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EMERGING ZINC/LEAD PRODUCER

QUARTERLY REPORT JUNE 2007

HIGHLIGHTS

♦ Development - Activities continue while awaiting final approval - No major increases to project cost forecast at this stage

♦ Exploration

- Lae Jehe results continue to impress - Encouraging sampling results received from Lae Puncu - Good lead and silver intercepts obtained at Sinar Pagi

www.herald.net.au

www.jaguarminerals.com.au

www.coronagold.com.au

31 July 2007

HERALD RESOURCES LIMITED ABN 15 008 672 071 Level 3, 50 Colin Street, West Perth Western Australia 6005 PO Box 893 West Perth Western Australia 6872

Tel +61 8 9322 2788 Fax +61 8 9481 1669 Email [email protected] Web www.herald.net.au

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HERALD RESOURCES DAIRI ZINC/LEAD PROJECT Herald 80% PT Antam 20% OVERVIEW Development activities at the Dairi zinc/lead project continued throughout the quarter. The Dairi Feasibility Study (“DFS”) is based solely on a 1Mtpa development of the high-grade Anjing Hitam deposit (diluted Reserves 6.6MT @ 15% Zn, 9% Pb) for an initial mine life of 7 years, although substantial other Resources also exist within the project area, e.g. Lae Jehe, where ongoing drilling has thus far delineated Resources of 6.5Mt @ 11.3% Zn & 6.1% Pb. FORESTRY APPROVAL PROCESS As previously advised, the Company is awaiting forestry approval in order to proceed to full development at the Dairi Project. In May the Company advised that Commission IV (a sub-committee of the Indonesian Parliament) had recommended that the Minister for forestry issue the forestry approval. At a working session in June, the Minister responded that, in his opinion, in order for him to issue approvals for underground mining in protected forests, a Presidential Decree would be required. A draft Presidential Decree, compiled jointly by the Depts of Forestry, Energy/Minerals and Environment, has been submitted to the President through the Cabinet Secretariat and is currently being reviewed by the legal section of the Cabinet Secretariat office. That draft states that permits for underground mining in protected forests should be issued for projects where the feasibility and environmental studies for site construction have been approved after consultation with the Forestry Department, and the project otherwise complies with the prevailing legislation. Transitional provisions exempt studies already approved and remaining current e.g. those for the Dairi Project.

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HERALD RESOURCES There is also a belief in some government circles that a government regulation (rather than the Presidential Decree) would be a more appropriate enabling device, so this is being drafted as well in consultation with various interest groups. Procedurally the government regulation needs to be signed by the President and the Minister for Law & Human Rights. Assuming the Presidential Decree and/or the regulation is issued, the Company would expect that the Minister of Forestry would grant forestry approval for the Dairi Project in short order thereafter. DEVELOPMENT ACTIVITIES

Construction of access road EPCM Works/Capital Costs The Project is progressing under the negotiated terms of the EPCM engineering contract with Ausenco Ltd. Formal signing of the contract will occur subject to Forestry permit approval which directly affects milestone completion dates to be written into the contract. Engineering Design Engineering and design of the process plant and infrastructure is well progressed. The delay to access into the forest area has provided time to further rationalize earthworks design at the plantsite. There has been a reduction in process plant earthworks construction volumes and the thickening and filtration areas of the plant have been relocated to a lower elevation in the valley. The decision has been made to relocate the tailings facility which will enable a significant increase in the storage volume. The facility has been redesigned to suit the revised location and application for approval is underway.

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HERALD RESOURCES The port facility designs are progressing with the design and construct contractor. Container offloading and concentrate dumping equipment design and construct pricing is currently being sought. Procurement and Contracts Tendering, adjudication and award has occurred on most major capital items. Most major equipment is now becoming available ex works and arrangements are underway to import the equipment and transport it to a consolidation area that has been secured at the port of Belawan in Northern Sumatra. Flotation cells have been transported to a consolidation yard at the town of Sidikalang and placed in the company laydown area awaiting construction. The accommodation camp mess and wet buildings have been fabricated, containerized and delivered, awaiting commencement of camp construction. Water treatment plants required for the camp facilities and process have been ordered. The Contractor carrying out the access road and camp area earthworks has almost completed the scope of work and will be demobilizing shortly. The bulk earthworks contract for the final section of access road and the complete process plant and infrastructure has been put out to tender. The tenders for the construction of the ring road section of the Sidikalang to Parongil regional road are under adjudication. Road, Port Agreements Agreement is in place with the Public Works authority to allow upgrade of the road between Sidikalang and Parongil. Final landowner surveys are underway and authorities are starting to prepare land transfer documents to facilitate the land acquisition required. The lease agreement between the Company and the Port authority for use of the land and waters at Kuala Tanjung is in place. The permit allowing the Contractor to commence clearing and to establish the construction site has been issued and this work is underway. The dredging and final construction permit are scheduled for issue this quarter. The long term use of the private access road to the port is under final negotiation. Construction The regional road works that are to occur between Sidikalang and Parongil are divided into a new 4km ring road around Sidikalang and 22km of upgrade of existing road. The 4km ring road works has been tendered and pending completion of land acquisition activities on that section of road, construction should commence early 4th quarter 2007. The upgrade works on the

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HERALD RESOURCES 22km of existing road has effectively begun with the Company working on small sections of the road already. A final survey of private landowners who will be affected by the upgrade works is nearing completion in advance of finalizing land acquisition. Tenders for the upgrade works are expected to be put to the market in the coming quarter. Construction work on the access road up to the forestry boundary and the earthworks associated with the accommodation camp is nearing completion. Construction works on the accommodation camp will commence shortly. Clearing and Contractor site establishment are underway at Kuala Tanjung port facility. Mining Contract and Planning PT McConnell Dowell Indonesia has been appointed to carry out all mining operations for the first four years of the mine’s life under a schedule-of-rates contract. Heavy equipment for the mining operation has been ordered. An Underground Manager has been recruited to head the mining department. This will facilitate detailed mine planning and scheduling and the establishment of standards for safety and health and mine design. Detailed geotechnical and cemented paste backfill studies are being carried out to allow mine development and support design to be finalised. Plant Construction Schedule & Capital Cost The date for commissioning of the process plant is dependent upon the granting of forestry approval to access the plant site area, and acquisition of the remaining land along the access corridor. Following the design changes referred to above and other matters, project times and cost schedules are currently being re-estimated by the project engineers Ausenco. Subject to the above review, the Company estimates total capital costs coming in at US$192M. This compares with the previous estimate made in November 2006 of US$182M i.e. a 5% increase in US$ terms since that time, however with the increase in the exchange rate over that period, the AU$ equivalent cost has actually decreased.

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HERALD RESOURCES EXPLORATION Lae Jehe Introduction The Lae Jehe prospect is located about 1.5km north of the main Anjing Hitam orebody and 800m north of the planned concentrator site. Lae Jehe is the most advanced target to provide future mill feed following the initial 7 year mine life at Anjing Hitam. The combined indicated and inferred resource at Lae Jehe stands at 6.5 Mt at 11.3% Zn, 6.1% Pb. Drilling continued through the quarter with two drill rigs in operation. Two deep holes and three shallow holes were completed. Drilling Drilling at the southern end of Lae Jehe “Deeps” on sections 700N and 800N (see attached cross section and longitudinal section) has demonstrated a downdip continuation of the interpreted M2 massive sulphide horizon on both sections in holes SOP253D and SOP256D respectively. Hole SOP253D intersected high grade, banded, massive sulphides (M2) horizon of 6.0m (estimated true width 5.4m) @ 15.6% Zn, 8.0% Pb. This intersection is 50m downdip from drill hole SOP218D. Hole SOP256D intersected 12.1m (estimated true width 11.3m) of pyritic and banded massive sulphides (M2) horizon at a distance of 35m downdip from drill hole SOP167D. Assays are awaited. Both SOP253D and SOP256D indicate a flattening of the dip of the M2 horizon which may be due to a kink in the horizon or even possibly due to faulting. Both drill holes flattened more than anticipated and thus intersected the mineralised horizon closer than anticipated to the previous drill holes. Therefore, the original targets still remain to be tested on these sections. The intersections have, however, confirmed the good widths and grade that are now expected in this part of the M2 horizon.

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HERALD RESOURCES The southern end of Lae Jehe was also targeted with the shallow drilling, and the 3 holes completed in the quarter have intersected various horizons in this area. Hole SOP254D, on Sopokomil grid 10900N, made a best intersection in the M1 horizon of 3.5m of 15.5% Zn, 12.9% Pb. The M2 and M3 horizons were also intersected as were other mineralised zones (see table below). Hole SOP255D, on the same section as, and down dip from SOP254D, intersected the M2 horizon as massive sulphide bands within carbonaceous shale and assayed 2.95m @ 8.5% Zn, 4.6% Pb. Hole SOP257D, drilling northwards from the same site as SOP254D, SOP255D, made relatively thin intersections on the M1, M2 and M3 horizons. Assays are awaited. Lae Jehe Drill Intersections Hole North East Dip/

Azimuth (mag)

From (m)

To (m)

Width (m)

ETW (m)

Zn (%)

Pb (%)

Ag (g/t)

Horizon

SOP253D 700 1346 -63°/210° 545.50 551.50 6.00 5.39 15.61 7.96 5 M2

SOP254D* 10925 4900 -53°/250°

75.53 82.90 91.60

100.00 218.90

79.00 83.90 94.22

101.00 222.70

3.47 1.00 2.62 1.00 3.80

3.45 0.99 2.60 0.99 3.78

15.51 7.35 7.51 3.04 3.83

12.95 2.68 4.58 1.15 0.70

11 6 4 4

10

M1 M2 M3 ?

MVT**

SOP255D* 10925 4900 -85°/250° 122.80 125.75 2.95 2.37 8.48 4.61 3 M2 SOP256D 700 1346 -65°/210° 518.20 530.32 12.12 11.27 Assays awaited M2 SOP257D* 10925 4900 -55°/307° 133.40

136.40 151.45

134.40 138.70 152.45

1.00 2.30 1.00

0.78 1.80 0.78

Assays awaited

M1 M2 M3

(N.B. Azimuth 210° magnetic is equivalent to 270° Lae Jehe Grid) * Hole drilled on Sopokomil Grid where azimuth 250° magnetic is equivalent to 270°. ** Carbonate hosted Mississippi Valley Type mineralisation. Pre-Feasibility Study Work on the schematic mining plan is due to commence in the current quarter. The present aim is to complete the PFS by the March quarter next year. Half drill core from SOP256D has been despatched from site for further metallurgical testwork which will take place over the next six months.

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ÃÃÃÃ

Ã

ÃÃ

Ã

Ã Ã

ÃÃ

Ã

ÃÃ

EnggangMo-Fe-Zn

Basecamp

BululagaPb-Zn-Ag

Lae Puncu

Lubuk RayaPb-Zn-Ag

Sinar PagiPb-Ag

SitapitapiZn-Bi-Fe

Batu Kapur

Lae LembaraPb-Zn-Ag-Mo

Pondok Gambir

Lae MaromasPb-Zn

Anjing Hitam

Lae JeheBongkaras

Lae Rimoh

Basuki

Dairi CoW

Sarkea SIPP

3 00'No

2 55'No

98 1

5'Eo

2 40'No

2 45'No

2 50'No

SIDIKALANG(REGENCY CAPITAL)

0 5 Kilometers

98 1

0'Eo

98 0

5'Eo

N

DAIRI AND SARKEA PROJECTSLOCATION OF MAIN PROSPECTS

Ã Prospect location with main commodities

%

PARONGIL

Sopokomil DomeZn-Pb-AgProspects

SOPOKOMIL

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[email protected]/0.7







[email protected]/0.6/12












DA

JE

JE

SO

JE JU

Ju12

Ju12

BK

SO

P169

D

M2

M3

M2

M4

M5

M6

SO

P 1

2D

SO

P16

8D

SO

P22

2D

SO

P22

8D

SO

P25

3D

70

0E

70

0E

80

0E

80

0E

90

0E

90

0E

10

00

E1

00

0E

11

00

E1

10

0E

12

00

E1

20

0E

200mRL 200mRL

300mRL 300mRL

400mRL 400mRL

500mRL 500mRL

600mRL 600mRL

700mRL 700mRL

LEGEND

Siltstones/dolomitic siltstones

Carbonaceous shales

Upper/Lower Zones massive sulphide horizons

Massive quartz veined dolomite

MVT mineralised zones

Shale and dolostone

Fault/thrust zones

Base of moderate weathering

Down hole width @ Zn%/Pb%/ppm Ag

DA

JU

JE

SO

SCALE 1:

DAIRI PROJECT - SUMATRA

SOPOKOMIL PROSPECT

LAE JEHE SECTOR

CROSS SECTION 700N

3000

0 20 40 60 80 100

100mRL 100mRL

SO

P253D

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ÊÚ

ÊÚ

ÊÚ

#S

#S#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S#S

#S#S

#S

#S

#S#S

#S#S

#S

#S

#S

#S#S

#S#S

#S

#S

#S

#S

#S

#S

#S#S

#S

#S#S

#S

#S

5D

6D

7D

8D 9D

10D

11D

12D

13D 16D

17D

39D 40D

49D

52D

54D

57D

59D 60D

166D

167D

168D

169D

170D

171D 172D

186D

196D

205D

206D 207D

208D

209D

Rob 1

SaporangAnton

217D

221D

223D

219D

173D

218D 222D228D

240D

215D

229D

256D

253D

254D 255D

257D

"

1200N

1000N

800N

1000E

600N

Plan Projectionof Resources

Proposed Sitefor

Sopokomil JuluTreatment Plant

Figure 2

N

FIGURE 5

10400 N

10600 N

10800 N

11000 N

11200 N

11400 N

11600 N

10400 N

10600 N

10800 N

11000 N

11200 N

11400 N

11600 N

4600

E

4800

E

5000

E

5200

E

4600

E

4800

E

5000

E

5200

E

Drill Hole ID206D! Drill Hole Trace

LEGEND

Massive SulphideOutcropÊÚ

Sedex TraceTracksRivers / streams

LAE JEHEDRILL HOLE LOCATION PLAN

1:5000 0 50 100 Meters

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20016012080400

5000

Looking to 210 mag.(Grid West)

Upper Zone, M2 Horizon

LONGITUDINAL SECTIONLAE JEHE SECTOR

SCALE 1:

Massive Sulphide Outcrop

June Quarter Program

Drillhole Pierce Point (est. true width @ %Zn/%Pb)

Downhole EM Anomaly

Published Resource Outline at +5% Zinc Equivalent

1000mRL1000mRL

800mRL800mRL

600mRL600mRL

400mRL400mRL

200mRL200mRL

0mRL0mRL 12

00

N1

20

0N

10

00

N1

00

0N

80

0N

80

0N

60

0N

60

0N

Assays awaited257D

Assays awaited255D

[email protected]/2.7254D

Assays awaited256D


253D


229D

[email protected]/1.3223D (faulted)


240D



223D


222D


221D

Fault Zone




173D

beneath the fault zone.

Potential exists for further resources

Fault Zone

[email protected]/21.9Sapurang Anton



205D


207D















54D


54D






12D


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HERALD RESOURCES Lae Puncu The major deposits identified at the Dairi Project to date (Anjing Hitam, Lae Jehe etc) lie on the eastern side of the large structure known as the Sopokomil Dome. Semi-detailed exploration recommenced at Lae Puncu, on the western side of the Sopokomil Dome, where preliminary exploration in 1999-2003 identified anomalous base metal values in stream sediments and a Helicopter Electromagnetic conductive anomaly, which coincide with Julu carbonaceous shale. Assay results from rock chip sampling during the qaurter at Lae Puncu returned values up to 10.4% Zn, 5.13% Pb and 15ppm Ag in the one sample. The highest lead assay was 7.56% Pb and the highest silver assay was 50ppm Ag in separate samples. Further work is planned including follow up of these high grade samples. Sinar Pagi Drilling continued throughout the quarter with holes SPA11D, SPA12D and SPA13D being completed on section 20,100E. These holes tested the strike extent of the galena (lead) mineralisation intersected by drill hole SPA09D, which was drilled on section 20,000E in the previous quarter. SPA09D intersected a 28.6m of 5% Pb, 78 g/t Ag partly oxidised galena lode with upper and lower zones which are less oxidised and more galena rich (see table below). Drill hole SPA11D was abandoned at 142.4m due to technical problems. Drill hole SPA12D tested the mineralised horizon some 200 meters down-dip from the target zone of drill hole SPA11D. It intersected a 6.8m quartz vein from 444.0m with up to 20% pyrite and unidentified black sulphides and traces of chalcopyrite and galena. The quartz-sulphide vein is hosted by altered and crackle-brecciated dolostone, and probably represents the target mineralised horizon. Drill hole SPA13D (essentially a redrill of the lode position near the SPA11D target) intersected a 4.7m mineralised zone from 234.4 - 239.1m, consisting of 3% galena, pyrite, quartz and carbonate veining in dolostone.

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HERALD RESOURCES

Sinar Pagi Drill Intersections

Hole North East Dip/ Azimuth

(mag)

From (m)

To (m)

Width (m)

ETW (m)

Zn (%)

Pb (%)

Ag (g/t)

Remarks

SPA09D 29780 20000 -50°/45° incl and

239.60 239.60 257.90

268.20 245.90 260.40

28.60 6.30 2.50

27.20 6.00 2.40

1.24 1.43 6.26

5.08 14.5 15.1

78 193 267

Part ox. Galena

rich

SPA10D 29780 20000 -75°/45°

Hole terminated in cavernous dolostone

SPA11D 29750 20100 -62°/45°

Hole abandoned due to technical problems

SPA12D 29750 20100 -75°/45°

SPA13D 29750 20100 -56°/45°

Assays awaited

(N.B. Azimuth 45° magnetic is equivalent to 5° Sinar Pagi Grid) Further drilling is planned for the September quarter to determine the orientation and extent of the galena lode of SPA09D.

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100806040200

2500

CROSS SECTION 20000E

SINAR PAGI PROSPECT

TIGA LINGGA BLOCK

DAIRI PROJECT - SUMATRA

SCALE 1:

Down hole width @ Zn%/Pb%/ppm AgDown hole width @ Zn%/Pb%/ppm Ag

Siltstones/ shales

Dolostone

Mineralised zone

LEGEND

900mRL900mRL

800mRL800mRL

700mRL700mRL

600mRL600mRL

500mRL500mRL

30

10

0N

30

10

0N

30

00

0N

30

00

0N

29

90

0N

29

90

0N

29

80

0N

29

80

0N

SP

A010D

SPA009D

SP

A001D

1.2/5.1/78

28.6m@ [email protected]/15.1/267


Void

4.6m @2.8/3.0/40

2.5m @6.3/0.6/6

9.1m @0.3/11.0/129

6m @ 0.5/23.1/179 (in surface trench)

[email protected]/7.4/369 (in surface trench)

[email protected]/25.7/72 (in surface trench)

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HERALD RESOURCES SARKEA BASE METALS PROJECT Herald 100% This area is centred about 10km south of the Dairi Project’s Anjing Hitam deposit. It is held under a SIPP prospecting permit covering 9,606ha. The assay results at Bukit Enggang, which were not available for the previous quarterly report, were generally disappointing apart from drill hole SKA11D which intersected 6.0m of 1.65% Zn from 5.05m downhole, which overlies a 10.05m zone assaying 0.3% Zn, 23.4 % Fe and 0.05% Sn from 13.05m downhole, and drill hole SKA14D which intersected an 11.85m zone assaying 0.4% Zn, 39.1% Fe and 0.10% Sn from 3.0m downhole. No further work is planned for the time being. MELUAK GOLD PROJECT Aceh Province Herald 26% via Corona Gold Ltd Meluak is contained within a 2,760ha SIPP prospecting permit issued by the Gayo Lues Regency. Discussions are continuing with the Regency authorities and the Mines Dept about converting the SIPP to a Contract of Work, which is deemed desirable prior to resuming drilling. Previous security concerns are no longer an issue. The original drill program intersected 72m @ 0.54 g/t Au from 7m, including 8m @ 1.95 g/t Au.

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HERALD RESOURCES MONTAGUE GOLD PROJECT Herald 15% free carried Airport (M 57/98, M57/99) No work reported this quarter. N.B. The above information is based on reports provided by WCP Resources Ltd, manager of the Montague JV. CRATER GOLD PROJECT Herald 20% free carried No work reported this quarter. N.B. The above information is based on reports provided by WCP Resources Ltd, manager of the Montague JV

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HERALD RESOURCES – CORPORATE CASH RESERVES At the date of writing, parent company Herald Resources Ltd held cash deposits of A$70M. VALE GRAEME HUTTON The Directors and staff of Herald were saddened by the passing of long serving non-executive director Graeme Hutton on 16 July 2007. Graeme joined the board in 1983 and oversaw the Company’s transformation to a successful mining company from that time. He will be greatly missed by all who knew him. M P WRIGHT Executive Director NOTE: Sections of information contained in this report that relate to Exploration Results and Mineral Resources were compiled or supervised by Mr B Kirkpatrick BSc, MAusIMM, MAIG who is a Member of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Kirkpatrick, a full-time employee of Herald Resources Limited, has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Kirkpatrick consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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HERALD RESOURCES - CORPORATE DIRECTORY

DIRECTORS BANKERS T M Allen, (Chairman) Societe Generale (Australia) M P Wright, BBus 400 George Street B J Hurley, AWASM, MAusIMM SYDNEY NSW 2000 J Dracopoulos, B.A. Acc, Grad Dip CSP, CPA COMPANY SECRETARY Challenge/Westpac M P Wright Banking Corporation 109 St Georges Tce SHARE REGISTRY PERTH WA 6000 Security Transfer Registrars Pty Ltd 770 Canning Highway AUDITORS APPLECROSS WA 6153 Stantons International 1 Havelock Street Telephone: 08 9315 0933 WEST PERTH WA 6005 Facsimile: 08 9315 2233 SOLICITORS AUSTRALIAN BUSINESS NUMBER Blakiston & Crabb 15 008 672 071 1202 Hay Street PERTH WA 6005 SHARE CAPITAL 193.5M shares REGISTERED OFFICE 8.4M options Level 3/50 Colin Street WEST PERTH WA 6005 Telephone: 08 9322 2788 Facsimile: 08 9481 1669 Email: [email protected]

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for personal use only - australian securities exchange · 2 herald resources dairi zinc/lead...

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