2000 Annual Report - Heron Resources Limited
2000 Annual Report - Heron Resources Limited
2000 Annual Report - Heron Resources Limited
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2.0 Continued<br />
Operations Review<br />
STRATEGIC ALLIANCE<br />
The <strong>Heron</strong>-Centaur Strategic Alliance Toll Milling Agreement was completed early in the reporting year. It is a mechanism that was<br />
formulated to move <strong>Heron</strong> towards production while minimising the project risk to <strong>Heron</strong> through eliminating high levels of debt funding,<br />
and resultant high debt service charges. Concomitantly, the Strategic Alliance will crystallise economies of scale for both parties through<br />
the larger ore throughput of the merged resource base. The proximity of the Cawse processing plant to <strong>Heron</strong>’s project areas, the<br />
strong similarity of Goongarrie ore types to Cawse ROM ore feed, and the successful commissioning and ramp up of Cawse Stage I<br />
during <strong>2000</strong> suggests a high level of synergy exists between the <strong>Heron</strong> and Centaur operations.<br />
PRE-FEASIBILITY STUDY<br />
<strong>Heron</strong> has completed most of the studies required for a PFS for the Goongarrie Nickel Project.<br />
• Metallurgical testing is current, testing upgrade, settling, rheology, leach recovery and post-leach neutralisation.<br />
• Baseline Flora and Fauna Studies have been finalised, with typical Eastern Goldfields flora regimes documented.<br />
• Archaeology and Ethnographic Surveys are well advanced, with no sites documented.<br />
• Native Title Access Agreements are being negotiated in Good Faith for the grant of Mining Leases.<br />
• A Hydrological Consultant has been retained, and a bore hole water level monitoring regime established.<br />
• Confirmation Diamond Drilling was successfully completed under difficult ground conditions. The drilling has:<br />
• Validated RC grade estimates, notably at higher nickel cut-off grades.<br />
• Quantified the In-situ Bulk Density,<br />
Siliceous Ore SG is 1.8 - 2.3 2.0 used in resource estimation.<br />
Limonite Ore SG is 1.3 - 1.8 1.6 used in resource estimation.<br />
• <strong>Heron</strong> has quantified the Geotechnical response of the ore environment, which has facilitated in-house scoping pit designs.<br />
The mining management of Tertiary palaeo-channel aquifers overlying the ore zones is an important issue. Traffickability issues may<br />
ultimately be addressed by the use of 6WD articulated dump trucks for Goongarrie mining.<br />
IN TERMS OF THE PFS, GOONGARRIE SOUTH IS STRONGLY ADVANTAGED BY THE EXCELLENT LOCATION<br />
AND ESTABLISHED INFRASTRUCTURE OF THE EASTERN GOLDFIELDS.<br />
CORPORATE ADVANCES DURING <strong>2000</strong><br />
Nickel Industry Alliance Strategies<br />
• Capital costs are the main challenge for Nickel Laterite production, with <strong>Heron</strong>’s current estimate being $1.4 billion for a standalone<br />
4mtpa Pressure Acid Leach (“PAL”) processing plant. For a company of <strong>Heron</strong>’s size, a strategic partner is required who<br />
contributes financial and technical resources to this style of project.<br />
• In terms of risk minimisation, industry alliances facilitate:<br />
• Economies of scale in mining, processing and utilities, to reduce unit operating costs.<br />
• Shared infrastructure including rail, gas and water, and sourcing ore and servicing projects over a wide ranging operating area.<br />
• Potential for utilising an off-site “Back-end” for metal refining, supporting an off-site “brownfields” expansion of refining capacity.<br />
• Strategic Off-take and marketing agreements to help facilitate the banking of a project.<br />
• Resource blending, using <strong>Heron</strong>’s high quality Limonite Ore to leverage off and blend with less favourable ore to provide a<br />
constant long-term blended ore feed. This can improve the metallurgical performance of problem clay ore types (notably<br />
Nontronite Ore), and may increase the resource and thus project life.<br />
Joint Venture and Industry Association Strategies<br />
Joint venturing is a key component of <strong>Heron</strong>’s tenement management strategy. It allows <strong>Heron</strong> to control the large land bank which<br />
is integral to the long term development of Nickel Laterite resources. <strong>Heron</strong> has in operation or has offers on the table involving some<br />
21 Joint Ventures, alliances, options and Memorandums of Understanding involving oil shales, gold, base metals and iron ore.<br />
These industry associations cover some 155 tenements that will see a minimum Department of Minerals and Energy (“DME”)<br />
commitment of $1.5 million spent by our partners annually whilst <strong>Heron</strong> is free-carried. In addition a minimum total outlay of $10.65<br />
million can be spent on <strong>Heron</strong>’s joint ventured tenements before equity is transferred to the partner. By this process <strong>Heron</strong> is entirely<br />
free-carried in its gold and non-nickel developments, and in terms of risk-minimisation and success optimisation, the <strong>Heron</strong> non-nickel<br />
portfolio provides a very low risk and low cost means of asset creation. As an example, through its Bungalbin Iron Ore Production<br />
Royalty, <strong>Heron</strong> has a potential long term income stream.<br />
<strong>Heron</strong> <strong>Resources</strong> NL <strong>Annual</strong> <strong>Report</strong> <strong>2000</strong> page 7