecca Prospect Drill Cross Section6 674 280 mNNickel Assays(ppm)


Mulgabbie West Prospect

Heron’s tenements adjoin and are along strike of the Old Plough Dam - Khartoum mineralised trend (one million ounce

gold discovery).

Aeromagnetic interpretation of the Heron prospect area identified several discrete high priority aeromagnetic targets with

similar structural signatures to the neighbouring Carosue gold deposit. The targets were followed up with MMI soil

geochemical sampling, which returned discrete anomalies at 10 to 20 times background levels.

Considering the extremely low background gold level of 0.36ppb, the soil results are highly encouraging, as the

anomalous zones occur within a regolith zone of transported calcareous colluvial and alluvial soils. The Carosue South

anomalies are coincident with a N-S aeromagnetic linear intersecting cross-cutting NE splay faults. The nearby Carosue

gold deposit appears to be associated with a similar structural setting.

Two anomalous zones have been prioritised for follow up drilling at Mulgabbie West:

a) Carosue West - 2.3 x 0.35km zone with peak values to 11.65ppb Au.

b) Carosue South - adjacent and parallel to the above anomaly and comprising a 1.1 x 0.15km zone

with peak values to 10.20ppb Au.

Farm-out of the prospect area is likely to be sought.

Rough Gap Prospect

Systematic 200 x 50m DGPS soil geochemical surveying was completed. Significant soil anomalies were defined, with

peaks of 51ppb Au at Brampton, 91ppb Au at Hayman, and 31ppb Au at Whitsunday.

Twenty two angled RAB holes for an advance of 511m (MGR01 - 22) were drilled to test the Brampton soil gold

anomaly. Anomalous gold results exceeding 0.1g/t from the Brampton Prospect were as follows:

A sequence of mafic and volcaniclastic units striking N-S and dipping 75° E were intersected in the Brampton drilling.

Alluvial gold workings are present in the area, and metal detected nuggets have been located on Heron’s tenement.

At the Hayman Prospect, in-fill MMI soil geochemistry was completed in the main target area and confirmed an alteration

zone discordant to the regional N-S strike.

Results for the Rough Gap Prospect are currently being assessed. At this stage it is likely that farm-out will be sought.

Hole North East Depth From To Interval GradeNo. m m m m m m g/t Au

MGR09 3900 7050 34 24 28 4 0.12

MGR11 4100 6950 27 12 27 15 0.13

MGR16 4600 6925 12 4 8 4 0.15

MGR21 4800 7000 29 24 27 3 0.14

Brampton Prospect RAB Intersection Summary



Round Hill Prospect

A 400 x 100m BLEG program was completed. A follow up target was generated, with anomalies of 15 to 27ppb Au.

The target area is characterised by BIF occurrences of the Laverton Tectonic Zone, and is a Sunrise Dam style gold target.

Crab Hill Prospect

Soil sampling on a 400 x 100m pattern was completed across five tenements. Open file research indicated five gold

target zones located along the central axis of the tenement group, based on anomalous gold auger samples, RAB drill

holes and structural interpretation. A gossan occurrence is also recorded.

Initial soil sampling results showed a zone of anomalous copper values coincident with the gossan. Check sampling

and repeat assays of samples have proved to be erratic. Several moderately anomalous copper values are however

indicated.

An expression of farm-out interest has been received, and negotiations are current. (Note 2, see Section 8.0 “Interest in

Mining Tenements”)

Old Pinjin Prospect

Regional 800 x 100m BLEG soil sampling defined low order gold anomalies, with a peak anomaly of 46ppb Au. The

prospect is located at the intersection of the Keith Kilkenny and Laverton Tectonic Zones. The tenement encompasses

a folded sequence of mafic to felsic lavas and meta-sedimentary units. A large granitoid intrusive underlies part of the

northern tenement area. The Keith Kilkenny Tectonic Zone changes strike direction as it passes around the south-west

margin of the granitoid, enhancing the prospectivity for gold mineralisation.

Follow up exploration is required.

Photo above:

Ian Buchhorn,

mining lease

conversion.

Right:

Typical bush on the

Hampton Hill

pastoral lease.

Much of Heron’s

Mulgabbie

exploration is on

Hampton Hill

Station. The Station

is the favoured earth

moving contractor

for Heron’s

Mulgabbie

exploration work.


2.3.3 Karonie South Project

Heron 100%.

Nickel - gold.

The 1,239km2 contiguous project area is located 140km SE of Kalgoorlie. The project area is dominated by a

greenstone belt associated with the Keith Kilkenny Tectonic Zone. The greenstone belt contains one million ounces

of gold resources and production to the north along strike at Karonie-French Kiss and Old Plough Dam-Khartoum,

confirming the belt’s prospectivity for gold.

Five mineralised target styles have been interpreted by Heron:

• Ultramafic-hosted nickel, which is documented elsewhere in the Karonie greenstone belt. Aeromagnetic data

indicates potential ultramafic occurrences within the Heron project area.

• Proterozoic ultramafic Jimberlana Dyke, which is documented elsewhere in the Karonie South district to host

anomalous secondary lateritic nickel. The primary mineralisation model is Ni-Cu-PGE within a fractionated lopolith

phase, as documented for the Great Dyke of Zimbabwe.

• An extensive area of the highly prospective Proterozoic Woodline Beds is present, this unit being a target for

volcanogenic precious and polymetallic mineralisation. At Ravensthorpe, an equivalent Proterozoic unit, the Mount

Barren Beds, hosts the Trilogy polymetallic deposit.

• Shear-hosted gold, as occurring at the Karonie and Khartoum projects. The structures hosting the Karonie deposits

can be traced south along strike into the Heron project area.

• BIF-hosted gold of the style located at Randalls-Maxwells 75km NW of Karonie South. Aeromagnetic interpretations

of the Heron project area indicate the potential for structurally complex BIF horizons, which are favourable hosts for

gold mineralisation.

Aeromagnetic images generated by Heron confirm the presence of prospective Karonie-style structures (northeast splay

faults and tight isoclinal folds), within a favourable mafic stratigraphy. Importantly the Aldiss Fault, which controls the

distribution of mineralisation within the Karonie mining centre, has been interpreted to extend into the Heron project area.

Aeromagnetic interpretation defined several major regional NE trending cross structures with substantial sinistral

displacement. These are very favourable gold targets.

A field program was undertaken incorporating first pass -2mm fraction BLEG soil sampling on a DGPS controlled 800 x

200m grid. Soil sampling targeted aeromagnetic features characterised by structurally disrupted and multiple folded

sequences. The dominant lithology encountered on traverses was lateritised meta-sediments. This geological setting

is analogous to that of the Randalls-Maxwells gold mining centre. Anomalous soil gold values are present, confirming

in-fill soil programs are required.

The Karonie South Project is unusual for the Eastern Goldfields, in that Heron has been able to acquire through pegging

an entire greenstone belt south of the Karonie gold mine on a demonstrated ore hosting structure. It is likely that farm-

out of the project will be sought.

Several expressions of farm-out interest are at hand, particularly to explore the Woodline Beds for VMS mineralisation.



2.4 Mungari Province

2.4.1 Mungari Northwest Joint Venture Project

Heron 100%. Kundana Gold right to earn 50% through spending $3.0m.

Gold.

The project area consists of 68km2 located 35km WNW of Kalgoorlie and 15km NW of Mungari.

The geological setting is comparable to that of the Mines and Resources Australia Pty Ltd - Mineral Commodities NL

White Foil 0.75 million ounce gold discovery at Mungari West. At both White Foil and Mungari Northwest, the favourable

geological setting is gabbroic units occurring between the Zuleika Shear Zone in the east and Kunanulling Shear Zone in

the west.

A high resolution aeromagnetic survey by Heron confirmed gabbroic lithologies and structures comparable to those

hosting the White Foil mineralisation. The Big High and Meat Feathers Prospects are associated with a major gabbro

unit termed the Powder Sill.

Kundana Gold as part of their farm-in program, have completed detailed mapping and blanket soil auger geochemistry.

A total of 3,615 auger holes have been drilled on the project tenements with 156 returning anomalous gold values above

10ppb.

Four of six anomalous areas have been followed up with 225 RAB holes for an advance of 11,083 metres. One hole

has intersected gold above 100ppb, and 31 holes have intersected 10ppb Au or better. The recent gold discoveries in

the area are characterised by intense surface depletion, so even low order regolith gold anomalies require systematic

follow-up deep drilling.

Further drilling, on both the untested anomalies and to in-fill first pass drilling, is planned by Kundana Gold.

MEAT FEATHERS

HOLY GRAIL

POWDER BLANC

BIG HIGH

Target generatedfrom RAB drilling

0 2500

METRES

Heron Resources NL

Mungari Northwest Project Aeromagnetic Image and Prospect Locations


2.5 Leonora Laverton Province

2.5.1 Laverton Nickel Project

Heron 100%.

Nickel (- gold).

Exploration Licence applications covering 552km2 were lodged between Laverton and Merolia north

along strike of the Coglia Well - Irwin Hills lateritic nickel prospects. Merolia consists of ultramafic

occurrences associated with strong aeromagnetic anomalies. From Heron’s literature research, the

areal extent of the lateritic nickel target is encouraging for a large tonnage “Kalpini-style” nickel laterite

occurrence. The research data is poorly recorded, but does confirm that previous drilling has

recorded nickel laterite mineralisation.

The exploration objective for the Laverton Nickel Project is to delineate a stand-alone lateritic nickel operation at Merolia.

The fall-back position would be to drill up the current targets as a source of cash flow through the sale of ore to an

established Eastern Goldfields nickel laterite processor.

2.5.2 Laverton Joint Venture Project

Heron 100%. Metex right to earn 70% through spending $0.5m.

Gold - nickel.

The 31km2 project area is located 240km NNE of Kalgoorlie and 17km SW of Laverton, surrounding the historic Hawks

Nest gold mining centre. The old Windarra nickel mines are located 20km N along strike.

Metex have been employing “state of the art” technology to explore in this area of transported cover. Vacuum drilling

was carried out, with two anomalies of 800m and 200m width generated. Peak values were 11ppb Au with supporting

multi-element geochemistry. Given the deep transported cover, the anomaly level is most encouraging.

Other lower order geochemical anomalies were returned from the vacuum drilling program, with highest values reaching

a peak of 7ppb Au.

Airborne magnetics on a 50m line spacing was completed. All data is currently being compiled to produce TMI

contours, profiles and images.

Excellent gold discoveries have recently been announced by the Metex-Delta Gold joint venture within their Chatterbox

Shear Zone project, immediately east of the Heron joint venture ground.

2.5.3 Mount Morgans Joint Venture Project

Heron 100%. Metex right to earn 70% through spending $0.2m.

Gold - nickel.

The 14km2 project area is located 220km NNE of Kalgoorlie. The main prospects are 5km NW along strike from the

Mount Morgans gold mining centre, and immediately east of the Murrin Murrin - Central Bore lateritic nickel deposits.

Aeromagnetic, DEMs, open file and geological compilations have been completed, and vacuum drilling carried out to

quantify the regolith profile. Data interpretation is being completed prior to RC drilling.

Photo right:

Geoffrey Stokes,

a traditional

custodian of parts

of Heron’s

exploration ground

south of Laverton.



2.5.4 Malcolm Project

Heron 100%.

Gold - nickel.

The 202km2 project area is located 190km N of Kalgoorlie, and 20km SE of Leonora. With the Heron exploration

emphasis now on lateritic nickel, farm-out is likely to be sought over much of this dominantly gold project area.

The Alice Prospect

Soil sampling was completed, with the geochemical peak being 187ppb Au. Significant old workings are present on the

tenement. The prospect has been converted to a Mining Lease application.

Horan Lake Prospect

Soil geochemical sampling returned a peak of 28ppb Au, which is anomalous in view of the transported regolith. Follow

up is required.

2.5.5 Victory Project

Heron 100%.

Gold - nickel.

The 113km2 project area is located 260km NNW of Kalgoorlie, adjoining the Marshall Pool nickel laterite resource, and

Victory and Bannockburn gold mining centres. Komatiites in the area have proven to be very prospective for lateritic

nickel, with the Marshall Pool resource currently undergoing a feasibility study by Anaconda Nickel Ltd.

Doyle Well Prospect

Prospect data appraisal identified a drill intercept of 10m at 0.7% Ni within laterite on the Heron tenement. Expressions

of farm-out interest have been received, and are being evaluated.

2.6 Menzies Leonora Province

2.6.1 Menzies Leonora Project

Heron 100%.

Nickel - gold - diamonds.

Exploration Licence applications at Lawrence Find 170km NW of Kalgoorlie are awaiting grant. The total project area is

508km2.

The Lawrence Find prospect area covers the historic Lawrence Find gold mining centre. There are significant lateritised

ultramafic units in the prospect area with demonstrated Pt and Cr anomalism. These require assessment for lateritic

nickel.

Regional soil geochemical programs by the Geological Survey of Western Australia have defined potential VMS targets

which Heron will evaluate.

Photo left:

Bobtail lizard on the track, Menzies area.


2.7 Ida Fault Province

2.7.1 Snake Hill Joint Venture Project

Heron 100%. Connemara right to earn 70% through spending $0.3m.

Gold - nickel.

The 70km2 project area is located on the Ida Fault 60km N of the Davyhurst gold mining centre. There is both gold and

nickel potential, with the Elsie May gold mine to the immediate north, and Riverina gold mine to the immediate south.

The project area is immediately south along strike of the Four Corners and Cullens lateritic and sulphidic nickel

prospects.

Nickel and gold soil geochemical targets have been defined for RAB drill testing.

2.7.2 Blister Dam Project

Heron 100%.

Gold - nickel.

The 28km2 project area is located 70km NW of Kalgoorlie, on the Zuleika Shear Zone. The area consists of extensive

sand cover between the Hawkins Find and Chadwin gold mining centres.

Drilling was undertaken by previous joint venture manager Normandy Exploration prior to their withdrawal from the

Kalgoorlie region. BLEG soil gold anomalies and structural targets interpreted from high resolution aeromagnetic data

were tested. The magnetic structural targets are N to NE trending cross-faults cutting the Zuleika Shear. Drilling primarily

targeted these faults and the NW termination of a graben containing Kurrawang Formation conglomerates.

A total of 102 Aircore holes (BDA17-118) were drilled for an advance of 6,145m with an average hole depth of 60m.

To the north of the Zuleika Shear the dominant intersected lithology was mafic. Ultramafic rocks associated with the

Shear were typically foliated and altered to talc-chlorite or talc-carbonate. The majority of anomalous intercepts were

hosted by ultramafics. Results include:

BDA49 32 - 36m 4m at 0.23g/t Au

BDA86 52 - 56m 4m at 1.18g/t Au

BDA22 68 - 77m 9m at 0.52g/t Au (includes 1m at 0.85g/t Au at EOH)

BDA112 52 - 80m 28m at 0.34g/t Au

BDA27 24 - 28m 4m at 1.25g/t Au

Anomalous gold values within the Tertiary cover sequence were common. Some of these values may be caused by

mobilisation of gold from the bedrock into the lower part of the cover sequence. The higher values were found to be

typically associated with gravel and sands in palaeochannels at the base of the cover. The origin of the gold in these

channels remains to be identified.

An expression of farm-in interest has been received, and negotiations are being finalised (Note 7, see Section 8.0

“Interest in Mining Tenements”).

2.7.3 Bullabulling Project

Heron 100%.

Nickel - gold.

Applications covering 147km2 were lodged over a greenstone succession at Bullabulling, 60km WSW of Kalgoorlie.

The area consists of extensive soil cover, and has previously been inferred to be granite subcrop. Aeromagnetic

interpretations however indicate the presence of ultramafic rocks with probable thrust repetitions.

The proximity to a major crustal structure (Ida Fault), inferred ultramafic, and known nickel occurrences in the area

(Nepean, Bouchers and Miriam) suggest good nickel prospectivity.

Initial reconnaissance soil geochemical sampling was carried out. No targets have as yet been generated.



2.7.4 Frances Lesley Project

Heron 100%.

Nickel - gold.

The 117km2 project area is located 90km NW of Kalgoorlie, within an area of active gold mining operations at Carbine

and Davyhurst.

Soil geochemistry by Heron returned a significant anomaly, with best soil results of 56ppb Au, 72ppm As and 277ppm

Ni. Sampling of old gold workings within lateritised ultramafic units returned consistent 1-6g/t Au assays. Extensive

stratiform gossan horizons were located and sampled, confirming base metal anomalism. A sulphidised exhalative

setting is indicated, with good nickel sulphide potential.

Previous drilling west of the Heron soil anomaly identified a quartz stockwork system hosted by pyritic meta-sediments.

Intersections included 8m at 4.85g/t Au in RAB drilling, and 5m at 3.4g/t Au in RC drilling. Heron’s inferred mineral

resource estimate is 93,000 tonne at 2.1g/t Au. The tenement has been converted to a Mining Lease application.

Several Exploration Licences have been lodged, to consolidate the Company’s tenement holding at Frances Lesley.

The high priority exhalative nickel sulphide targets generated by Heron have attracted joint venture interest.

2.7.5 Yilmia Hill Project

Heron 100%

Nickel - gold

This 134 km2 project area located 60km S of Kalgoorlie represents a presence for Heron in the Spargoville-

Widgiemooltha nickel mining camp. Tenement acquisition has been on the basis of mapped komatiite occurrences.

Exploration Licence applications were lodged at Spargoville covering a komatiite sequence immediately north of the

historic Spargoville gold mine.

An Exploration Licence at Larkinville was lodged to cover the western synformal repetition of the nickel mine-hosting

Spargoville ultramafic sequence. Laterites are extensive in the area, providing potential for lateritic nickel occurrences.

The Larkinville application surrounds several historic gold mining areas, and is along strike from the Chalice gold mine.

Exploration Licence applications are awaiting grant.

2.7.6 Cowan Project

Heron 100%

Nickel - gold

The 252km2 Cowan Prospect is located 120km SSE of Kalgoorlie, covering lacustrine sediments

at Lake Cowan. The area is a prime gold exploration target completely surrounded by Mining

Leases associated with Versaille, Eundynie and the Peninsula gold mining centres. The Heron

application is in a ballot.

The Pioneer Prospect covers the Mariners-Dordie Rocks nickel sulphide-hosting komatiite

succession. The Pioneer komatiite has been previously diamond drilled, testing for nickel

sulphides. The main Heron target is lateritic nickel. Lateritic cobalt mineralisation has recently

been discovered to the south along strike at Mount Thirsty.

There are no competing applications and the Exploration Licence application is awaiting grant.

Photo below:

Salmon gum woodland, Ida Fault Province.


2.8 Kambalda Domain Province

2.8.1 Binduli East Project

Heron 100%. MPI Gold right to earn 70% through spending $0.75m.

Gold - nickel.

This 34km2 contiguous tenement holding straddles the Abattoir Shear and is located 10km SW of Kalgoorlie.

The project area is south along strike from the Janet Ivy gold resource, with the Binduli gold mining centre at the western

project boundary, and KCGM Superpit to the east.

MPI Gold has commenced field exploration with the acquisition of aeromagnetic data, regolith mapping and soil auger

sampling of structural targets within dolerite.

An additional Exploration Licence to the immediate south was acquired by Heron, covering a documented nickel

sulphide occurrence.

2.8.2 Mount Martin Project

Heron 100%

Nickel - gold

This 64km2 project area is located 40km SE of Kalgoorlie. Tenement applications have been lodged on favourable

structural and ultramafic targets in the area of the Blair nickel, Mount Martin gold-nickel and New Celebration-Jubilee

gold mines.

Tenement applications are awaiting grant.

2.9 Southern Cross Province

2.9.1 Bungalbin Project

Heron 100%.

Iron ore - gold - nickel.

The 194km2 project area is located 100km NNE of Southern Cross, and is east along strike of the Marda gold mining

centre, within an area of pervasive laterite cover. The main gold ore host in the region is banded iron formation (BIF).

Lateritic nickel potential in footwall ultramafics is indicated from open file searches by Heron.

The project area includes an iron ore resource previously reported to be 66.8 million tonne at 58.5% Fe and 0.13% P.

The total BIF strike extent within the project area is 20km. Scope for a Koolyanobbing style iron ore project would

appear to be present.

2.9.2 Maggie Hays Hill Project

Heron 100%

Nickel (- gold)

Initial data evaluation of the 81km2 project area 140km SE of Southern Cross has commenced. Excellent potential

exists for Maggie Hays (14.78mt at 1.45% Ni) and Emily Ann (2.06mt at 4.06% Ni) style structurally controlled massive

nickel sulphide deposits. The Heron project area will require blanket ground SIROTEM surveying over and along strike

of all komatiite sequences. Lateritic nickel is recorded in previous RAB drilling from the southern tenement area, and is

currently the prime exploration target for Heron. The Exploration Licence application is awaiting grant.



2.10 Gawler Craton Province

2.10.1 G2 Project

Heron 100%.

Gold - copper - uranium - diamonds.

The G2 Project is located in the Port Pirie area of South Australia 180km NNW of Adelaide on the south east margin of

the Gawler Craton. The project area consists of 2,668km2 held under two granted Exploration Licences.

The tenements are prospective for Olympic Dam, Moonta or Ernest Henry style gold-copper mineralisation, diamond

bearing kimberlite pipes, and diamond placer deposits. The G2 project area is situated on the major G2 structural

corridor extending NNW across the Gawler Craton. The G2 structure has been interpreted as a major ore forming

crustal structure, localising the world class Olympic Dam copper-gold-uranium mine 200km NNW of the project area.

The potential for Olympic Dam or Ernest Henry type ore bodies in the project area is indicated by previous stratigraphic

drilling. This encountered indications of major mineralising systems, notably haematitic breccias and host rock alteration

in the Port Broughton area. A series of 20 vertical holes was drilled by North Broken Hill Ltd between 1978 and 1981 in

a 400km2 area of coincident magnetic and gravimetric anomalism. In nine holes over a 20 x 7km area, highly

anomalous copper, zinc, gold and uranium was intersected in Gawler Craton basement rocks and overlying Adelaidian

Proterozoic sequences. The best intercepts included 7.3m at 0.85% Cu, 3.2m at 0.3g/t Au, and uranium values up to

250g/t. These results are highly significant and indicative of a major regional mineralising system.

High-resolution low level aeromagnetic surveys have been completed at Wandearah and Koolunga. Data imaging and

interpretation by Heron indicates structural controls favourable for Olympic Dam style mineralisation have been identified

at Wandearah, and 11 promising kimberlitic aeromagnetic targets have been identified at Koolunga.

As well as kimberlitic diamond potential, scope exists for diamond placers derived from the erosion of high level

diamondiferous kimberlites in the Flinders Ranges to the east of the project area. The Heron exploration model involves

diamondiferous placer deposition from an ancestral west-flowing River Murray, with heavy minerals deposited in coastal

flats within the western project area. The exploration model is based on the Namaqualand marine diamonds,

South Africa.

I J Buchhorn

Managing Director

The information is based on, and accurately reflects, information compiled by Ian James Buchhorn, who is a

Member of the Australasian Institute of Mining and Metallurgy.

Photo above:

Left to right;

Alan Rudd

(Senior Geologist),

Ross Arancini

(Company Secretary),

Chris Hassell

(Field Foreman),

Rod Evans

(Chairman),

David Crook

(Exploration Manager).

3.0 Corporate Profile 34

Corporate Governance Practices 35

4.0 Directors’ Report 36

5.0 Financial Statements 40

Profit And Loss Account 40

Balance Sheet 41

Statement Of Cash Flows 42

Notes To And Forming Part Of The Accounts 43

Directors’ Statement 54

6.0 Independent Audit Report 55

7.0 Shareholder Information 56

8.0 Interest In Mining Tenements 59


ContentsStatutory Information

3.0 Corporate Profile

Heron Resources NL is a Kalgoorlie-based exploration and mining company. The corporate aim is to become a profitable

mining company through the development of mineral deposits.

Heron is focused on exploration activities on nickel and gold projects in the Eastern Goldfields of Western Australia.

The Company undertakes cost-effective exploration based on literature reviews, aeromagnetic structural interpretations,

regional soil geochemistry, and deep drill testing of targets so generated.

The management of the Company is based in Kalgoorlie. Accordingly, the Company has excellent access to tenement

acquisition opportunities, and to specialist contractor services. Administrative overheads are also maintained at lower levels

due to the Kalgoorlie base.

The Company is managed and staffed by a team of seven with extensive mining industry experience.

OBJECTIVES

a) To increase the value of the Company through the acquisition, exploration and development of mineral resources;

b) To establish mining cash flows to fund future exploration and development activity, and increase the Company’s marketcapitalisation and value to shareholders; and

c) To conduct operations in a safe and environmentally responsible manner, to offer employment opportunities to thosewho live in the exploration province, and to respect and nurture the indigenous culture of the exploration province.

STRATEGY

a) Acquire project equity through pegging, optioning or outright purchase;

b) Focus on cost-effective regional exploration and RC drilling in the Eastern Goldfields of Western Australia;

c) Location of corporate base in Kalgoorlie;

d) Active acquisition and testing of new exploration concepts and targets;

e) Use of best management, technical, safety and financial control techniques; and

f) Utilise farm-outs where appropriate to spread exploration risk (see Table 1).

Table 1 - Joint Venture Schedule

Project Operator Right to Earn Farm-in Expenditure

Menzies East Golden State Resources 60% $0.25m

Mungari Northwest Kundana Gold 50% $3.00m

Laverton Metex Resources 70% $0.50m

Mount Morgans Metex Resources 70% $0.20m

Snake Hill Connemara 70% $0.30m

Blister Dam Not formally executed 75% $0.60m

Binduli East MPI Gold 70% $0.75m

CORPORATE GOVERNANCE PRACTICES

General

The Company does not have any formally constituted committees of the Board of Directors. The Company is not of a size

nor are its affairs of such complexity to justify the formation of separate or special committees. The Board as a whole is able

to address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriate

ethical standards.


Corporate ProfileHeron Resources NL

Composition of the Board

At the date of this statement the Board comprises three Directors, two of whom are non executive Directors. The names,

qualifications and relative experience of each Director is included in the Directors’ Report, Section 4.0.

The Company’s Articles provide that the number of Directors shall not be less than three and not more than nine (Article 19.1).

There is no requirement for any share holding qualification although it is preferable that Directors will become significant

shareholders. An Employee Option Plan has been established to encourage Directors to take significant shareholdings.

As the Company’s activities increase in their size, nature and scope, the size of the Board will be reviewed periodically and

the optimum number of Directors required to supervise adequately the Company’s activities determined within the limitations

imposed by the Articles and as circumstances demand.

Board Membership

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining the

identification and appointment of a suitable candidate for the Board shall include the quality of the individual, experience and

achievement, compatibility with other Board members, credibility within the Company’s scope of activities and the mining

industry, intellectual ability to contribute to the Board’s duties and physical ability to undertake the Board’s duties and

responsibilities.

Under the Company’s Articles the tenure of the Directors (other than a Managing Director) is subject to re-appointment by

shareholders not later than the third anniversary following their last appointment (Article 19.7). The Board does not subscribe

to the principle of a retirement age and there is no maximum period of service as a Director.

Appointment to Other Boards

Directors are required to take into consideration any conflicts when accepting appointment to other boards. Accordingly,

Directors wishing to accept appointment to other boards must first seek approval from the Board, approval of which will not

be withheld unreasonably .

Directors’ Remuneration

At the date of this statement,the maximum amount payable per annum to Directors as Director’s fees was set by shareholders

at a general meeting on 21 June 1996 at $100,000. Currently fees are paid at the rate of $70,000 per annum.

No Director’s fees are paid to the Managing Director, who receives a salary approved by the Board.

Independent Support

The Board has determined that individual Directors may in appropriate circumstances engage outside advisers at the

Company’s expense. The engagement of an outside adviser is subject to the prior approval of the Board and will not be

withheld unreasonably.

Compensation Arrangements

The Board is responsible for reviewing compensation arrangements (including superannuation and other benefits) for the

Managing Director and other senior executives.

Continuous Review of Corporate Governance

Directors consider on an ongoing basis how management information is presented to them and whether such information is

sufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enable

Directors to determine appropriate operating and financial strategies from time to time in light of changing circumstances and

economic conditions. The Directors recognise that mineral exploration is an inherently risky business and that operational

strategies adopted should, notwithstanding, be directed towards improving the value of the net worth of the Company.


Corporate Profile3.0 Continued

4.0 Directors’ Report

The Directors submit their report on the operations of the Company for the year ended 30 June 1998 including the accounts

for the financial period ended on that date in accordance with a resolution of the Directors of the Company.

DIRECTORS

The names and details of the Directors of the Company in office at the date of this report are:

Director Rodney Michael Evans - FCA, FCIS, FCIM, AIArbA

Appointed 26 March 1996

Position Chairman (Non-Executive)

Rod Evans is a chartered accountant and consultant who has had wide experience in corporate administrationand finance. He is a Director and Chairman of Giants Reef Mining NL and RAC Insurance Pty Ltd, DeputyChairman of RAC Finance Pty Ltd, a Director of SDS Corporation Ltd, and past Chairman of Clark KennethLeventhal, a world-wide association of accounting firms, the Australian Automobile Association, and a numberof publicly listed companies involved in mining and exploration in Australia.

Director Ian James Buchhorn - BSc (Hons), Dip Geosci, MAusIMM

Appointed 17 February 1995

Position Managing Director

Ian Buchhorn has worked on nickel, gold, lead-zinc and diamond projects in southern Africa. In Australia, MrBuchhorn has worked on bauxite and industrial mineral mining and exploration, gold and base metal projectgeneration and supervision, and in gold mine operation and in corporate evaluations. He has 26 yearsexperience as an economic geologist, and has provided expert technical advice in benchmark mining litigationcases, systematically monitored and acquired tenements throughout the Eastern Goldfields, commissionedseveral open cut gold mines, and has been a Registered Mine Manager. Mr Buchhorn is responsible for theday to day technical management of the Company.

Director Robert George Colville - AssocRMIT, MAusIMM

Appointed 09 December 1996

Position Director

Bob Colville has over 26 years exploration experience, predominantly within the Eastern Goldfields of WesternAustralia. He has held a number of senior and executive positions with both major companies and juniorexplorers. He has been associated with the discovery and development of mines at Ranger Uranium (NT),and New Celebration, Goongarrie and Davyhurst (Eastern Goldfields WA). Mr Colville is an executive directorof Barminco Pty Ltd, the largest private underground mining contractor in Australia.

DIRECTORS’ INTEREST IN CONTRACTS WITH THE COMPANY

There are no material contracts involving Directors’ interests at the end of the financial year nor have any been entered into

since the end of the previous financial year not otherwise disclosed in this report.

PRINCIPAL ACTIVITIES

The principal activities of the Company during the year were exploration for nickel and gold deposits and joint venturing with

other mining companies to explore for mineral deposits. There has been no significant change in the nature of these activities

during the year.

OPERATING RESULTS

The loss of the Company for the 1998 financial year after income tax was $543,326 (1997 : $282,930).


Directors’ ReportHeron Resources NL

DIVIDENDS

The Directors recommended that no dividend be paid for the current year.

REVIEW OF OPERATIONS

The detailed review of operations of the Company for the year is contained in Section 2.0 of the Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Company during the year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Other than noted below, at the date of this report there is no matter or circumstance which has arisen since 30 June 1998

that has significantly affected or may significantly affect:

a) The operations, in the financial years subsequent to 30 June 1998, of the Company;

b) The results of those operations; or

c) The state of affairs, in financial years subsequent to 30 June 1998, of the Company.

A tenement within the Scotia Kanowna Project area, being E 27/123, was relinquished on 24 September, 1998. The ScotiaKanowna Project area was a major exploration target of the Company at listing in 1996. Subsequent exploration of E27/123however was unsuccessful, and parts of the project area which are not prospective for laterite nickel are now beingrelinquished. In the current year further work is proceeding elsewhere within the Scotia Kanowna Project where high prioritynickel laterite targets have been identified.

OPTIONS

During the year the following options exercisable at $0.25 were issued under the Company’s Employee Option Plan:

Number Issued Expiry Date

135,000 28 August 2001

150,000 01 September 2001

500,000 15 December 2001

65,000 05 March 2002

Details of options issued to Directors and options that expired or were cancelled during year are contained in Note 10 of the

financial statements.

As at 30 June 1998 there were a total of 10,850,000 options exercisable at $0.25 on issue as follows:


10,000,000 30 June 2000

135,000 28 August 2001

150,000 01 September 2001

500,000 15 December 2001

65,000 05 March 2002

LIKELY DEVELOPMENTS

The Company will continue its core nickel and gold exploration activities through sole funded exploration and joint venture.

The Company is continually assessing commercial opportunities for corporate growth. Because of the unpredictable nature

of these opportunities, developments could occur at short notice.

No information is included on the likely developments in the operations of the Company and the expected results of those

operations, as it is the opinion of the Directors that this would prejudice the interests of the Company if included in this report.


Directors’ Report4.0 Continued

DIRECTORS’ BENEFITS

Disclosure of benefits provided to Directors during the financial year is made in Notes 13 and 14 of the financial statements,

in accordance with ASC class order 97/2348.

DIRECTORS’ INTEREST IN CONTRACTS WITH THE COMPANY

There are no material contracts involving Director’s interests at the end of the financial year nor have any been entered into

since the end of the previous financial year not otherwise disclosed in this report.

DIRECTORS’ SHAREHOLDING IN THE COMPANY

As at the date of this report the interests of the Directors in the shares of the Company were:

Ordinary Shares Options over Ordinary SharesDirect Indirect Direct Indirect

RM Evans - 800,000 - 200,000

IJ Buchhorn 1,199,999 19,321,999 250,000 8,900,000

RG Colville - 140,000 - 150,000

DIRECTORS MEETINGS

During the year the Company held 12 meetings of Directors. The attendance of the Directors at meetings of the Board were:

Director Meetings held Number ofwhile a Director meetings

attended

RM Evans 12 12

IJ Buchhorn 12 12

GJB Porter 4 4

RG Colville 9 8

AUDIT COMMITTEE

At the date of this report the Company has not formed an Audit Committee. The Directors discuss the Company’s activities

with the auditors throughout the year. Due to the size and nature of operations, it has not been considered necessary to form

an Audit Committee of the Board of Directors.

INSURANCE OF OFFICERS

During the financial year the Company has paid an insurance premium in respect of a Directors’ and Officers Liability

Insurance Contract. The insurance premium relates to liabilities that may arise from an officer’s position, with the exception of

conduct involving a wilful breach of duty or improper use of information or position to gain personal advantage.

The officers covered by the insurance policies are the Directors and the Company Secretary.



CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Heron Resources

NL support and have adhered to the principles of corporate governance. The Company’s corporate governance statement

is contained in the Corporate Profile section of the Annual Report.

Signed in accordance with a resolution of Directors

R G COLVILLE I J BUCHHORNDirector Director

Kalgoorlie, 25 September 1998



Heron Resources NL

5.0 Financial Statements

Profit and Loss Account

FOR THE YEAR ENDED 30 JUNE 1998

Notes 1998 1997$ $

OPERATING REVENUE 2(c) 220,410 383,630

OPERATING PROFIT/(LOSS) BEFORE ABNORMAL ITEMS AND INCOME TAX (62,893) 113,000

ABNORMAL ITEMS BEFORE INCOME TAX 3 (480,433) (395,930)

OPERATING LOSS BEFORE INCOME TAX (543,326) (282,930)

INCOME TAX ATTRIBUTABLE TO OPERATING LOSS 4 - -

OPERATING LOSS AFTER INCOME TAX (543,326) (282,930)

ACCUMULATED LOSSES at the beginning of the financial year (546,969) (264,039)

ACCUMULATED LOSSES at the end of the financial year (1,090,295) (546,969)

The accompanying notes form part of these financial statements


Financial Statements

Balance Sheet


Notes 1998 1997$ $

CURRENT ASSETS

Cash 2,467,742 5,572,782

Receivable 5 6,346 9,627

TOTAL CURRENT ASSETS 2,474,088 5,582,409

NON-CURRENT ASSETS

Property, plant and equipment 6 193,956 130,965

Exploration and evaluation costs carried forward 7 11,072,712 6,984,667

TOTAL NON-CURRENT ASSETS 11,266,668 7,115,632

TOTAL ASSETS 13,740,756 12,698,041

CURRENT LIABILITIES

Accounts payable 8 232,807 32,519

Provisions 9 48,243 12,490

TOTAL CURRENT LIABILITIES 281,050 45,009

TOTAL LIABILITIES 281,050 45,009

NET ASSETS 13,459,706 12,653,032

SHAREHOLDERS’ EQUITY

Share Capital 10 14,550,001 13,200,001

Accumulated losses (1,090,295) (546,969)

TOTAL SHAREHOLDERS’ EQUITY 13,459,706 12,653,032



Financial Statements5.0 Continued

Statement of Cash Flows


Notes 1998 1997$ $

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 223,691 374,003

Payment to suppliers (211,936) (281,759)

NET CASH INFLOWS FROM OPERATING ACTIVITIES 11(a) 11,755 92,244

CASH FLOWS FROM INVESTING ACTIVITIES

Exploration expenditure (3,013,780) (1,389,255)

Acquisition of plant & equipment (103,015) (136,714)

NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (3,116,795) (1,525,969)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares - 8,000,000

Loans from/(to) related parties - (417,731)

Payments for prospectus costs - (576,592)

NET CASH INFLOWS FROM FINANCING ACTIVITIES - 7,005,677

NET INCREASE/(DECREASE) IN CASH HELD (3,105,040) 5,571,952

Cash at the beginning of the financial year 5,572,782 830

CASH AT THE END OF THE FINANCIAL YEAR 11(c) 2,467,742 5,572,782

Non-cash financing and investing activities 11(b) 1,350,000 -




Notes to and Forming Part of the Accounts


Note 1. Statement of Accounting Policies

The financial statements are a general purpose financial report that have been prepared in accordance with applicable

Accounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views)

and the Corporations Law. The financial statements have been prepared on the basis of historical costs and do not take into

account changing money values or, except where stated, current valuations of non-current assets. The accounting policies

have been consistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial

statements.

a) Income Tax

The Company adopts the liability method of tax-effect accounting whereby the income tax expense shown in the profitand loss account is based on the operating profit before income tax adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense areincluded in the determination of operating profit before income tax and taxable income are brought to account as eithera provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicableto the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonabledoubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty ofthe realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that noadverse change will occur in income tax legislation and the anticipation that the Company will derive sufficient futureassessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by thelaw.

b) Exploration, Evaluation and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area ofinterest.

Accumulated costs are only carried forward to the extent that they are expected to be recouped through the successfuldevelopment of the area, or by its sale, or where the activities in the area have not reached a stage which permits areasonable assessment of the existence of economically recoverable reserves, and active and significant operations inrelation to the area are continuing.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decisionto 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 arecurrent.

c) Investments

Investments are brought to account at cost or at Directors’ valuation. The carrying amount of investments is reviewedannually by Directors to ensure it is not in excess of the recoverable amount of these investments.

d) Depreciation

Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each item of property,plant and equipment over its expected useful life.



e) Interests in Joint Ventures

The Company’s share of the assets, liabilities, revenue and expenses of joint ventures is included in the appropriate itemsof the balance sheet and the profit and loss account.

Details of the joint ventures are set out in Note 19.

f) Employee Entitlements

Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured as the amount unpaidat the reporting date at current pay rates in respect of employees’ service up to that date.

A liability for long service leave is recognised and is measured as the present value of expected future payments to bemade in respect of services provided by employees up to the reporting date.

Consideration is given to the expected future wage and salary levels, experience of employee departures and periodsof service. Expected future payments are discounted using interest rates on national government guaranteed securitieswith terms to maturity that match, as closely as possible, the estimated future cash outflows.

g) Cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money marketinvestments readily convertible to cash within two working days, net of outstanding bank overdrafts.

h) Acquisition of Assets

The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets areacquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental tothe acquisition. Where shares are issued in an acquisition, the value of the shares is determined by reference to the fairvalue of the assets acquired, including goodwill where applicable.

Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure,development properties or mine properties based on the stage of development reached at the date of acquisition.Assets acquired may also include mineral reserves, mineral resources and unexplored and unevaluated acreage.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to theirpresent value as at the date of acquisition. The discount rate used is the rate at which a similar borrowing could beobtained under comparable terms and conditions.

A liability for restructuring costs is recognised as at the date of acquisition of an entity or part thereof when there is ademonstrable commitment to a restructuring of the acquired entity and a reliable estimate of the amount of the liabilitycan be made.

i) Recoverable Amount of Non-Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arisingfrom its continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to itsrecoverable amount. Where the net cash inflows are derived from a group of assets working together, recoverableamount is determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reversesa revaluation increment previously credited to, and still included in the balance of, the asset revaluation reserve, thedecrement is debited directly to that reserve. Otherwise the decrement is recognised as an expense in the profit andloss account.

The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to theirpresent values using a market-determined, risk adjusted discount rate.

j) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial yearand which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition.



k) Receivables and Revenue Recognition

Bills of Exchange

Bills of Exchange have been purchased in the market at a discount to face value. The bills are carried at an amountrepresenting cost and a portion of the discount recognised as income on an effective yield basis. The discount broughtto account each period is accounted for as interest received.

l) Year 2000 Software Modification Costs

Costs relating to the modification of computer software for the year 2000 compatibility are charged as expenses whenincurred.

m) Earnings per Share

i) Basic Earnings per Share

Basic earnings per share is determined by dividing the operating profit/(loss) after income tax by the weighted averagenumber of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issuedduring the year.

ii) Diluted Earnings per Share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share by taking intoaccount amounts unpaid on ordinary shares and options and any reduction in earnings per share that will probably arisefrom the exercise of options outstanding during the financial year.

1998 1997$ $

Note 2. Operating Loss

The operating loss before income tax is arrived at after:

a) Charging as Expenses:

Depreciation 40,024 5,749

b) Crediting as Income:

Interest received from other persons 220,410 383,630

c) Operating Revenue:

Other operating revenue

Interest received 220,410 383,630

220,410 383,630

Note 3. Abnormal Items

Included in the operating loss after tax is the following abnormal item:

Exploration written off 480,433 -

Prospectus and share issue costs written off - 395,930

(no income tax expense applicable)



1998 1997$ $

Note 4. Income Tax

Prima facie income tax benefit on operating loss reconciles to the income tax expense as follows:

Operating loss before tax (543,326) (282,930)

Prima facie tax at 36% (195,597) (101,855)

Non deductible items 139,432 150,545

Timing differences and tax losses not brought to account 56,165 -

Prior year tax losses brought to account - (16,099)

Section 330 deductions brought to account - (32,591)

Income tax expense - -

The directors estimate the potential tax losses and Section 330 exploration expenditure deduction entitlements available to

be $3,228,000 (1997 : $1,221,000).

The future income tax benefit arising from tax losses has not been recognised as an asset because recovery is not virtually

certain.

The tax benefits will only be obtained if:

i) the Company derives future assessable income of a nature and of an amount sufficient to enable the benefit from thedeductions for the losses to be realised;

ii) the Company continues to comply with the conditions for deductibility imposed by tax legislation; and

iii) no changes in tax legislation adversely affect the Company in realising the benefit from the deductions for losses.

Note 5. Receivable (Current)

Accrued interest 6,346 9,627

Note 6. Property Plant and Equipment

Plant and equipment at cost 56,676 34,112

Accumulated depreciation (14,189) (982)

42,487 33,130

Office equipment at cost 6,885 6,285

Accumulated depreciation (2,610) (639)

4,275 5,646

Motor vehicles at cost 176,168 96,317

Accumulated depreciation (28,974) (4,128)

147,194 92,189

Total property, plant and equipment 193,956 130,965



1998 1997$ $

Note 7. Exploration and Evaluation Costs Carried Forward

Balance at beginning of year 6,984,667 5,764,224

Acquisition costs 2,494,616 190,571

Exploration and evaluation costs incurred during the year 2,073,862 1,029,872

Exploration and evaluation costs written off (480,433) -

Balance at end of year 11,072,712 6,984,667

The ultimate recoupment of costs carried forward is dependant upon the successful development and/or commercialexploitation or alternatively, sale of respective areas of interest.

Note 8. Accounts Payable (Current)

Trade creditors and accruals 232,807 32,519

Note 9. Provisions (Current)

Employee entitlements 48,243 12,490

Note 10. Share Capital

Issued Capital

59,400,000 (1997 : 54,000,000) ordinary shares of $0.25 each 14,850,000 13,500,000

Less: Discount on shares (299,999) (299,999)

14,550,001 13,200,001

Movements in issued and paid up capital during the year are as follows:

1998Number $

Balance at beginning of year 54,000,000 13,200,001

Issued during the year 5,400,000 1,350,000

Balance at end of year 59,400,000 14,550,001

The purpose of the issue of the 5,400,000 shares during the year was to acquire interests in mining tenements.

During the year the following options exercisable at $0.25 were issued under the Company’s Employee Option Plan:


135,000 28 August 2001

150,000 01 September 2001

500,000 15 December 2001

65,000 05 March 2002



The 500,000 options expiring on 15 December 2001 were issued to the following Directors or their nominees:

Director Number of Options

RM Evans 200,000

RG Colville 150,000

IJ Buchhorn 150,000

The issue of these options was approved by shareholders at the Company’s 1997 Annual General Meeting.

10,000 of the options expiring on 28 August 2001 were cancelled as the employee to whom the options were issued left

the Company prior to satisfying the Employee Option Plan’s service requirement.

As at 30 June 1998 there were a total of 10,850,000 options exercisable at $0.25 on issue as follows:


10,000,000 30 June 2000

135,000 28 August 2001

150,000 01 September 2001

500,000 15 December 2001

65,000 05 March 2002

1998 1997$ $

Note 11. Statement of Cash Flows

a) Reconciliation of operating loss after income tax to the net cash flows from operations

Operating loss after income tax (543,326) (282,930)

Add/(less)

Exploration and evaluation costs written off 480,433 -

Prospectus costs written off - 395,930

Depreciation 40,024 5,749

(Increase)/decrease in accrued interest 3,281 (9,627)

Increase/(decrease) in creditors and accruals 31,343 (16,878)

11,755 92,244

b) Non-Cash Financing and Investing Activities

During the year the Company purchased interests in mining tenements for which it issued shares as consideration 1,350,000 -

c) Reconciliation of Cash

Cash on hand and at bank 476,413 96,560

Commercial bills 1,991,329 5,476,222

Closing cash balance 2,467,742 5,572,782



1998 1997Number Number

Note 12. Remuneration of Executives

The number of executives of the Company whose remuneration is $100,000 or more is as follows:

$110,000 - $119,999 1 1

$140,000 - $149,999 1 -

In the opinion of the Directors remuneration paid to executives is considered fair and reasonable.

1998 1997$ $

Note 13. Remuneration of Directors

Income received, or due and receivable, by Directors 190,015 184,451

1998 1997Number Number

The numbers of parent entity Directors whose income was within the specified bands are as follows:

$0 – $9,999 1 -

$10,000 - $19,999 - 2

$20,000 - $29,999 1 1

$30,000 - $39,999 - -

$40,000 - $49,999 1 1

$90,000 - $99,999 - -

$110,000 - $119,999 1 1

Details of options granted to Directors during the year are set out in Note 10.

Note 14. Related Party Disclosures

a) The Directors of the Company during the financial year were:

Rodney Michael Evans

Ian James Buchhorn

Glenn James Beresford Porter Resigned 23 October 1997

Robert George Colville

b) Related party transactions during the financial year were:

· payment of $48,951 (1997 : $19,362) to parties related to Mr IJ Buchhorn for the provision of secretarial servicesand office accommodation on normal commercial terms and conditions. During the year the Company agreed toenter a three year lease agreement on normal commercial terms and conditions with a party related to Mr IJ Buchhornfor the provision of office accommodation;

· payment of $11,871 (1997 : $6,872) for legal work undertaken by G Porter & Associates, of which Mr GJB Porteris the principal, on normal commercial terms and conditions;

· payment of $23,920 (1997 : $5,520) for residential accommodation secured by the Company for an employee froma party related to Mr IJ Buchhorn on normal commercial terms and conditions; and

· information on remuneration of Directors and Executives of the Company is disclosed in Notes 12 and 13.



c) Transactions of Directors and Director related entities concerning Shares or Share Options were:

· Aggregate number of Shares and Share Options of the Company held directly, indirectly or beneficially by Directorsor Director-related entities at balance date:

1998 1997$ $

Ordinary Shares held 21,461,998 21,382,252

Options over Ordinary Shares held 9,500,000 9,000,000

· During the year, Directors and Director related entities acquired 110,000 Shares of the Company on the same basisas similar transactions with other shareholders;

· During the year, Directors and Director related entities sold 30,254 Shares of the Company on the same basis assimilar transactions with other shareholders; and

· During the year Directors and Director related entities were issued 500,000 Share Options under the Company’sEmployee Option Plan (refer Note 10). Such Options are exercisable on or before 15 December 2001 at $0.25 perShare.

d) No other benefits have been received or are receivable by Directors or Director related entities, other than those alreadydisclosed in the notes to the accounts.

Note 15. 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 date, are as follows:

Recognised Financial Balance Accounting Policies Terms and ConditionsInstruments Sheet Notes

i) Financial assets

Commercial bills Commercial bills are carried at an Commercial bills have a term ofamount representing cost and a 29 days with interest rate of 5.48% portion of the discount recognised (1997:5.40%).as income on an effective yield basis.

11am Call Account 11am call account is carried at cost. The 11am call account is at call with an interest rate of 4.75% (1997:5.25%).

ii) Financial liabilities

Trade creditors 8 Liabilities are recognised for amounts to Trade liabilities are normally settled onand accruals be paid in the future for goods and 30 day terms.

services received, whether or not billed to the Company.

iii) Equity

Ordinary shares 10 Ordinary share capital is recognised at The Company is authorised to issuethe par value of the amount paid up up to 400,000,000 sharesless any discount. (1997: 400,000,000) of $0.25 par

value each. Details of the shares issued and the terms and conditions ofthe options outstanding over ordinary shares at balance date are set out in Note 10.



b) Interest rate risk

The Company’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities, both

recognised and unrecognised at the balance date are as follows:

Financial Instruments Floating Fixed interest Total carrying Weighted average interest rate rate maturing in: amount as per effective

1 year or less balance sheet interest rate

1998 1997 1998 1997 1998 1997 1998 1997$ $ $ $ $ $ % %

i) Financial assets

Cash on hand and at bank 130,716 (320,416) - - 130,717 (320,415) 3.00 3.50

Commercial bills - - 1,991,329 5,476,222 1,991,329 5,476,222 5.48 5.40

11am Call Account 345,696 416,975 - - 345,696 416,975 4.75 5.25

Total financial assets 476,412 96,559 1,991,329 5,476,222 2,467,742 5,572,782 - -

Non-interest Total carrying Weighted average Bearing amount as per effective

balance sheet interest rate

1998 1997 1998 1997 1998 1997$ $ $ $ % %

ii) Financial liabilities

Trade creditors and accruals 232,807 32,519 232,807 32,519 N/A N/A

Total financial liabilities 232,807 32,519 232,807 32,519 - -

c) Net fair values

Total carrying amount as per Aggregate net fair value (i)balance sheet

1998 1997 1998 1997$ $ $ $

Financial assets

Cash on hand and at bank 130,716 (320,416) 130,717 (320,415)

Commercial bills 1,991,329 5,476,222 1,991,329 5,476,222

11am Call Account 345,696 416,975 345,696 416,975

Total financial assets 2,467,741 5,572,781 2,467,742 5,572,782

Financial liabilities

Trade creditors and accruals 232,807 32,519 232,807 32,519

Total financial liabilities 232,807 32,519 232,807 32,519

The following methods and assumptions are used to determine the net fair values of financial assets and liabilities:

Recognised financial instruments

Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short-term maturity.

Receivables and trade creditors: The carrying amount approximates fair value.



1998 1997$ $

Note 16. Auditors’ Remuneration

Amounts received or due and receivable by the auditors for:

- audit services 13,750 9,658

- other services - 36,592

Note 17. Commitments for Expenditure

Exploration Commitments

In order to maintain current rights of tenure to exploration and mining tenements, the Company has the following discretionary

exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiation upon

expiry of the leases, are not provided for in the financial statements and are payable:

1998 1997$ $

Not later than 1 year 2,000,000 1,450,000

Later than 1 year but not later than 2 years 2,000,000 1,450,000

Later than 2 years but not later than 5 years 4,000,000 4,350,000

If the Company decides to relinquish certain leases and/or does not meet these obligations, assets recognised in the balance

sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out of exploration

rights to third parties will reduce or extinguish these obligations. Those amounts detailed above do not include expenditure

commitments which are the responsibility of joint venture partners (refer Note 19).

Note 18. Segment Information

The Company operates in the mineral exploration industry in Australia.

Note 19. Joint Venture Agreements

The Company has entered into the following joint venture agreements:

Project Operator Right to Farm-inEarn Expenditure

Menzies East Golden State Resources 60% $0.25m

Mungari Northwest Kundana Gold 50% $3.00m

Laverton Metex Resources 70% $0.50m

Mount Morgans Metex Resources 70% $0.20m

Snake Hill Connemara 70% $0.30m

Blister Dam Not formally executed 75% $0.60m

Binduli East MPI Gold 70% $0.75m



Note 20. 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 Company or its projects.

Note 21. Earnings per Share

1998 1997$ $

Basic earnings per share (0.0098) (0.006)

Weighted average number of Ordinary Shares outstanding during the year used in the calculation of basic earnings per share. 55,583,013 50,668,493

As diluted earnings per share is not materially different from basic earnings per share it has not been disclosed.

Note 22. Subsequent Event

Subsequent to the year end E27/123, an exploration tenement, one of the tenements in the Scotia Kanowna Project area of

interest, has been relinquished. The carrying value of the Scotia Kanowna Project area of interest in the amount of Exploration

and Evaluation Costs Carried Forward at 30 June 1998 is $4,621,000 of a total amount of Exploration and Evaluation Costs

Carried Forward of $11,072,712.

The financial effect of this event has not been recognised in these financial statements.

At this stage the Directors are unable to reliably estimate the carrying value of the Scotia Kanowna Project area of interest as

activities in the area have not reached a stage which permits a reasonable assessment of the existence of economically

recoverable reserves. Technical work is planned on the Scotia Kanowna Project area of interest in the 1998/99 year. A

decision will be made during the year ending 30 June 1999 as to carrying value of the Scotia Kanowna Project area of interest

in accordance with the Company’s accounting policy as stated in Note 1 b) of the Accounts.



In accordance with a resolution of the Directors of Heron Resources NL, in the opinion of the Directors:

a) the financial statements set out on pages 40 to 53 are drawn up in accordance with Divisions 4, 4A and 4B of Part 3.6of the Corporations Law and so as to give a true and fair view of:

i) the state of affairs as at 30 June 1998 and the result for the financial year ended on that date; and

ii) the other matters with which they deal;

b) at the date of this statement there are reasonable grounds to believe that the Company will be able to pay its debts asand when they fall due; and

c) the financial statements have been made out in accordance with Applicable Standards and other mandatoryprofessional reporting requirements.

On behalf of the Board

R G COLVILLE I J BUCHHORNDirector Director

Kalgoorlie, 25 September 1998


5.0 ContinuedDirectors’ Statement

6.0 Independent Audit Report

To the members of Heron Resources NL

SCOPE

We have audited the financial statements of Heron Resources NL for the year ended 30 June 1998 as set out on pages 40

to 54. The Company’s Directors are responsible for the preparation and presentation of the financial statements and the

information they contain. We have conducted an independent audit of the financial statements in order to express an opinion

on them to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether

the financial statements are free of material misstatement. Our procedures included examination, on a test basis, of evidence

supporting the amounts and other disclosures in the financial statements and the evaluation of accounting policies and

significant accounting estimates. These procedures have been undertaken to form an opinion as to whether, in all material

respects, the financial statements are presented fairly in accordance with Accounting Standards and other mandatory

professional reporting requirements and statutory requirements, so as to present a view which is consistent with our

understanding of the Company’s financial position, the results of its operations and its cash flows.

The audit opinion expressed in this report has been formed on the above basis.

AUDIT OPINION

In our opinion, the financial statements of Heron Resources NL are properly drawn up:

a) so as to give a true and fair view of:

i) the state of affairs as at 30 June 1998 and the loss and cash flows of the Company for the financial year ended onthat date; and

ii) the other matters required by Divisions 4, 4A and 4B of Part 3.6 of the Corporations Law to be dealt with in financialstatements;

b) in accordance with the provisions of the Corporations Law; and

c) in accordance with applicable Accounting Standards and other mandatory professional reporting requirements.

BUTLER SETTINERI COLIN BUTLERChartered Accountants Partner

Perth, 25 September 1998


Heron Resouces NLIndependent Audit Report

7.0 Shareholder Information

1. Issued Shares and Options

a) Distribution of Shareholders:

Size of Holding Number of Holders Shares Held

1 - 1000 17 12,023

1001 - 5000 174 654,297

5001 - 10000 355 3,118,464

10001 - 100000 595 19,607,290

100001 - 43 36,007,926

1184 59,400,000

b) The twenty largest shareholders hold 54.38% of the issued fully paid capital of the Company.

c) Substantial shareholder who has notified the Company:

Holder Number of Shares %

Hazurn Pty Ltd 17,5000,000 29.46

d) Distribution of optionholders:

The following options were on issue:

i) 10,000,000 exercisable on or before 30 June 2000 by payment of $0.25 per option exercised;

ii) 125,000 exercisable on or before 28 August 2001 by payment of $0.25 per option exercised;

iii) 150,000 exercisable on or before 01 September 2001 by payment of $0.25 per option exercised;

iv) 500,000 exercisable on or before 15 December 2001 by payment of $0.25 per option exercised; and

v) 65,000 exercisable on or before 05 March 2002 by payment of $0.25 per option exercised.

Size of Holding Number of Holders Options Held

1 - 1000 - -

1001 - 5000 - -

5001 - 10000 1 10,000

10001 - 100000 8 590,000

100001 - 6 10,240,000

15 10,840,000

e) There were 25 shareholders who held less than a marketable parcel.

f) The following securities have been classified by ASX as restricted:

i) 5,400,000 Ordinary Shares of $0.25 cents each fully paid issued to the vendors of mining exploration properties.

These securities cease to be restricted on 23 March 1999.

VOTING RIGHTS

In accordance with Article 18.1 of the Company’s Articles of Association, 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.


Heron Resources NLShareholder Information

Twenty Largest Shareholders as at 17 September 1998

Number of Shares % of Issued Shares1. Hazurn Pty Ltd 17,500,000 29.462. Fodina Minerals Pty Ltd 2,700,000 4.553. Outokumpu Exploration Ventures Pty Ltd 2,700,000 4.554. GHK Mining Pty Ltd 1,580,000 2.665. Buchhorn PJ 1,509,998 2.546. Buchhorn IJ 1,199,999 2.027. Bronwen Pty Ltd 800,000 1.358. Yan’s Investment Pty Ltd 500,000 0.849. Hawke RL 493,333 0.8310. Leigh BJ 380,000 0.6411. Allens Business Group Pty Ltd 350,000 0.5912. Corcarr Nominees Pty Ltd 346,000 0.5813. Gianni PR 338,586 0.5714. Everest WA and R 300,000 0.5115. Sundowner International Pty Ltd 300,000 0.5116. Zeus Pty Ltd 294,600 0.5017. Olld Pty Ltd 258,250 0.4318. Rocket Investment Pty Ltd 253,000 0.4319. ANZ Nominees Limited 250,000 0.4220. O’Connell JDN 250,000 0.42

TOTAL ISSUED SHARES 32,303,766 54.38

Optionholders as at 17 September 1998

Optionholders (options exercisable on or before 30 June 2000) were:

Number of Options % of Issued OptionsHazurn Pty Ltd 8,750,000 87.50GHK Mining Pty Ltd 740,000 7.40Buchhorn IJ 100,000 1.00Killoran NL 100,000 1.00Kerr I 86,668 0.87Gianni PR 86,666 0.87Hawke RL 86,666 0.86Manorina Mining Pty Ltd 40,000 0.40Buchhorn PJ 10,000 0.10

10,000,000 100.00

Optionholders (options exercisable on or before 28 August 2001) were:

Number of Options % of Issued OptionsCrook JA 100,000 80.00Rossetto SE 25,000 20.00

125,000 100.00

Optionholders (options exercisable on or before 01 September 2001) were:

Number of Options % of Issued Options

Red Oaks Pty Ltd 150,000 100.00


Shareholder Information7.0 Continued

Optionholders (options exercisable on or before 15 December 2001) were:


Whitebeach Pty Ltd 200,000 40.00

Buchhorn IJ 150,000 30.00

Colville MJ 150,000 30.00

500,000 100.00

Optionholders (options exercisable on or before 05 March 2002) were:


Rudd MJ 50,000 77.00

Rossetto SE 15,000 23.00

65,000 100.00

Summary of Optionholders as at 17 September 1998


1. Hazurn Pty Ltd 8,750,000 80.72

2. GHK Mining Pty Ltd 740,000 6.83

3. Buchhorn IJ 250,000 2.31

4. Whitebeach Pty Ltd 200,000 1.85

5. Colville RG 150,000 1.38

6. Red Oaks Pty Ltd 150,000 1.38

7. Killoran NL 100,000 0.92

8. Crook JA 100,000 0.92

9. Kerr I 86,668 0.80

10. Gianni PR 86,666 0.80

11. Hawke RL 86,666 0.80

12. Rudd MJ 50,000 0.46

13. Manorina Mining Pty Ltd 40,000 0.37

14. Rossetto SE 40,000 0.37

15. Buchhorn PJ 10,000 0.09

TOTAL ISSUED OPTIONS 10,840,000 100.00


Shareholder Information7.0 Continued

8.0 Interest in Mining Tenements

Prospect Geographic Tenement Area Status InterestLocation Identifier km2 Held

EMU FAULT PROVINCE Kalpini Nickel Project: Ni(-Au)Acra North 65 km NE of Kalgoorlie E27/76 1.14 G 100%

M27/349 A 100%

Wellington East 65 km NE of Kalgoorlie E27/129 86.80 G 100%

M27/364 A 100%

M27/365 A 100%

Wellington East 70 km NE of Kalgoorlie E27/185 53.20 A 100%

Wellington Dam 70 km NE of Kalgoorlie E27/195 25.20 A 100%



Acra North 65 km NE of Kalgoorlie E28/426 36.98 G 100%

M28/199 A 100%

M28/200 A 100%

M28/201 A 100%

M28/202 A 100%

Betsy Bore 65 km NE of Kalgoorlie E28/459 23.80 G 100%

M28/169 A 100%

M28/205 A 100%

M28/206 A 100%

Grey Dam 70 km NE of Kalgoorlie E28/991 11.20 A 100%

Burtons 65 km NE of Kalgoorlie M28/127 0.10 A 100%

Wellington North 70 km NE of Kalgoorlie P27/1448 1.60 G 100%



M27/361 A 100%



M27/362 A 100%


Subtotal 292.81

EMU FAULT PROVINCE Kalpini Nickel Project: Ni infrastructure (- Au)Kurnalpi South 75 km ENE of Kalgoorlie E28/647 11.20 G 100%

Kurnalpi South 75 km ENE of Kalgoorlie E28/819 11.06 A 100%

Kurnalpi South 75 km ENE of Kalgoorlie E28/863 22.40 A 100%

Betsy Bore 85 km NE of Kalgoorlie E28/897 173.60 A 100%

Hancock Hill 90 km E of Kalgoorlie E28/910 64.40 A 100%

Mount Parkin 90 km E of Kalgoorlie E28/911 19.60 A 100%

Lake Yindarlgooda 90 km E of Kalgoorlie E28/916 50.40 A 100%

Steeple Hill 90 km E of Kalgoorlie E28/918 11.20 A 100%

Tap Rock Hill 90 km E of Kalgoorlie E28/927 190.40 A 100%

Garibaldi 45 km NE of Kalgoorlie P27/1424 0.87 G 100%

Subtotal 555.13


Interest in Mining TenementsHeron Resources NL


EMU FAULT PROVINCE Gindalbie East Project: AuGindalbie South 50 km NE of Kalgoorlie E27/164 3.00 G 100%

Kalpini Northwest 60 km NE of Kalgoorlie E27/170 46.00 G 100%

Mayday North 50 km NE of Kalgoorlie E27/182 2.95 G 100%

Gindalbie South 50 km NE of Kalgoorlie E27/183 10.59 G 100%

Lindsay Find 55 km NNE of Kalgoorlie P27/1265 1.20 G 100%

M27/305 A 100%

Carmelia Dam 50 km NE of Kalgoorlie P27/1328 1.26 G 100%

M27/348 A 100%

Kalpini West 50 km NE of Kalgoorlie P27/1353* 0.47 G 100%

Kalpini West 50 km NE of Kalgoorlie P27/1354 1.28 G 100%







Gindalbie South 45 km NE of Kalgoorlie P27/1407 2.00 G 100%





Lindsays North 55 km NNE of Kalgoorlie P27/1420 1.15 G 100%



Lindsays Find 55 km NNE of Kalgoorlie P27/1474 0.77 G 100%

Subtotal 85.89

* Tenement relinquished subsequent to date of report

EMU FAULT PROVINCE Transline Project: Ni-AuTrans Find North 60 km ESE of Kalgoorlie E25/176 2.80 A 100%

Trans Find North 60 km ESE of Kalgoorlie E25/179 89.60 A 100%

Trans Find 60 km ESE of Kalgoorlie E25/184 56.00 A 100%

Gundockerta Hill West 60 km ESE of Kalgoorlie E25/186 8.40 A 100%

White Dam 60 km ESE of Kalgoorlie E25/188 16.80 A 100%

Seabrook Hills 60 km ESE of Kalgoorlie E25/189 2.80 A 100%

Seabrook Hills 60 km ESE of Kalgoorlie E25/191 14.00 A 100%



Hawke Hill 60 km ESE of Kalgoorlie E25/204 8.40 A 100%

Randalls 60 km ESE of Kalgoorlie P25/1580 0.97 A 100%

Subtotal 286.57


Interest in Mining Tenements8.0 Continued


SCOTIA KANOWNA PROVINCE Scotia Kanowna Project: Ni(-Au)Mulgarrie North 47 km N of Kalgoorlie E24/097 30.80 A 100%

Black Swan North 45 km NE of Kalgoorlie E27/123* 8.40 G 100%

Gindalbie 50 km NNE of Kalgoorlie E27/145 95.20 G 100%

Kanowna 25 km NNE of Kalgoorlie E27/166 29.54 A 100%

Scotia East 60 km N of Kalgoorlie E27/169 108.40 G 100%

Scotia North 75 km NW of Kalgoorlie P24/3273 0.06 G 100%

M24/744 A 100%

King of the West 30 km NNW of Kalgoorlie P24/3404* 2.00 G 100%

Scotia East 55 km NNW of Kalgoorlie P24/3459 1.17 G 100%







Scotia 68 km NNW of Kalgoorlie P24/3479 0.28 G 100%

Silver Swan North 47 km NNE of Kalgoorlie P27/1427 1.50 G 100%




Subtotal 291.26

* Tenement relinquished subsequent to date of report

SCOTIA KANOWNA PROVINCE Menzies East Joint Venture Project: Au-NiMenzies East 112 km NNW of Kalgoorlie P29/1381 1.29 G 100%1

M29/231 A 100%1

Menzies East 112 km NNW of Kalgoorlie P29/1413 0.10 G 100%1

M29/230 A 100%1







Subtotal 8.381 Golden State Resources NL right to earn 60%

SCOTIA KANOWNA PROVINCE Kanowna East Project: Au-NiKanowna East 23 km NE of Kalgoorlie P27/1242* 1.95 G 100%

Kanowna East 23 km NE of Kalgoorlie M27/272* A 100%

Kanowna East 23 km NE of Kalgoorlie P27/1440* 0.03 G 100%

Subtotal 1.98

* Subject to an Option for Sale Agreement




KEITH KILKENNY PROVINCE Edjudina Project: Ni(-Au)Wallbrook Hill 125 km NE of Kalgoorlie E31/237 18.00 G 100%

Yerilla North 165 km NNE of Kalgoorlie E31/278 28.00 G 100%

Mt Catherine South 145 km NNE of Kalgoorlie E31/279 56.00 G 100%

Webb Find North 150 km NNE of Kalgoorlie E31/287 2.80 G 100%

Webb Find North 150 km NNE of Kalgoorlie E31/288 47.60 G 100%

Boyce Creek East 150 km NNE of Kalgoorlie E31/304 11.20 G 100%

Mt Remarkable East 155 km NNE of Kalgoorlie E31/346 2.80 B 100%

Claypan Dam 155 km NNE of Kalgoorlie E31/347 2.80 B 100%

Yerilla Creek Dam 155 km NNE of Kalgoorlie E31/348 11.20 B 100%

Mt Catherine East 145 km NNE of Kalgoorlie E31/372 5.60 B 100%

Mt Catherine East 145 km NNE of Kalgoorlie E31/373 2.80 B 100%

Webb Find West 145 km NNE of Kalgoorlie E31/374 14.00 A 100%

Webb Hill 145 km NNE of Kalgoorlie E31/375 2.97 A 100%

Boyce Creek South 150 km NNE of Kalgoorlie E31/377 28.00 A 100%

Yerilla 150 km NNE of Kalgoorlie E31/385 2.98 A 100%

Yerilla 150 km NNE of Kalgoorlie E31/399 2.80 A 100%

Boyce Creek 150 km NNE of Kalgoorlie E31/400 5.60 A 100%

Webb Hill South 145 km NNE of Kalgoorlie E31/402 22.40 A 100%

Duck Hill West 165 km NNE of Kalgoorlie E31/430 84.00 A 100%

Campbell Well 165 km NNE of Kalgoorlie E31/435 8.40 A 100%

Claypan Well 165 km NNE of Kalgoorlie E31/446 39.20 B 100%

Aubils 175 km NNE of Kalgoorlie E39/345 33.60 G Option for100%

Larkin Well 170 km NNE of Kalgoorlie E39/641 5.60 A 100%

Kilmore Hill 175 km NNE of Kalgoorlie E39/648 26.93 G 100%

Mount Percy 175 km NNE of Kalgoorlie E39/680 2.98 A 100%



Mount Kildare 175 km NNE of Kalgoorlie E39/692 190.40 B 100%

Kilmore Hill 175 km NNE of Kalgoorlie E39/694 42.00 A 100%

Kilmore Hill 175 km NNE of Kalgoorlie E39/695 8.40 A 100%

Kilmore Hill 175 km NNE of Kalgoorlie E39/699 14.00 B 100%

Lake Raeside 175 km NNE of Kalgoorlie E39/700 32.88 B 100%



Yerilla 150 km NNE of Kalgoorlie M31/105 2.40 G 100%

Yerilla 150 km NNE of Kalgoorlie M31/110 7.20 G 100%

Yerilla 150 km NNE of Kalgoorlie P31/1485 0.70 G 100%

Yerilla 150 km NNE of Kalgoorlie P31/1538 1.11 G 100%

813.43




KEITH KILKENNY PROVINCE Edjudina Project: AuOutcamp Bore 155 km NE of Kalgoorlie E31/190 34.00 G 100%Oak Bore 155 km NE of Kalgoorlie E31/233 2.80 G 100%Oak Bore South 155 km NE of Kalgoorlie E31/234 2.80 G 100%Yarri South 135 km NE of Kalgoorlie E31/235 3.00 G 100%Yilgangi East 140 km NE of Kalgoorlie E31/236 1.60 G 100%Patricia West 155 km ENE of Kalgoorlie E31/244 16.80 A 100%2

Pinjin 140 km ENE of Kalgoorlie E31/263 5.60 G 100%2

Stophanis East 155 km ENE of Kalgoorlie E31/265 2.80 G 100%2

Outcamp Bore W 150 km NE of Kalgoorlie E31/311 33.60 G 100%Yarri East 155 km NE of Kalgoorlie E31/312 68.41 A 100%Yarri North East 160 km NE of Kalgoorlie E31/313 2.80 G 100%2

Yarri North East 160 km NE of Kalgoorlie E31/315 5.60 G 100%2

Edjudina East 160 km NE of Kalgoorlie E31/317 38.65 A 100%2

Stophanis East 150 km ENE of Kalgoorlie E31/343 2.97 G 100%2

Broken Hill Bore 160 km NE of Kalgoorlie E31/352 2.86 A 100%2

Clymies Well 160 km NE of Kalgoorlie E31/353 37.46 A 100%2

Seddon Bore 155 km NE of Kalgoorlie E31/354 16.80 A 100%Hobble Gap 160 km NE of Kalgoorlie E31/434 44.80 A 100%2

Gairdiner West 170 km NNE of Kalgoorlie E39/642 2.80 A 100%Larkin West 170 km NNE of Kalgoorlie E39/643 5.60 A 100%Deep Well North 170 km NE of Kalgoorlie E39/662 2.98 A 100%2

Deep Well 170 km NE of Kalgoorlie E39/663 2.98 A 100%2

Gairdiners Find 170 km NNE of Kalgoorlie E39/721 47.60 A 100%2

Mount Hornet 170 km NNE of Kalgoorlie E39/729 33.60 B 100%2

Gairdiners Find 170 km NNE of Kalgoorlie E39/734 5.60 A 100%Yarri 145 km NE of Kalgoorlie M31/115 4.21 G 100%Banjo Well 145 km NE of Kalgoorlie M31/47 4.70 G 100%Yarri 145 km NE of Kalgoorlie P31/1398 0.19 G 100%

M31/141 A 100%Yilgangi Castle 140 km NE of Kalgoorlie P31/1414 0.34 G 100%

M31/173 A 100%Mt Catherine 145 km NNE of Kalgoorlie P31/1470 0.58 G 100%

M31/249 A 100%Yarri 145 km NE of Kalgoorlie P31/1483 0.11 G 100%Webb Find 145 km NE of Kalgoorlie P31/1487 0.93 G 100%Quondong South 120 km NE of Kalgoorlie P31/1489* 1.77 G 100%Quondong South 120 km NE of Kalgoorlie P31/1490* 0.89 G 100%Webb Find West 145 km NE of Kalgoorlie P31/1493 0.27 G 100%Porphyry North 155 km NE of Kalgoorlie P31/1537 0.85 G 100%Stophanis South 150 km ENE of Kalgoorlie P31/1546 1.61 A 100%2

Stophanis South 150 km ENE of Kalgoorlie P31/1547 1.20 A 100%2

Edjudina South 135 km NE of Kalgoorlie P31/1548 0.40 G 100%Edjudina 160 km NE of Kalgoorlie P31/1569 1.79 A 100%2

Edjudina 160 km NE of Kalgoorlie P31/1570 2.00 A 100%2






Gairdiners Find 170 km NNE of Kalgoorlie P39/3691 2.00 G 100%

456.40

* Tenement relinquished subsequent to date of report2 Agreement in principle for a farm-inee right to earn 80% with Heron free-carried to bankable feasibility




KEITH KILKENNY PROVINCE Mulgabbie Project: Ni(-Au)Lake Rebecca 110 km NE of Kalgoorlie E31/388 2.80 A 100%

Lake Rebecca 110 km NE of Kalgoorlie E31/390 8.40 A 100%

Lake Rebecca 110 km NE of Kalgoorlie E31/391 2.80 A 100%

Lake Rebecca 110 km NE of Kalgoorlie M31/080 2.02 G 100%



18.37

KEITH KILKENNY PROVINCE Mulgabbie Project: Ni infrastructure (- Au)Kurnalpi East 100 km NE of Kalgoorlie E28/886 53.20 A 100%

Mulgabbie West 100 km NE of Kalgoorlie E28/971 5.60 A 100%

Away From It All Dam 100 km NE of Kalgoorlie E28/972 25.20 A 100%

Gilarna Rock 100 km NE of Kalgoorlie E28/973 39.20 A 100%

Gilarna Rock 100 km NE of Kalgoorlie E28/974 5.60 A 100%

Mulgabbie 100 km NE of Kalgoorlie E28/975 36.40 A 100%

Mulgabbie West 100 km NE of Kalgoorlie E28/976 8.40 A 100%

Yindi Dam 100 km NE of Kalgoorlie E28/995 67.20 A 100%

240.80

KEITH KILKENNY PROVINCE Mulgabbie Project: AuRough Gap 115 km ENE of Kalgoorlie E28/567 17.00 G 100%

Round Hill 125 km ENE of Kalgoorlie E28/576 12.00 G 100%

Round Hill 125 km ENE of Kalgoorlie E28/577 26.00 G 100%

Old Pinjin 120 km ENE of Kalgoorlie E28/591 42.00 G 100%


Mulgabbie 105 km NE of Kalgoorlie E28/605 2.80 G 100%

Mulgabbie 105 km NE of Kalgoorlie E28/606 11.20 G 100%


Rough Gap 110 km ENE of Kalgoorlie E28/612 41.00 G 100%



Yindi West 110 km ENE of Kalgoorlie E28/824 50.40 B 100%

Mulgabbie 110 km ENE of Kalgoorlie E28/826 1.11 A 100%

Hunt Pinnacles 100 km ENE of Kalgoorlie E28/827 28.00 B 100%

Mulgabbie East 120 km ENE of Kalgoorlie E28/828 11.85 A 100%

Mulgabbie South 110 km ENE of Kalgoorlie E28/829 8.88 A 100%

Mount Eric 100 km ENE of Kalgoorlie E28/852 11.20 B 100%

Lake Rebecca 110 km ENE of Kalgoorlie E28/888 30.80 A 100%

Pinjin South 140 km ENE of Kalgoorlie E28/891 11.20 A 100%2

Rough Gap 110 km ENE of Kalgoorlie E28/892 36.40 A 100%




Rough Gap 110 km ENE of Kalgoorlie P28/883* 1.44 G 100%








KEITH KILKENNY PROVINCE Mulgabbie Project: - Au continuedRough Gap 110 km ENE of Kalgoorlie P28/888* 0.87 G 100%

Crab Hill 135 km ENE of Kalgoorlie P28/923 1.38 G 100%2





Mulgabbie West 105 km ENE of Kalgoorlie P28/930 1.74 G 100%










Old Plough Dam 105 km ENE of Kalgoorlie P31/1482 1.87 G 100%




478.38

* Tenement relinquished subsequent to date of report2 Agreement in principle for a farm-inee right to earn 80% with Heron free-carried to bankable feasibility

KEITH KILKENNY PROVINCE Karonie Project: Ni-AuFraser Range North 140 km SE of Kalgoorlie E28/602 165.20 G 100%

Karonie South 140 km SE of Kalgoorlie E28/631 196.00 G 100%




Karonie South 140 km SE of Kalgoorlie E28/860 8.78 A 100%





Roe Hills 140 km SE of Kalgoorlie E28/967 50.40 B 100%

Madoonia Downs North 140 km SE of Kalgoorlie E28/968 11.20 B 100%

Madoonia Downs South 140 km SE of Kalgoorlie E28/969 19.60 B 100%

Fraser Range West 140 km SE of Kalgoorlie E63/455 151.20 A 100%

Fraser Range West 140 km SE of Kalgoorlie E63/631 36.40 A 100%

1,239.10




MUNGARI PROVINCE Mungari North West Joint Venture Project: AuMungari North West 35 km WNW of Kalgoorlie E15/411 2.08 A 100%3

Mungari North West 35 km WNW of Kalgoorlie E16/121 47.60 G 100%3

Mungari North West 35 km WNW of Kalgoorlie E16/146 0.34 G 100%3

Mungari North West 35 km WNW of Kalgoorlie P16/1682 2.00 G 100%3










Balgarri South 35 km WNW of Kalgoorlie P16/1963 2.00 G 100%3

3 Kundana Gold right to earn 50% 68.21

LEONORA LAVERTON PROVINCE Laverton Nickel Project: Ni(-Au)Mt Varden West 55 km N of Laverton E38/0944 11.20 A 100%

Mt Varden East 45 km N of Laverton E38/0946 75.60 A 100%

Merolia 40 km SE of Laverton E38/1079 39.07 A 100%




Mt Varden East 55 km N of Laverton E38/1138 84.00 A 100%

Mt Varden West 55 km N of Laverton E38/1152 126.00 A 100%

Mt Varden West 55 km N of Laverton E38/1153 19.60 A 100%


Perseverance Well 60 km NW of Laverton E39/0738 36.40 A 100%

Perseverance Well 60 km NW of Laverton E39/0739 2.80 A 100%

551.60

LEONORA LAVERTON PROVINCE Laverton Joint Venture Project: Au-NiHawkes Nest 15 km WSW of Laverton E38/831 16.80 G 100%4

Hawkes Nest South 15 km WSW of Laverton E38/832 14.00 G 100%4

4 Metex right to earn 70% 30.80

LEONORA LAVERTON PROVINCE Mount Morgans Joint Venture Project: Au-NiMt Morgans NW 40 km WSW of Laverton P39/3454 1.56 G 100%5

Mt Morgans NW 40 km WSW of Laverton P39/3455 1.95 G 100%5



Mt Morgans West 40 km WSW of Laverton P39/3466 1.71 G 100%5




5 Metex right to earn 70% 14.15




LEONORA LAVERTON PROVINCE Malcolm Project: Au-NiGlenorn Station South 45 km SE of Leonora E31/410 67.20 A 100%

Horan Lake 15 km SE of Leonora E37/350 14.00 G 100%

Mount Melita 25 km SE of Leonora E40/072 22.40 G 100%

Morapoi 55 km S of Leonora E40/088 11.20 G 100%

Morapoi 55 km S of Leonora E40/132 5.97 A 100%

Tampa 40 km SSE of Leonora E40/140 8.98 A 100%

Tampa 40 km SSE of Leonora E40/141 2.99 A 100%

Tampa 40 km SSE of Leonora E40/142 14.00 B 100%

Malcolm East 25 km SE of Leonora M37/727 4.43 A 100%




Alice Gold Mine 17 km ESE of Leonora P37/5122 0.10 G 100%

M37/953 A 100%

Malcolm North 12 km ENE of Leonora P37/5513 1.20 G 100%

















201.67

LEONORA LAVERTON PROVINCE Victory Project: Au-NiBellevue East 150 km NW of Leonora E36/307 16.80 G 100%

Bellevue West 150 km NW of Leonora E36/320 33.60 A 100%

Mount McClure 120 km NNW of Leonora E36/387 16.80 A 100%

Mount McClure 120 km NNW of Leonora E36/388 5.60 G 100%

Doyle Well 60 km NW of Leonora E37/406 33.60 G 100%

Victory Gold Mine 55 km NW of Leonora P37/5097 0.18 G 100%

M37/931 A 100%

Victory 50 km NW of Leonora P37/5830 1.95 A 100%




113.36




MENZIES LEONORA PROVINCE Menzies Leonora Project: Ni-Au-diamondsLawrence Find 80 km W of Menzies E30/203 208.52 A 100%

Lawrence Find North 80 km W of Menzies E30/226 196.00 A 100%

Lawrence Find 80 km W of Menzies E30/228 64.40 A 100%

Union Jack Well 55 km WNW of Leonora E37/498 39.11 G 100%

508.03

IDA FAULT PROVINCE Snake Hill Joint Venture Project: Au-NiSnake Hill North 140 km NW of Kalgoorlie E29/290 14.00 G 100%6

Mulline 140 km NW of Kalgoorlie E30/158 39.20 B 100%6

Snake Hill 140 km NW of Kalgoorlie E30/166 16.80 G 100%6

6 Connemara right to earn 70% 70.00

IDA FAULT PROVINCE Frances Lesley Project: Ni-AuFrances Lesley 90 km NW of Kalgoorlie E16/173 5.60 A 100%

Frances Lesley 90 km NW of Kalgoorlie E16/174 5.60 A 100%




Frances Lesley 90 km NW of Kalgoorlie P16/1729 2.00 G 100%

M16/384 A 100%

116.80

IDA FAULT PROVINCE Blister Dam Project: Au-NiBlister Dam 70 km NW of Kalgoorlie E24/88 28.00 G 100%7

7 Agreement in principle for a farm-inee right to earn 75% 28.00

IDA FAULT PROVINCE Siberia Project: Au-NiSiberia 70 km NNW of Kalgoorlie E29/356 4.78 G 100%

4.78

IDA FAULT PROVINCE Bullabulling Project: Ni-AuBullabulling 60 km WSW of Kalgoorlie E15/541 19.60 A 100%

Bullabulling 60 km WSW of Kalgoorlie E15/542 5.60 A 100%



Bullabulling-Dunnsville 60 km W of Kalgoorlie E16/181 2.80 A 100%

Bullabulling-Dunnsville 60 km W of Kalgoorlie E16/182 14.00 A 100%

Bullabulling-Carbine 60 km W of Kalgoorlie E16/195 44.80 A 100%

Bullabulling 60 km WSW of Kalgoorlie P15/4049 0.87 A 100%





146.95




IDA FAULT PROVINCE Yilmia Hill Project: Ni-AuYilmia Hill 60 km S of Kalgoorlie E15/550 5.86 A 100%

Larkinville 80 km S of Kalgoorlie E15/557 55.61 A 100%

Wannaway West 90 km SSW of Kalgoorlie E15/561 29.21 A 100%

Wannaway West 90 km SSW of Kalgoorlie E15/577 36.40 A 100%

Spargoville 80 km SSW of Kalgoorlie P15/4150 1.98 A 100%




133.71

IDA FAULT PROVINCE Cowan Project: Ni-AuLake Cowan 120 km SSE of Kalgoorlie E15/570 204.01 B 100%

Pioneer 120 km SSE of Kalgoorlie E15/573 47.60 A 100%

251.61

KAMBALDA DOMAIN PROVINCE Binduli East Project: Au-NiBinduli East-Mount Hunt 10 km SW of Kalgoorlie E26/81 14.00 A 100%

Binduli East 10 km SW of Kalgoorlie M26/561 3.87 A 100%8

Binduli East 10 km SW of Kalgoorlie P26/2791 1.98 G 100%8










Binduli East 10 km SW of Kalgoorlie P26/2904 1.84 A 100%8

Binduli East 10 km SW of Kalgoorlie P26/2905 2.00 A 100%8

8 MPI Gold right to earn 70% 33.85

KAMBALDA DOMAIN PROVINCE Mount Martin Project: Ni-AuCutters Luck 50 km SSE of Kalgoorlie E26/72 2.80 G 100%

Cutters Luck 50 km SSE of Kalgoorlie E26/80 53.20 A 100%

Cutters Luck 50 km SSE of Kalgoorlie P26/2585 0.27 G 100%

Cutters Luck 50 km SSE of Kalgoorlie P26/2586 2.00 G 100%

M26/667 A 100%

Mount Martin 40 km SE of Kalgoorlie P26/2907 1.60 A 100%



63.53




SOUTHERN CROSS PROVINCE Bungalbin Project: Fe-Au NiBungalbin 100 km NNE of Southern Cross E77/842 112.58 A 100%

Bungalbin 100 km NNE of Southern Cross E77/860 2.96 A 100%

Mount Jackson 100 km NNE of Southern Cross E77/896 36.40 A 100%

Mount Dimer Northwest 100 km NNE of Southern Cross E77/897 42.00 A 100%

193.94

SOUTHERN CROSS PROVINCE Maggie Hays Hill Project: Ni-AuMaggie Hays Hill 140 km SE of Southern Cross E63/625 81.20 A 100%

81.20

NORSEMAN PROVINCE Dundas Project: AuMount Deans 10 km S of Norseman M63/417 9.87 A 100%

Mount Deans 10 km S of Norseman M63/418 9.26 A 100%

19.13

GAWLER CRATON PROVINCE G2 Project: Au-Cu-U-diamondsCrystal Brook 180 km NNW of Adelaide EL 2159 1,835.00* G 100%

Port Pirie 180 km NNW of Adelaide EL 2160 833.00* G 100%

2,668.00

*Tenement area reduced subsequent to date of report

TOTAL EXPLORATION AREA 10,115.00

A = Application

G = Granted

B = Exploration Licence Application in Ballot





Leonora

Menzies

Coolgardie

Kambalda

Kalgoorlie

Mulgabbie

KalpiniNickel

KaronieSouth

Edjudina

Merolia

Union Jack Well

Frances Lesley

Bullabulling

Yilmia Hill

Pioneer

Lake Cowan

TranslineMt Martin

Menzies East

GindalbieEast

LawrenceFind

BlisterDam

MungariNW

ScotiaKanowna

LavertonMt Morgans

Victory

Malcolm

Aubils

Yerilla Hobble Gap

Binduli East

Snake Hill

0 50

KILOMETRES

“Aeromagnetic Survey” means a survey made from the air, recording variations in the earth’s magnetic field.

“Alteration” means rock-forming minerals which have been chemically changed.

“Anomaly” means a value higher or lower than expected, which outlines a zone of potential exploration interest but notnecessarily of commercial significance.

“Aircore drilling” means a rotary drilling technique which uses compressed air to cut a core sample and return core fragmentsto surface inside the drill rods.

“Au” means gold.

“Autoclave” means a reaction vessel in which ore is mixed with high temperature and pressure solutions to enable metals toenter into solution as a precursor to extraction in metallic form.

“Cu” means copper.

“Electrowinning” is a metallurgical process whereby metal is recovered from a metal bearing electrolyte solution throughdeposition onto a metal cathode.

“Geochemical Survey” means the systematic study of the variation of chemical elements in rocks or soils.

“g/t” means grams per tonne.

“Granitoid” means a family of coarse-grained igneous rocks that contain abundant quartz and feldspar.

“Helimag” means an aeromagnetic survey flown by a helicopter.

“km” means kilometres.

“km2” means square kilometres.

“Komatiite” means an ultramafic rock with high magnesium content extruded from a volcano. Textural variations include:

“Orthocumulate” means a rock which exhibits a high proportion of crystallised trapped interstitial (“intercumulus”) liquid.The surrounded (“cumulus”) olivine crystals are subhedral to enhedral in form. This komatiite type is regarded as veryprospective for nickel sulphide mineralisation (e.g. Kambalda nickel mine).

“Adcumulate” means a rock with little or no intercumulus material and characterised dominantly by anhedral crystals.This komatiite type is regarded as prospective for nickel laterite mineralisation.

“Mesocumulate” means a rock with cumulus crystals exhibiting extensive mutual boundary contact, but retaining somerecognisable interstitial material. This komatiite type is regarded as prospective for nickel laterite mineralisation.

“m” means metres.

“Mineralisation” means, in economic geology, the introduction of valuable elements into a rock body.

“Ni” means nickel.

“NiCo” means %Ni plus four times %Co, and reflects long term relative Ni and Co metal prices.

“Olivine” means a magnesium-iron silicate mineral, often occurring in rocks prospective for nickel.

“Option” means a share option to subscribe for fully paid ordinary $0.25 Shares in Heron exercisable by payment of $0.25prior to the expiry date of the option.

“PGE” means platinum group element.

“prospect” means a target upon which exploration programs are planned or have commenced.

“project” means a grouping of prospects within a specific geographic location, often with a common geological setting.

“province” means a grouping of projects within a geological district defined by a major mineralised crustal structure.

“ppb” means parts per billion.

“ppm” means parts per million.

“RAB drilling” means the drilling technique in which a sample is returned to surface outside the rod string by compressed air.

“RC drilling” means the drilling method employing a rotating or hammering action on a drill bit which returns a sample to thesurface inside the rod string by compressed air.

“SG” means specific gravity, being the insitu mass of the rock per volume.

“Shear Zone” means a zone in which crushed rock has been produced by the action of a shearing stress as on a fault.

“Tectonic Zone” means a major structural feature characterised by deformation of several kilometres in width.

“Ultramafic” means rocks composed almost entirely of mafic minerals which are prospective for nickel mineralisation.

“VMS” means volcanogenic massive sulphide, which relates to base metal sulphide mineralisation.


Glossary of TermsHeron Resources NL

Pictured Top:

Heron Resources NL

exploration and administration office,

21 Close Way, West Kalgoorlie.

Middle:

Opening of Heron’s offices by Hon. Julian Grill MLA.

Left:

Sue Geary, Heron’s Administration Manager,

(pictured here with geologist Simon Gobbett)

is pleased to assist with any shareholder enquiries.

Telephone Sue on (08) 9091 9253.

Heron Resources NL

21 Close Way, West Kalgoorlie,

PO Box 1280, Kalgoorlie,

Western Australia 6430

Telephone: (08) 9091 9253

Facsimile: (08) 9091 9256

Email: [email protected]

mailto:[email protected]

8337 Annual F/A - Heron Resources Limited · Heron’s 1998 exploration and nickel laterite project...

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Transcript of 8337 Annual F/A - Heron Resources Limited · Heron’s 1998 exploration and nickel laterite project...