Kalgoorlie Nickel Project

Transcription

1 Kalgoorlie Nickel Project a rare combination of size, amenability to pressure acid leaching, political security, and environmental stability Why nickel laterites are back in fashion! A Presentation To the Sydney Mining Club March 2006 Mathew Longworth Chief Operating Officer, Executive Director Heron Resources Limited ASX: HRR

2 Disclaimer Forward Looking Statement The material used in this presentation is intended to be a summary of selected geological data, current and proposed activities, as well as resource estimates based on information available to Heron Resources at the time. It does not include all available information and should not be used in isolation as a basis to invest in Heron Resources. Any potential investor should refer to Heron Resources ASX releases and statutory reports before considering investing in the company. This presentation includes information relating to a completed independent scoping study, completed independent resource estimate and a feasibility study which is in progress and includes forward looking statements which include, without limitation, estimates of potential nickel in concentrate production based on mineral resources that are currently being evaluated. While the Company has a reasonable basis on which to express these estimates, any forward looking statement is subject to risk. Risks include, without limitation: nickel metal prices, foreign exchange rate movements, failure to meet joint venture milestones, project funding capacity, concentrate off-take contracts and estimates of future capital and operating costs. The Company does not undertake to release publicly any revisions to forward looking statements included in this presentation to reflect events or results after the date of this presentation, except as may be required under applicable securities laws.

3 Overview of Presentation Why Laterites Company Profile Track Record and Nickel Focus Kalgoorlie Nickel Project the right Partner the right Project the right Location Sulphide Nickel Project Nickel and Corporate Strategy

4 Company Profile Corporate Listed ASX August 1996 Focus on acquisition and exploration Aim to develop a long life nickel mine Capital Structure 165m shares at A$0.48, mkt cap A$79m A$11 million cash at bank, debt free Significant Shareholders Directors and associates 25.5% Inco Limited 9.9% BHP Billiton 9.6%

5 Track Record of Value Creation A dollar invested In Heron on listing is worth $1.80 In addition there have been two in specie distributions Avoca in 2002 equal to 0.56 cents Pioneer 2003 equal to 0.07 cents Today s value of a dollar invested in Heron on listing $2.43

6 Laterites never went out of fashion If you are serious about nickel you are serious about nickel laterites Each of Inco, BHPB, Falconbridge and Rio Tinto have assessed every laterite on the planet. WHY? Demand Supply Technology Inco and BHPB have converged on the KNP

7 Demand is Driven by China While global primary nickel demand for the period is forecast to increase at a moderate compound average growth rate of 3.5%, almost all of this is coming out of China. source Alan Heap Citigroup Outlook for supply and & demand- the China factor AJM Conference, Sydney 8-9 September 2005.

8 Growth in sulphide ore sources will be insufficient to meet demand WA Production Year on Year Source GSWA Sulphide Laterite DJF

9 Growth in sulphide ore sources will be insufficient to meet demand WA Resources and Reserves 35,000 30,000 Laterite 25,000 20,000 15,000 10,000 5,000 Sulphide DJF

10 Dominance of the laterites 8000 Mt Margaret/Murrin 7000 KNP 6000 Contained Nickel (kt) Ravensthorpe Weld Range Wingellina Sulphides Laterites Mt Keith Leinster Yakabindie Honeymoon Well Ranked on Contained Nickel (kt) Cosmos

11 KNP Location Located North and East of Kalgoorlie Centred around a centralised processing plant Total resource base of 903mt at 0.74% Ni and 0.04% Co

12 Inco the Right Partner for KNP Inco selected following global search A premier integrated nickel producer Market Capitalisation US$8 billion Estimated net cash US$1.8 billion 200,000tpa nickel, second largest producer Proposed merger Falconbridge, N o 1 World leader in nickel laterite projects PT Inco 60,000tpa Ni production Goro planned 60,000tpa Ni production

13 Inco Farm-in & JV Attractive Terms Subject to meeting technical milestones, Inco sole funds Feasibility Study Pre-Feasibility, minimum US$18m Full Feasibility, minimum US$50m Inco earn 60% on completion of Feasibility and securing project funding Inco procures all project debt funding Heron equity fund cap 4.5% of total equity Inco lends Heron its remaining equity funds

14 Inco JV Funding Mechanisms Assumptions $1.4 billion project construction cost Debt : equity = 70 : 30, $980m Debt, $420m Equity Debt project finance procured by Inco Equity finance KNP JV 60:40, Inco $252m, Heron $168m Heron capped at 4.5% of equity, $19m Inco lends Heron $149m, repay cashflow

15 Inco Farm-in -Timing Milestones Step 1, confirm 120mt at 1.5% Ni Diamond drilling, screening studies Completion deadline July 2006 Step 2, flow sheet selection Batch metallurgy and mini-pilot, Sep 2007 Step 3, resource and engineering Resource drill out, plant design, Jan 2009 Feasibility Study Bankable, completion deadline July 2011

16 Screened slurry Limonite 40% Leach feed grade 1.5% Ni Inco Farm-in - Step 1 & 2 Metallurgy Screen Upgrade Scrubbed slurry into pilot plant trommel screen deck Screened rejects Silica fragments 60% Reject grade 0.3% Ni Run-of-mine siliceous ore Consisting of yellow-brown limonite and coarse silica 0.8% Ni

17 Inco Farm-in Step 3 Resource Definition lots of Work for Inco 1.86% Ni (Avg) 1.61% Ni (Avg) Max Ni (%) 1.5 to 10,000 1 to to to to to mn Cross Section 1.45% Ni (Avg) 1.2% Ni (Avg) East Mineralised Zone West Mineralised Zone 1.57% Ni (Avg) mn SIBERIA NORTH PROJECT RECENT DRILLING MAX LEACH FEED GRADE NICKEL (%) 75 MICRON SCREENED Metres Weighted average average leach leach feed feed grades grades

18 KNP Nickel Screen Upgrade mE mE mE mE mE 400RL 0.67% Ni 0.57% Ni 0.75% Ni 0.96% Ni 1.02% Ni 1.00% Ni 1.13% Ni 2.21% Ni nontronite ore, no upgrade GOOGARRIE HILL PROJECT Section N Nickel Head Grade Note x 4 vertical exaggeration 1.00% Ni 24 metres at 1.00% Nickel grade without screening

19 KNP Nickel Screen Upgrade mE mE mE mE mE 400RL 0.67% Ni 0.95% Ni LFG 0.57% Ni 1.05% Ni LFG 0.75% Ni 1.68% Ni LFG 0.96% Ni 1.65% Ni LFG 1.00% Ni 1.72% Ni LFG 1.02% Ni 2.09% Ni LFG 1.13% Ni 1.19% Ni LFG 2.21% Ni 1.22% Ni LFG nontronite ore, no upgrade GOOGARRIE HILL PROJECT Section N Nickel Screen Upgrade Note x 4 vertical exaggeration 1.72% Ni LFG 24 metres at 1.72% Nickel Leach feed grade after screening at 0.075mm, based on bottle roll testwork

20 KNP the Right Project Among largest undeveloped Ni projects Heron s vast nickel footprint is unique Focus on Goongarrie-Siberia siliceous ore 455mt at 0.7% Ni and 0.05% Co Screen beneficiation 1.5% Ni leach feed Target 120mt leach feed, >4mtpa for 25 yrs Limonite ore, premium metallurgy Pressure Acid Leach (PAL) processing PAL proven at Moa Bay and Cawse

21 KNP the Right Project Heron s substantial tenement holdings underpin resource base Mainly 100% owned and unencumbered Historically underexplored Inco s funding means this will change BHP BILLITON MINARA HERON LEONORA Goongarrie KALGOORLIE Ravensthorpe ESPERANCE Murrin Murrin Kalpini Bulong

22 The Right Location Infrastructure Rail Gas Road Ports Goongarrie Kalgoorlie Murrin Murrin Refinery Leonora Laverton Kalpini Bulong KWINANA KALGOORLIE ESPERANCE Esperance

23 Execution of formal agreement 01-Dec Sep Jun-05 Milestone Driven Growth 160 Inco JV, Placement 140 BHPB on Register Scoping study and resources Market Cap M AUD Mar Dec Sep Jun Mar Dec-03 Date What laterites can deliver

24 Proposed Sulphide Nickel Project Explore Heron s ultramafic holding Heron will control initial exploration Proposed that Inco will: Fund 100% of costs on defined projects Keep KNP land holding in good standing

25 WILDARA NORTH Yilgarn ultramafics WINDARRA Nickel mines Laverton Sulphide Laterite Leonora MURRIN MURRIN MINERAL PATCH EMU LAKE Heron Ni-Sulphide Prospect SNAKE HILL Heron tenements Goongarrie GHOST ROCKS HIGHWAY BARDOC CAWSE Kalgoorlie CARR BOYD LAKE REBECCA EMU LAKE PINNACLES SOUTH ACRA NORTH YINDARLGOODA Kalpini Sulphide Nickel Project Tenements and Nickel Sulphide Targets GIBRALTAR NEPEAN CARNILYA HILL KAMBALDA WIDGIEMOOLTHA Bulong ROE HILLS SOUTH

26 Nickel and Corporate Strategy Heron investment offers a unique mix of fundamentals, near-term & long-term Strong shareholder returns Milestone driven upside, associated with development of world class nickel project Sulphide Nickel blue sky Strong shareholder returns Exposure to strong long term nickel market Ability to invest alongside major nickel players Inco & BHPB Fully funded path towards 40% interest in long-life 50,000 tpa Ni operation

27 ASX: HRR Mathew Longworth Chief Operating Officer and Executive Director Phone: mlongworth@heronresources.com.au