Investor Presentation - July 2004 - Heron Resources Limited

Kalgoorlie Nickel ProjectAn Emerging World Class Nickel ProducerInvestor Presentation – July 2004

Forward Looking StatementsThis presentation contains “forward-looking statements”. Such forward-looking statements include, without limitation,(i) estimates of future earnings, the sensitivity of earnings to nickel and other metal prices and foreign exchange ratemovements; (ii) estimates of future nickel and other metal production and sales; (iii) estimates of future cash costs; (ivestimates of future cash flows, the sensitivity of those cash flows to the nickel and other metal prices and foreignexchange rate movements; (v) statements regarding future debt assumptions; (vi) estimates of future capitalexpenditures and (vii) estimates of resources and statements regarding future drilling programs.Where the Company expresses or implies an expectation or belief as to future events or results, such an expectationor belief is expressed in good faith and believed to have a reasonable basis. However, forward looking statements aresubject to risks, uncertainties and other factors which could cause actual results to differ materially from future resultsexpressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, nickeland other metal price volatility, currency fluctuations, increased projected production costs and variances in ore gradeor recovery rates from those assumed in mining plans, as well as political and operational risks, governmentregulation and judicial outcomes.For a more detailed discussion of such risks and other factors, see the Company’s Annual Report for the year ended30 June 2003 and Half Year Report for the six months to 31 December 2003 as well as the Company’s other filings. TheCompany does not undertake any obligation to release publicly any revision to any “forward-looking statement” toreflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events,except as may be required under applicable securities laws.The Company has recently released the results of an Independent Resources Estimates and Scoping Study. TheCompany wishes to make it clear that at this stage (i) none of the Company’s Resources have been converted intoReserves and (ii) a bankable feasibility study been yet to be completed on the Kalgoorlie Nickel Project (“KNP”).JORC Code 1999 ComplianceThe information in this report that relates to Mineral Resources is based on information compiled by Norman MathewLongworth, who is a Member of the Australasian Institute of Mining and Metallurgy. Norman Mathew Longworth hassufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to theactivity which he is undertaking to qualify as a Competent Person as defined in the 1999 Edition of the “AustralasianCode for Reporting of Mineral Resources and Ore Reserves”. Mr. Longworth is a fulltime employee of HeronResources Limited, employed as Exploration Director.

Heron Resources LimitedHeron Resources is poised to emerge as Australia’s next world classnickel producer‣ 100% owner of the Kalgoorlie Nickel Project (“KNP”)• Australia’s premium nickel laterite project• Global resource of 862mt at 0.74% Ni and 0.05% Co‣ Committed to laterites• Systematically acquired laterite tenements since 1997• Stopped drilling program to focus on acquiring projects / land for “cents in thedollar” of costs already expended• “Spun off” other gold and base metal interests to fund laterite focus• Most recently acquired the entire Bulong mineral rights in April 2004‣ Largely completed its ultramafic and nickel resource acquisitionstrategy‣ Aggressive strategy for taking the KNP project to production

Chaos Investments(%)10%Heron Resources - SnapshotHRR Share Price (Jan 2003 – Jul 2004)0.300.280.260.240.220.200.180.160.140.120.100.08$Vol('000)5,0004,5004,0003,5003,0002,5002,0001,5001,000500001-Jan-0305-Feb-0312-Mar-0316-Apr-0321-May-0325-Jun-0330-Jul-0303-Sep-0308-Oct-0312-Nov-0317-Dec-0321-Jan-0425-Feb-0431-Mar-0405-May-0409-Jun-0414-Jul-04Financial Summary (as at 14/07/04)Share Price($)0.25Shares on IssueMarket CapitalisationKey Shareholders(m)128.9($m) 32.2Source:IRESS, Management estimatesIan BuchhornOMG Cawse(%)(%)29%12%

Why Nickel Laterites?‣ Excellent macro economicpositioning• Nickel demand is expected tooutstrip supply for at least thenext few years– World nickel demand1.2mtpa– 4 - 5% p.a. growth (7% in2003)China has anextremely highdependence onforeign nickel supplyto meet current andexpected demand• China and India’sindustrialisation will continueto drive demandSource: Goldman Sachs JBWere• Chronic shortage of “worldclass”nickel projects– Long term nickel demandcan only be met by asignificant increase insupply from laterite projects‣ Long term nickel demandcan only be met by asignificant increase insupply from laterite projects

Why Nickel Laterites? (2)‣ The world has changed – laterites have been validated• Minara Resources Limited (ASX:MRE) recorded its maiden profit to 31December 2003– Only owns 60% of Murrin Murrin yet still commands a market capitalisation of >$1b• BHP Billiton’s (ASX:BHP) commitment to developing the US$1.4bRavensthorpe project in March 2004• Recent AIM listing of laterite companies have been heavily over-subscribedon significant valuations• Listed laterite companies (globally) have experienced significant share priceappreciations– Except for Heron• Heron Resources will be 4 th generation‣ Laterites are the future• ~70% world’s quantified nickel resources are laterites but they currentlycontribute only ~40% of world production• New sulphide and laterite projects have similar operating costs• Nickel consumers are indifferent to processing route

World Class ProducerHeron Resources intends to be one of the world’s leading nickel producers‣ Critical mass• 50,000tpa nickel in concentrate processing plant plus by-product• Longer term the KNP could potentially support annual production output of ~60,000t –80,000t‣ Expected favourable construction and commissioning timing• Ravensthorpe to KNP‣ Process circuit similar to Ravensthorpe but treating higher grade feed stock• Comprehensive Bankable Feasibility Study able to build on Ravensthorpe‣ Low production risk / Utilising off-the-shelf technologies• De-coupled flow-sheet• Multiple process train• On-site acid plant• Off-site refining‣ Access to existing plants for full scale production testing and cash flow‣ Refiners aggressively seeking long term supply contracts

Proposed FlowsheetMining & Ore Preparation• Low cost bulk mining• Progressive waste backfill• Ore from pit to ROM Pad• Blended ROM ore fingersBeneficiation• Siliceous goethite & saprolite• Standard Cawse screen circuit• Coarse Silica reject pit backfill• Finer Screen, higher LFGMetal Extraction• Acid plant: acid, steam, power• Murrin PAL Autoclave- proven• Saprolite neutralises PAL acid• Saprolite 15,000 tpa Ni nil costMetal Precipitation• Murrin CCD & Neutralisation• Cawse Hydroxide Precipitation• Nil Technology riskSaproliteCircuitSaprolitePrimary CrusherBeneficationSaproliteNeutralisationSALMillingNickel/CobaltHydroxide PrecipitationSaproliteOre StockpileCrushedSaproliteStockpileCyclonesSaprolite ThickenerSulphurRejectsSulphuric AcidSecondaryNeutralisationBackfill to Mine PitsCoarse RejectsGoethiteOre StockpileRejectsWashing andHydroxide FiltrationCrushedGoethiteStockpileMillingCyclonesGoethite ThickenerAcid PlantSulphuric AcidUnderflowSteam HeatTailings NeutralisationCCD CircuitGoethiteCircuitPrimary CrusherAutoclavesTailings Storage FacNickel-CobalHydroxide

The KNP offers considerable upside potentialAttractive Financial PropositionThe recently completed Sinclair Knight Mertz (“SKM”) Scoping Studyhighlights the KNP’s attractiveness and robustnessBase Case - Real, Leveraged Project ReturnsPre TaxPost TaxNPVA$m891607IRR%2825Key Assumptions:‣ 10% discount rate‣ Project debt / equity mix of 70:30‣ Assumes a AUD/USD exchange rate of 0.65‣ Ni price of US$3.50 / lb (US$7714 / t)‣ Capex - AUD$1.4b‣ Annual production of 50,000 tpa of Ni in conc (35,000 t p.a. from Cawse style PAL plus 15,000 t p.a. fromseparate SALUnder the base case scenario, the KNP will typically generate the followingannual financial results:‣ Revenue of approximately $710m‣ Operating costs of $312m‣ Pre tax profit of $276m (post refining and capital replacement charges)

Attractive Financial PropositionCaseVariableNPV (A$M) at Discount Rate5% 7.5% 10%IRR at 30% taxBase Case1.5% Ni1,38791560725High Grade1.75%Ni1,9131,28086929Low Grade1.25% Ni82952032119High PriceUS$5.25 Ni / US$18.00 Co4,4323,1892,35859Low PriceUS$2.33 Ni / US$8.00 Co-927-846-769NAHigh CapexA$1,761M1,05363036317Low CapexA$1,127M1,6291,11878333High OpexA$390Mpa66136418014Low OpexA$249Mpa1,9271,31891832Long Ramp-upFull production in Yr 61,16971041618Short Ramp-upFull production in Yr 41,41894764027High Refining ChargeUS$0.50/lb Ni, US$3.00/lb Co1,19877349822Low Refining ChargeUS$0.30/lb Ni, US$2.00/lb Co1,5761,05571527

World Class ResourceAustralia’s highest quality nickel laterite project‣ Highest Australian laterite Ni grades• Ore zones have consistent chemistry• Thickest Australian nickel ore zones• Leach feed grade 1.5% Ni; 15% higher than Murrin Murrin‣ Resource base considerably largerthan Ravensthorpe and 10% highergrade• Global resource of 862 million tonneat 0.74% Ni & 0.05% Co• Under-explored – future resourceupgrades likely‣ Amenable to screen upgrade• Screen to minimum 130 million tonne at 1.5% Ni for processingTable 1Kalgoorlie Nickel Project total in situ Mineral Resourcesby Resource ClassificationJORC (1999)Resource Class Tonnage (Mt) % Ni % CoMeasured 12 0.96 0.079Indicated 154 0.83 0.055Inferred 696 0.72 0.048Total 862 0.74 0.05• 2 million tonnes contained nickel metal (US$30b of Ni at current price)‣ Excellent mix of ore types• Premium metallurgy siliceous goethite, PAL• Nontronite / saprolite for neutralisation, SAL‣ Tenements are 100% owned‣ Main resources are unencumbered

SignificantTenement HoldingStrategicobjectiveto dominateProvinceBHPMINARAHeronRavensthorpe

World Resource ComparisonTonnes400,000,000350,000,000300,000,000LateritesMurrin MurrinTotal KalgoorlieNickel Project250,000,000Ravensthorpe200,000,000CawseGuatemala150,000,000100,000,000BulongGoongarrieSiberiaGoro50,000,000KalpiniKazakhstanTurkey0Grade0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.90% 2.00%Source: IRESS, Company PresentationsNotes:Based on publicly available informationHeron information is based on a 0.75% Ni lower cutoff. This assumption has been adopted for

World’s s Best LocationWestern Australia is assessed to have the world’s best conditions for nickelprojectsWestern Australia also offers:‣ Extensive technical laterite knowledge - Murrin Murrin, Bulong, Cawse andRavensthorpe‣ Able to “piggyback” off the Ravensthorpe experience‣ WA Mining Act facilitates 42 year tenure‣ Proximity to key emerging markets (China and India)CountrySovereign WeightedProspectivity Fiscal Terms Terms RankingsWeightings 50% 35% 15% 100%Western Australia 94 96 96 95Chile 92 95 97 94Australia 77 98 99 88Brazil 78 91 97 85Canada 66 92 97 80China 61 90 88 75South Africa 59 87 71 70Turkey 50 85 96 69Kazakhstan 59 74 58 64Indonesia 55 82 10 58Venezuela 48 80 27 56Russia 50 62 57 55Philippines 40 77 54 55Zimbabwe 44 77 3 49“Many competingprojects are located inless favourable locationssuch as Indonesia,Philippines, NewCaledonia, Guatemalaand Kazakhstan”

Significantly Under-Valued Relative to“Peers”Heron Resources continues to trade at a significant discount to itsAustralian and international “peers” (both sulphide and laterite)July 2004ShareNi Mkt Cap /NPV / Premium /Exchange CodePrice Shares Mkt Cap Resource Resource NPV Share Discount to NPV($A) (m) ($Am) (kt) (A$/tonne) (A$) (A$) (%)Sulphide Companies - AustraliaJubilee Mines NL ASX JBM 4.18 125 523 46 11,390 357 2.85 46%Reliance Mining Limited ASX REM 0.44 125 55 21 2,643 32 0.26 71%Australian Mines Limited ASX AUZ 0.15 127 18 9 1,975NaWestern Areas NL ASX WSA 1.07 100 107 48 2,243 84 0.84 28%Mincor Resources NL ASX MCR 0.71 194 138 84 1,643 135 0.69 2%Sally Malay Mining Limited ASX SMY 0.75 151 113 81 1,405 98 0.65 16%Independence Group NL ASX IGO 1.07 110 118 83 1,428 112 1.02 5%Titan Resources Nl ASX TIR 0.30 181 54 94 579 69 0.38 -21%MPI Mines Ltd ASX MPM 1.65 134 222 1,078 206 205 1.53 8%Laterite Companies - InternationalOriel Resources Limited AIM ORI 1.24 164 203 242 841NaMinara Resources Limited ASX MRE 2.55 464 1,182 2,434 486 915 1.97 29%Canico Resource Corp. TSX CNI 14.84 41 610 2,245 272 1,041 25.31 -41%European Nickel Plc AIM ENK 0.53 110 58 405 143 141 1.28 -59%Jaguar Nickel Inc TSX JNI 0.52 102 53 2,482 22NaHeron Resources Limited ASX HRR 0.25 129 32 6,379 5 608 4.71 -95%Source: Company Reports, IRESS, Argonaut Capital Limited, Independent Mining Research‣ Heron Resources’ planned AIM listing is expected to start to address thisvalue discrepancy

Indicative Development MilestonesActivity (Quarters)Completed Resource StatementCompleted Scoping StudyIntroduction of Strategic InvestorPre-Feasibility StudyLondon AIM ListingTechnical PartnershipBankable Feasibility StudyOff Take PartnershipConstructionProductionJun-04Jul-042004 2005 2006 20072008Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep DecRecent Progress‣ Released Independent Resource Estimates completed by SnowdenMining Consultants‣ Released Independent Scoping Study completed by SKMContinuing to systematically advance towards production‣ Commencing Pre-Feasibility Study‣ Preparing for an AIM listing in Q4 FY2004 to fund Feasibility Studies

Technical Appendices

GoongarrieNickelOre Zones0.5% NiLode EnvelopeDaphne MinaSiliceous OreSylvia VirginiaSiliceous OrePatricia AnneGoethite Ore1.5% NiHigh Grade CorePamela JeanGoethite OreElsie TynanGoethite Ore0 3kmMavis IreneGoethite Ore

GoongarrieInterceptsGoongarrie South47m, 1.43%Ni, 0.228%Co43m, 1.22%Ni, 0.276%Co50m, 1.37%Ni, 0.203%Co43m, 1.39%Ni, 0.187%Co46m, 1.48%Ni, 0.111%Co39m, 1.42%Ni, 0.253%Co65m, 1.17%Ni, 0.074%Co89m, 1.19%Ni, 0.131%Co86m, 1.23%Ni, 0.081%Co77m, 1.32%Ni, 0.084%Co64m, 1.15%Ni, 0.076%Co48m, 1.41%Ni, 0.127%Co70m, 1.3%Ni, 0.152%Co63m, 1.23%Ni, 0.057%Co67m, 1.28%Ni, 0.076%Co74m, 1.29%Ni, 0.077%Co93m, 1.45%Ni, 0.08%Co57m, 1.28%Ni, 0.101%Co104m, 1.33%Ni, 0.087%Co81m, 1.24%Ni, 0.197%Co71m, 1.39%Ni, 0.15%Co49m, 1.47%Ni, 0.141%Co48m, 1.37%Ni, 0.124%Co59m, 1.33%Ni, 0.126%Co83m, 1.41%Ni, 0.154%Co56m, 1.33%Ni, 0.042%Co2 kmHERON’SGOONGARRIERESOURCE

Run-ofof-Mine Sections Contain ThickContinuous High Grade OreSection 69 400NGSRC928GSRC927GSRC926GSRC989GSRC877GSRC876GSRC875GSRC874GSRC87332m 1.42Ni1.5%Ni0.5%Ni1.0%NiPit Outline35m 1.37Ni43m 1.52Ni0 50m

With Locally SpectacularOre Thickness and GradeGSRC570GSRC1022GSRC907GSRC1036GSRC571GSRC1035Section 69 600N0.5%Ni81m 1.33Ni1.0%Ni1.5%NiPit Outline80m 1.22Ni0 50m

Contained nickel metalHeron exceeds World peersKN Project(screened)KN Project(non-screen)