Heron Resources Limited (TSX:HER)
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6 Months : From Feb 2017 to Aug 2017
Heron Resources Ltd. (TSX: HER; ASX: HRR) ("Heron" or the "Company") announces its quarterly activities for the three months ended March 31, 2017. Details of the Company's results are contained in the filing “Heron Resources Limited Quarterly Report March 2017” which is available on SEDAR at www.sedar.com and the Company's website www.heronresources.com.au
March Quarter 2017 Highlights
Woodlawn Zinc-Copper Project
- Front End Engineering Design (FEED): Work with Sedgman saw the finalisation of the plant layout design, tendering of construction earthworks and completion of the major plant equipment packages
- Project Readiness: Continuation of site activities focused on the site water balance, water treatment, mine dewatering and land subdivision for purchase
- Project Financing: Negotiations and documentation are well advanced with debt and equity providers and the Company expects that the financing process will be completed in the current quarter. Significant progress was made with a number of pre-financing activities:
- Due diligence – project financing related technical review activities have been completed
- Veolia Cooperation Agreement – the Company entered into a new cooperation agreement with Veolia covering the shared use of the Woodlawn Site
- Environmental Protection Licence - NSW Environment Protection Authority (EPA) issued Heron’s environment protection licence (EPL)
- EPC & Offtake Contracts – contracts covering the Engineering, Procurement and Construct of the Woodlawn processing facility and the concentrate offtake are in their final stages with award expected in the next month
- G2 Lens: New drilling program initiated targeting an expansion to shallow reserves as initial plant feed – drilling will focus on the high grade G2 Lens hanging-wall zone discovered in 2016
- Kangiara Project: (90 km NW of Woodlawn): Strong soil geochemistry anomalism provides potential for a significant McPhillamys style greenfields gold and base-metal discovery at the Crosby Prospect – RAB drilling to commence in May to test key areas
- Ardea Resources: Spin-out of the Company’s non-Woodlawn assets into Ardea Resources resulting in a successful ASX listing on 9 February 2017, currently trading at $0.60, significant value creation for Heron shareholders
- R&D: On 13 March 2017 the Company received the 2015/16 R&D activity refund totalling A$3.2M
- Cash: Heron held A$16.3M in cash (excluding bonds) and A$4.7M in investments as at 31 March 2017
Woodlawn Project – Development Progress
The Company is currently focused on a number of work streams to enable the commencement of construction immediately following the closing of project finance arrangements. Components of this work are also required as part of the project financing process. The main work activity areas included:
- EPL Licence – On 29 March the NSW Environment Protection Authority (EPA) issued Heron’s environment protection licence (EPL) (refer below);
- Veolia – The Company entered into a new Cooperation Deed with Veolia Environmental Services (Australia) Pty Ltd governing the joint use of the Woodlawn Project site (refer below);
- Project Engineering – Sedgman Pty Ltd (Sedgman) progressed front-end engineering design (FEED) for the plant and infrastructure of the Woodlawn Project. Work completed included the finalisation of the plant layout design, tendering of construction earthworks and major equipment packages. Engineering design is ongoing and approximately 20% completed;
- Mine plan –Mine re-entry planning continued during the quarter. Work focused on planning for probe drilling to place fill into existing workings adjacent to the landfill. This probe drilling will commence in the current quarter and will be conducted using a specialist geotechnical engineering company;
- Water management – Water management activities saw the continuation of emptying Tailings Dam South in readiness for tailings mining. This work will slow over the coming cooler months. Mine dewatering is scheduled to commence in the current quarter;
- Water treatment – Water treatment test work was completed during the quarter and invitations to tender to service providers is underway; and
- Community – The quarterly project community consultation committee met in February with no concerns being raised. The Company exhibited at the Tarago Show in March with strong interest expressed in the employment opportunities the project will bring to the local community.
Project Finance – The Company has continued to advance negotiations and documentation with debt and equity providers for the project development funding. These discussions have taken longer than desired and initially anticipated; however, they are now well advanced and the Company expects that the financing process will be completed in the current quarter.
- In addition to these discussions, significant progress was made with a number of pre-financing activities:
- Due diligence – project finance related technical and commercial review activities have been completed with strong results;
- Veolia Cooperation Agreement – The original Cooperation Deed with Veolia Environmental Services Australia Pty Ltd (“Veolia”) was entered into in 2008 and reflected the project as it was understood at that time. The project studies since this time resulted in a number of technical changes to the profile of the project and these factors, along with Veolia’s continued development of their activities on site, meant a detailed review and update of the previously agreed Cooperation Deed was required to ensure that it remained relevant and complete. The new agreement deals with the respective Heron and Veolia areas, rights and responsibilities associated with the joint use of the site. Specifically the agreement covers:
- Delineation of Heron and Veolia area of operations;
- Establishment of a committee comprising Heron and Veolia representatives to consider site interaction aspects;
- Heron’s right to purchase the freehold lands covering its area of operation;
- Division of site rehabilitation obligations and provision of compost material from Veolia for mine-site rehabilitation;
- Working offset distances and controls to minimise impact on operations;
- Management of site water with an overall principle of maintaining a zero discharge site; and
- Commercial terms including insurance coverage, environmental bond and the provision of a bank guarantee.
- Environment Protection Licence – On 29 March 2017 the Company was issued its Environment Protection Licence (No. 20841) (EPL) from the NSW Environment Protection Authority (EPA) covering proposed construction, mining and processing activities at the Woodlawn Project site. This is the final licensing requirement prior to the commencement of construction activities at Woodlawn. In relation to the Woodlawn Project the EPL covers:
- the permitted activities;
- management of site activities and their impact on the environment;
- the setting of limits for water, noise, blasting, hours of operation and odour;
- monitoring and recording requirements; and
- reporting obligations to the EPA.
- EPC - the Engineering, Procurement and Construct (EPC) contract for the Woodlawn processing facility is in a final draft form with award expected in the next month; and
- Offtake Contracts – Contracts covering the offtake for the zinc, copper and lead concentrates are in their final stages with award also expected in the next month.
Woodlawn Exploration - G2 Lens Drilling
- Woodlawn exploration activities are currently focusing on finding additional mineralisation proximal to the planned decline and able to be accessed early in the mine schedule. In particular, the G2 Lens, described below, shows promise in this regard.
- A drilling contract has been entered into with the program expected to take two to three months to complete. It is important to note that this drilling program is not a pre-requisite to project financing and is being undertaken now to complete mine planning stope design prior to the start of mine development.
- The G2 Lens is located to the south of the Kate Lens, and adjacent to the planned route of the decline between 100-200m below the surface. Drilling in 2016 targeted this area to test its ability to add immediately to the early mine inventory.
About Woodlawn Zinc-Copper Project
Heron’s primary development project is the high grade Woodlawn Zinc-Copper Project located 250km southwest of Sydney, New South Wales. The project consists of both a high grade underground and a large medium grade tailings resource. The development approach envisages the construction of a single 1.5Mtpa processing plant capable of treating material from both sources. Planned production will see the generation of three separate base metal concentrates (zinc, copper and lead) with associated precious metal credits. In addition, the project is very well supported by excellent infrastructure, an existing mining lease and state government development approvals.
Woodlawn is expected to become an important Australian near term zinc producer delivering concentrates into a market with strong supply and demand fundamentals underpinning a strong commodity price.
About Heron Resources
Heron’s primary focus is the development of its 100% owned, high grade Woodlawn Zinc-Copper Project located 250km southwest of Sydney, New South Wales, Australia.
FOR FURTHER INFORMATION, CONTACT:
Mr Wayne Taylor Tel: +1 647 862 1157 (Toronto)
Managing Director and Chief Executive Officer firstname.lastname@example.org
Tel: +61 2 9119 8111 or +61 8 6500 9200 www.heronresources.com.au
CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
This news release contains forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws, which are based on expectations, estimates and projections as of the date of this news release. This forward-looking information includes, or may be based upon, without limitation, estimates, forecasts and statements as to management’s expectations with respect to, among other things, the timing and amount of funding required to execute the Company’s exploration, development and business plans, capital and exploration expenditures, the effect on the Company of any changes to existing legislation or policy, government regulation of mining operations, the length of time required to obtain permits, certifications and approvals, the success of exploration, development and mining activities, the geology of the Company’s properties, environmental risks, the availability of labour, the focus of the Company in the future, demand and market outlook for precious metals and the prices thereof, progress in development of mineral properties, the Company’s ability to raise funding privately or on a public market in the future, the Company’s future growth, results of operations, performance, and business prospects and opportunities. Wherever possible, words such as “anticipate”, “believe”, “expect”, “intend”, “may” and similar expressions have been used to identify such forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and on information available to management at such time. Forward-looking information involves significant risks, uncertainties, assumptions and other factors that could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors, including, but not limited to, the ability to implement the Woodlawn Zinc-Copper Project Feasibility Study on time or at all, fluctuations in currency markets, fluctuations in commodity prices, the ability of the Company to access sufficient capital on favourable terms or at all, changes in national and local government legislation, taxation, controls, regulations, political or economic developments in Canada, Australia or other countries in which the Company does business or may carry on business in the future, operational or technical difficulties in connection with exploration or development activities, employee relations, the speculative nature of mineral exploration and development, obtaining necessary licenses and permits, diminishing quantities and grades of mineral reserves, contests over title to properties, especially title to undeveloped properties, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other geological data, environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding, limitations of insurance coverage and the possibility of project cost overruns or unanticipated costs and expenses, and should be considered carefully. Many of these uncertainties and contingencies can affect the Company’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Prospective investors should not place undue reliance on any forward-looking information. Although the forward-looking information contained in this news release is based upon what management believes, or believed at the time, to be reasonable assumptions, the Company cannot assure prospective purchasers that actual results will be consistent with such forward-looking information, as there may be other factors that cause results not to be as anticipated, estimated or intended, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of any such forward-looking information. The Company does not undertake, and assumes no obligation, to update or revise any such forward-looking statements or forward-looking information contained herein to reflect new events or circumstances, except as may be required by law.
No stock exchange, regulation services provider, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.
Mr Wayne Taylor
Managing Director and Chief Executive Officer:
+61 2 9119 8111 or +61 8 6500 9200
+1 647 862 1157 (Toronto)