2000 Annual Report - Heron Resources Limited

Operations Review
Heron Resources NL
2.0 Operations Review
HERON’S ACHIEVEMENTS
• During 2000, Heron has doubled its Inferred Mineral Resource, and upgraded 34.3 million tonne or
19% of the resource to an Indicated Mineral Resource status.
• Goongarrie South has developed into a deposit with exceptional early cashflow potential:
• Grade, at around 1.1% Ni and 0.1% Co, Goongarrie South has amongst the highest documented grades for
an Australian laterite. Selective mining can deliver significant tonnages at 1.3% Ni and 0.4% Co.
• Metallurgy, excellent leaching and rheological performance, which is characteristic of Limonite Ore.
• Width and continuity, excellent with high grade zones continuous over strike lengths exceeding 2km and
widths exceeding 160m. This favours future low cost bulk mining.
• Highest ore grades are accessed early in the mining, with bonanza grade cobalt occurring at the top
of the ore body. This is important for early project payback.
• During 2000, genuine production opportunities have been negotiated by Heron:
• The Cawse Stage II Toll Milling Strategic Alliance is Heron’s current focus, and has a potential production credit
for Heron of 12,000tpa nickel metal.
• A jointly-developed processing plant based in part on Keith Kilkenny Province Nontronite Ore is under discussion,
with a potential production credit to Heron’s account of at least 20,000 tpa nickel metal in intermediate product.
• Subject to Cawse Stage II ore requirements as determined by the Centaur August 2001 BFS, critical mass
has been demonstrated for a Standalone Heron-owned processing plant based on Heron’s Walter Williams
Formation Limonite Ore.
• As part of a 30 year Strategic Plan, Heron has continued to secure strategic resources of commodities
required as potential feed-stocks for processing Nickel Laterite. This will protect a potential $1.4 billion
investment against unforeseen operating cost pressures. In all cases, Heron has sought to Joint Venture these
tenements, but retain strategic revenue streams and Off-take rights. An increasingly valuable asset is the Oil Shale.
• Reflecting on-going excellent drilling results during 2000, Heron has expended $2.5 million on
exploration and has been continually drilling throughout the year:
• At Goongarrie South, Heron completed 598 Reverse Circulation (“RC”) holes for 30,379 metres to confirm
resource continuity at 80x80m, and 8 PQ Diamond Drill (“DD”) metallurgical holes for 406 metres.
• At Goongarrie Hill, Heron completed 155 RC holes for 5,211 metres, including a 20x20m pattern to
elucidate structural controls on mineralisation and confirm ore body lateral continuity.
• At Scotia Dam, Heron completed 29 RC holes for 1,330 metres to outline resources and confirm geology.
• The Company’s working capital position is robust at $3.9 million (at 30 June 2000), and is such that the
cash demands of the proposed 2001 drilling programs are well accommodated. This cash position has arisen
through the exercise of 10.15 million Options during the year, raising $2.54 million.
Heron has developed a key position within the Australian Nickel Laterite industry, particularly in the event of any
industry rationalisation, as demanded by the capital-intensive nature of the industry. Goongarrie is a premium product
on all counts, including high start-up Ni-Co grades, ability to bulk mine, ability to blend Limonite Ore with lower quality
ores, and proximity to rail and road infrastructure.
GOONGARRIE SOUTH HAS STRATEGIC SIGNIFICANCE AND AS A 100%-OWNED ASSET,
HAS TREMENDOUS VALUE TO THE COMPANY.
Photo Strip: The bush at Goongarrie is in magnificent condition, reflecting its management by Conservation
and Land Management (“CALM”), the station owner. CALM has established an ecotourism camp in the western
part of Goongarrie at former pastoralist Bill Riddle’s old homestead. Heron’s tenements and drilling areas are restricted
to the eastern part of Goongarrie.
‘Back Home’ Wyvern Jackson “This picture represents a revegetated mine site.
After Heron finishes mining, the Aboriginal people will come back to their land.”
page 4
Heron Resources NL
Annual Report 2000