hrr qr 2013 06 lodge - heron resources limited · veins of quartz(-pyrolusite-limonite) that were...

Heron Resources Limited June 2013 Quarterly Report 1

SUMMARY AND HIGHLIGHTS CORPORATE

Finance

Heron remains in a strong financial position with $39.6 million cash and $3.3 million listed investments, these assets being equivalent in value to $0.17 per share.

BUSINESS DEVELOPMENT

The Company continues to review business development opportunities in Australia and overseas, to acquire operating mining assets, pre-development resources, or less likely, advanced stage exploration projects. It is a key objective of the Company to complete a significant transaction when a suitable opportunity is identified.

EXPLORATION

New South Wales - Copper-Gold Exploration

The Company’s 100%-owned tenement portfolio in NSW continues to grow with some 3,500km2 in the Lachlan Fold Belt now under application or granted. High quality tenure with drill targets was secured at Tarago and Eurow in the Lachlan Fold Belt. Several advanced stage exploration joint venture opportunities are also under review.

Currently active field programs include:

Gundagai Gold Project, a 15 hole RC drilling program for 1,609m was completed. Drilling targeted bulk tonnage gold systems below the historic Big Ben lode workings. Results include 20 metres at 1.58g/t gold from 27m.

Sussex Copper-Gold Project, soil auger sampling and aeromagnetic data modelling has defined a high priority target located 11km northeast of the Mt Boppy gold mine.

Mt Allen, Osterley Downs and Nymagee East Copper-Gold Projects, surface EM and soil geochemical surveys are defining “Mallee Bull-style” polymetallic targets. Preliminary EM results for Osterley Downs have revealed a subtle bedrock conductor that is being followed up with further soil auger geochemical surveys.

Coolabah Copper-Gold Project, a strong copper anomaly over a 1 kilometre strike was returned from Heron’s soil auger sampling located 3km northwest of the Avoca Tank copper-gold discovery. EM follow up is planned.

West Australia - Exploration

Bedonia Nickel-Copper Project, “Nova-style” nickel-copper target, EM surveying has identified conductors coincident with coherent geochemical anomalies and magnetic anomalies. Drill testing is expected to commence in August.

Big Four Gold Project, a 673m RAB program in 26 holes was completed, best result 12 metres at 1.12g/t gold.

Siberia South Gold Project, 1,350m RAB program in 68 holes completed, visual mineralization, results awaited.

PROJECT DEVELOPMENT

Kalgoorlie Nickel Project (KNP)

Simulus Engineers, agreement signed to undertake metallurgical testwork using sulphuric acid leaching on various KNP ore-types, and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery technology to the KNP. Three nickel laterite bulk ore types have been delivered to the Simulus laboratory in Kewdale, Western Australia for initial testwork.

Direct Nickel, testwork continues after favourable results from March 2013, with up to 98% nickel recoveries using nitric acid leaching.

Quarterly Report For the Quarter Ending 30 June 2013


EXPLORATION PROJECTS NEW SOUTH WALES COPPER-GOLD PROJECTS

The Company continues to focus its exploration activities in the Lachlan Fold Belt of NSW (Figure 1) with RC drilling, ElectroMagnetic (EM) and soil auger sampling surveys being completed in the last Quarter. Additional tenements have also been applied for in the Gundagai, Tarago and Parkes areas with over 3,500km2 now held. The targets are primarily copper-gold mineralisation including Besshi style VMS, similar to that being mined at the Tritton operation, porphyry copper-gold of the Cadia/Ridgeway style, and high-grade epithermal gold veins of the Temora style.

Figure 1 Lachlan Fold Belt, Heron tenement locations and regional mineralized centres.


Gundagai Gold-Copper Project (100% Heron)

The Gundagai tenements and applications covering some 500km2 are located 315km southwest of Sydney (Figure 1-4). The area consists of northerly trending ridgelines underlain by the slates and other meta-sediments of the Silurian-aged Jakalass Slate Formation intruded by mineralized porphyry units. Several old gold workings exist in the Heron tenement area with mining dating back to 1842, however prior to Heron there has been little or no modern exploration.

Big Ben Gold Prospect

The Big Ben gold prospect is located 7km south of Gundagai, and contains a sequence of meta-sandstones and conglomerates intruded by multiple north-south trending mineralised porphyry dykes.

The porphyry contains a stockwork and sheeted veins of quartz(-pyrolusite-limonite) that were historically mined and yielded several high-grade gold lodes. The Heron exploration target is a bulk tonnage gold stockworks hosted in a brittle porphyry intrusive.

Various drilling directions were trialled by Heron to intersect the vein sets at the optimum angle to the drill-holes (Figures 3-4).

Difficulties were encountered during drilling, so that targets were not always reached. The objective of the program as an initial test was however to elucidate mineralizing controls, and this was achieved.

Significant results are provided below in Table 1 with a full set of results provided in the Heron ASX release dated 15 July 2013.

Figure 2 Project Location Map showing the Company’s key Gundagai targets.

Table 1 Significant Drill Results (full results listed in ASX announcement dated 15 July 2013, Appendix 1)

Hole Significant Intercepts

0.5g/t gold cut-off grade Comments

BBRC001 7m at 0.78g/t gold from 47m Most accessible position within central quarry and old workings

BBRC006 4m at 1.04g/t gold from 25m Porphyry southern extension

BBRC007 20m at 1.58g/t gold from 27m Southern porphyry, test south dipping veins along-strike on north bearing azimuth, includes 1m at 23.7g/t gold from 27m

1m at 5.23g/t gold from 81m

BBRC011 8m at 1.07g/t gold from 25m Porphyry southern extension

1m at 3.3g/t gold from 100m Porphyry southern extension

Several intervals had panned visible gold indicating coarse gold in the system. Peak assay was 1 metre at 23.7g/t gold from 27 metres in BBRC007. A program of resampling and screen fire assays is being undertaken to determine the precision of the gold assays due to this presence of coarse gold. The high grade results are encouraging and will be assessed in more detail to determine the potential for high-grade zones (as historically mined), that can be targeted with further deep drilling. The system is open to the south, under alluvial cover. Follow-up is planned.

The Big Ben RC drilling is the first of a series of the reconnaissance field programs planned for the broader Gundagai Gold-Copper Project.


Figure 3 Big Ben Prospect geology and drill collar locations

Figure 4 Drill section showing drilling within mineralised felsic porphyry

Califat and Snowball Copper-Gold Prospects

The Califat and Snowball copper-gold prospects are located 15km south of Gundagai (Figure 2). Host stratigraphy is fine grained slate, granite and felsic volcanics with mylonite shears, the latter being the host for a number of historic possibly VMS-related base metal sulphide workings.

The numerous old copper workings throughout the area contain abundant secondary malachite and azurite mineralization and as reported last Quarter have yielded high grade gold of up to 84 g/t from mullock samples. The diversity of geology and mineralisation styles, and some promising data obtained from historic results provides encouragement for a significant discovery in this area.

A surface EM survey was commenced in mid-July over the zones of known mineralisation to generate drill targets, but to date has experienced delays due to exceptionally wet weather.

Basin Creek Copper Prospect

Historic workings have significant VMS-style copper mineralization hosted within a package of Silurian turbiditic sediments and epiclastic felsic volcanic rocks. Previous drill results include 4.5 metres at 18% copper, 4.5 metres at 3.1% copper and 3.0 metres at 5.5% copper. A mapping program and EM survey are being designed for target generation to commence upon grant of the tenement.

Perseverance Gold Prospect

The Perseverance prospect is a recent application that covers a sequence of Ordovician meta-sediments some 50km south of Wagga Wagga. The area was applied for primarily for the significant Coppabella (or Carboona) lead, silver, zinc and fluorite workings that occur around the edge of a Silurian/Devonian granite intrusion. Several high grade historic gold workings also occur in the area. The vein system metallogenesis suggests epithermal gold affinities.


West Lachlan Copper-Gold Projects (100% Heron)

Heron’s West Lachlan projects cover some 1,100km2 over Ordovician and Devonian sequences in the western part of the Lachlan Fold Belt (Figure 1). Access is excellent both in terms of roads and tracks, but also in terms of the positive reception from the local land owners and graziers. As tenements are being granted, reconnaissance field work has quickly commenced, including rock-chip sampling, soil auger programs and EM surveys. While some significant delays have been encountered during the Quarter due to wet weather, the programs are once more progressing well.

Sussex Copper-Gold Project

Sussex covering some 600km2 is located 50km east of Cobar and 10km northeast of the Mt Boppy gold mine. The area contains a large, complex, magnetic high within Girilambone Beds along the northern extension of the Gilmore Suture, one of the controlling metallogenic structures in the Lachlan Fold Belt. The main target area is located 11km northeast of the Mt Boppy gold mine and along strike from several historical base-metal and gold workings. Results from the Heron reconnaissance soil auger sampling were received during the Quarter and revealed a large, coherent copper-zinc-nickel anomaly on the south side of the magnetic anomaly (Figure 5), plus an additional copper-gold-arsenic anomaly over a small satellite magnetic high in the south. Follow-up auger sampling has commenced in the area to extend and infill the existing lines.

Figure 5 Sussex project auger sampling points over aeromagnetic image showing current anomalies. Infill and extensional auger sampling is currently being undertaken along with modelling of the magnetic bodies to generate targets for EM survey then RC drill follow up.

Osterley Downs Copper-Gold Project (renamed from McKinnons South Project)

Osterley Downs covering some 300km2 is located 25km southwest of Cobar, and contains predominantly turbiditic sediments of the Devonian Upper Amphitheatre Group and sandstone of the Biddabirra Formation. The Thule Fault, which runs through the centre of the area, is a major regional structure that was targeted by previous explorers as a conduit for mineralising fluids containing gold and copper mineralisation associated with fault breccia units.


Better results from historic GeoPeko drilling at Osterley Downs include 6 metres at 0.56g/t gold (Figure 6, 7). The focus of Heron’s exploration is on subsidiary structures adjacent to the main Thule Fault. Such subsidiary cross-cutting dilational structures are often the focus for Cobar Basin style mineralisation.

A surface-based EM survey, which targeted the Thule Fault and mapped gossan occurrences, has been completed. A number of mapped gossan zones within Devonian sediments were identified by previous explorers in the early 1990s and have had little follow-up since that time. The Heron EM program has identified a subtle, but coherent anomaly directly to the southeast of an old GeoPeko gossan zone in an area of deeper soil cover. The anomaly is associated with a discrete magnetic low and could be related directly to mineralisation at depth, or a structural offset where mineralisation has been re-mobilised. A program of soil auger sampling has commenced to further test this area.

Figure 6 Regional magnetic image showing Heron tenements south of Cobar, NSW. Key target areas are shown. The Nymagee East Project incorporates the most recent applications in this area.

Figure 7 Osterley Downs Prospect showing EM anomalies on aeromagnetic image and location of the old GeoPeko grid.

Mt Allen Copper-Gold Project

Mt Allen covering some 300km2 is located on the tenement block at the southern boundary of the Peel Exploration holding which hosts the Mallee Bull polymetallic discovery (Figure 8).

The Mt Allen area has a complex array of NE trending structures splaying off the dominant NNW trending Cobar Trough basin margin structures. The Mallee Bull discovery is located 15km northeast of Mt Allen on Heron’s interpreted NE trending structures.

Soil auger sampling is underway after an extended delay due to wet weather. Four initial targets have been identified based on Heron’s regional geological and structural interpretations.

The next exploration phase will be ground EM follow-up of any anomalous soil responses.

Figure 8 Mt Allen Prospect showing auger geochemical survey areas on aeromagnetic image.


Nymagee East Copper-Gold Project

This project area covering some 500km2 comprises a number of tenement applications over recently relinquished ground located 75km southeast of Cobar and 15km northeast of the Nymagee copper mine. The tenements cover a complex zone of north-west trending Devonian-aged sediments and the Ordovician-aged Girilambone Beds adjacent to the southern extension of the Coonara Fault (hosts the Overflow and Mineral Hill copper-gold mines 10km and 50km south).

Several gold and base-metal occurrences exist within the applications and these are the immediate focus for generating drill targets. Site reconnaissance has been completed and a blanket soil auger program designed for the Coonara Fault.

Eurow Copper-Gold Project

Eurow is a recent application over Ordovician and Devonian-aged meta-sediments intruded by Silurian and Devonian granites, located some 40km southeast of Parkes in central NSW. The tenement was primarily acquired for the historic Eurow-Vychan copper-gold workings where a small non-JORC compliant resource has been previously reported. Previous drilling below the workings included intercepts of 8 metres at 2.94% copper and 0.85g/t gold from 47 metres, 3 metres at 4.0% copper and 1.25g/t gold from 73 metres, and 4.4 metres at 1.57% copper and 0.63g/t gold from 212 metres. The mineralisation is planar and stratiform and associated with pyrrhotite sulphides (highly conductive and magnetic). There are excellent targets for follow-up drilling based on Heron’s review of historic exploration.

Girilambone Copper-Gold Project

The Girilambone copper-gold project is located within two granted tenements (EL7955 and EL7951) 25km and 60km northwest of Nyngan NSW. Heron is targeting Tritton/Avoca Tank style copper-gold mineralisation within mafic units of the Ordovician-aged Girilambone Beds.

During the Quarter, soil auger programs in the Coolabah area have generated a strong, coherent copper anomaly located 3.5km northwest along strike of the Avoca Tank discovery (Straits Resources Limited). The anomaly has a multi-element signature with elements such as arsenic, silver and bismuth showing a strong coincidence with the copper signature. Ground reconnaissance was completed to map the geology, prior to an EM survey.

Geological mapping and detailed soil auger sampling was completed in the Target 1 area (Figure 9, 10) and delineated a coherent copper and nickel anomaly associated with a magnetic high and which probably reflects an ultramafic bedrock source and so does not provide an immediate copper-gold follow-up target. In addition, down-hole EM surveying was completed on the last of the RC holes at Target 1, but failed to produce any significant conductor targets at depth.

First pass drill testing of this area (EL7955) has now largely been completed, with the focus now moving towards the Coolabah Target described above.

Figure 9 Girilambone Project - Targets. Figure 10 Coolabah Copper Auger Anomaly.


ALBANY FRASER NICKEL-COPPER PROJECTS, WESTERN AUSTRALIA

Bedonia Nickel-Copper Prospect (100% Heron)

The Company’s Bedonia Project covers 720km2 and is located 75km east of Norseman, Western Australia and some 60km west-southwest of the Nova-Bollinger nickel-copper discovery by Sirius Resources NL (Figure 11, 12).

The Company is seeking “Nova-Bollinger style” nickel-copper mineralisation within the Proterozoic Mount Andrews Gneiss Complex where there is potential for discrete mineralised intrusive bodies.

The previously reported Bedonia EM survey consisted of a moving loop survey followed by fixed loop surveys to better define anomalies.

Figure 11 Albany Fraser location plan on regional aeromagnetics.

The Bedonia EM anomaly is considered to be related to a bedrock conductive body with a time constant modelled at around 14 milliseconds. The conductive unit is modelled as being some 200 metres below the surface, which is relatively deep and may account for the more subtle response seen at the surface.

The EM conductor has an apparent WNW strike, oblique to the regional N-S magnetic trend, suggesting remobilisation along a cross-cutting structure (Figure 13, 14).

The conductor is adjacent to and partly overlaps a coherent copper and nickel soil auger geochemical anomaly.

In addition, there is a subtle magnetic high on the shoulder of the broader magnetic high in the area. This magnetic feature has also been modelled and will be drill tested as part of the RC program.

Figure 12 Aeromagnetic image showing Bedonia Project tenements with known mineral occurrences, Heron drill target and includes recent tenement applications made by Heron.

Ethnographic and archaeological surveys were completed in mid-July, with no issues identified. Drill collars have been marked out. Subject to final sign-off, drilling is expected to commence in August, an unexpected but brief delay having arisen in securing drill access.


Figure 13 Detailed aeromagnetic image showing relationship between magnetic features, soil anomalies and identified EM conductors. EM conductors and magnetic anomalies to be drilled.

Figure 14 Cross Section showing the planned holes to be drilled to test the modelled conductive plates at depth

Rocky Gully Nickel-Copper Prospect (100% Heron)

At Rocky Gully, 85km northwest of Albany, the Company is targeting nickel-copper sulphide mineralisation associated with mafic/ultramafic intrusions in the area. Previous work by Heron had identified a number of mafic-ultramafic intrusive bodies within the Proterozoic Birunup Gneiss Complex. These bodies are associated with strong nickel-copper-cobalt anomalies in lateritic soils. Previous Heron reconnaissance drilling in the area identified nickel-copper mineralization in laterite as well as nickel-copper sulphides in the bedrock sequence (comparable initial exploration history to Nova).

The Company is currently considering options to divest or farm-out the ground and has received a number of expressions of interest to that effect.

MT ZEPHYR GOLD AND BASE-METAL PROJECT, WESTERN AUSTRALIA (100% HERON)

The Mt Zephyr Project is located 80km north northeast of Leonora and represents a 5 kilometre strike of volcanics with strong indications of Volcanogenic Massive Sulphide (VMS) style mineralisation (Figure 15). The Company is currently seeking a joint venture partner to drill a sequence of deeper holes down-dip from the distal style VMS mineralisation.

The area is also highly prospective for gold mineralisation with high-grade laminated quartz reefs in the north of the project area.

The surface EM survey at Two Bills Well failed to find any significant bedrock conductors. Further nickel sulphide targets are currently being assessed to the north of the Two Bills Well prospect along similar ultramafic stratigraphy.

Figure 15 Mt Zephyr Project Map


NORTHWEST QUEENSLAND COPPER-GOLD PROJECT (100% HERON)

The Company has acquired a portfolio of 15 tenements covering some 1,700km2 in the Mt Isa Inlier of northwest Queensland, targeting copper-gold-REE mineralisation in Iron Oxide Copper Gold (IOCG) settings (Figure 16).

The Mt Isa Inlier is a world-class Proterozoic mining province hosting the large copper, lead and zinc mines at Mt Isa and George Fisher and the copper-gold mines at Ernest Henry and Osborne plus several other significant mines and development projects. The potential for new economic discoveries in the area is high.

Following Heron field reconnaissance, a detailed review of open file reports of previous exploration was finalized during the Quarter and has identified several areas in Heron tenure with potential for copper or copper-gold mineralisation.

In particular, within the Mammoth East Prospect in EPMs 19122 and 19168, previous exploration in the late 1980s identified a zone of high-level copper-gold mineralised quartz veining within basalt and quartzite of the Proterozoic Haslingden Group. The mineralisation was discovered through a program of stream sediment sampling followed by detailed soil and rock-chip sampling with the anomaly extending over 500 metres of strike and 50-100 metres wide.

Figure 16 Northwest Queensland Heron Tenement Locations and Mineralized Centres

Previous reconnaissance drilling (4 RC holes) intersected moderate to strong gold, copper and lead anomalism within a polyphase breccia quartz vein exhibiting comb and crustiform quartz textures, suggesting an epithermal origin.

The host to the mineralised quartz veining is a sericite-hematite altered shale within a larger basalt unit. The most significant results from this program, from 2 metre down-hole samples were 0.33% copper, 0.63% lead, 2g/t silver and 0.3g/t gold. The focus of this exploration at the time was actually diamonds and no further work has apparently been completed since that time. Such prospects provide an immediate target for Heron’s on ground follow-up exploration.

The northwest Queensland acquisitions reflect the Company’s positive view of Proterozoic copper-gold systems. The Company is currently seeking expressions of interest from parties who would be interested in farming into or acquiring the tenements.

An Information Memorandum on the project areas was completed during the Quarter and has been forwarded to potential interested parties.


PROJECT DEVELOPMENT KALGOORLIE NICKEL PROJECT (KNP) (100% HERON)

RESOURCE INVENTORY

The KNP has a nickel laterite resource totalling 727 million tonnes grading 0.72% nickel and 0.044% cobalt (for details of resource categories and distribution between project areas see the attached statement of mineral resources, page 15 following).

METALLURGICAL TEST WORK PROGRAMS

The Company recognises the potential inherent value of the KNP, and is pursuing a multi-disciplinary strategy to enhance and ultimately crystallise project value.

There is an increased focus on new nickel laterite extractive technology which, in part, reflects the tightening situation of traditional sources of supply from nickel sulphides.

The Company’s most active program has been with Direct Nickel, where testwork has continued after favourable results from March 2013, with up to 98% nickel recoveries using nitric acid leaching.

Heron’s strategy is to match these various evolving technologies to specific ore types within the KNP.

Figure 17 Kalgoorlie Nickel Project location.

COMMENCEMENT OF SIMULUS ENGINEERS METALLURGICAL STUDY

During the Quarter Heron has negotiated an agreement with Simulus Engineers (Simulus) to undertake sulphuric acid-based metallurgical testwork on various KNP ore-types and to produce a Scoping Study on the applicability of Simulus’ innovative reagent recovery technology to the KNP.

Simulus is a Perth-based metallurgical engineering firm specialising in developing innovative and cost effective solutions to complex metallurgical processes. Simulus has a team of some 20 engineers and has a proven track record of innovative design and cost-effective execution.

Within its subsidiary Carbon Friendly Nickel Processing (CFNP), Simulus has developed a new process technology able to be applied towards the extraction and refining of nickel and cobalt from nickel laterite ore.

The essence of the process is the recovery and re-use of the key reagents used in leaching and purification. The Simulus reagent recovery process can be matched up with any front-end leach process such as high pressure acid leach, atmospheric tank leach, or heap leach. A range of intermediate products or refined metal can also be produced as required.

CFNP has the potential to offer substantial benefits compared to existing processes including reduction in all of reagent costs, tailings production and water consumption, leading to the potential for significant improvements in operating costs.


Applicability to Heron’s KNP

Heron has a multi-disciplinary strategy to match various extractive technologies to specific ore types within the KNP with the ultimate aim of enhancing and crystallising value from the KNP through innovative technology.

Heron believes that the technology Simulus is seeking to apply to the KNP sulphuric acid processing flowsheet has significant potential to catalyse a “step change” in the project economics of the KNP.

If successful, this initial testwork and Scoping Study is intended to lead into a closer partnership between Heron and Simulus through CFNP under which the technology will be further developed.

Delivery of Representative KNP Bulk Samples

Three bulk samples of nickel laterite ore have been delivered to Simulus in Kewdale, Western Australia. The samples represent the three main ore types within the KNP:

Goethite ore from composites of sonic drill core drilled at Siberia North Saprolite ore mined by Heron from Heron’s Boulder Block pit at Bulong Nontronite ore from Heron’s ore stockpiles at the Jump Up Dam trial pit (Yerilla Project)

These samples are designed to represent the three end members of the dominant material types recovered from the Heron KNP nickel laterite resource inventory and will demonstrate the viability of the Simulus process over the spectrum of KNP metallurgical variability.

The work is expected to be completed in about three months.

KNP GOLD INITIATIVES

BIG FOUR GOLD PROJECT, WESTERN AUSTRALIA (100% HERON)

The Big Four Gold Project is located 65km north of Kalgoorlie where high grade gold mineralisation has been found within an intermediate porphyry unit in the lower part of a well mineralized unit termed the Siberia Komatiite (Fig 18,19).

Figure 18 Project Locations, KNP gold targets. Figure 19 Big Four Cross Section 1040N.


A RAB drilling program was completed with 26 holes for 673 metres to test the south-west extension of the Big Four mineralisation beneath a strong gold-in-soil anomaly generated by Heron auger sampling. Significant results include:

BFRB 202 12 metres grading 1.12g/t gold from 20 metres depth BFRB204 12 metres grading 0.76g/t gold from surface

The Company has recently received an expression of interest from a local mining group to develop a small-scale open pit to open up the ore zone prior to further deeper drilling.

SIBERIA SOUTH GOLD PROJECT, WESTERN AUSTRALIA (100% HERON)

A 1,350 metre RAB drilling program for 68 holes was completed at the Siberia South Gold Project located 70km northwest of Kalgoorlie, Western Australia within the KNP. The drilling is targeting Archaean gold mineralisation along the contact between ultramafic rocks (Siberia Komatiite) and a range of mafic volcanic and intrusive rocks.

Figure 20 Image showing gold anomalism from the Heron soil auger campaign on an aerial photo image with RAB drillholes. Extensive old workings (black crosses on image) are present.

The targeted soil anomalies are up to 49ppb gold and covered a strike length of up to 1 kilometre. They are partially associated with shallow old workings, however the anomalism extended beyond the workings into an area of deeper soil cover and these extensional areas are the key targets for the drilling.

Figure 21 RAB drilling at the Siberia gold prospects, July 2013. Visual mineralization has been identified in Heron’s sample logging, assay results are awaited

The RAB holes in the west of P24/4206 were to test high grade gold and copper assays from Heron rock-chip sampling, with assays up to 14g/t gold and 1.1% copper. In addition, malachite staining at Siberia South in olivine orthocumulate ultramafic rocks suggests nickel sulphide potential. If RAB drilling results are positive for nickel-copper, these will be pursued with a targeted EM survey to test for massive nickel sulphides at depth.


KNP NICKEL SULPHIDE INITIATIVES As part of Heron’s regional soil auger gold sampling, several positions have been identified which are prospective for nickel sulphide mineralization. These programs help to maintain the KNP nickel laterite tenure in good standing.

KALPINI NICKEL PROJECT, WESTERN AUSTRALIA (100% HERON)

The Kalpini ultramafic belt which hosts KNP nickel laterite resources additionally has several documented fertile nickel sulphide ultramafic contacts. Heron’s project generation studies through the belt have generated several nickel sulphide targets. The Company EM consultant has commenced a review of these targets, with several good opportunities already identified.

JOINT VENTURE PROJECTS, WESTERN AUSTRALIA Heron has farmed out various of the KNP nickel laterite tenure for gold exploration, again as a means to assist in keeping the KNP in good standing with the WA Department of Mines and Petroleum (DMP).

Bulong Gold Project (Heron 20%, Southern Gold Limited 80%; Heron retains 100% of nickel laterite rights at Bulong East)

Southern Gold Limited has earned its 80% interest in the two joint venture areas at Bulong (30km east of Kalgoorlie) through meeting the required expenditure commitments. At Bulong East, Heron is free carried at 20% interest until a pre-feasibility study is completed and $8M has been expended. At Bulong South, Heron is free carried at 20% interest until the completion of Bankable Feasibility Study.

Southern Gold has completed several field programs within the Heron tenure over the last two years with several encouraging results being received including 4 metres at 6.8g/t gold and 4 metres at 4.5g/t gold at the Turnpike prospect.

Work continued during the Quarter on the development of a robust structural-lithological model which has enabled the majority of known geochemical anomalies in the Bulong Project to be placed into the context of a rheological contrast-fluid flow framework. Evaluation of the model has advanced sufficiently to enable the significance of individual geochemical anomalies to now be evaluated in the context of their position in the regolith and associated landforms. This program will facilitate further targeted exploration.

Figure 22 Location Map showing Heron/Southern Gold Bulong JV Tenure (Source: Southern Gold)


Kalgoorlie Nickel Project, Statement of Mineral Resources

Project Prospect Million Ni Co Ni Co Cut-off Category Estimation tonnes % % tonnes tonnes %Ni Method Goongarrie Big Four 40.4 0.77 0.049 311,000 19,800 0.5 Indicated Recoverable Goongarrie Big Four 13.4 0.71 0.045 95,000 6,100 0.5 Inferred Recoverable Goongarrie Goongarrie Hill 66.6 0.67 0.031 446,000 20,600 0.5 Inferred Recoverable Goongarrie Goongarrie South 5.6 1.11 0.107 62,000 6,000 0.5 Measured Recoverable Goongarrie Goongarrie South 48.1 0.85 0.067 409,000 32,200 0.5 Indicated Recoverable Goongarrie Goongarrie South 47.0 0.69 0.035 324,000 16,500 0.5 Inferred Recoverable Goongarrie Highway 52.6 0.72 0.039 379,000 20,500 0.5 Indicated Recoverable Goongarrie Highway 40.4 0.70 0.038 283,000 15,400 0.5 Inferred Recoverable Goongarrie Scotia 11.2 0.77 0.080 86,000 9,000 0.5 Inferred Krige

Sub-Total Goongarrie 325.3 0.74 0.045 2,395,000 146,100 Siberia Siberia South 111.8 0.65 0.035 727,000 39,100 0.5 Inferred Krige Siberia Siberia North 15.5 0.71 0.040 110,000 6,200 0.5 Indicated Recoverable Siberia Siberia North 75.9 0.73 0.033 554,000 25,100 0.5 Inferred Recoverable Siberia Black Range 20.4 0.75 0.102 153,000 20,800 0.5 Inferred Krige Siberia Ghost Rocks 47.3 0.66 0.042 312,000 19,900 0.5 Inferred Krige

Sub-Total Siberia 270.9 0.69 0.041 1,856,000 111,100

Total KNP West 596.2 0.71 0.043 4,251,000 257,200 Bulong East 16.7 0.90 0.047 150,000 7,800 0.5 Indicated Krige Bulong East 38.0 0.81 0.053 308,000 20,200 0.5 Inferred Krige

Sub-Total Bulong 54.7 0.84 0.051 458,000 28,000 Hampton Kalpini 76.4 0.73 0.044 558,000 33,600 0.5 Inferred Krige

Total KNP East 131.1 0.77 0.047 1,016,000 61,600

Total KNP 727.3 0.72 0.044 5,267,000 318,800

JORC COMPLIANCE STATEMENTS

The information in this report that relates to Mineral Resources is based on information reviewed by Steven Jones who is a Member of the Australasian Institute of Mining and Metallurgy. Steven Jones is a full time employee of Heron Resources Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the resource estimation activities undertaken to qualify as Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Steven Jones has consented to the inclusion in this report of the matters based on his information in the form and context that it appears. Note that Mineral Resources that are not Ore Reserves do not have demonstrated viability.

The information in this report that is related to Heron’s exploration activities is based on information compiled by David von Perger who is a member of Australian Institute of Mining and Metallurgy. David von Perger is a full time employee of Heron Resources Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration, and to the exploration activity that is being undertaking to qualify as Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. David von Perger consents to the inclusion in this report of the matters based on his information in the form and context that it appears.

Ian Buchhorn Managing Director


Appendix 5B

MINING EXPLORATION ENTITY QUARTERLY REPORT Name of entity HERON RESOURCES LIMITED ABN Quarter ended 30 068 263 098

30 June 2013

Consolidated statement of cash flows

Cash flows related to operating activities

Current Qtr

$A’000

Year to Date (12 months)

$A’000 1.1 Receipts from product sales and related debtors 1.2 Payments for: (a) exploration and evaluation (624) (3,146) (b) development (c) production (d) administration, business development (306) (2,208) 1.3 Dividends received 1.4 Interest and other items of similar nature received 338 1,796 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other –GST (1) (134) Net Operating Cash Flows (593) (3,692) Cash flows related to investing activities

1.8 Payment for purchases of: (a) prospects (34) (62) (b) equity investment (c) other fixed assets (4) (10) 1.9 Proceeds from sale of: (a) prospects 40 (b) equity investment 146 (c) other fixed assets 4 4 1.10 Loans to other entities 1.11 Loans repaid by other entities Net Investing Cash Flows (34) 118 1.12 Total operating and investing cash flows (carried forward)

(627)

(3,574)


1.12 Total operating and investing cash flows (brought forward)

(627)

(3,574)

Cash flows related to financing activities

1.13 Proceeds from the issue of shares, options, etc. 1.14 Proceeds from the sale of forfeited shares 1.15 Proceeds from borrowings 1.16 Repayment of borrowings 1.17 Dividends paid 1.18 Other (provide details if material) Net financing cash flows - - Net increase (decrease) in cash held

(627) (3,574)

1.19 Cash at beginning of quarter/year 40,224 43,171 1.20 Exchange rate adjustments 1.21 Cash at end of quarter 39,597 39,597 Payments to directors of the entity and associates of the directors, payments to related entities of the entity and associates of the related entities Current Qtr

$A’000 1.22 Aggregate amount of payments to the parties included in item 1.2

171

1.23 Aggregate amount of loans to the parties included in item 1.10

1.24 Explanation necessary for an understanding of the transactions

Directors fees, salaries and superannuation (A$131,574). Provision of legal services by director related entity (A$2,835) Provision of office accommodation by director related entity (A$36,450)

Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

See attached schedule


Financing facilities available

Add notes as necessary for an understanding of the position

Amount available $A’000

Amount used

$A’000 3.1 Loan facilities

3.2 Credit standby arrangements

Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 750 4.2 Development 4.3 Production 4.4 Administration

- -

400 Total 1,150 Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to related items in the accounts as follows.

Current Quarter

$A’000

Previous Quarter

$A’000 5.1 Cash on hand and at bank 65 105 5.2 Deposits at call 39,008 39,595 5.3 Bank Overdraft 5.4 Other (provide details) Property Rental bond 47 47 Environmental bonds 477 477 Total: cash at end of quarter (Item 1.21)

39,597

40,224


Changes in interests in mining tenements Tenement Nature of interest Interest at Interest at reference (note (2)) Begin of

Quarter End of Quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

See attached

schedule

6.2 Interests in mining tenements acquired or increased

See attached

schedule

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number

Number quoted

Issue price per security

(see note 3) ($)

Amount paid up per security (see

note 3) ($)

7.1 Preference securities (description)

7.2 Changes during Quarter (a) Increases through share

issues (b) Decreases through

returns of capital, buybacks, redemptions

Ordinary securities 252,985,787 252,985,787 7.3 Changes during Quarter *

(a) Increases through share issues

(b) Decreases through returns of capital, buybacks

7.4 Convertible debt securities (description)

7.5 Changes during Quarter (a) Increases through issues (b) Decreases through

securities matured, converted


7.6 Options (description and conversion

factor)

5,000,000 4,500,000 4,818,776 2,600,000 4,750,000 2,750,000 2,750,000 333,333 333,333 333,334

1,000,000 1,000,000 1,000,000

Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil Nil

Exercise Price $0.6864

$2.50 $0.30

$0.425 $0.22 $0.27 $0.31 $0.22 $0.27 $0.31 $0.22 $0.27 $0.31

Expiry Date 7/09/2016

05/06/2014 09/06/2014 25/06/2014 23/06/2014 23/06/2015 23/06/2016 16/01/2015 16/01/2016 16/01/2017 05/03/2016 05/03/2017 05/03/2018

7.7 Issued during Quarter 1,000,000 1,000,000 1,000,000

Nil Nil Nil

$0.22 $0.27 $0.31

05/03/2016 05/03/2017 05/03/2018

7.8 Exercised during Quarter

7.9 Expired during Quarter

2,000,000 3,000,000

Nil Nil

$1.50 $2.00

05/06/2013 05/06/2013

7.10 Debentures (totals only)

7.11 Unsecured notes (totals only)

Compliance 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest. Nothing to report 6.1 Interests in Mining Tenements transferred, relinquished, withdrawn, reduced or lapsed.

Tenement Nature of Interest % Beginning of

Quarter % At end of

Quarter

E15/01112 Registered Holder 100 0


E27/00439 Registered Applicant 100 0


ELA4725 Registered Applicant 100 0







P31/02026 Registered Applicant 100 0




Interests in Mining Tenements acquired or increased

Tenement Nature of Interest % Beginning of

Quarter % At end of

Quarter








ELA4838 Registered Applicant 0 100 Compliance Statement 1. This statement has been prepared under accounting policies which comply with accounting standards as defined

in the Corporations Act or other standards acceptable to ASX (see note 4). 2. This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 30/07/2013 Company Secretary Print name: Bryan Horan Notes 1. The Quarterly Report is to provide a basis for informing the market how the entity’s activities have been financed

for the past Quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The “Nature of Interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

hrr qr 2013 06 lodge - heron resources limited · veins of quartz(-pyrolusite-limonite) that were...

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