Heron Resources Limited (TSX:HER)
Historical Stock Chart
1 Year : From Feb 2017 to Feb 2018
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 (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.
 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:
Mr Wayne Taylor
Managing Director and Chief Executive Officer
Tel: +61 2 9119 8111 or +61 8 6500 9200
Tel: +1 647-862-1157 (Toronto)