Heron Resources Limited (ASX:HRR TSX:HER, “Heron” or the
“Company”) is pleased to advise that it has awarded an
Engineering, Procurement and Construction (EPC) contract for its
wholly-owned Woodlawn Project to Sedgman, a member of the CIMIC
Group (Sedgman).
- Heron executes a A$107M guaranteed maximum price EPC
contract with Sedgman for a 1.5 million tonne per annum mineral
processing plant and associated infrastructure at
Woodlawn
- This major milestone positions Heron to commence
construction and development immediately following completion of
project financing
The EPC contract follows a front-end engineering design (FEED)
program that commenced in October 2016 after the completion of the
Woodlawn Project Feasibility Study. The scope of the EPC
contract is for a 1.5 million tonne per annum mineral processing
plant to enable the processing of both underground and tailings ore
to produce zinc, copper and lead concentrates. The design
also includes a paste backfill plant and supporting infrastructure
at the project site, located near Tarago, 250km southwest of
Sydney, New South Wales, Australia.
The EPC contract is in the form of a guaranteed maximum price
(GMP) of A$107 million with cost under-run and performance
incentives to support an early completion and under budget
result.
Heron Resources Managing Director and CEO, Mr Wayne Taylor,
said:
“This contract award follows the successful undertaking of a
FEED program that included a value engineering approach
incorporating significant improvements on the earlier feasibility
study work. The nature of the contract, which includes guaranteed
maximum price and performance incentives, aligning Sedgman and
Heron in delivering an under-budget and early result. We are
very pleased to be working with Sedgman as they have demonstrated
their ability to provide a superior solution with technical and
commercial advantages, having already delivered a reduction in
projected capital expenditure. The execution of this contract
represents another important milestone in Heron’s progress to
become an important Australian zinc producer.”
Figure 1: 3D view of the Woodlawn process plant
Full project engineering is approximately 20% complete (to
March) and onsite work is scheduled to commence immediately
following the completion of project financing. More than 250
personnel will be employed on the construction project at its peak,
with acceptance testing (production) scheduled for late 2018.
Work by Sedgman in the lead-up to entering this contract has
enabled the Company to reduce the estimated plant and
infrastructure capital cost at Woodlawn by A$8.7 million.
Further project refinement by Heron has resulted in bringing
forward the timing of the initial underground development thereby
improving project economics and reviewing contingencies that are in
addition to those provided for and capped in the EPC
contract. This brings the revised initial capital estimate to
A$151.6 million, which includes A$105.8 million of plant and
infrastructure, A$13.2 million of underground mine establishment
costs, A$20.2 million of engineering and owners’ costs and A$12.4
million of contingency.
Sedgman is a wholly owned subsidiary of CIMIC Group Limited and
is based in Brisbane with design offices in Perth and Vancouver.
Sedgman has completed numerous EPC and GMP projects and first
worked on the Woodlawn Project in 2007 through the completion of an
earlier detailed project study.
The process treatment facility will be delivered in stages that
aligns with mine development. The facility will commence with
the tailings reprocessing and will switch over to underground
processing when ore is available. Infrastructure to support
the project includes an administration complex with offices, change
rooms, car parking, workshops, laboratory, water treatment,
infrastructure and power supply.
The Woodlawn Project Feasibility Study delivered ore reserves of
2.8 million tonnes at 14% ZnEq[1] (5.5% Zn, 1.6% Cu, 1.9% Pb,
0.45g/t Au and 42 g/t Ag) from underground and 9.5 million tonnes
at 6% ZnEq (2.2% Zn, 0.5% Cu, 1.3% Pb, 0.31g/t Au and 31 g/t Ag)
from reclaim tailings ore. The Company is continuing to progress
the project including the recently announced program targeting the
resource expansion at the shallow G2 Lens position along with
confirmatory drilling of the initial decline route, and shallow
mine excavation drilling to assist with backfilling.
The Company has also continued to advance project financing
negotiations and documentation with debt and equity providers.
These discussions are now well advanced and the Company expects
that the financing process will be completed in the current
quarter. Whilst the EPC is still subject to project financing, the
execution of the contract represents one of the key pre-financing
activities. Heron looks forward to working with Sedgman to bring
Woodlawn into production.
About Heron Resources Limited:
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.
[1] ZnEq % used in this release refers to the calculated Zn
equivalent grade based on the Zn, Cu, Pb, Au and Ag grades.
The zinc equivalent ZnEq calculation takes into account, mining
costs, milling costs, recoveries, payability (including transport
and refining charges) and metal prices in generating a Zinc
equivalent value for Au, Ag, Cu, Pb and Zn. ZnEq =
Zn%+Cu%*3.12+Pb%*0.81+*Au g/t*0.86+Ag g/t*0.03.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
INFORMATION
This report 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 report. 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,
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 report 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 report.
For further information, please visit www.heronresources.com.au or contact:
Australia:
Mr Wayne Taylor
Managing Director and Chief Executive Officer
Tel: +61 2 9119 8111 or +61 8 6500 9200
Email: heron@heronresources.com.au
Canada:
Tel: +1 647-862-1157 (Toronto)