abn 30 068 263 098 heron resources nl€¦ · as at 30 june 2000, the total indicated and inferred...

Heron Resources NL

21 Close Way, West Kalgoorlie

PO Box 1280, Kalgoorlie,

Western Australia 6430

Telephone: (08) 9091 9253

Facsimile: (08) 9091 9256

Email: [email protected]

www.heronresources.com.au

Heron, with the Rotary Club of Hannans and Rotary Internationalsupports the special education needs of East KalgoorliePrimary School. One project involved minesite and bushexcursions, with the children’s impressions captured in their art.Salena Abdullah’s painting was chosen to featureon the cover of this report.

The title of Salena’s painting is “Binduli”.

“My painting is of the manmade and natural environment.In the background is the revegetated land.In front is a road that leads to the mine.The colour represents the earth”.

The accompanying photographic image of the HeronGoongarrie Project on the front cover can also be described bySalena’s words.

ABN 30 068 263 098

Reynold

s Grap

hics, Kalgoorlie 11839

mailto:[email protected]

http://www.heronresources.com.au

COMPANY SECRETARYRoss James Arancini BBus, ACA - Company Secretary110 Hensman Street, South Perth, Western Australia, 6151Telephone: (08) 9367 1213 Facsimile: (08) 9367 7853Email: [email protected]

REGISTERED AND PRINCIPAL OFFICE21 Close Way, PO Box 1280, Kalgoorlie, Western Australia, 6430Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256Email: [email protected]: http://www.heronresources.com.au

AUDITORSButler Settineri Chartered Accountants35-37 Havelock Street, West Perth, Western Australia, 6005

SOLICITORS TO THE COMPANYMcKenzie Lalor74 Egan Street, Kalgoorlie, Western Australia, 6430

Pullinger Readhead Stewart46-50 Kings Park Road, West Perth, Western Australia, 6005

BANKERSChallenge Bank, 230-236 Hannan Street, Kalgoorlie, Western Australia, 6430

CORPORATE ADVISORCarmichael First Capital Pty LtdLevel 11, 77 St Georges TerracePerth, Western Australia, 6000

SHARE REGISTRYSecurity Transfer Registrars Pty Ltd Level 1, 168 Adelaide Terrace, Perth, Western Australia, 6000Telephone: (08) 9221 4200 Facsimile: (08) 9221 1581Email: [email protected]

STOCK EXCHANGEAustralian Stock Exchange Limited2 The Esplanade, Perth, Western Australia, 6000

ASX CODEHRR

SEAT ABBREVIATIONHeron

HOME BRANCHPerth

INDUSTRY CLASSIFICATIONOTHER METALS - 022 BASE METALS

RESEARCH SERVICE INDEX NUMBERMining H50

ISINAU000 000 HRR6

Corporate DirectoryHeron Resources NL

In the CommunityHeron Resources NL

All inset artistic contributions are from the students of East Kalgoorlie Primary School; See inside back cover.

All photographic page art was taken at Heron’s Goongarrie Nickel Project by Justin Madden, Reynolds Graphics Kalgoorlie.Heron sponsored an Art Prize and Exhibition for the students of East Kalgoorlie Primary School. Salena’s work was selected to feature on the front cover.

Other works featured throughout this report are testimony to the creative skills of the students of East Kalgoorlie Primary School.

Heron would like to thank the team at Reynolds Graphics for their expertise and professionalism in the design and production of this report.

Heron Resources NLExploration and Administration Office21 Close Way, West Kalgoorlie

Back Row, from left: Derrick Sceghi, Kenneth Jackson,

Wyvern Jackson, Kevin Banks,Teacher: Amber Lewington,

Merita Stevens, Naomi Ellis, Krystal Foley, Andrea Munmurrie

Front Row, from left:Natalia Tucker, Tony Champion,Shane Stokes, Leith Stevens,Salena Abdullah, Marika Smith, Kim-Thi Nguyen, Joelene TuckerAbsent: Charis Abdullah, Cheynne Graham,Andrew Abdullah

Project Geologist (and starwinger for Boulder Rugby

Union Football Club)Simon Gobbett and

Administration Manager Sue Geary.

Please telephone Sue on(08) 9091 9253

if you wish to discuss anyaspect of Heron’s operations.

Heron Hospitality TentIan Buchhorn, Pam Buchhornand Shyama Peebles, theCentenary EventsCo-ordinator.

East Kalgoorlie Primary SchoolGrades 3 to 7

The Artists:

The Heron Team at the Balzano Barrow Race.

Laverton Centenary Cricket Tournament

Doreen, Paula, Eva and Coral from NTP atthe new childrens health clinic

which Heron has helped to purchase.

Rodney Michael Evans

FCA, FCIS, FCIM, AIArbA

Chairman (Non Executive)

21 Close Way, Kalgoorlie, Western Australia, 6430

Ian James Buchhorn

BSc (Hons), Dipl Geosci, MAusIMM

Managing Director (Executive)

21 Close Way, Kalgoorlie, Western Australia, 6430

Robert George Colville

AssocRMIT, MAusIMM

Director (Non Executive)

Level 1, 1 Sleat Road, Applecross, Western Australia, 6153

Peter James Lee

BBus, CA, FCIS, MAICD

Director (Non Executive)

210 Kings Way, South Melbourne, Victoria, 3205

DirectorsHeron Resources NL

Heron Resources NL Annual Report 2000 page 1

ContentsAnnual Report 2000

1.0 Chairman’s Review...............................................................................................3

2.0 Operations Review ...............................................................................................4

3.0 Corporate Profile ................................................................................................38

4.0 Directors’ Report ................................................................................................40

5.0 Financial Statements........................................................................................45

Profit and Loss Account.................................................................................45

Balance Sheet ......................................................................................................46

Statement of Cash Flow.................................................................................47

Notes to and Forming Part of the Accounts ......................................48

Directors’ Declaration......................................................................................60

6.0 Independent Audit Report .............................................................................61

7.0 Shareholder Information ................................................................................62

8.0 Interest in Mining Tenements ......................................................................65

Glossary of Terms ..............................................................................................79

Photo: Robert Colville, Rodney Evans, Ian Buchhorn

Heron Resources NL

page 2 Heron Resources NL

Annual Report 2000

Annual Report 2000

400,

000m

E

6,800,000mN

6,600,000mN

6,400,000mN

200,

000m

E

Sandstone

Laverton

Leonora

Southern Cross

KALGOORLIE

Coolgardie

Kambalda

Salmon Gums

Menzies

50km

Murrin Murrin

Cawse

Bulong

Balladonia

Balladonia West

Karonie South JV

Transline JV

Kurnalpi JV

Kalpini

Maggie Hays Hill

Pioneer

Bullabulling

Bungalbin

Goongarrie

Edjudina

Ghost Rocks

Aubils

Merolia

Mount Varden

Victory JV

FrancesLesley

LawrenceFind

SnakeHillJV

MtMartin

Southern LavertonTectonic Zone

BinduliJV

MungariNW

BlisterDam

GindalbieTerrane

Mulgabbie

Mineral Patch Hill

Victory North

KookynieJV

Dunnsvilles

Widgiemooltha JV

Norseman

Photo Strip: Drilling Contractor Deep Mining Pty Ltd has continued its professional work throughout 2000. The excellent Diamond Drillvalidation results are an endorsement of Deep Mining’s attention to detail and quality assurance.

Figure 1 - TENEMENT HOLDINGS

1.0 Chairman’s Review

It is with pleasure that I present the fifth Annual Report of Heron Resources NL (“Heron”). Exploration and development success during2000 at the Goongarrie Nickel Project has resulted in the Company identifying a deposit acknowledged to be one of the premium ore occurrences in terms of grade, thickness and metallurgy that has been recorded within the fledgling AustralianNickel Laterite industry. Goongarrie is part of the Cawse Stage II Heron - Centaur Strategic Alliance.

A year ago, Goongarrie was an inferred deposit drilled on an 800x80m pattern. In just 12 months, Heron has advanced its technicalwork such that:• Resource Definition Reverse Circulation drilling continued almost non-stop, with 36,920m in 782 holes completed.

Strict rehabilitation procedures are in place, to ensure that environmental disturbance is minimised during the intense drill activity.• Confirmation Diamond Drilling was completed, consisting of 406m in 8 holes, which validated the RC drilling data and

confirmed an excellent quality ore body.• Detailed metallurgical evaluation commenced at the Lakefield Oretest metallurgical laboratory, Perth, with 16 Goongarrie bulk

samples currently under test. Results to date have been excellent.• Archaeological, ethnographic, flora, fauna, photogrammetry and baseline environmental surveys were completed,

and tenement and hydrological surveys were commenced.

As at 30 June 2000, the total Indicated and Inferred Mineral Resource above a 0.75% Ni cut-off for Goongarrie-Ghost Rocks-Kalpini and satellite nickel projects was 182.1 million tonne at 1.07% Ni and 0.08% Co.

The Indicated and Inferred Mineral Resource above a 0.50% Ni cut-off for the Goongarrie-Ghost Rocks-Kalpini and satellitenickel projects was 405 million tonne at 0.8% Ni and 0.06% Co. The fully diluted Mineral Resource was 474 million tonne at 0.7%Ni and 0.05% Co, with contained metal of 3.4 million tonne nickel and 0.3 million tonne cobalt.

The Goongarrie ore body will be a major factor in the continuing expansion of the Australian Nickel Laterite industry. This factor has been widely recognised. On 8 February 2000, Centaur Nickel Investments Pty Limited, a wholly-owned subsidiary ofCentaur Mining & Exploration Limited, launched a Part C takeover bid to acquire the issued capital of Heron at 30 cents per Share.On 14 March 2000, Heron responded to the bid with a Part D Statement which included an Independent Expert’s Report valuing HeronShares at 77 to 99 cents, with a preferred value of 86 cents per Heron Share. The Independent Directors of Heronrecommended that Shareholders reject the offer by Centaur. The bid lapsed on 25 May 2000 without Centaur acquiring any Sharespursuant to the bid. The Shares have since traded in a range of 32 to 45 cents.

At the date of this report, Centaur is completing a Pre-feasibility Study (“PFS”) for Cawse Stage II, but the results have not as yet beenpublished. It is not known whether Centaur will proceed to a Bankable Feasibility Study (“BFS”) for Cawse Stage II.

During the year, Peter Lee replaced Ken Hellsten as Centaur’s Nominee Director. The Company was fortunate to have access to Ken’sfinancial and technical knowledge of the lateritic nickel industry, and acknowledges Ken’s contribution to the Company’s growth.

Highlights of the Company’s tenement activities during 2000 have been:• Consolidation of the Nickel Laterite tenement holding. This has involved pegging, outright tenement purchase, and the

active trading of non-nickel tenements for demonstrated Nickel Laterite occurrences. The Heron tenement portfolio has remainedconstant at around 400 tenements, with non-nickel tenements progressively replaced by nickel tenements.

• Securing a new Nickel Laterite project area at Merolia-Mineral Patch Hill, 60km SE of Laverton.• Securing 20km of strike of ultramafic-hosting Boorara Shear Zone immediately north and east of Kalgoorlie.

The acquired ground is prospective for gold, being a comparable geological setting to that hosting the Paddington and Kanowna Belle gold mines.

• Consolidation of the Balladonia Oil Shale Project. With escalating oil prices, Oil Shale development interest is increasing.

Your Board’s continuing objective for the Company is to maximise growth for Shareholders through the identification, acquisition,evaluation and development of high quality mining projects. To this end, the Company’s Cawse Stage II Toll Milling agreement withCentaur is intended to bring the Goongarrie Nickel Project into production as the initial cash flow project for the Company.

It is pleasing for Shareholders to reflect upon the market’s positive re-rating of our Company during 2000, with a share price increasein the order of 300% since 30 June 1999. The Board acknowledges the enthusiastic efforts and technical professionalism of itsmanagement and staff, and takes this opportunity to express its sincere thanks.

Chairmans ReviewHeron Resources NL


RM Evans, Chairman

2.0 Operations Review

HERON’S ACHIEVEMENTS

• During 2000, Heron has doubled its Inferred Mineral Resource, and upgraded 34.3 million tonne or 19% of the resource to an Indicated Mineral Resource status.

• Goongarrie South has developed into a deposit with exceptional early cashflow potential:

• Grade, at around 1.1% Ni and 0.1% Co, Goongarrie South has amongst the highest documented grades foran Australian laterite. Selective mining can deliver significant tonnages at 1.3% Ni and 0.4% Co.

• Metallurgy, excellent leaching and rheological performance, which is characteristic of Limonite Ore.

• Width and continuity, excellent with high grade zones continuous over strike lengths exceeding 2km andwidths exceeding 160m. This favours future low cost bulk mining.

• Highest ore grades are accessed early in the mining, with bonanza grade cobalt occurring at the topof the ore body. This is important for early project payback.

• During 2000, genuine production opportunities have been negotiated by Heron:

• The Cawse Stage II Toll Milling Strategic Alliance is Heron’s current focus, and has a potential production creditfor Heron of 12,000tpa nickel metal.

• A jointly-developed processing plant based in part on Keith Kilkenny Province Nontronite Ore is under discussion,with a potential production credit to Heron’s account of at least 20,000 tpa nickel metal in intermediate product.

• Subject to Cawse Stage II ore requirements as determined by the Centaur August 2001 BFS, critical masshas been demonstrated for a Standalone Heron-owned processing plant based on Heron’s Walter WilliamsFormation Limonite Ore.

• As part of a 30 year Strategic Plan, Heron has continued to secure strategic resources of commoditiesrequired as potential feed-stocks for processing Nickel Laterite. This will protect a potential $1.4 billioninvestment against unforeseen operating cost pressures. In all cases, Heron has sought to Joint Venture thesetenements, but retain strategic revenue streams and Off-take rights. An increasingly valuable asset is the Oil Shale.

• Reflecting on-going excellent drilling results during 2000, Heron has expended $2.5 million onexploration and has been continually drilling throughout the year:

• At Goongarrie South, Heron completed 598 Reverse Circulation (“RC”) holes for 30,379 metres to confirmresource continuity at 80x80m, and 8 PQ Diamond Drill (“DD”) metallurgical holes for 406 metres.

• At Goongarrie Hill, Heron completed 155 RC holes for 5,211 metres, including a 20x20m pattern toelucidate structural controls on mineralisation and confirm ore body lateral continuity.

• At Scotia Dam, Heron completed 29 RC holes for 1,330 metres to outline resources and confirm geology.

• The Company’s working capital position is robust at $3.9 million (at 30 June 2000), and is such that thecash demands of the proposed 2001 drilling programs are well accommodated. This cash position has arisenthrough the exercise of 10.15 million Options during the year, raising $2.54 million.

Heron has developed a key position within the Australian Nickel Laterite industry, particularly in the event of anyindustry rationalisation, as demanded by the capital-intensive nature of the industry. Goongarrie is a premium producton all counts, including high start-up Ni-Co grades, ability to bulk mine, ability to blend Limonite Ore with lower qualityores, and proximity to rail and road infrastructure.

GOONGARRIE SOUTH HAS STRATEGIC SIGNIFICANCE AND AS A 100%-OWNED ASSET, HAS TREMENDOUS VALUE TO THE COMPANY.

Heron Resources NL


Operations Review

Annual Report 2000

‘Back Home’ Wyvern Jackson “This picture represents a revegetated mine site. After Heron finishes mining, the Aboriginal people will come back to their land.”

Photo Strip: The bush at Goongarrie is in magnificent condition, reflecting its management by Conservation and Land Management (“CALM”), the station owner. CALM has established an ecotourism camp in the western part of Goongarrie at former pastoralist Bill Riddle’s old homestead. Heron’s tenements and drilling areas are restricted to the eastern part of Goongarrie.

CONFIDENCE IN GOONGARRIE

• The 80x80m in-fill RC drilling which commenced in March 2000 has confirmed excellent ore continuity at GoongarrieSouth. Remarkably virtually no loss of resource tonnes has resulted when moving from an 800x80m pattern to an 80x80m pattern.

• The thickest and highest grade ore zone occurs as a uniform blanket at the Eastern Contact of the host ultramafic unit. Thisarea will be the zone of initial mining. There are no barren holes of internal waste within this zone. This ore zone has beendesignated the Pamela Jean, in recognition of the on-going contribution of Pam Buchhorn to the success of Heron.

• Bonanza grade cobalt (Cawse style “SiCo” ore) is associated with Tertiary-aged palaeo-channels that overlie the ore zones.From Diamond Drill core, the higher grade cobalt zones are found to correlate as a supergene blanket over what will be miningwidths of 160m or more. The high grade Cobalt Resource at Goongarrie South is contained within a sub-resource of 8.2 milliontonne at 1.3%Ni and 0.4% Co, representing 13% of the Goongarrie South resource.

• The Diamond Drilling program has generated representative core samples of undisturbed ore which confirm:• Consistent ore correlation between holes, consisting of upper Mottled Clay, middle Limonite Ore, and lower Siliceous Ore.• Strong visual ore identification, with dark yellow hues and pyrolusite bands characterising high grade mineralisation.• Soft and free-digging orebody, with all ramps and infrastructure preferred to be on the competent eastern side basalt.

• Well defined and logical mine scheduling proposals are apparent. The Stage I Pits will be on the Pamela Jean Zone, withprogressive west-heading cut-backs for later stage pits. Ramps will remain restricted to the eastern wall basalt.

It is apparent that any future Heron ore entitlement to Cawse Stage II could be sourced from Goongarrie South alone.This has favourable implications in respect of the centralisation of Heron’s infrastructure, and the ability for Heron to deal in a secondand new development proposal for its non-Goongarrie Nickel Laterite resources.

Operations Review2.0 Continued


121º

121º

30'

-30º30'

-

122º

-30º

Ora Banda

Edjudina

Gindalbie

Yerilla

Broad Arrow

KALGOORLIE

Comet Vale

Goongarrie

Menzies

Davyhurst

GOONGARRIE

GHOSTROCKS

KALPINI

Kookynie

GA

S P

IPE

LINE

20km

Cawse SpurPipeline

Cawse Nickel LateriteProcessing Plant

Bulong Nickel LateriteProcessing Plant

THE 2000

EXPLORATION

RESULTS HAVE

ALLOWED

EXCEPTIONAL

CONFIDENCE IN

GOONGARIE AS

A WORLD CLASS

ORE BODY

Figure 2 -MAIN NICKEL

LATERITE PROJECT AREA

Showing StrategicAlliance tenementsand infrastructure

2.0 Continued


Operations Review

Annual Report 2000

‘The Painting of the Man’ Tony Champion “I drew a man on the mine. This man is standing on the mine. The blue sky is the boss of his land.”

Photo Strip: Geologist Colin Earle supervising the Goongarrie drilling. Colin was seconded to Heron from the CentaurCawse operation. Colin’s contribution during 2000 is much appreciated. His good humour along with the willing assistanceof other Cawse minesite personnel has made for an efficient Strategic Alliance.

Laverton

Murrin MurrinLeonora

Sandstone

Edjudina Nickel

Edjudina Laverton JVVictory JV

LawrenceFind JV

Snake Hill JVKookynie JV

Kalpini

EdjudinaLaverton JV

GindalbieTerrane JV Mulgabbie Nickel

Kurnalpi Nickel

Bungalbin JV FrancesLesley

JV BlisterDam

KALGOORLIE

Cawse

Kurnalpi JV

Southern LavertonTectonic Zone JV

BooraraShear

MungariNW JV

Laverton Nickel

Southern Cross TranslineJV

Bulong

Salmon Gums

Balladonia

Norseman

Karonie South JV

Maggie Hays Hill

Bullabulling

MtMartin Kurnalpi

Widgiemooltha JV

Karonie South

Kambalda

Norseman

Port of Esperance

Southern Ocean

Southern Cross

Goongarrie

Ghost RocksGhost Rocks

Menzies

Goongarrie

Kalpini

5000

00 m

E

6400000 mN

6800000 mN

6600000 mN

1000

00 m

E

3000

00 m

E

Figure 3 - Joint Venture Areas

STRATEGIC ALLIANCE

The Heron-Centaur Strategic Alliance Toll Milling Agreement was completed early in the reporting year. It is a mechanism that wasformulated to move Heron towards production while minimising the project risk to Heron through eliminating high levels of debt funding,and resultant high debt service charges. Concomitantly, the Strategic Alliance will crystallise economies of scale for both parties throughthe larger ore throughput of the merged resource base. The proximity of the Cawse processing plant to Heron’s project areas, thestrong similarity of Goongarrie ore types to Cawse ROM ore feed, and the successful commissioning and ramp up of Cawse Stage Iduring 2000 suggests a high level of synergy exists between the Heron and Centaur operations.

PRE-FEASIBILITY STUDY

Heron has completed most of the studies required for a PFS for the Goongarrie Nickel Project.

• Metallurgical testing is current, testing upgrade, settling, rheology, leach recovery and post-leach neutralisation.• Baseline Flora and Fauna Studies have been finalised, with typical Eastern Goldfields flora regimes documented.• Archaeology and Ethnographic Surveys are well advanced, with no sites documented.• Native Title Access Agreements are being negotiated in Good Faith for the grant of Mining Leases.• A Hydrological Consultant has been retained, and a bore hole water level monitoring regime established.• Confirmation Diamond Drilling was successfully completed under difficult ground conditions. The drilling has:

• Validated RC grade estimates, notably at higher nickel cut-off grades.• Quantified the In-situ Bulk Density,

Siliceous Ore SG is 1.8 - 2.3 2.0 used in resource estimation.Limonite Ore SG is 1.3 - 1.8 1.6 used in resource estimation.

• Heron has quantified the Geotechnical response of the ore environment, which has facilitated in-house scoping pit designs.The mining management of Tertiary palaeo-channel aquifers overlying the ore zones is an important issue. Traffickability issues mayultimately be addressed by the use of 6WD articulated dump trucks for Goongarrie mining.

IN TERMS OF THE PFS, GOONGARRIE SOUTH IS STRONGLY ADVANTAGED BY THE EXCELLENT LOCATIONAND ESTABLISHED INFRASTRUCTURE OF THE EASTERN GOLDFIELDS.

CORPORATE ADVANCES DURING 2000

Nickel Industry Alliance Strategies

• Capital costs are the main challenge for Nickel Laterite production, with Heron’s current estimate being $1.4 billion for a stand-alone 4mtpa Pressure Acid Leach (“PAL”) processing plant. For a company of Heron’s size, a strategic partner is required whocontributes financial and technical resources to this style of project.

• In terms of risk minimisation, industry alliances facilitate:• Economies of scale in mining, processing and utilities, to reduce unit operating costs.• Shared infrastructure including rail, gas and water, and sourcing ore and servicing projects over a wide ranging operating area.• Potential for utilising an off-site “Back-end” for metal refining, supporting an off-site “brownfields” expansion of refining capacity.• Strategic Off-take and marketing agreements to help facilitate the banking of a project.• Resource blending, using Heron’s high quality Limonite Ore to leverage off and blend with less favourable ore to provide a

constant long-term blended ore feed. This can improve the metallurgical performance of problem clay ore types (notablyNontronite Ore), and may increase the resource and thus project life.

Joint Venture and Industry Association Strategies

Joint venturing is a key component of Heron’s tenement management strategy. It allows Heron to control the large land bank whichis integral to the long term development of Nickel Laterite resources. Heron has in operation or has offers on the table involving some21 Joint Ventures, alliances, options and Memorandums of Understanding involving oil shales, gold, base metals and iron ore.

These industry associations cover some 155 tenements that will see a minimum Department of Minerals and Energy (“DME”)commitment of $1.5 million spent by our partners annually whilst Heron is free-carried. In addition a minimum total outlay of $10.65million can be spent on Heron’s joint ventured tenements before equity is transferred to the partner. By this process Heron is entirelyfree-carried in its gold and non-nickel developments, and in terms of risk-minimisation and success optimisation, the Heron non-nickelportfolio provides a very low risk and low cost means of asset creation. As an example, through its Bungalbin Iron Ore ProductionRoyalty, Heron has a potential long term income stream.



DMEProject Number of Tenements Area Expenditure

Pending Granted Total km2 $million

Strategic Alliance 33 32 65 908 0.46

Heron 100% - owned 76 37 113 1,756 0.52

Subtotal 109 69 178 2,664 0.98

Established Joint Venture 57 98 155 3,710 1.47

Advanced JV Negotiations 53 28 81 3,038 0.43

Oil Shale 35 7 42 5,506 0.05

Subtotal 145 133 278 12,254 1.95

TOTAL 254 202 456* 14,919 2.93

* Includes 37 Mining Lease applications covering active Prospecting Licences and Exploration Licences.

The Heron Philosophy

The commodity emphasis for Heron is unequivocally Nickel Laterite,and the project emphasis is Goongarrie, followed by Ghost Rocksand Kalpini.

The Company appreciates the assistance provided by theGindalbie, Hampton Hill, Mount Vetters and Goongarrie stations interms of field camp sites, drill site preparation and rehabilitation.These stations have a long established land care ethic, under whichHeron works at all times. Bill Riddle, the retired Goongarriepastoralist, has been a great help in allowing Heron to understandhis former property.

Heron is an equal opportunity employer, committed to thecommunity of Kalgoorlie-Boulder. It supports Work for the Doleprograms, and several Aboriginal training schemes. The Companyis proud to be a long term sponsor of Ngunytju Tjitji Pirni AboriginalCorporation (“NTP”), an organisation committed to Aboriginal motherand children’s health in the Eastern Goldfields.

One of Heron’s environmental contractors is KarlkurlaEnvironmental. Karlkurla started as a Work for the Dole program doing community environmental work around Kalgoorlie-Boulder, and has now developed into a commercialcontractor. Heron was the first of its mining clients, and wishesKarlkurla every future success.

Heron, as with all Australian mineral explorers, continues to work within the framework of Native Title. The Companyis committed to a policy of cultural respect and negotiation with the Aboriginal custodians of our exploration land. Tothe claimants of this land and the Goldfields Land and Sea Council, we once again express our appreciation of theirpatient negotiation, and ongoing site clearance field work.

2.0 Continued


Operations Review

Annual Report 2000

‘Two Ways’ Krystal Foley “This is a painting of two sides of the desert and of the mine site.”

Photo Strip: These mudcracks are in a sump which holds drill return water. This particular sump is at GSRC 363 and themud assays over 1.2% Ni. The sump prevents saline ground water affecting nearby vegetation. Hole GSRC 363 wasdrilling ahead in high grade ore at 84m depth. The sump became full of ground water. Continued drilling would haveplaced nearby tan wattles at salt risk. The hole was thus stopped in high grade ore.

Table 1 - HERON RESOURCES NL

Summary of 100%-Owned and Joint Venture Tenements

Photo: Sanderson Drilling Pty Ltd, contractors for theDiamond Drilling. The quality of core recovered wasvery good and a tribute to the skills of Sandersons.

RESOURCE STATUS OF NICKEL LATERITE PROJECTSOn the basis of 80x80m resource definition drilling (Indicated Mineral Resource status) and 400x80m reconnaissance drilling (Inferred Mineral Resource status), the total Heron resource inventory at a 0.75% Ni cut-off is:

Pit Strike Width Million Ni Co Ni4Co*km km Tonnes % % %

Goongarrie Hill GN1 5.80 0.20 17.7 1.08 0.06 1.31

Goongarrie South GN2 7.00 0.30 63.0 1.08 0.09 1.44

Scotia Dam GN3 2.40 0.30 9.1 1.10 0.11 1.56

Total Goongarrie 89.8 1.09 0.09 1.44Ghost Rocks GR1 3.00 0.08 5.7 0.91 0.12 1.39

Ghost Rocks GR2 4.50 1.00 12.3 1.02 0.06 1.26

Total Ghost Rocks 18.0 0.98 0.08 1.30Acra North KA1 1.60 0.12 6.9 1.01 0.08 1.31

Acra North KA2 0.40 0.20 5.4 1.31 0.07 1.57

Wellington East KA3 0.40 0.12 3.8 1.04 0.08 1.36





Wellington Fold KA9 2.50 0.20 2.1 0.88 0.07 1.14

Wellington North KA10 3.60 0.16 1.5 1.04 0.06 1.27

Total Kalpini 44.4 1.09 0.07 1.38

STRATEGIC ALLIANCE SUB-TOTAL 152.2 1.07 0.08 1.40

Binti Binti BB1 2.40 0.16 2.8 0.91 0.09 1.28

Wyo Well WW1 1.00 0.16 0.8 0.83 0.04 0.99

Acra AA1 0.70 0.30 0.5 0.75 0.04 0.91

Total Kurnalpi 4.1 0.88 0.08 1.18Lake Rebecca LR1 2.20 0.30 11.6 1.15 0.07 1.46

Lake Rebecca LR2 1.10 0.15 2.1 1.03 0.03 1.16

Total Lake Rebecca 13.6 1.13 0.07 1.41Boyce Creek YE1 1.00 0.20 6.4 0.93 0.09 1.27

Lady Byron YE2 0.60 0.20 2.8 1.11 0.05 1.30

Aubils YE3 0.80 0.20 2.9 0.99 0.10 1.37

Total Edjudina 12.1 0.99 0.08 1.30

NON-STRATEGIC ALLIANCE SUB-TOTAL 29.8 1.04 0.08 1.34

HERON TOTAL 182.1 1.07 0.08 1.39

* “Ni4Co%” is %Ni plus 4 times %Co.

The resource estimate uses intercepts above 0.75% Ni over a minimum 2 metre vertical thickness, with a maximum 2 metre of internalwaste within the calculated intercept. The in-situ bulk density is interpreted to be 1.6 where Limonite Ore is predominant, and 2.0 whereSiliceous Ore is predominant.



Table 2 - HERON RESOURCES NL NICKEL PROJECTS

Inferred and Indicated Mineral Resource Inventory, 0.75% Ni Cut-off

RESOURCE STATUS UPGRADE

From the results compiled from the 80x80m drilling to date, the distribution of resources into Inferred andIndicated Mineral Resource categories is as follows:

Project Category Million Ni Co Ni4Co*Tonnes % % %

Goongarrie Hill Inferred 15.7 1.09 0.06 1.33Indicated 2.0 0.99 0.04 1.14Sub-total 17.7 1.08 0.06 1.31

Goongarrie South Inferred 32.5 1.06 0.07 1.39Indicated 30.5 1.10 0.11 1.53Sub-total 63.0 1.08 0.09 1.44

Scotia Dam Inferred 9.1 1.10 0.11 1.56Indicated - - - -Sub-total 9.1 1.10 0.11 1.56

Ghost Rocks Inferred 18.0 0.98 0.08 1.30Indicated - - - -Sub-total 18.0 0.98 0.08 1.30

Kalpini Inferred 42.6 1.08 0.07 1.38Indicated 1.8 1.12 0.06 1.37Sub-total 44.4 1.09 0.07 1.38

SUB-TOTAL Inferred 117.9 1.07 0.07 1.35SUB-TOTAL Indicated 34.3 1.09 0.10 1.51

TOTAL STRATEGIC ALLIANCE 152.2 1.07 0.08 1.40

* “Ni4Co%” is %Ni plus 4 times %Co.

Having the higher quality Indicated Ore can substantially increase an Independent Valuation for a resource inventory, with a Yardstick Valuation typically doubling when the resource is upgraded from Inferred to Indicated status.

When compared to the original 400x80m drilling, the grades generated from the 80x80m infil drilling are slightly higher,and the tonnes are slightly lower. This is the expected result of resource infill drilling.

2.0 Continued


Operations Review

Annual Report 2000

‘The Mullock Dump of Binduli Mine’ Merita Stevens “This painting represents the Binduli mine. The big orange hill is the mullock dump.”

Table 3 - STRATEGIC ALLIANCE NICKEL LATERITE PROJECTS

Medium Grade Inferred and Indicated Mineral Resource 0.75% Ni Cut-off

Photo Strip: The drill samples are sieved and the drill chips are collected in chip trays as Heron’s reference set of the ore. Heron has some 50,000 of these chip samples archived at its Kalgoorlie office. The hardest and most important job on therig is collecting the drill samples. A $1.4 billion investment decision hinges significantly on how well this job is done.

% Ni Cut-Off

% N

icke

l Gra

de

Tonn

age

50,000,000

45,000,000

40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

00.50 0.75 1.00

1.5

1.4

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

41,600,000

0.910.90

1.12

1.09

27,190,000

24,630,000

13,740,00013,870,000

44,850,000 1.32

1.31

%Ni 400x80m%Ni 80x80m

Tonnes 400x80mTonnes 80x80m

Figure 4 - GOONGARRIE PROJECT

Comparison between400mx80m and 80x80m

Resource Drilling



6670000 mN

6675000 mN

6660000 mN

3250

00 m

E

6665000 mN

3200

00 m

E

AEROMAGNETIC IMAGE

3200

00 m

E

6670000 mN

6675000 mN

6660000 mN

3250

00 m

E

6665000 mN

TENEMENT LOCATIONAND GEOLOGY

>1.25

1.0 - 1.24

0.75 - 0.9

0.5 - 0.74

<0.5

6670000 mN

6675000 mN

6660000 mN

3250

00 m

E

6665000 mN

3200

00 m

E

DRILLHOLE LOCATION ANDSIGNIFICANT INTERSECTIONS

Intercept % Ni

Figure 5 - GOONGARRIE PROJECTAeromagnetic Image, Geology, Drill Summary

INDEPENDENT RESOURCE AUDITAn Independent Consultant has completed a draft audit of the Heron Nickel Laterite resource base. Heron’smethodology, quality assurance measures and data management were favourably assessed. Comparisons ofresource estimates in respect of audited project areas were:

Project million tonne % Ni % Co million tonne % Ni % Co

Goongarrie 229 0.74 0.06 233 0.74 0.06Kalpini 103 0.73 0.04 104 0.74 0.05Lake Rebecca 26 0.84 0.04 24 0.87 0.05TOTAL 358 0.74 0.05 361 0.75 0.05

Results appear to be quite acceptable at a 0.5% Ni cut-off grade. At progressively higher cut-off grades, the BlockModel tonnage estimates are increasingly lower than the Polygonal estimates. This is as expected when wide spaceddrilling (400x80m) is used in Block Modelling. In view of the excellent continuity results to date at Goongarrie Southusing an 80x80m pattern, and subject to detailed lateral continuity studies, Heron may be able to use a 20x20mpattern for the Measured Mineral Resource estimates in its future Goongarrie South BFS.

2.0 Continued


Operations Review

Annual Report 2000

‘Dump Truck’ Shane Stokes “This is a painting of a dump truck carrying yellow sand. The sky is a grey-blue colour because of rain.”

Photo Strip: This excavator was used for previous prospector exploration and mining at Goongarrie Hill. By chance, itopened up part of Heron’s Goongarrie Hill Nickel Laterite deposit. This excavation records large slabs of barren silica withinthe Nickel Laterite ore. This silica can be screened out, to increase Ni-Co grades by 35%.

Table 4 - RESOURCE COMPARISONS

INDEPENDENT CONSULTANTRecoverable Resource Estimation

0.5% Ni Cut-off Grade - Block Model

HERON RESOURCES NLFully Diluted One Metre Selvedge

0.5% Ni Cut-off Grade - Polygonal End Area

25m

66m60m

51m60m63m

GSRC036

20/1.36/0.0517/0.9/0.0648/1.15/0.10

13/1.15/0.095/1.34/0.12 4/0.93/0.10

4/1.09/0.10

GSRC029

GSRC030

GSRC031

GSRC034

GSRC035

GSRC028

GSRC027

68m75m76m

300

0 m

E

280

0 m

E

260

0 m

E

GOONGARRIE SOUTH 69,200mN

30/0.93/0.07

83m

8/1.07/0.06

13/0.95/0.02

89m

20/1.2/0.16

77m

10/1.36/0.16

58m

25/1.00/0.04

2/0.87/0.54

78m68m

12/1.53/0.40

81m

15/1.35/0.11

64m

53/1/0.05

76m64m

5/0.86/0.13

70m

GSRC202

GSRC200

GSRC201

GSRC044

GSRC045

GSRC046

GSRC043

GSRC041

GSRC042

GSRC040

GSRC047

320

0 m

E

300

0 m

E

260

0 m

E

2800

mE

4/0.86/0.07

71m 71m

GSRC198

37/1.01/0.08

GSRC197

GSRC196

8/0.85/0.02

74m

89m89m80m 81m

GSRC194

GSRC195

18/0.83/0.02

GSRC193

18/1.52/0.296/1.01/0.492/1.4/0.03

GSRC192

12/1.23/0.12

GSRC191

11/1.39/0.23

GSRC190

89m

65m

300

0 m

E

280

0 m

E

260

0 m

E



>0.75 % Ni

LEGEND

0.50 - 0.74 % NiINTERCEPT METRES / %Ni / %Co10/1.36/0.16

Figure 6 - GOONGARRIE SOUTH CROSS SECTIONS

2.1 HERON RESOURCES NL - CENTAUR MINING & EXPLORATION LIMITEDSTRATEGIC ALLIANCENICKEL LATERITE RESOURCE, PRE-FEASIBILITY STUDY FOR PROPOSED CAWSE STAGE II.

The priority for the Strategic Alliance during 2000 has been to drill out the various Goongarrie resources to an 80x80m pattern, forinclusion in the Cawse Stage II PFS. This program, and the completion of Heron’s $3 million Strategic Alliance expenditure requirement,should be finalised in 2001. After that point, the more detailed drilling patterns (at least 20x20m) required for a BFS would be to Centaur’saccount. There has been a seamless exchange of data and ideas between Heron and the Cawse minesite throughout 2000, which hascontributed to the success of the Heron-Centaur Strategic Alliance.

2.1.1 Goongarrie Nickel ProjectHeron 100%. Heron Toll Milling rights for ore processing through Centaur’s proposed Cawse Stage II plant.

Nickel (- gold).

The 181km2 contiguous project area covering 24 tenements is located 60-100km NNW of Kalgoorlie along the eastern flank of theGoongarrie Dome. The western flank of this structure hosts the Cawse lateritic nickel mine. The lithological precursor of the Goongarrieand Cawse lateritic nickel mineralisation is the Walter Williams Formation komatiite, which unit defines the margin of the Dome.

The Goongarrie Nickel Project is located 25km N of the Cawse processing plant. The Heron project area straddles the Kalgoorlie-Leonora Highway and Railway, and Goldfields Gas Transmission natural gas pipeline is located immediately to the east. Infrastructureis thus excellent in terms of Nickel Laterite mining and processing.

Heron’s Goongarrie expenditure to date has been $1.77 million.

Goongarrie Hill Prospect

During 2000, Heron completed 155 RC drill holes at Goongarrie Hill for 5,211 metres. Significant intercepts include:

Hole No. North East From To Interval Ni Co Ni4Co Ni4Co%*m m m m m % % % x m

GWRC036 76,400 1,599 8 19 11 0.94 0.042 1.11 12.21

GWRC040 77,205 1,520 6 16 10 1.06 0.093 1.43 14.30

GWRC056 78,803 1,045 12 20 8 1.32 0.047 1.51 12.08

GWRC062 78,780 1,450 0 14 14 0.91 0.051 1.11 15.54

GWRC064 79,608 1,201 6 13 7 2.01 0.155 2.63 18.41

GWRC098 76,557 1,561 4 24 20 1.06 0.023 1.15 23.00

GWRC123 76,558 1,600 13 24 11 0.94 0.051 1.15 12.65

* ”Ni4Co% x m” for a drill intercept is the value of %Ni plus 4 times %Co of the interval multiplied by the intercept in metres.

Section interpretation and resource estimation has been completed for the area covered by the above drilling, with a current InferredMineral Resource of 17.7 million tonne at 1.08% Ni and 0.06% Co at a 0.75% Ni cut-off.

Shallow high grade ore centred on drill holes GWRC088-091 (peak 2m at 1.97% Ni) has been targeted for processing through CawseStage I. The ore zone is on a granted Mining Lease. Environmental Performance Bonds have been lodged with the DME, and a Noticeof Intent to Commence Mining is awaiting the final Flora and Fauna Survey report. Drill site rehabilitation outside the proposed miningarea has been completed.

Mineralised zones at Goongarrie Hill tend to consist of lower grade siliceous ore occurring at shallow depths. A total of 137 drillcomposites were submitted for screen upgrade assessment. Screen upgrades for nickel and cobalt are both very good. At a -0.5mmscreen size, there is a 40% coarse (silica) reject, increasing both nickel and cobalt grades by 35%, with 76% of metal retained. This result is comparable to the published data for the Cawse nickel project, and is typical of Walter Williams Formation Siliceous Ore.



Table 5 - GOONGARRIE HILL PROSPECT

RC Drilling Significant Intersections, 0.75% Ni Cut-off

Goongarrie South Prospect

During 2000, Heron completed 598 RC drill holes at Goongarrie South for 30,379 metres. Significant intercepts include:


GSRC043 68,400 2,790 11 23 12 1.53 0.399 3.13 37.51GSRC049 70,800 2,560 6 10 4 0.96 0.827 4.27 17.08

17 39 22 1.04 0.070 1.32 29.04GSRC056 64,398 4,241 18 40 22 1.16 0.094 1.54 33.79GSRC057 64,397 4,324 14 40 26 1.25 0.069 1.53 39.68GSRC063 63,606 4,166 19 26 7 1.56 1.401 7.16 50.15GSRC160 71,199 2,401 9 17 8 1.12 0.051 1.32 10.56

21 45 24 1.32 0.146 1.90 45.70GSRC165 70,397 2,321 19 23 4 0.93 0.038 1.08 4.33

33 69 36 1.38 0.038 1.53 55.15GSRC197 68,798 3,040 34 52 18 1.52 0.289 2.68 48.17GSRC198 68,798 3,122 24 61 37 1.01 0.084 1.35 49.80GSRC200 68,398 3,121 15 35 20 1.20 0.159 1.84 36.72GSRC204 68,004 2,801 20 41 21 1.23 0.431 2.95 62.03GSRC259 68,239 2,721 11 37 26 1.34 0.191 2.10 54.70GSRC276 68,478 2,640 16 39 23 1.20 0.236 2.14 49.31GSRC309 68,719 3,043 24 71 47 1.43 0.228 2.34 110.07GSRC317 68,879 2,960 28 66 38 1.27 0.298 2.46 93.56GSRC318 68,881 3,040 20 54 34 1.33 0.043 1.50 51.07GSRC319 68,878 3,123 20 60 40 1.22 0.156 1.84 73.76GSRC330 69,040 2,718 38 60 22 1.41 0.141 1.97 43.43GSRC335 69,038 3,121 17 53 36 1.22 0.133 1.75 63.07GSRC336 68,958 3,120 19 42 23 1.01 0.084 1.35 30.96GSRC340 69,117 2,641 29 49 20 1.42 0.296 2.60 52.08GSRC346 69,119 3,119 13 45 32 1.40 0.142 1.97 62.98GSRC354 69,280 3,038 26 62 36 1.40 0.126 1.90 68.54GSRC355 69,278 3,120 21 43 22 1.20 0.098 1.59 35.02GSRC358 69,360 2,640 19 58 39 1.06 0.078 1.37 53.51GSRC362 69,359 2,960 21 45 24 1.17 0.096 1.55 37.30GSRC363 69,360 3,040 34 84 50 1.37 0.203 2.18 109.10GSRC377 68,241 3,280 23 37 14 1.67 0.179 2.39 33.40GSRC379 69,281 2,401 27 58 31 1.05 0.055 1.27 39.37GSRC399 68,080 2,882 29 60 31 1.26 0.043 1.43 44.39GSRC413 63,678 4,322 19 44 25 1.07 0.134 1.61 40.15GSRC420 63,757 4,322 26 56 30 1.11 0.139 1.67 49.98GSRC440 64,160 4,001 23 40 17 1.25 0.138 1.80 30.63GSRC462 64,560 4,321 4 28 24 1.12 0.093 1.49 35.81GSRC477 67,520 3,040 35 63 28 1.07 0.059 1.31 36.57GSRC529 68,160 3,360 21 41 20 1.24 0.072 1.53 30.56GSRC562 69,440 2,320 18 40 22 1.23 0.232 2.16 47.48GSRC571 69,440 3,040 37 60 23 1.22 0.085 1.56 35.88GSRC577 69,520 2,480 21 37 16 1.30 0.257 2.33 37.25GSRC594 69,680 2,880 19 40 21 1.42 0.040 1.58 33.18GSRC604 69,760 2,720 18 40 22 1.18 0.098 1.57 34.58GSRC626 69,920 2,640 36 53 17 1.43 0.147 2.02 34.31GSRC637 70,080 2,800 40 64 24 1.19 0.082 1.52 36.43


Given that in Nickel Laterite, a value of 15 for Ni4Co% x m is considered a good result, the values returned at GoongarrieSouth are exceptional. It is important to note the areal extent of the above intercepts, 7.52 km N-S by 2.00 km E-W.

2.0 Continued


Operations Review

Annual Report 2000

‘Bill’s Mine’ Marika Smith “Around the mine are some plants and trees. The colour of the earth at the mine was green, yellow, grey and purple.”

Photo Strip: The drill samples are collected from the drill rig in polyester bags. Within a month of drilling, once Heron has completed all analyses, the ore sample is tipped out in sequential rows on the ground, and the polyester bagsremoved from site.

Table 6 - GOONGARRIE SOUTH PROSPECT


Goongarrie South Resource Estimation

The drilling results from Goongarrie South have been exceptional, with extensive areas of drilling exceeding 15 Ni4Co% x m. Two holes in particular within the Pamela Jean Zone were outstanding:

GSRC309 47 metres at 1.43% Ni and 0.23% CoGSRC363 50 metres at 1.37% Ni and 0.20% Co (and open at depth)

This scale of metal enrichment is not documented elsewhere in the Eastern Goldfields Nickel Laterite province. Section interpretationand resource estimation is in progress, with a current Inferred Mineral Resource of 63.0 million tonne at 1.08% Ni and 0.09% Co at a 0.75% Ni cut-off. Ore zone continuity is excellent.

A screen upgrade study has commenced on RC drill chip composites. As expected from drill chip logging, the Limonite Ore doesnot upgrade, since it lacks silica. In contrast, with Siliceous Ore, there is a 47% screen reject at a -0.5mm screen size, for 43% Niupgrade and 37% Co upgrade, with 74% metal recoveries.

Of interest, gold mineralisation has been intersected in the course of Heron’s nickel laterite drilling, with the main Au-As anomaly at a100ppb Au threshold extending over a 2.2km strike length. The gold anomalism occurs in saprock beneath the nickel lateritemineralisation. Heron has completed a gold targeting plan, but as yet no gold drilling has been done. All resource drilling in the areaof the gold target has a standard precious metal assay suite run on the drill composites. This work is outside the Strategic Alliance.

Elsewhere in the Eastern Goldfields, gold anomalism is not recorded in association with lateritic nickel, reflecting an absence of ironwithin laterite-hosting komatiites.

Goongarrie South Diamond Drill Core Grade Validation

A program of PQ Diamond Drilling was completed by Heron as part of a quality control audit and to provide material for detailedmetallurgy and density determinations. Heron completed 8 Diamond Drill holes for 406 metres. Core recovery was acceptable, withonly GSDD04 having to be abandoned in transported cover (re-drilled as GSDD008, which similarly failed to reach its full target depth).Significant intercepts include:


GSDD001 68,401 2,724 15 28 13 1.49 0.195 2.27 29.51GSDD002 68,400 2,795 11 16 5 1.29 0.243 2.26 11.31

22 24 2 0.83 0.054 1.05 2.09GSDD003 68,398 3,126 15 33 18 1.05 0.199 1.85 33.22GSDD005 68,798 3,127 25 44 19 1.24 0.123 1.73 32.91GSDD006 69,195 3,038 27 46 19 1.50 0.034 1.64 31.16GSDD007 69,199 3,124 7 54 47 1.11 0.110 1.55 72.85GSDD008 68,798 3,035 31 43 12 1.44 0.590 3.80 45.60

50 55 5 1.22 0.111 1.66 8.32


In-situ Bulk Density measurements indicate a range of SGs from 1.0 to 3.0. The arithmetic mean SG is 1.9 (1.8 SG is used at Cawse),but it is obvious that the SGs are extremely heterogeneous and will require detailed geology-based modelling. To be conservative, the Goongarrie South and Scotia Dam SGs have been reduced from 1.8 (as per Cawse) to 1.6 (as per Kalpini).

Assay comparisons between a Diamond Drill hole and the adjacent RC drill hole are good, particularly within the supergene enrichedupper mineralised intervals. There is thus confidence in the predictability of the upper high grade ore. This ore will be the mainstay ofmining during the early project life. Within the lower ore zones, both lithological and assay correlations are less strong, reflectinglocalised structural controls on grade distributions. Correlation problems with cobalt are recognised in the limited Diamond Drill holescompleted to date, with the RC drilling appearing to underestimate the cobalt grade when compared to the adjacent Diamond Drillhole. This result is somewhat biased by the exceptionally high cobalt grades in Diamond Drill hole GSDD008.




Diamond Drilling Significant Intersections, 0.75% Ni Cut-off

The drill hole numbers with “GSDD” as a prefix and printed above in bold, denote the Diamond Drill hole results. Theunderlying row of data with “GSRC” as a prefix is for the adjoining RC drill hole, located some 5m from the DiamondDrill hole collar.

Comparing Tables 8 and 9, all ore zones defined by the RC drilling have been replicated by theConfirmation Diamond Drilling. In terms of the large grade variability normally attributed to Nickel Lateritemineralisation, the correlation and validation results for the Goongarrie South ore zones are exceptional.

Goongarrie South Metallurgy

Half drill core samples were dispatched to the Lakefield Oretest metallurgical laboratory in Perth. A total of 14 halfcore and 2 RC drill chip geological bulk composites are undergoing metallurgical evaluation. Sample splits werereturned to Kalgoorlie for check assay and qualitative screen upgrade testing. Replicate assays have demonstratedexcellent precision, confirming a high level of confidence in the analytical programs. Initial metallurgical test work onLimonite Ore indicates an acid consumption of around 200-250kg/t and Ni and Co recoveries exceeding 93%, whichis encouraging.

A further 4 samples from Goongarrie South were collected by Centaur and submitted for metallurgical study as partof the Cawse Stage II PFS. Metallurgical performance was as expected for Walter Williams Limonite Ore, althoughfinal results are not as yet available to Heron.

2.0 Continued


Operations Review

Annual Report 2000

‘Land of Navajo’ Leith Stevens “My painting represents a birds-eye view of the Navajo mine. The four hills represent the mine.”

Photo Strip: These ore sample piles were drilled a year ago, during the 800x80m pattern drilling. The sample piles quicklydecompose when exposed to the weather.

Comparisons, 1.25% Ni Cut-off

Hole From To Interval Ni CoNumber m m m % %

GSDD001 17 28 11 1.58 0.221GSRC042 19 28 9 1.46 0.119

GSDD002 12 14 2 1.81 0.404GSRC043 12 16 4 1.86 0.647

GSDD005 28 34 6 1.41 0.18439 42 3 1.34 0.060

GSRC198 29 32 3 1.41 0.18256 59 3 1.39 0.058

GSDD006 27 45 18 1.52 0.033GSRC035 35 45 10 1.62 0.042

GSDD007 13 29 16 1.43 0.22834 37 3 1.32 0.048

GSRC036 15 30 15 1.47 0.14754 57 3 1.30 0.092

GSDD008 35 38 3 2.34 1.52050 52 2 1.51 0.074

GSRC197 35 43 8 1.72 0.47250 52 2 1.62 0.087


Diamond Drilling (DD) and

Reverse Circulation (RC) Drilling

Comparisons, 1.00% Ni Cut-off

Hole From To Interval Ni CoNumber m m m % %

GSDD001 16 28 12 1.54 0.207GSRC042 18 28 10 1.42 0.113

GSDD002 11 14 3 1.55 0.355GSRC043 11 23 12 1.53 0.399

GSDD005 28 43 15 1.28 0.129

GSRC198 24 34 10 1.12 0.18240 42 2 1.10 0.052

GSDD006 27 46 19 1.50 0.034GSRC035 28 47 19 1.38 0.054

GSDD007 10 29 19 1.38 0.19634 47 13 1.05 0.064

GSRC036 12 35 23 1.34 0.12149 57 8 1.16 0.093

GSDD008 35 43 8 1.70 0.70050 54 4 1.33 0.125

GSRC197 34 43 9 1.64 0.44249 52 3 1.45 0.086


Diamond Drilling (DD) and

Reverse Circulation (RC) Drilling

Goongarrie South Ore Genesis Studies

Detailed technical studies, including XRD clay analysis in conjunction with the Geological Survey of WA at Kalgoorlie, are current onHeron’s Diamond Drill core, to elucidate the controls on mineralisation. There are two dominant ore styles.

“Limonite Ore” consists of massive non-textured, amorphous clay-goethite occurring in the upper weathering zone of the ultramafic.Typically the ore is yellow-brown, and includes darker coloured horizons containing hydromorphic pyrolusite. The ore style and gradesare remarkably uniform. Grades typically exceed 1.1% Ni and 0.1% Co, with the peak grades at the top of the ore zone. Fromgeotechnical logging, the Limonite Ore is expected to be entirely soft and free-digging, with an in-situ bulk density of 1.3 to 1.8.

“Siliceous Ore” underlies and is a less leached totally gradational variant from Limonite Ore. It contains massive to vuggychalcedonic silica, which occurs as cellular stockworks with a dark brown clay infill. There is a sharp visual and grade boundary at thebase of the Siliceous Ore, which is recognised by a pronounced increase in MgO to above 10%, accompanied by green clay coloursand the appearance of magnesite in vugs and joints. Grades of Siliceous Ore typically exceed 0.75% Ni and 0.07% Co, and withscreen upgrading of 30-45%, leach feed grades exceeding 1.1% Ni and 0.1% Co for the life of the project can be achieved. TheSiliceous Ore should be initially free-digging in upper zones, but require paddock blasting with increasing depths. The in-situ bulkdensity similarly increases with depth, from 1.8 to 2.3.

Detailed multi-element geochemistry has been completed on the Goongarrie RC drill data base to categorise ore styles:

Figure 7 - GOONGARRIE NICKEL PROJECTDifferentiation of Limonite Ore and Siliceous Ore

Scotia Dam Prospect

During 2000, Heron completed 29 RC drill holes at Scotia Dam for 1,330 metres. Significant intercepts include:


GSRC068 59,203 6,010 14 38 24 1.32 0.239 2.28 54.72

GSRC069 59,200 6,086 11 17 6 1.03 0.178 1.74 10.44

21 48 27 1.27 0.062 1.52 41.04

GSRC076 58,800 6,169 14 35 21 1.39 0.226 2.29 48.09

GSRC090 56,002 7,366 20 35 15 1.03 0.082 1.36 20.40


A nickel sulphide target has been delineated at Scotia Dam. The anomalous interval is 18m at 2,466ppm Ni and 347ppm Cu at the basal contact of the olivine cumulate komatiite sequence. Peak copper is 0.14%.

The eastern Scotia Dam prospect area on Siberia Formation ultramafic contains an area of 1.20x0.15km hosting a 20-78ppb Au soilanomaly within a favourable Bardoc Tectonic Zone structural setting. There has been no systematic drill testing of the target. Thetarget zone is close to proposed mullock dump sites for the future Scotia Dam pit, so the gold target will be drill tested in the courseof mullock sterilisation drilling.



SiO

2 (C

alc)

FeO

90

80

70

60

50

40

30

20

10

010.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00

Siliceous Ore

Limonite Ore

Table 10 - SCOTIA DAM PROSPECT


E27/185

P27

/144

9

P27/1448

P27/1450

P27/1452P27/1453

E27/129

E27/185

E27/129

P27/1451

M28/199

M28/202

M28/200

M28/201

M27/364

M27/349

M28/206

M28/205

M28/169

M27/365

M27/362

M27/361

0 5

KILOMETRES

M28/201

M28/202

M28/200

M28/199

M28/205

E27/129

M28/206

M27/349

M27/364

M28/169E27/129

M27/365

P27/1453P27/1452P27/1451

E27/185

M27/362

P27/1450P27/

1448

P27

/144

9M27/361

Legend

Drill hole 0.5 - 0.99 % Ni

Drill hole >1.0 % Ni

Mining Lease application

Exploration Licence

2.1.2 Ghost Rocks Nickel ProjectHeron 100%. Heron Toll Milling rights for ore processing through Centaur’s proposed Cawse Stage II.Nickel (- gold).

The 207km2 contiguous project area covering 3 tenements is located 140km NNW of Kalgoorlie along the easternflank of the Goongarrie Dome. The Ghost Rocks area is located immediately west of the Kalgoorlie-Leonora Highwayand Railway, and natural gas pipeline. Infrastructure is very good. Ghost Rocks is 100km NNW of the Cawseprocessing plant. The project area is 60km NNW of Goongarrie on the same Walter Williams Formation komatiite unitthat hosts Goongarrie South.

There are extensive areas of siliceous mineralisation at Ghost Rocks uniformly assaying 0.7-0.9% Ni with high cobalt.This ore style has significant increases in grade through screening, being comparable to the upgrade for Cawsemineralisation. An RC drill chip screen upgrade program was completed. At a -0.5mm screen size, Siliceous Ore hasa 41% coarse silica reject, increasing both nickel and cobalt grades by 32%, with 75% of the metal retained. LimoniteOre upgrades 8% through screening, with 87% of the nickel retained. Limonite Ore thus does not require screening.

Section interpretation and resource estimation was completed with a current Inferred Mineral Resource of 18.0million tonne at 0.98% Ni and 0.08% Co at a 0.75% Ni cut-off. In-fill drilling on an 80x80m pattern to upgradethe resource status is proposed for late in 2001. Expenditure to date has been $0.26 million.

2.1.3 Kalpini Nickel ProjectHeron 100%. Heron Toll Milling rightsfor ore processing through Centaur’sproposed Cawse Stage II plant.Nickel (- gold).

The 519km2 contiguous project area covering 17 tenements is located 65km NE of Kalgoorlie.Infrastructure is good. Kalpini is 75km E of the Cawseprocessing plant, and 45km NE of the Bulong Nickel Operation.

Having confirmed metallurgical viability through the 1999 testprogram, detailed section interpretation and resource estimationwas completed, with an Inferred Mineral Resource of 44.4 million tonne at 1.09% Ni and 0.08% Co at a 0.75% Ni cut-off.

A comprehensive screen upgrade metallurgical program based onRC drill chips was completed on all ore zones identified fromHeron’s previous drilling. Results indicate nickel upgrades rangingfrom 10% for Limonite Ore to 20% for Siliceous Ore. Nickel metalrecovery is good at 82% for Siliceous Ore and 91% for Limonite Ore.

Infill drilling on an 80x40m pattern has recently been completed, with 17 holes for442m at Wellington North, 8 holes for 236m at Wellington East and 19 holes for523m at Acra North. Typical Kalpini Nickel Laterite profiles were intersected, butno analytical results are as yet available.

Native Title negotiations for the grant of Mining Leases are current. Ethnographicsurveys have been completed in accordance with draft Native Title Heritageagreements on the exploration tenements. Rehabilitation of historical drill areas hasbeen completed. The program was very ably completed by Brian Champion, anIndigenous rehabilitation contractor.

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Annual Report 2000

‘The Two Waters in the Middle’ Natalia Tucker “The circle is the green water at the bottom of the mine. The brown circle is the water at the bottom of the other mine.”

Photo Strip: The bush in the future Goongarrie and Kalpini mine areas is a profusion of eucalypts,acacia, eromophila and lesser quondong. The Flora Surveys have determined that widespread comparable habitats adjointhe areas of proposed mining, so no environmental constraints exist for the projects.

Figure 8 -KALPININICKEL

PROJECT

A geological evaluation of basal komatiite nickel-copper sulphide targets generated from Heron’s regional RC drilling was completed,with laterite resource Zones 4 to 6 emerging as the optimum nickel sulphide target areas. Soil geochemistry within the broad targetarea has coincident anomalies of 114-602ppm Cu and 788-1,941ppm Ni, notably at the Zone 4 Western Ultramafic. A soil anomalyof 50-230ppb Pd occurs at Zone 6, again indicating a potentially favourable nickel sulphide setting. A proposed farm-in partner hascompleted literature studies followed by field traversing to validate the Heron exploration model and target areas. Centaur has a pre-emptive right on any nickel sulphide farm-out.

Heron’s expenditure to date at Kalpini has been $2.68 million.

2.2 SCOTIA KANOWNA PROVINCENICKEL LATERITE RESOURCES NOT WITHIN THE STRATEGIC ALLIANCE.

GOLD EXPLORATION JOINT VENTURES.

Nickel laterite projects have continued to be acquired by Heron in the Scotia Kanowna Province subsequent to the formation of the Strategic Alliance. These projects are to assist a future Heron stand-alone processing operation, independent of the Strategic Alliance.

2.2.1 Scotia Kanowna ProjectHeron 100%.

Nickel (- gold).

The 62km2 project area covering 7 recently pegged tenement applications is located 50-150km N of Kalgoorlie on the western flankof the Scotia Kanowna Anticline.

The main target area is Vettersberg, adjoining the southern boundary of Heron’s Scotia Dam nickel laterite prospect. Grant oftenements is awaited, at which stage blanket 160x80m RC drilling of all ultramafic horizons will commence.

Vettersberg Prospect

Vettersberg occurs at the granite-greenstone contact on the eastern flank of the Goongarrie Dome, covering a 4km strike length of thenickel-prospective Walter Williams Formation. Previous drilling at Vettersberg confirms the presence of nickel laterite mineralisation.Following field mapping, a potential nickel sulphide target has been defined by Heron at the komatiite basal contact.

Heron’s rockchip sampling of old costeans returned a peak value of 0.48% Ni from siliceous laterite. In terms of the lower nickel gradesnormally expected at surface, this result is encouraging. This zone is a high priority target, and drilling will commence once thetenements are granted.

2.2.2 Kurnalpi Nickel ProjectHeron 100%.

Nickel (- gold).

The recently pegged 203km2 project area covering 5 tenement applications is located 50-100km NE of Kalgoorlie on the western flankof the Arcoona Granite in association with the Emu Fault. The project area adjoins the Kalpini Nickel Project, but is not part of theStrategic Alliance. Three significant nickel targets have been generated, with potential for both nickel laterite and nickel sulphideoccurrences. Grant of tenements is awaited, at which stage blanket 160x80m RC drilling of the ultramafic horizons will commence.

Wyo Well Prospect

Heron has tenement applications at Wyo Well, providing access on grant to a 12km strike length of ultramafic lithologies. PreviousRAB intercepts include 12m at 0.84% Ni and 4m at 0.81%Ni. This previous exploration was not specifically targeted at the nickellaterite potential. Good potential exists for a Kalpini-style resource development.



Acra Prospect

Heron’s field mapping at Acra has identified a 700x300m zone of poorly outcropping olivine cumulate lithologies.Previous drilling has confirmed the presence of nickel laterite mineralisation at the target zone northern margin.


AA002 21,166 3,597 32 42 10 0.94 0.025 1.04 10.40AA012 20,911 3,617 16 24 8 0.89 0.110 1.33 10.64AA013 20,934 3,584 10 28 18 1.19 0.107 1.62 29.12AA055 21,480 3,392 2 8 6 1.04 0.310 2.28 13.68


A 160x80m RC drilling program has commenced, with eight holes drilled for 154m. Analytical results are awaited.

As well as nickel laterite at Acra, zones of pervasive low grade nickel sulphide mineralisation have been previouslydrilled, associated with olivine orthocumulate lithologies. Heron has designed an Electro-Magnetic ground surveycoverage to follow up the target, including zones of gossan occurrences. High grade supergene gold targets havebeen identified by Heron through a review of previous exploration data. The peak previous drill intercepts are 1m at43-85g/t Au. These gold targets will be offered for farm-out.

Mining Lease applications have been lodged on all nickel and gold resource targets which are identified at Acra.

Binti Binti Prospect

Binti Binti is the only granted tenement within the Kurnalpi Nickel project area. The Prospect is located 80km NE ofKalgoorlie immediately north of the Kalpini Nickel Project. The tenement comprises a wedge of northerly strikinginterlayered komatiite, basalt and felsic volcanic rock. Alluvium and laterite obscures bedrock.

Aircore and RAB drilling carried out by previous explorers has delineated lateritic nickel-cobalt mineralisation.Significant intersections at a 1.0% Ni cut-off include:

• 10m at 1.14% Ni, 0.12% Co• 6m at 1.28% Ni, 0.15% Co• 4m at 1.18% Ni, 0.07% Co• 4m at 1.14% Ni, 0.10% Co.

The currently estimated Inferred Mineral Resource is 2.8 million tonne at 0.91% Ni and 0.092% Co at a 0.75%Ni cut-off. Cobalt is particularly elevated. Resource definition drilling is planned on a 160x80m pattern once thecurrent Goongarrie drilling has been completed. Drill collars have been surveyed, access prepared and a DMEGround Disturbance Application lodged ahead of drilling. Rehabilitation has commenced in the drilling areas ofprevious tenement holders. Expenditure to date at Binti Binti has been $0.17 million.

2.2.3 Menzies East Joint Venture ProjectHeron 100%. Golden State Resources Limited right to earn 60% through spending $0.25m.Gold (- nickel).

The 8km2 project area covering 8 tenements is located 112km NNW of Kalgoorlie, on the eastern flank of the ScotiaKanowna Anticline associated with the Moriaty Shear Zone. Golden State has completed a detailed soilgeochemistry-aeromagnetic evaluation to assist in target generation. This study has highlighted the NW project areaas Golden State’s exploration focus. Expenditure to date has been approximately $0.15 million.

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Operations Review

Annual Report 2000

‘Binduli Mine’ Kim-Thi Nguyen “This is a conveyor belt with a sign that says go and stop on each side. The sky is grey because it was a showery day.”

Photo Strip: In the heat of the day, the drill mast is the only source of shade. On rocky outcrops, nickel grades tend to below. Out on the flats, the ultramafic host rocks are more strongly weathered, and nickel grades improve accordingly.

Table 11 - ACRA PROSPECT

Aircore Drilling Significant Laterite Intersections, 0.75% Ni cut-off

2.2.4 Gindalbie Terrain Joint Venture ProjectNickel rights retained by Heron. Delta Gold Limited right to earn 70% in respect of gold through spending $1.0m.

Gold - nickel.

The 201km2 project area covering 6 tenements is located 25-60km NE of Kalgoorlie on the eastern flank of the Scotia KanownaAnticline. The main structural control of the project area is the Moriaty Shear Zone. The Moriaty structure is a bifurcation of the intenselygold-mineralised Bardoc Tectonic Zone, which is an associated structure occurring on the western flank of the Scotia KanownaAnticline. The Gindalbie Terrrain adjoins the Golden Cities-Federal granitoid gold province.

A detailed data appraisal and field inspection has generated both gold and lateritic nickel targets. The main gold target is the MoriatyShear Zone in the SW project area, where alluvial gold previously has been mined. Drill access has been difficult, due to wet groundconditions since February 2000.

Delta has completed a GIS data review ahead of a regional Auger drilling program. Heron’s expenditure to date has been $0.21 million.

2.2.5 Yindarlgooda ProjectHeron 100%.

Nickel (- gold).

The 58km2 project area covering one tenement application is located 40km E of Kalgoorlie at Clinker Hill on the western flank of theBulong Ultramafic Complex. Heron’s main target interest is lateritic nickel associated with the Bulong ultramafic units. From datareviews, several gold targets, including 3m at 5.49g/t Au, have been generated for follow-up once the tenement is granted.

2.3 EMU FAULT PROVINCEGOLD EXPLORATION JOINT VENTURES

2.3.1 Kurnalpi Gold Joint Venture ProjectHeron 100%. Farm-in partner right to earn 80%.

Gold.

The 260km2 project area covering 4 tenements is located 60-90km E of Kalgoorlie, adjoining Heron’s Transline Joint Venture Project.Tenement grant is awaited.

Following a GIS data review and target generation by Heron, a farm-out has been agreed whereby a farm-in partner may earn 80%,with Heron free-carried to decision to mine.

A further 9 tenement applications covering 730km2 are currently subject to farm-out negotiation. This project area has an excellentstructural setting, covering the Emu-Avoca Fault System. The dominant outcrop lithology is felsic volcaniclastics and lateritised meta-sediments. This geological setting is analogous to that of the Randalls-Maxwells gold mining centre to the immediate south.From data reviews, several gold targets have been generated for drill follow-up once the tenements are granted. Significantly, borefieldtargets associated with Tertiary palaeochannels and the Emu-Avoca Fault System have been defined for future Kalpini process water requirements.

2.3.2 Kalpini Gold ProjectHeron 100%.Gold.

The 88km2 project area covering 10 tenements is located 50-60km NE of Kalgoorlie, within felsic volcaniclastics occurring betweenthe Avoca, GMQ and Emu Faults.

The felsic volcaniclastic geological setting is comparable to that hosting the Carasue gold mine located to the northeast. Several goldtargets have been generated by Heron’s regional soil geochemistry. These anomalies occur within a favourable structural setting, coveringthe Emu-GMQ Fault System. Heron’s main interest is volcanogenic massive sulphide targets, as potential sulphur sources for future nickellaterite processing. Literature reviews are current, with soil geochemical field programs planned to commence once key tenementsare granted. Heron’s expenditure to date has been $0.10 million.



2.3.3 Transline Joint Venture ProjectHeron 100%. New Hampton Goldfields Limited right to earn 80% through spending $0.8m.Gold-nickel.

The 421km2 contiguous project area covering 13 tenements is located 60km ESE of Kalgoorlie on the Bulong Anticlinestraddling the Emu Fault. The project area is underlain by the Juglah Monzogranite which intrudes felsic volcanics. Goldmineralisation is extensively developed, and includes the Juglah, Trojan and Transfind gold mining centres. The geological setting is a rift granitoid, and is comparable to the Laverton Tectonic Zone located to the east.

Heron previously generated several +50ppb gold in soil targets associated with the GMQ Shear Zone, following whicha tenement acquisition program was carried out. GIS compilations were subsequently completed, identifying fromprevious exploration several +1g/t Au RAB anomalies, peaking at 6g/t Au.

The Heron gold targets are planned for drill follow-up by New Hampton. Expenditure prior to joint venturing was $0.10million, with most tenements only granted during June 2000.

2.4 KEITH KILKENNY PROVINCENICKEL LATERITE RESOURCES.

GOLD RIGHTS WITHIN OR UNDER JOINT VENTURE OFFER.

Heron’s Keith Kilkenny Province nickel laterite projects are associated with discrete rift-related ultramafic olivinecumulate channels, as opposed to the more sheet-like adcumulates of the Walter Williams Formation. As such, theKeith Kilkenny occurrences are prospective for Silver Swan style nickel sulphide mineralisation. Heron’s explorationto date has however been restricted to nickel laterite.

2.4.1 Kookynie Joint Venture ProjectHeron 100%. Barminco Pty Ltd and Kookynie Resources NL right to earn 70% through spending $0.75m.Nickel rights retained by Heron.Gold-nickel.

The 275km2 project area covering 8 tenements islocated 20-60km SE of Leonora within the westernmargin of the Keith Kilkenny Tectonic Zone. Thetenements are all within hauling distance of Barminco’sOrient Well CIP gold plant.

The project area is largely soil covered basalt and felsicvolcanics occurring along strike from the Apollo Hill goldoccurrence. Lateritic nickel targets are associated withrift margin serpentinites, for which Heron retains allnickel rights.

Heron and Barminco have completed a GIS targetgeneration study, with field mapping confirmingfavourable drill targets. Tenements are in their firstyear of grant, so field programs have not as yetcommenced. Expenditure to date has been $0.1 million.

Discussions are current in respect of a farm-out of a further 7 tenement applications covering 36km2 in the northeastKookynie area.

2.0 Continued


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Annual Report 2000

‘The Dreamtime Road’ Kenneth Jackson “It is going back in the past.”

Photo Strip: Heron minimises track clearing in its exploration work. It is far easier to drive around a tree or use existingpastoralist tracks, than clear new ground. After scarifying the track when exploration is completed, rehabilitation is thenonly a couple of good storms away.

Photo: Ian Buchhorn (Managing Director) and David Crook (ExplorationManager). The Heron office is fully set up for all of Heron’s datamanagement and plotting needs.

2.4.2 Edjudina Nickel ProjectHeron 100%.

Nickel (- gold).

The 338km2 project area covering 31 tenements is located 145-175km NNE of Kalgoorlie within the Keith Kilkenny Tectonic Zone.This rift structure is associated with ultramafic complexes from south to north at Lake Rebecca, Boyce Creek, McAuliffe West, MonkWell and Aubils. The ultramafic flows are located on the rift margins interbedded with basalt, with the rift axes containing coarsesediments.

During 2000, drill programs were designed and collars surveyed to follow up the ore zones drilled up by Heron during the 1999 fieldseason. Several attempts were made to access the target areas, which are marginal to Lake Raeside. Rig access near the lake edgewas however not possible. Ethnographic surveys were completed for the Edjudina mineralised areas. Mining Lease applications werelodged covering all known nickel laterite resources within the project area.

The Edjudina nickel laterite targets are an important asset in a Keith Kilkenny Nickel Laterite resource rationalisation now underdiscussion involving Heron’s Lake Rebecca to Aubils lateritic nickel resources.

Heron’s expenditure to date on the Edjudina Project has been $0.7 million.

Yerilla-Boyce Creek Lateritic Nickel Prospect

Drill hole sectional interpretations, provisional pit designs and resource estimation were completed. The current Boyce Creekresource estimate is 6.4 million tonne at 0.93% Ni and 0.09% Co at a 0.75% Ni cut-off. An independent audit of the resourcewas completed. Discussions are current in respect of trial mining using a locally based miner and earthmoving contractor. Heron willnot be contributing to earthmoving costs. Ground Disturbance Applications have been lodged with the DME ahead of detailed oreresource drilling. Rehabilitation of historical drill areas outside the proposed mine area is current.

A Mining Lease application over the ore zone has been lodged, and Heritage Surveys completed.

Yerilla-Lady Byron - McAuliffe West Prospect

Drill hole sectional interpretations, provisional pit designs and resource estimation were completed. The current Lady Byronresource estimate is 2.8 million tonne at 1.11% Ni and 0.05% Co at a 0.75% Ni cut-off. Ground Disturbance Applicationshave been lodged with the DME ahead of detailed ore resource drilling.

Yerilla-Aubils Prospect

Drill hole sectional interpretations along with field geological mapping has confirmed the Aubils laterite profile has been variably erodedby Tertiary-aged palaeochannel development. There is thus a complex regolith profile at Aubils, which has necessitated in-fill drillingof the defined ore zones. Some of the northern zones of strong aeromagnetic anomalism adjoining Kilmore Hill are now interpreted tobe gabbro related, rather than ultramafic.

Resource estimation was completed. The current Aubils resource estimate is 2.9 million tonne at 0.99% Ni and 0.10% Coat a 0.75% Ni cut-off. Ground Disturbance Applications have been lodged with the DME ahead of detailed ore resource drilling.

2.4.3 Keith Kilkenny-Laverton Tectonic Zone Joint Venture Project

Nickel rights retained 100% by Heron. Croesus Mining NL right to earn 80% in respect of gold through spending $1.0m.

Gold.

The 569km2 joint venture area covering 18 tenements is located within two separate areas. The southern area Edjudina joint ventureis 120-160km NE of Kalgoorlie north and south along strike of the Porphyry gold mine within the eastern Keith Kilkenny Tectonic Zone.Gold mineralisation occurs dominantly in quartz stockworks within felsic and granitoid host rocks.

The northern area Mount Varden joint venture is 55km N of Laverton within the Laverton Tectonic Zone. Major gold mining centres inthe area are generally associated with Banded Iron Formation (“BIF”), and from south to north include Corktree Well, King of Creationand Rosemont.

Croesus has expended $0.3 million on exploration to date, with in excess of 9,000m of drilling completed.



Edjudina Prospect

The prospect area including the Oak Well tenement group covers a very complex shear zone into which syn- andpost-tectonic granitoids have been emplaced. Deformation in the region has been taken up as ductile shears in thegreenstone belts, as brittle-ductile structures in granitoids, and locally as a late stage rift basin into which the YilgangiConglomerate was deposited.

The syntectonic granitoids are gold-mineralised, including gold mining centres at Yarri (brittle structures) and Porphyry(ductile mylonite zones). The Oak Well Shear Zone is characterised by an elongate composite granitoid hostingremnants of basalt and felsic to intermediate schist. A post-tectonic gabbro is locally emplaced into the Shear Zone.

Recent exploration has confirmed the area to be prospective for both base metals and gold. Highly anomalous Cu,Zn, Pb and As values are associated with chert and gossanous schists within a magnetic intermediate schist unit.This zone is also anomalous for gold, with gold in soil to 1,900ppb, and gold in rock chips to 46.8g/t.

Exploration by Heron and then Croesus has included target generation, field mapping, and Aircore and RAB drilling.Drill target areas were generated using detailed aeromagnetic data, followed by regolith mapping and fieldreconnaissance.

Tenement Drill Type Holes Metres Samples

E31/190 RAB 10 131 34

E31/233 RAB 9 455 104

E31/234 RAB 10 340 78

E31/235 RAB 51 296 134

E31/288 RAB 54 3,096 677

E31/288 Aircore 8 527 121

E31/311 RAB 75 3,324 733

Project Total 217 8,169 1,881

Two campaigns of drilling were completed which included 217 holes for 8,169 metres within the Oak Well group:

Hole ID North East From To Intercept Grade Geology

m m m m m g/t Au

ENRB088 22,400 21,200 25 30 5 0.55 Clay-sericite saprolite, 2% quartz veining

49 52 3 0.23 Sheared volcaniclastic schist

ENRB110 23,300 20,600 45 55 10 0.20 Foliated clay-sericite felsite

Varden Prospect

A RAB program was completed on the Varden Prospect located 50km north of Laverton, to test low-tenor soil goldanomalies. A total of 27 holes for 1,108m were completed. Rock types encountered include black shale, chlorite-altered quartzite, serpentinite and lesser basalt, dolerite, porphyry, felsic schist and BIF. Chlorite and sericite were thedominant alteration styles, with silica and carbonate alteration associated with gold anomalism.

2.0 Continued


Operations Review

Annual Report 2000

‘The Water Holes’ Andrea Munmurrie “There was lovely green water and on the top of the green water there was brown water.”

Photo Strip: After a good rain or two, these scarifying furrows become verdant with annuals. In a year or so, the saltbushis back, and then the acacia understorey.

Table 12 - EDJUDINA LAVERTON JOINT VENTURE

Oak Well Drilling Summary

Table 13 - EDJUDINA LAVERTON JOINT VENTURE

Oak Well Drilling Significant Assays

Photo: Simon Gobbett (Project Geologist) andAlan Rudd (Senior Geologist). This year, Simon and Alan added about 50 million tonnes of high gradelaterites to their discovery record.

2.4.4 Southern Laverton Tectonic Zone Joint Venture ProjectNickel rights retained 100% by Heron. Gutnick Resources NL right to earn 80% in respect of gold through spending $1.2m.

Gold.

The Southern Laverton Tectonic Zone Project is located 150km NE of Kalgoorlie. Heron’s tenements comprise 19 granted tenementsand 14 applications that cover a total of 302km2. The tenements within the Southern Laverton Tectonic Zone extend 100km from thesouthern limit of the Anglo-Saxon gold mines (170,000oz) to immediately west of the Red October gold mine (340,000oz). Thisstructural zone hosts gold mineralisation from south to north at Pinjin, Edjudina, Safari Bore, Red October and Sunrise Dam, and thennorth into the Laverton gold mining district. The Laverton Tectonic Zone gold province has a total resource base that is in excess of22 million ounces of gold. Its rise to exploration prominence over the last decade reflects the use of “state of the art” Remote Sensingtechniques to define drill targets in areas of uniform transported lake cover.

The western joint venture area is associated with the Keith Kilkenny Tectonic Zone which hosts gold mineralisation from south to northat Karonie, Carasue, Old Plough Dam, Porphyry, Apollo Hill, Malcolm and Sons of Gwalia, and then north into the Yandal Belt. Goldmineralisation is dominantly associated with bimodal felsic volcaniclastics and mafic volcanics hosting comagmatic granitoids whichhave been emplaced into the rift sequence. The eastern joint venture area is associated with BIF horizons of the Laverton Tectonic Zone.

The structural framework and rock-type package that hosts the large gold deposits of the Laverton Tectonic Zone gold province has beencharacterised by Remote Sensing techniques and traced through Heron’s project area. These favourable settings are reflected bynumerous small high-grade gold deposits, which have been mined since the early 1900s until the late 1980s within and adjacent toHeron’s tenements.

A detailed study of available open file data has been completed, involving the GIS synthesis of Heron’s aeromagnetic data, satelliteimagery and geological mapping. These Remote Sensing data sets were merged with geochemical, drilling and mining data. This hashighlighted that previous exploration has been confined to areas of good exposure and shallow weathering profiles, with very littleeffective work completed in the more prospective areas of thicker cover. The Joint Venture is utilising the Remote Sensing techniqueswhich are required for areas of deeper weathering profiles. Several mineralised trends and conceptual targets have been defined fromthe GIS interpretations within Heron’s tenements, which will require drill testing.

At present, Auger drilling of the Heron project area is in train, utilising pedogenic calcrete sampling. Full analysis of results is awaitingcompletion of the program.

A further 163km2 project area covering 16 tenements is currently subject to farm-out discussions. Advanced prospects previouslydrilled by Heron within this area include Banjo (28m at 1.41g/t Au), Webb Find (12m at 3.80g/t Au), Yarri (14m at 2.06g/t Au) andYilgangi (4m at 1.75g/t Au). The exploration target is quartz stockwork gold systems. Under the proposed joint venture, Heron wouldbe free-carried through to mining. Expenditure by Heron on the proposed farm-out area has been $0.5 million.

2.4.5 Mulgabbie Nickel ProjectHeron 100%.

Nickel (- gold).

The 4km2 project area covering 3 tenements is located 110km NE of Kalgoorlie. The project area covers rift-related mafic to ultramaficunits striking NNW along the southwest shore of Lake Rebecca. This sequence occurs at the eastern margin of the Keith KilkennyTectonic Zone.

Access preparation was planned to facilitate RC drill testing of the flood-prone southern extension of the main Lake Rebecca nickel lateritemineralisation. Proposed drill collars have been marked out, but rig access at this stage is not possible without causeway construction.The extensive areas of previous drilling completed prior to Heron’s tenancy of the project area have been rehabilitated to Heron’senvironmental standard. An ethnographic and archaeological survey was completed for the Lake Rebecca area.

The current Lake Rebecca resource estimate is 13.6 million tonne at 1.13% Ni and 0.07% Co at 0.75% Ni cut-off. Theresource is open to the south. Metallurgical testwork and scoping studies in respect of the high grade nickel laterite ore are on-going.Testwork indicates a Nontronite Ore. A licensed alternate extraction technology is being evaluated.

Croesus Mining NL is exploring adjoining tenements for gold under joint venture with Heron (refer Section 2.4.3 above). Heron anticipates that these joint venture tenements will have application for future infrastructure at the Lake Rebecca Nickel Project.



2.4.6 Karonie South Joint Venture ProjectHeron 100%. WMC Resources Limited right to earn 80% through spending $0.30m.Gold (- nickel).

The 666km2 contiguous project area covering 9 tenements is located 140-170km SE of Kalgoorlie associated withthe southern Keith Kilkenny Tectonic Zone. This structure hosts gold mineralisation from French Kiss and Karonie inthe south through to Carasue and Old Plough Dam in the north.

Heron’s aeromagnetic data for Karonie South confirms the presence of prospective Karonie gold mine structures(northeast splay faults and tight isoclinal folds), within a favourable mafic stratigraphy. Importantly the Aldiss Fault,which controls the distribution of mineralisation within the Karonie gold mining centre, extends into the Heron projectarea. Aeromagnetic interpretation has defined several major regional NE trending cross structures.

Following commencement of the Joint Venture, WMC hascompleted a detailed 474 station, 1x1km grid gravitysurvey. This has provided excellent definition of the maficand sedimentary packages of the Roe Hills and KaronieGreenstone Belts. The data has been processed toproduce Bouger gravity images.

The data reveals a low intensity gravity unit in the westernsurvey area, which represents the Archaean MountBelches sedimentary formation. To the east of this is amajor NNW trending gravity high that represents the maficto ultramafic Roe Hills Greenstone Belt, with other east-parallel gravity highs interpreted as thrust repetitions of theKaronie Greenstone Belt, intercalated with sediments. TheNNW trending gravity-high stratigraphy is cut by numerousNE trending structures interpreted as Lower Proterozoicaged Albany-Fraser deformation effects.

Granites located in the northeast and the south of thesurvey area are represented as gravity lows, and adistinctive ENE Proterozoic dyke is a linear gravity high.Both of these features are favourable gold targets.

An ethnographic survey was completed, clearing the entireJoint Venture area in terms of ethnographic sites. The survey team consisted of registered claimants of theNarnoonbinya People.

An orientation soil geochemical program has beencompleted, and RAB drilling is current to determine theregolith and geological profile. WMC expenditure to date is$0.1 million.

A further 691km2 project area covering 4 tenementapplications is currently subject to farm-out discussions.The target is the southern soil-covered extension of theKaronie Greenstone Belt into the Fraser Range area.

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Annual Report 2000

‘My Painting’ Kevin Banks “The left hand side is the country. It has many quondong trees in it. On the right hand side is the mine site with its spiral ramp into the earth.”

Photo Strip: The concrete plug next to the peg is used to cap the drill hole. After site rehabilitation, only the black PVCtube protrudes from the ground, as a marker of the hole’s position. When mining is ready to commence, the plugs will beremoved, since the enclosing top-soil is used for rehabilitation works around the minesite.

E28/861

E28/860

E28/929

E28/665

E28/1014

E28/862

E28/638

6530000mN

6520000mN

6510000mN

6500000mN

6490000mN

4700

00m

E

4000

00m

E

Figure 9- KARONIE SOUTHBouger Gravity Image

2.5 MUNGARI PROVINCEGOLD and PLATINUM GROUP ELEMENT TARGETS.

2.5.1 Mungari Northwest Joint Venture ProjectHeron 100%. Kundana Gold Pty Ltd right to earn 50% through spending $3m.Gold.

The 2km2 project area covering 2 tenements is located 35km WNW of Kalgoorlie within the Zuleika Shear Zone. This general area hasbeen subject to intense exploration activity by Kundana Gold, with several recent high grade gold discoveries announced near theKundana gold mining centre, notably the recent Raleigh discovery. Grant of the Joint Venture tenement is awaited.

2.5.2 Mungari Northwest ProjectHeron 100%.Platinum-gold.

The 50km2 project area covering 16 tenements is located 45km WNW of Kalgoorlie associated with the Zuleika Shear Zone.

The central Mungari Northwest tenements contain extensive outcrop of the Powder Sill gabbro. The Powder Sill is a highly fractionatedlayered mafic intrusion that is hosted within the Black Flag Group sediments. The sill, a south-east plunging syncline reaches amaximum width of 2.8km within the Heron project area, before thinning substantially towards the south.

Gold occurrences in the Mungari Northwest region are generally associated with the two major NW trending regional structures, beingthe Kunanalling and the Zuleika Shear Zones. Additionally, a NNE trending brittle fault system traverses the entire project area, beingthe Black Flag-Royal Standard Faults. These structures localise the Mount Pleasant gold mining centre 15km NNE. The prime host rock exploration target in Heron’s Mungari Northwest tenements is the Powder Sill, particularly iron-rich quartzgranophyric upper phases. These are favourable hosts for gold mineralisation within layered intrusives in the Eastern Goldfields.

A high resolution aeromagnetic survey was completed by Heron, and identified gabbroic lithologies and structures comparable to thosehosting the White Foil mineralisation to the immediate south. Detailed geochemistry has been completed over the tenements with4,591 Auger holes drilled. All samples were assayed for Au and As generating a number of coherent Au and Au-As anomalies. Augersampling was followed up with an extensive rock chip sampling program, with 134 samples collected. From these 23 were thinsectioned for petrographic description.

Drilling was continuous throughout 1999 and 2000. Gold targets have been partially tested with 590 RAB drill holes completed,predominantly within Exploration Licence 16/121, for a total drill advance of 22,513 metres. In addition, 400 Aircore holes for 20,000mwere completed. Anomalous intersections include 12m at 0.46g/t Au from 36m, 4m at 0.36g/t Au from 52m, and 4m at 0.35g/t Aufrom 56m, confirming alteration systems are present, but as yet no ore grade mineralisation. A series of 333 samples were analysedusing Neutron Activation Analysis, ICP-AES and XRF multi-element geochemistry. A total of 42 elements were analysed, includinggold. Expenditure to date at Mungari Northwest has been $0.64 million.

Heron will continue to evaluate the project area as a Ni-Cu-PGE target, having commenced re-interpretation of the extensive Herondata base for PGE targets. A PGE joint venture proposal has been received and is being evaluated.



0 2500

METRES

Figure 10 - MUNGARI NORTHWEST PROJECT

Aeromagnetic data

>0.05 (5)0.02 to 0.05 (27)0.015 to 0.02 (56)0.01 to 0.015 (225)0.007 to 0.01 (483)0.005 to 0.007 (717)<0.005 (2877)

Mungari NW Auger SoilsMaximum Au (ppm)

Gold Auger SoilGeochemistry

2.6 LEONORA LAVERTON PROVINCEGOLD JOINT VENTURES and NICKEL

2.6.1 Laverton Nickel ProjectHeron 100%. Agreement has been reached where another entity will acquire the gold rights at Merolia.Nickel - gold.

The 534km2 project area covering 10 tenements is located in the Laverton District. The main nickel target is atMerolia-Mineral Patch Hill adjoining and immediately north along strike of the Coglia Well-Irwin Hills lateritic nickelprospects. From a GIS and literature review, the Merolia-Mineral Patch Hill ultramafic occurrence is associated withstrong aeromagnetic anomalies, with previous drill-confirmed nickel laterite mineralisation.

Detailed aeromagnetic coverage has been acquired, and interpretation completed to define zones with olivineadcumulate units. The Merolia-Mineral Patch Hill tenements are in their first year of grant. A 640x80m RC drillingprogram at Merolia-Mineral Patch Hill has been designed and field checking completed. Drilling will commence oncethe current Goongarrie area drilling has been completed. Tenement applications north of Laverton cover gold miningcentres at Mulga Queen and King of Creation, which were acquired through pegging. Farm-out discussions inrespect of gold rights on these targets are current.

2.6.2 Laverton Joint Venture ProjectHeron 100%. Metex Resources NL right to earn 70% through spending $0.5m.Gold.

The 30km2 contiguous project area covering 2 tenements is located 15km WSW of Laverton immediately west of theChatterbox Shear Zone. The project area surrounds the Hawks Nest-Mt Gooses gold mining centres. Excellent golddiscoveries have been announced by the Metex-Delta Gold joint venture within their Chatterbox Shear Zone project,immediately east of the Heron Joint Venture ground.

Metex advises that reinterpretation of gravity and aeromagnetic data has been completed and a number of targetsgenerated. Geochemical orientation surveys have also been completed in areas of known mineralisation, trialingpartial extraction gold techniques that could be used in areas of deeper cover, such those as occurring within theJoint Venture tenements. Expenditure to date has been $0.2 million.

2.6.3 Mount Morgans Joint Venture ProjectHeron 100%. Metex Resources NL right to earn 70% through spending $0.2m.Gold.

The 14km2 project area covering 8 tenements is located 40km WSW of Laverton immediately west of the MountMorgans-Korong Shear Zone. The main prospects are 5km NW along strike from the Mount Morgans gold miningcentre, associated with an intra-greenstone granitoid. Aeromagnetic, DTMs, open file geological compilations andVacuum and RAB drilling have been completed. A 13 hole RAB drilling program for 786m was completed, testingprominent stratigraphic magnetic anomalies for potential gold and base metal mineralisation. Results are awaited.Expenditure to date has almost reached $0.2 million.

2.6.4 Victory Joint Venture ProjectHeron 100%. Farm-in partner right to earn 80%.Gold - nickel.

The 23km2 project area covering 6 tenements is located 50-120km NW of Leonora, adjoining the Marshall Pool nickellaterite resource, and Victory and Bannockburn gold mining centres. Following field mapping and sampling, MiningLease applications have been lodged on resource targets at the Victory gold prospect and Doyle Well nickel lateriteprospect. A further 42km2 project area covering 3 tenement applications is located NE of Victory, immediately northalong strike of the newly developing Thunderbox gold mining centre. Farm-out discussions are current.

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Operations Review

Annual Report 2000

‘The Mine Site’ Naomi Ellis “My painting is of an open pit mine. There is a road with a crack in the pit.”

Photo Strip: Cotton bush, cotton sample bags, eucalyptus and acacia scrub. The Goongarrie and Kalpini ore zones areboth almost 30km long. Rehabilitation is a key issue for Heron.

2.7 ILLAARA PROVINCEVOLCANOGENIC MASSIVE SULPHIDE EXPLORATION JOINT VENTURE,

PLATINUM and NICKEL LATERITE.

2.7.1 Lawrence Find ProjectHeron 100%.Copper - zinc - gold - nickel - sulphur.

The 944km2 contiguous project area covering 7 tenements andapplications is located 170-320km NW of Kalgoorlie. The projectcovers the Illaara Greenstone Province over a continuous strike of120km. The project area is in its first year of grant.

A review of all available exploration data within the area has identifiedseveral target areas, including a 30km strike “epithermal gold” soil anomalyand a 50m thick massive “VMS” gossan. Several under-explored goldoccurrences occur throughout the project area, and a copper occurrencewas drilled previously within the northern project area.

Upper cycle felsic volcanic exhalative units are extensive, and includechert, BIF and muscovite schist. Three target areas have to date beenidentified which warrant follow-up drill exploration:• Day Rock Prospect - Volcanogenic massive sulphide Cu-Zn-Au• Regional As-Sb-Bi-Se Anomalies - Epithermal Au• Central Felsic Volcanic Complex - Volcanogenic massive sulphide Cu-Zn-Au

The Day Rock Prospect is a classic VMS setting, characterised bypyrite altered calc-alkaline acid volcanics, laminated massive sulphides,black shale ore-equivalent horizon, and possible proximal epiclasticlenses. The target sulphide stratigraphic horizon is up to 100m thick.A gossan is mapped over a 1,000m strike length, with every possibilityof further continuity under cover.

Regional As-Sb-Bi-Se Anomalies are interpreted by Heron todisplay a chemical association indicative of epithermal goldmineralisation. Spatially, this anomalism appears to be sourced fromthe central felsic to intermediate volcanic complexes. The well-developed linearity of the anomalies would indicate astratigraphic control, and therefore a VMS association. A gold andpathfinder element anomaly over a 30km strike length is indicated. Thistarget is largely untested by any form of drilling.

The Central Felsic Volcanic Complex of the Illaara Greenstone Beltis conceptually favourable for VMS mineralisation. Regional mappingindicates a lower felsic sequence appears to be the most prospective,due to mapped occurrences of sulphides. Fragmental units are notedto coarsen northwards, which would suggest a highly prospective volcanic vent complex in this direction. The polymetallic associationof the Reindler Prospect within the central felsic to intermediate volcanic complex, in particular anomalous barium, is furtherencouragement for VMS mineralisation within the belt. The sulphide horizons within the project area (as evidenced by significant gossanoccurrences) could represent a future strategic sulphur resource to assist nickel laterite processing by Heron.

Heron has recently defined high priority nickel laterite targets in the western project area, which will be retained 100% by Heron.Prospector Jack Otway has introduced Heron to a prospective PGE target associated with a layered ultramafic complex within Heron’ssouthern project area. Jack discovered the prospect in the 1970s. His sampling confirms a layered anorthosite and pyroxenite setting.Soil geochemical follow up is planned once the application is granted. Jack has received a “spotters fee” and Heron otherwise retainsall mineral rights. A joint venture offer is to hand for Lawrence Find, to further develop the defined Au and Cu-Zn targets. Under theoffer, Heron retains the rights to nickel laterite, and would retain by-product sulphur from any future VMS smelting operation.



10km

MetzkeFind Au

LawrenceFind Au

Day RockCu, Zn, Au

Multi elementsoil geochemistryanomaly

-30º

-29º20'

120º

120º

20'

-29º40'

-29º20'

As-Sb-Bi-SeSoil Anomaly

Chert, sediment, BIF

Felsic volcanics /agglomerate

Basalt

Granite gneiss

Granite

Tenement Boundary

Figure 11 - LAWRENCE FIND PROJECT

Geology, Tenements and Target

2.8 IDA FAULT PROVINCENICKEL LATERITE and JOINT VENTURE GOLD.

2.8.1 Snake Hill Joint Venture ProjectHeron 100%. Connemara Gold Mines Pty Ltd right to earn 70% through spending $0.3m.

Gold (- nickel).

The 56km2 project area covering 3 tenements is located 140km NW of Kalgoorlie immediately west of the Ida Fault.The recent gold discoveries by Croesus Mining NL 20km south at Davyhurst (Giles prospect) have upgraded thearea’s gold prospectivity. The project area is immediately south along strike of the Four Corners and Cullens lateriticand sulphidic nickel prospects.

Nickel and gold soil geochemical targets have been defined for RAB drill testing. Exploration expenditure to date is$0.12 million.

2.8.2 Frances Lesley ProjectHeron 100%. Agreement has been reached where another entity will acquire the gold rights.

Nickel.

The 133km2 contiguous project area covering 5 tenement applications is located 90km NW of Kalgoorlie at theconvergence of the Ida Fault and Kunanalling Shear Zone. The Frances Lesley project area is 20km S of the Davyhurstgold mining centre within an area of active gold mining operations. Extensive old gold workings occur in the project areaand are hosted by strongly pyritic sediments and basalt. Previous drilling has identified a quartz stockwork systemhosted by pyritic meta-sediments. Intersections included 8m at 4.85g/t Au in RAB drilling, and 5m at 3.4g/t Au in RCdrilling. Heron estimates an Inferred Mineral Resource of 93,000 tonne at 2.1g/t Au.

The regional rift structural setting, olivine orthocumulate style of komatiite occurrence, and abundance of sulphidisedblack shales suggests a very good potential for nickel sulphide occurrences. This nickel sulphide target concept isHeron’s active exploration interest at Frances Lesley. Grant of tenements is awaited.

2.8.3 Blister Dam ProjectHeron 100%.

Gold - nickel.

The 27km2 project area covering 13 tenements is located 70km NW of Kalgoorlie on the Zuleika Shear Zone. Thearea consists of an extensive sand cover between the Hawkins Find and Chadwin gold mining centres.

The northern tenement area covers part of the Walter Williams and Siberia Formation ultramafics, where they aretruncated by the Zuleika Shear Zone. Additional ultramafics (possibly stratigraphically younger flows than the WalterWilliams Formation) are associated with the Zuleika - Kunanalling Shear Zones, and occur at Blister Dam as well asFrances Lesley and adjoining Heron tenements.

A nickel laterite data review was completed. The shear zone ultramafics have historical drilling at various locations,however the best intercept recognised is 5m at 0.92% Ni. The narrow, structurally controlled rift setting is consideredmore prospective for sulphide nickel targets, in contrast to the broad sheet flow facies which favour nickel laterite.

Aircore, RC and Diamond Drilling were completed at Blister Dam during 1999 and 2000, testing beneath thepreviously discovered supergene gold mineralisation. Broad zones of low order mineralisation (0.1-0.3g/t) suggestthe presence of a large alteration system, with a peak intercept of 14m at 2.89g/t Au.

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Annual Report 2000

‘Two Sides’ Cheynne Graham “This painting represents the two sides of mining. On the left is the natural environment.On the right are two old pits filled with water.”

Photo Strip: Quality sampling methods are the corner stone to reliable resource estimates. To this end, Heron has placedgreat emphasis on taking replicate field samples for check assays. Quality control standards are submitted with allanalytical batches.

At Blister Dam, sub-vertical zones of altered feldspar-phyric basalt, with up to 10% sulphide (pyrite, pyrrhotite and arsenopyrite), silicaflooding and textural destruction within mylonitic zones all confirm a favourable gold mineralised setting.

An Aircore drilling program was designed to test four structural targets. A best intercept of 15m at 0.44/t Au from 35m was returnedin BDA267 from within the Carnage Shear Zone. Anomalous results are listed as follows.

Hole ID North East From To Interval Au Comment

Local Local m m m g/t

BDA228 49,850 18,650 35 47 12 0.33 carbonate alteration

BDA235 50,300 18,850 20 25 5 0.10

BDA237 50,200 18,850 10 15 5 0.10

BDA267 50,200 19,320 35 50 15 0.44 Carnage Shear

BDA273 50,100 19,520 15 20 5 0.10

BDA277 50,000 19,520 10 20 10 0.12

Potential exists for strike extensions of at least 600m to the anomalous zone, both east and west of the intercept in BD267.

Heron’s exploration is now focussing on nickel laterite targets, restricted to an ultramafic horizon interpreted to correlate with the WalterWilliams Formation. Proposed drill collars have been marked out and Ground Disturbance Application lodged. Previous drilling areashave been rehabilitated.

Expenditure to date has been $0.3 million. Negotiations to farm-out the gold rights are current.

2.8.4 Bullabulling ProjectHeron 100%.

Nickel - gold.

The 188km2 project area covering 5 tenements is located 60km WSW ofKalgoorlie immediately east of the IdaFault. The project area has an extensivesoil cover. Aeromagnetic interpretationindicates the presence of ultramaficrocks with probable thrust repetitions.

At the Dunnsville Prospect, Heron’sfield reconnaissance has confirmed thepresence of nickel laterite mineralisation.No previous drilling is apparent, althoughold costeans indicate excellent goldtarget settings, and some small-scalegold mining activity is evident.

Exploration Licence applications areawaiting grant.



Table 14 - BLISTER DAM PROJECT

Aircore Drilling Significant Intersections

Photo: Ready for action. The tray of the Managing Director’s Hilux. From left to right, spare gerry can, waterbottle, all the sampling gear for soils, costeans and RC drilling, plus wooden claim pegs in case a mining leaseneeds to be pegged.

All Heron vehicles are similarly set up. From safety viewpoint, the vehicles each carry a GPS, EPIRB andsatphone for working in remoter areas.

2.8.5 Widgiemooltha Joint Venture ProjectHeron 100%. WMC Resources Limited right to earn 80% through spending $0.3m.

Nickel - gold.

The 150km2 Widgiemooltha project area covering 4 tenement applications is located 120km SSE of Kalgoorlie withinthe southern extension of the Kunanalling and Zuleika Shear systems. Field reconnaissance confirms a Zuleika ShearZone structural setting.

The Pioneer Prospect covers the Mariners-Dordie Rocks nickel sulphide-hosting komatiite succession. ThePioneer komatiite has nickel sulphide occurrences to the immediate north along strike.

The Larkinville Prospect covers the western synformal repetition of the nickel mine-hosting Spargoville ultramaficsequence. Larkinville surrounds several historical gold mining areas, and is north along strike from the Chalice gold mine.

Heron’s geological reconnaissance and interpretation suggests the Pioneer and Larkinville ultramafic rocks aredominantly spinifex textured komatiite sheet-flows and channels, and accordingly are more prospective for nickelsulphide targets than nickel laterite.

A Joint Venture offer has been received from WMC Resources on the Widgiemooltha tenements to appraise the nickelsulphide potential. In particular, a high priority nickel sulphide target has been generated at Pioneer, which will be drilltested on grant of the tenements.

Farm-out discussions are current on a further 5 tenement applications covering 12km2 at Yilmia Hill in the northernSpargoville-Widgiemooltha nickel mining field. An 800x100m MMI soil sampling program was completed by Heron.A coincident Au-Pd anomaly was generated, with 10.2ppb Au and 4.2ppb Pd.

2.8.6 Mount Thirsty ProjectHeron 100%.

Nickel (-gold).

The 12km2 project area covering 9 tenements is located 12km N of Norseman. Previous drill testing of ultramafic unitsduring gold exploration programs has intersected up to 10m at 0.8% Ni. Prospecting Licence applications areawaiting grant.

2.9 KAMBALDA DOMAINGOLD-NICKEL EXPLORATION

2.9.1 Binduli East ProjectHeron 100%. AngloGold Australasia Limited right to earn 75% through spending $0.5m.

Gold - nickel.

The 35km2 contiguous project area covering 14 tenements is located 10km SW of Kalgoorlie straddling the AbattoirShear Zone. Dominant lithology is dolerite to the east of the Shear, and felsic volcaniclastic to the west.

The project area is south along strike from the Janet Ivy gold resource, with the Binduli gold mining centre at thewestern project boundary. Both of these deposits are felsic hosted. The KCGM Superpit hosted by dolerite occurs8km E. Expenditure by Heron to date is $0.1 million, from soil and rock chip sampling.

AngloGold has completed a review of Heron’s previous exploration, prior to commencing Auger soil sampling.

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Annual Report 2000

‘The Emu’ Andrew Abdullah “At Binduli mine we saw lots of emus. The emus were looking for quondongs.”

Photo Strip: Eucalypt, acacia, eromophilia, quondong and sandalwood trees are widespread through the Goldfieldswoodlands. Quondong is highly valued for its bush tucker, and sandalwood for its aromatic timber. A drill site can alwaysbe moved a metre or two when there is a quondong or sandalwood tree near the proposed drill hole.

2.9.2 Kurramia ProjectHeron 100%.

Gold - nickel.

The 105km2 project area covering 13 tenements is located 10-30km N of Kalgoorlie

associated with felsic volcaniclastics and lateritised ultramafics within the Boorara

Shear Zone. An extensive lacustrine cover associated with Gidgi Lake is present in

the northern project area.

Tenement applications are awaiting grant. Heron granted Tribute Rights to a

prospector syndicate, which has been exploring alluvial gold occurrences within the

southern project area. No bedrock gold targets have as yet been generated from

this work.

Kanowna South Prospect

The tenement applications are located 3km S of Kanowna, some 20km NE of Kalgoorlie.

The area is dominantly volcaniclastic sediments. Importantly, the Shamrock Ultramafic Sequence trends N-S through the project area,and is prospective for Silver Swan style nickel sulphide mineralisation. Intrusive porphyry, locally being a prime gold target, occursthroughout the tenements. A southern extension of the Kanowna Shear Zone is also interpreted as transecting the western tenementarea, suggesting a Kanowna Belle target setting.

Previous RAB drilling includes intersections of up to 1m at 0.95g/t Au. Regional Aircore drilling and limited RC drilling produced up to4m at 2.35g/t Au at the Phoenix Prospect. In view of the deep surface depletion zone, further drill testing is required.

The similarity of the geological setting to the nearby Kanowna Belle gold mine means that very detailed drill exploration is warranted atthe Kanowna South Prospect once the tenements are granted. Farm-in interest has been expressed.

Roaster Prospect

The tenement applications are located 15km N of Kalgoorlie associated with the Bardoc Tectonic Zone (northern extension of theBoorara Shear Zone).

Sedimentary rocks of the Black Flag Group, interbedded with lesser mafic and porphyritic felsic rocks dominate the local geology. Thesediments consist of epiclastic siltstone and carbonaceous shale. Evidence of old gold workings from the late 1800s and early 1900sexists. No record of production is available.

Previous exploration of the tenement area includes aeromagnetic interpretation, an airborne Electro-Magnetic survey, a broad spacedgravity survey, geological and regolith mapping and interpretation, Auger sampling, several phases of follow up RAB drilling at theRoaster and Penghana Prospects, RC drilling at the Roaster and Penghana Prospects and regional Aircore-RAB drilling traverses. Thegeological setting is highly prospective for gold mineralisation. Heron’s main target is however nickel laterite associated with ultramaficunits interpreted during the course of previous gold exploration.

2.9.3 Mount Martin ProjectHeron 100%.

Gold - nickel.

The 60km2 project area covering 5 tenement applications is located 45km SE of Kalgoorlie, associated with the Boulder Lefroy FaultSystem to the west, and main Boorara Shear Zone to the east. The applications are precisely located on favourable structural andultramafic targets in the area of the Blair nickel, Mount Martin gold-nickel and New Celebration-Jubilee gold mines.

Tenement acquisition has been on the basis of the Woolibar Fault, which is a southern splay extension of the intensely mineralisedBoorara Shear Zone. Alluvial gold production is widespread within and adjoining the Heron project area. From Heron’s initial geologicalreconnaissance, gold-prospective zones appear to have a direct dolerite association.



Photo: Ian Buchhorn (Managing Director), Alan Rudd(Senior Geologist), David Crook (Exploration Manager).

2.10 SOUTHERN CROSS PROVINCEIRON PRODUCTION ROYALTY, GOLD-NICKEL EXPLORATION

2.10.1 Bungalbin ProjectHeron 100%.

Gold - nickel.

The 708km2 project area covering 7 tenement applications is located 100-130km NNE of Southern Cross. Dominantlithology is E-W trending ridges of banded iron formation (“BIF”).

Lateritic nickel potential in footwall ultramafic units is indicated from Heron’s literature reviews. Follow up of the nickeltarget will commence once tenements are granted.

Discussions are current for farming out the gold rights at Bungalbin.

2.10.2 Bungalbin Iron Ore ProjectHeron 100%. Portman Limited right to acquire iron ore rights through spending $0.25m and providing Heron an

Iron Ore Production Royalty.

Heron retains all other mineral rights, notably gold-nickel.

The 204km2 project area covering 3 granted tenements is located 105km N of Southern Cross. Dominant lithologyis an E-W trending ridge of BIF. The project area includes an iron ore Inferred Mineral Resource estimated fromHeron’s open file study at 65.7 million tonne at 57.9% Fe, with a calcined grade of 64.1% Fe. Within this globalresource, it is felt that good potential exists for smaller structurally controlled high grade iron-low phosphorus orepositions. The total BIF strike extent within the project area is 20km.

Portman is completing a Bankable Feasibility Study which is expected to be ready within one year. The Study includesa possible railway spur-line to the Bungalbin iron ore deposit to supplement the Koolyanobbing iron ore operation.The target ore type at Bungalbin is low-phosphorous ore. Heron holds a Royalty entitlement over iron ore productionfrom Bungalbin. The Royalty is not capped.

2.10.3 Maggie Hays Hill ProjectHeron 100%.

Nickel - gold.

The 81km2 project area covering 1 tenement application is located 140km SE of Southern Cross. The dominantlithological target is a komatiite-basalt contact that trends NNW through the project area.

Good potential exists for Maggie Hays-Emily Ann style structurally controlled massive nickel sulphide deposits. TheHeron project area will require blanket ground Electro-Magnetic surveying over and along strike of all komatiitesequences.

Lateritic nickel is recorded in previous RAB drilling from the southern tenement area, and is currently the primeexploration target for Heron. Follow up of the nickel targets will commence once the tenement is granted.

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Annual Report 2000

‘2000’ Derrick Sceghi “This is a painting of a mine. There are people working.”

Photo Strip: Fred Andrei has virtually single handedly surveyed each Heron drill hole, collected the drill samples, and thensupervised the rehabilitation. Fred is a well-known local prospector, who contracts to Heron as a Field Supervisor.

2.11 BREMER-EUCLA PALAEODRAINAGE PROVINCEOIL SHALE SCOPING STUDY.

2.11.1 Balladonia and Ravensthorpe-Norseman Oil Shale ProjectsHeron 100%.

Oil shale – lignite – sulphur – limestone - heavy mineral sands – kaolin - vanadium.

The 3,497km2 Balladonia project area covering 20 tenement applications is located 20-180km E of Norseman. The 2,008km2

Ravensthorpe-Norseman project area covering 22 tenement applications is located from Norseman and SW to Ravensthorpe. Theproject areas cover Tertiary-aged palaeodrainages which are prospective for lignite resources. Heron has demonstrated these lignitesto be oil shale bearing. From Landsat studies, the target basins are structurally controlled. Following a GIS study by Heron, sometenement rationalisation was completed, particularly where the target carbonaceous units were felt to be too thin or at excessive depth.

With the dramatic increase in oil prices during 2000, Heron’s Oil Shale acquisition strategy of the last two years has been validated.

Energy

Resource estimates are qualitative at best, but from reviewing previous exploration data, there is a stated a potential of 1.5 billion tonneat a Fischer Oil Yield of 95 litre per tonne. The Balladonia lignite has a higher ash content and lower specific energy values thanVictorian Tertiary brown coals, but is comparable to the Leigh Creek deposits being actively mined in South Australia. All of the Heronlignite resources have a high oil yield, being up to 190 litre per tonne. The oil yields are comparable to oil shale deposits in Queensland,which are now in production. The Bremer-Eucla Oil Shales are free of the environmental issues which relate to the Queenslandprojects, operating as they do within proximity to the Great Barrier Reef.

Sulphuric Acid

The Bremer-Eucla lignite is relatively pyritic. Following flotation and roasting, this pyrite would be suitable for sulphuric acid manufacture.Sulphuric acid is a major feedstock in nickel laterite processing. This sulphur requirement was the prime consideration for Heronacquiring the Bremer-Eucla Oil Shale tenements. The increase in oil price has now changed the commodity emphasis to oil.

Oil Shale Scoping Study

Heron is re-appraising its Scoping Study using the Balladonia West deposit as the conceptual ore model (high oil yield, low strip ratio,proximity to downstream energy users). The minimum economic Oil Shale target is felt to be:

• Minimum oil yield of 100 litres per tonne.• Minimum resource 1 billion tonne.• Waste to ore less than 2.0.• Overburden depth not to exceed 25m.• Scale of operation 50,000 barrels per day of oil/diesel.• Mine life 20 years.

Potential production of sulphur-free syncrudes from lignite by pyrolysis, gasification or hydrogenation is being assessed, with wasteheat and tail gases of potential use for power generation.

With the capital costs of such projects around A$2.0 billion, a major industrial end-user would need to be introduced at some stageto advance the Bremer-Eucla projects towards production. Development decisions will be made once the current Scoping Study hasbeen finalised.

The current study model involves a resource mined and milled at a rate of 22mtpa for at least 20 years, producing 50,000 barrels ofoil per day. Products are likely to include hydrogen, low sulphur naptha and shale oil. Residual carbon and spent shale could be usedto preheat and fuel the processing plant. The conceptual mining model involves 80 million bcm moved per annum at a strip ratio of1:1.6. After the initial excavations, overburden waste would be used to backfill exhausted mined out areas.

Expressions of interest have been received, and a Memorandum of Understanding is being reviewed to evaluate various alternatetechnologies and development concepts. The comprehensive Heron data base has been made available for review at the Perth officeof Heron’s Consultant, Paul Askins. Paul’s work on Heron’s Oil Shales has been outstanding.



Acknowledgement

Heron has progressed the Goongarrie Project through from the initial aquisition in 1998, to the 800x80mreconnaissance drilling in 1999, to 80x80m infill drilling and finally to the Pre-Feasibility Study in 2000. Kalpini wassimilarly fast tracked. With a staff of five and a budget of $2.5 million per annum, the work output of Heron isunsurpassed. To Dave, Alan, Simon, Sue and Fred, many thanks indeed.

I J BuchhornMANAGING DIRECTOR

The information is based on, and accurately reflects, information compiled by Ian James Buchhorn, who is a Memberof the Australasian Institute of Mining and Metallurgy.

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Annual Report 2000

1998 - Pegging of Goongarrie SouthIan Buchhorn, pegging P29/1636, 1637, January 1998. 2000 - Two years and 50,000m of RC

drilling later, Goongarrie South Pit DesignDavid Crook’s Pit Design generated inhouse.

Photo Strip: Heads down and tails up, the Heron way.

Opposite page: Goongarrie historical town plan, courtesy of the Eastern Goldfields Historical Society. The work of theHistorical Society ensures that these plans and other historical documents are preserved.

N Goongarrie Hill, Siliceous Ore

Proposed Mullock Dump

Goongarrie South, Limonite OrePamela Jean Zone

Big Four, Limonite Ore

Gold Target

Scotia, Siliceous OreGold Target

Scotia Dam,Limonite Oreshallow, high grade Cobalt Ore

1999 - Goongarrie South General Arrangement Plan, showing target areas. DTM (Digital Terrain Model) shows the high grade Limonite Ore is in low lying areas (green hues) and low grade Siliceous Ore is intopographic highs (brown hues).

100m

Pamela JeanZone

3.0 Corporate Profile 38

Corporate Governance Practices 38

4.0 Directors’ Report 40

5.0 Financial Statements 45

Profit And Loss Account 45

Balance Sheet 46

Statement Of Cash Flows 47

Notes To And Forming Part Of The Accounts 48

Directors’ Declaration 60

6.0 Independent Audit Report 61

7.0 Shareholder Information 62

8.0 Interest In Mining Tenements 65

Glossary of Terms 79

Statutory InformationHeron Resources NL

page 37Heron Resources NL Annual Report 2000

3.0 Corporate Profile

Heron Resources NL is a Kalgoorlie-based exploration and development company. The corporate aim is to become aprofitable mining company through the development of mineral deposits. Heron is focused on the exploration anddevelopment of its nickel laterite projects in the Eastern Goldfields of Western Australia.

The Company undertakes cost-effective exploration based on literature reviews, aeromagnetic interpretation, and oreresource drill testing of targets so generated.

The management of the Company is based in Kalgoorlie. Accordingly, the Company has excellent access to tenementacquisition opportunities, and to specialist contractor services. Administrative overheads are also maintained at lower levelsdue to the Kalgoorlie base.

The Company is managed and staffed by a team of five professional geoscientists with extensive industry experience.Specialist consultants are used as required, particularly in disciplines where future project due diligence may be required.Field programs such as drill rig access, drill site rehabilitation and hydrological monitoring are implemented under long-termcontracts to experienced operators.

OBJECTIVES

a) To convert the existing nickel laterite mineral resources into profitable mining operations for the Company;

b) To increase the value of the Company through the continued acquisition, exploration and development of mineralresources;

c) To establish mining cash flows that increase the Company’s market capitalisation and value to Shareholders;

d) To conduct operations in a safe and environmentally responsible manner, to offer employment opportunities to thosewho live in the exploration provinces, and to respect and nurture the Indigenous culture of the exploration provinces; and

e) Manage the risk in all exploration, development and corporate endeavours.

STRATEGY

a) Acquire the maximum available equity in nickel laterite and associated commodity projects through pegging, optioningor outright purchase, concentrating within the Eastern Goldfields of Western Australia;

b) Focus on cost-effective drill exploration to convert exploration targets into mineral resources;

c) Location of the corporate base at Kalgoorlie within the principal area of operation;

d) Active acquisition and testing of new exploration concepts and targets, such as the Bremer-Eucla oil shale project;

e) Use of best management, technical and financial control techniques; and

f) Utilise farm-outs where appropriate to spread exploration and commodity risk.

CORPORATE GOVERNANCE PRACTICES

General

The Company does not have any formally constituted committees of the Board of Directors. The Company is not of a sizenor are its affairs of such complexity to justify the formation of separate or special committees. The Board as a whole is ableto address the governance aspects of the full scope of the Company’s activities and to ensure that it adheres to appropriateethical standards.

Corporate ProfileHeron Resources NL

page 38 Heron Resources NL Annual Report 2000

Composition of the Board

At the date of this statement the Board comprises four Directors, three of whom are non executive Directors. The names,qualifications and relative experience of each Director are included in the Directors’ Report, Section 4.0.

The Company’s Articles provide that the number of Directors shall not be less than three and not more than nine (Article 19.1).There is no requirement for any Share holding qualification although it is preferable that Directors will become significantShareholders. An Employee Option Plan has been in operation to encourage Directors to take significant Shareholdings.

As the Company’s activities increase in their size, nature and scope, the size of the Board will be reviewed periodically and theoptimum number of Directors required to adequately supervise the Company’s activities determined within the limitations imposedby the Articles and as circumstances demand.

Board Membership

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining theappointment of a suitable candidate for the Board shall include the quality of the individual, experience and achievement,compatibility with other Board members, credibility within the Company’s scope of activities and the mining industry, intellectualability to contribute to the Board’s duties and physical ability to undertake the Board’s duties and responsibilities.

Under the Company’s Articles the tenure of the Directors (other than the Managing Director) is subject to re-appointment byShareholders not later than the third anniversary following their last appointment (Article 19.7). The Board does not subscribe tothe principle of a retirement age and there is no maximum period of service as a Director.

Appointment to Other Boards

Directors are required to take into consideration any conflicts when accepting appointment to other boards. Accordingly,Directors wishing to accept appointment to other boards must first seek approval from the Board, approval of which will notunreasonably be withheld.

Directors’ Remuneration

At the date of this statement the maximum per annum total amount payable to Directors as Director’s fees was set byShareholders at a general meeting on 21 June 1996 at $100,000.

No Director’s fees are paid to the Managing Director, who receives a salary approved by the Board.

Independent Support

The Board has determined that individual Directors may in appropriate circumstances engage outside advisers at the Company’sexpense. The engagement of an outside adviser is subject to the prior approval of the Board, approval of which will notunreasonably be withheld.

Compensation Arrangements

The Board is responsible for reviewing compensation arrangements (including superannuation and other benefits) for theManaging Director and other senior executives.

Continuous Review of Corporate Governance

Directors consider on an ongoing basis how management information is presented to them and whether such information issufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enableDirectors to determine appropriate operating and financial strategies from time to time in light of changing circumstances andeconomic conditions.

The Directors recognise that mineral exploration has inherent risks and that operational strategies adopted should,notwithstanding, be directed towards improving the value of the net worth of the Company.

Corporate Profile3.0 Continued


4.0 Directors’ Report

The Directors submit their Report on the operations of the Company and its controlled entities for the year ended 30 June2000 including the accounts for the financial year ended on that date in accordance with a resolution of the Directors of theCompany.

DIRECTORS

The names and details of the Directors of the Company in office at any time during or since the end of the year are:

Director Rodney Michael Evans - FCA, FCIS, FCIM, AIArbA

Appointed 26 March 1996

Position Chairman (Non-Executive)

Rod Evans is a chartered accountant and consultant who has had wide experience in corporate administrationand finance. Mr Evans is a Director and Chairman of RAC WA Holdings Pty Ltd and RAC Finance Limited,and a past Chairman of Clark Kenneth Leventhal a world-wide association of accounting firms, the AustralianAutomobile Association, and a number of publicly listed companies involved in mining and exploration inAustralia.

Director Ian James Buchhorn - BSc (Hons), Dip Geosci, MAusIMM

Appointed 17 February 1995

Position Managing Director

Ian Buchhorn is a Mineral Economist and Geologist. He has worked on nickel, gold, lead-zinc and diamondprojects in southern Africa. In Australia, Mr Buchhorn has worked on bauxite and industrial mineral mining andexploration, gold and base metal project generation, gold mine operation and in corporate evaluations. He has27 years’ experience as an economic geologist, and for the last 14 years, has acquired and developedprojects throughout the Eastern Goldfields of Western Australia, commissioned several open cut gold mines,and has been a Registered Mine Manager. Mr Buchhorn is responsible for the day to day technicalmanagement of the Company. He is active within the local community, serving as a Councillor for the City ofKalgoorlie-Boulder.

Director Robert George Colville - AssocRMIT, MAusIMM

Appointed 09 December 1996

Position Director (Non-Executive)

Bob Colville has over 28 years’ exploration experience predominantly within the Eastern Goldfields of WesternAustralia. Mr Colville has held a number of senior and executive positions with both major companies andjunior explorers. He has been associated with the discovery and development of mines at Ranger Uranium(NT), and New Celebration, Goongarrie and Davyhurst (Eastern Goldfields WA). Mr Colville is an executivedirector of Barminco Pty Ltd, the largest private underground mining contractor in Australia.

Director Peter James Lee - BBus, CA, FCIS, MAICD

Appointed 26 May 2000

Position Director (Non-Executive)

Peter Lee joined Centaur Mining & Exploration Limited in June 1987 and is currently company secretary ofCentaur. Mr Lee has over 20 years’ experience in the accounting, company secretarial and commercial fieldsin both Australia and overseas. Mr Lee has been involved in the development and introduction of a numberof corporate issues including registration of several companies in the United States of America, chairing duediligence committees, preparation of prospectuses and takeover documents and project management. Priorto joining Centaur, Mr Lee spent six years with PriceWaterhouse in Melbourne and Papua New Guinea.

Directors’ ReportHeron Resources NL


Ken Hellsten was appointed as a Director on 17 September 1999. Mr Hellsten was the Centaur Nickel Pty Limited and CentaurMining & Exploration Limited ("Centaur") nominee to the Board pursuant to the Strategic Alliance Agreement between Heron andCentaur. Mr Hellsten resigned on 26 May 2000 following which Peter James Lee was appointed as Centaur’s nominee pursuantto the Strategic Alliance.

PRINCIPAL ACTIVITIES

The principal activities of the economic entity during the year were:

a) Lateritic nickel mineral exploration and development; and

b) Various non-nickel mineral exploration activities, often implemented through farm-out.

There has been no significant change in the nature of these activities during the year.

OPERATING RESULTS

The consolidated loss of the economic entity for the 2000 financial year after income tax of nil (1999 : nil) was $535,636 (1999 : $5,680,473).

DIVIDENDS

No dividends were paid during the year and the Directors do not recommend the payment of a dividend.

OPERATIONS REVIEW

The detailed Operations Review of the economic entity for the year is contained in Section 2.0 of this Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than noted below there were no significant changes in the state of affairs of the economic entity during the year.

On 17 September 1999 the Company entered into a Strategic Alliance Agreement with Centaur Mining & Exploration Limited.The Alliance supports the planned Stage II expansion of the Cawse Nickel Project to a production level of more than 40,000tonnes per annum of LME grade nickel. Pursuant to the Agreement the Company received $3,132,000 and granted CentaurMining & Exploration Limited an option, at no additional cost, to call for the issue of 10,440,000 Shares in the Company. On 28 September 1999 Centaur Mining & Exploration Limited called for the issue of the 10,440,000 Shares, which Shares havesince been issued.

There were no significant changes in the state of affairs of controlled entities during the year.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Other than mentioned below at the date of this Report there is no matter or circumstance which has arisen since 30 June 2000that has significantly affected or may significantly affect:

a) The operations, in the financial years subsequent to 30 June 2000, of the economic entity;

b) The results of those operations; or

c) The state of affairs, in the financial years subsequent to 30 June 2000, of the economic entity.

In June 2000 Optionholders of the Company exercised 10,000,000 Options at 25 cents each which were to expire on 30 June2000 and 150,000 Options at 25 cents each which were to expire on 15 December 2001. Shares were allotted and issued toOptionholders on 13 July 2000.

Directors’ Report4.0 Continued


OPTIONS

10,150,000 Options in the Company were exercised during the year.

1,000,000 Options were issued by the Company during the year.

As at 30 June 2000 the Company had the following Options on issue:

Number Issued Expiry Date Exercise Price

125,000 28 August 2001 25 cents

150,000 01 September 2001 25 cents

350,000 15 December 2001 25 cents

65,000 05 March 2002 25 cents

200,000 19 December 2002 25 cents

200,000 19 December 2002 35 cents

200,000 19 December 2002 45 cents

200,000 19 December 2002 55 cents

200,000 19 December 2002 65 cents

1,690,000

LIKELY DEVELOPMENTS

The Company will continue its core nickel development activities through sole funded exploration and joint ventures whereappropriate. Inferred Mineral Resources at Goongarrie are being drilled out to an Indicated status for the Cawse Stage IIBankable Feasibility Study to be completed by Centaur Mining & Exploration Limited on or before 19 August 2001.

The Company is continually assessing commercial opportunities for corporate growth. Because of the unpredictable natureof these opportunities, developments could occur at short notice.

Further information is not included on the likely developments in the operations of the economic entity and the expectedresults of those operations, as it is the opinion of the Directors that this would prejudice the interests of the economic entityif included in this Report.

DIRECTORS’ BENEFITS

Disclosure of benefits provided to Directors during the financial year is made in Notes 14 and 16 of the financial statements,in accordance with ASC class order 98/2395.

DIRECTORS’ INTEREST IN CONTRACTS WITH THE COMPANY

There are no material contracts involving Directors’ interests at the end of the financial year nor have any been entered intosince the end of the previous financial year not otherwise disclosed in this Report.

DIRECTORS’ SHAREHOLDING IN THE COMPANY

As at the date of this Report the interests of the Directors in the Shares of the Company were:

Director Ordinary Shares Options over Ordinary SharesDirect Indirect Direct Indirect

R M Evans - 800,000 - 200,000

I J Buchhorn 2,447,857 28,221,998 1,000,000 -

R G Colville - 140,000 - 150,000

P J Lee - - - -



DIRECTORS MEETINGS

During the year the Company held 10 meetings of Directors. The attendance of the Directors at meetings of the Board were:

Director Meetings held Number ofwhile a Director meetings

attended

R M Evans 10 10

I J Buchhorn 10 10

R G Colville 10 9

KJ Hellsten (resigned 26 May 2000) 6 6

PJ Lee (appointed 26 May 2000) 1 1

EMOLUMENTS OF DIRECTORS AND SENIOR EXECUTIVES

Executive remuneration and other terms of employment are reviewed by the Board on an ongoing basis having regard toperformance against goals set at the start of the year, the relevant comparative information and independent expert advice.Remuneration packages are set at levels that are intended to attract and retain executives capable of managing the economicentity’s operations.

Director Salary Directors Superannuation Other Options Fees

$ $ $ $ $

R M Evans - - 43,938 - -

I J Buchhorn 130,000 - 20,000 - 60,000

R G Colville - 20,000 1,400 - -

K J Hellsten - 13,337 934 - -

P J Lee - 1,663 116 - -

Senior Executive

D J Crook 90,118 - 29,880 30,002 -

Mr Crook is the only employee of the economic entity qualifying as a Senior Executive.

1,000,000 Options in the parent entity were issued to Ian James Buchhorn during the year as approved by Shareholders at theCompany’s 1999 Annual General Meeting on the following terms:


200,000 19 December 2002 25 cents

200,000 19 December 2002 35 cents

200,000 19 December 2002 45 cents

200,000 19 December 2002 55 cents

200,000 19 December 2002 65 cents

The value of the 1,000,000 19 December 2002 Options issued to I J Buchhorn is calculated to be $60,000.



AUDIT COMMITTEE

At the date of this Report the Company has not formed an Audit Committee. The Directors discuss the Company’s activitieswith the auditors throughout the year. Due to the size and nature of operations, it has not been considered necessary toform an Audit Committee of the Board of Directors.

INSURANCE OF OFFICERS

During the financial year the Company has paid an insurance premium in respect of a Directors’ and Officers LiabilityInsurance Contract. The insurance premium relates to liabilities that may arise from an officer’s position, with the exceptionof conduct involving a wilful breach of duty or improper use of information or position to gain personal advantage.

The officers covered by the insurance policies are the Directors and the Company Secretary.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Heron Resources NLsupport and have adhered to the principles of corporate governance. The economic entity’s corporate governance statement iscontained in the Section 3.0 Corporate Profile of the Annual Report.

ENVIRONMENTAL REGULATION

The economic entity is subject to and compliant with all aspects of environmental regulation in respect of its explorationactivities. The Directors are not aware of any environmental regulation which is not being complied with.

ABORIGINAL CULTURE AND HERITAGE

The economic entity is subject to and compliant with all aspects of Aboriginal Heritage regulation in respect of its explorationand development activities. The Directors are not aware of any regulation which is not being complied with. The Directorsare committed to cultural respect and Indigenous Reconciliation.

Signed in accordance with a resolution of Directors

R G COLVILLEDirector

Perth, 29 September 2000



5.0 Financial Statements

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 30 JUNE 2000

Economic Entity Parent EntityNotes 2000 1999 2000 1999

$ $ $ $

REVENUE 2(c) 171,718 149,287 171,718 149,287

OPERATING LOSS BEFORE ABNORMALITEMS AND INCOME TAX (535,636) (539,483) (535,636) (539,483)

ABNORMAL ITEMS BEFORE INCOME TAX 3 - (5,140,990) - (5,140,990)

OPERATING LOSS BEFORE INCOME TAX (535,636) (5,680,473) (535,636) (5,680,473)

INCOME TAX ATTRIBUTABLE TO OPERATING LOSS 4 - - - -

OPERATING LOSS AFTER INCOME TAX (535,636) (5,680,473) (535,636) (5,680,473)

ACCUMULATED LOSSES at the beginning of the financial year (6,770,768) (1,090,295) (6,770,768) (1,090,295)

ACCUMULATED LOSSES at the end of the financial year (7,306,404) (6,770,768) (7,306,404) (6,770,768)

The accompanying notes form part of these financial statements

Financial StatementsHeron Resources NL


BALANCE SHEET

AT 30 JUNE 2000


$ $ $ $

CURRENT ASSETS

Cash 3,925,296 1,286,067 3,925,286 1,286,067

Receivables 5 6,661 4,289 6,661 4,289

TOTAL CURRENT ASSETS 3,931,957 1,290,356 3,931,947 1,290,356

NON-CURRENT ASSETS

Receivables 6 - - 363,346 -

Investments 7 - - 10 -

Property, plant and equipment 8 117,632 166,135 117,632 166,135

Exploration and evaluation costs carried forward 9 10,263,600 7,681,825 9,900,254 7,681,825

TOTAL NON-CURRENT ASSETS 10,381,232 7,847,960 10,381,242 7,847,960

TOTAL ASSETS 14,313,189 9,138,316 14,313,189 9,138,316

CURRENT LIABILITIES

Accounts payable 10 172,323 14,614 172,323 14,614

Provisions 11 77,769 64,469 77,769 64,469

TOTAL CURRENT LIABILITIES 250,092 79,083 250,092 79,083

TOTAL LIABILITIES 250,092 79,083 250,092 79,083

NET ASSETS 14,063,097 9,059,233 14,063,097 9,059,233

SHAREHOLDERS’ EQUITY

Share capital 12 21,369,501 15,830,001 21,369,501 15,830,001

Accumulated losses (7,306,404) (6,770,768) (7,306,404) (6,770,768)

TOTAL SHAREHOLDERS’ EQUITY 14,063,097 9,059,233 14,063,097 9,059,233


Financial Statements5.0 Continued


STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2000


$ $ $ $

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 161,007 83,844 161,007 83,844

Proceeds from sale of tenements 15,000 67,500 15,000 67,500

Payments to suppliers (619,699) (531,218) (619,699) (531,218)

NET CASH OUTFLOWS FROM OPERATING ACTIVITIES 13(a) (443,692) (379,874) (443,692) (379,874)

CASH FLOWS FROM INVESTING ACTIVITIES

Exploration expenditure (2,454,234) (2,030,861) (2,090,888) (2,030,861)

Acquisition of plant & equipment (2,355) (20,940) (2,355) (20,940)

NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (2,456,589) (2,051,801) (2,093,243) (2,051,801)

CASH FLOWS FROM FINANCING ACTIVITIES

Loan to controlled entity - - (363,346) -

Proceeds from issue of shares 5,669,510 1,250,000 5,669,500 1,250,000

Share issue costs (130,000) - (130,000) -

NET CASH INFLOWS FROM FINANCING ACTIVITIES 5,539,510 1,250,000 5,176,154 1,250,000

NET INCREASE / (DECREASE) IN CASH HELD 2,639,229 (1,181,675) 2,639,219 (1,181,675)

Cash at the beginning of the financial year 1,286,067 2,467,742 1,286,067 2,467,742

CASH AT THE END OF THE FINANCIAL YEAR 13(c) 3,925,296 1,286,067 3,925,286 1,286,067

Non-cash financing and investing activities 13(b) 176,841 30,000 176,841 30,000




NOTES TO AND FORMING PART OF THE ACCOUNTSFOR THE YEAR ENDED 30 JUNE 2000

NOTE 1. STATEMENT OF ACCOUNTING POLICIES

The financial statements are a general purpose financial report that has been prepared in accordance with applicableAccounting Standards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views)and the Corporations Law. The financial statements have been prepared on the basis of historical costs and do not take intoaccount changing money values or, except where stated, current valuations of non-current assets. The accounting policieshave been consistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of thefinancial statements.

a) Principles of Consolidation

The consolidated accounts comprise the accounts of Heron Resources NL and its controlled entities. A controlled entityis any entity controlled by Heron Resources NL. Control exists where Heron Resources NL has the capacity to dominatethe decision making in relation to the financial and operating policies of another entity so that the other entity operateswith Heron Resources NL to achieve the objectives of Heron Resources NL. A list of controlled entities is contained inNote 22.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits orlosses, have been eliminated on consolidation.

Where controlled entities have entered or left the economic entity during the year, their operating results have beenincluded from the date of control was obtained or until the date control ceased.

Outside interests in the equity and results of the entities that are controlled are shown as a separate item in theconsolidated financial report.

b) Income Tax

The economic entity adopts the liability method of tax-effect accounting whereby the income tax expense shown in theprofit and loss account is based on the operating profit before income tax adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense areincluded in the determination of operating profit before income tax and taxable income are brought to account as eithera provision for deferred income tax or an asset described as future income tax benefit at the rate of income tax applicableto the period in which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonabledoubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty ofthe realisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that noadverse change will occur in income tax legislation and the anticipation that the Company will derive sufficient futureassessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

c) Exploration, Evaluation and Development Expenditure

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.

Accumulated costs are only carried forward to the extent that they are expected to be recouped through the successfuldevelopment of the area, or by its sale, or where the activities in the area have not reached a stage which permits areasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decisionto abandon the area is made.

Accumulated costs are not carried forward in respect of any area of interest unless rights to tenure of that area are current.



d) Investments

Investments are brought to account at cost or at Directors’ valuation. The carrying amount of investments is reviewedannually by Directors to ensure it is not in excess of the recoverable amount of these investments.

e) Depreciation

Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each item of property, plantand equipment over its expected useful life. Rates of depreciation are 15% for motor vehicles, 15% to 100% for plant &equipment and 20% to 36% for office furniture and equipment.

f) Interests in Joint Ventures

The economic entity’s share of the assets, liabilities, revenue and expenses of joint ventures is included in the appropriateitems of the balance sheet and the profit and loss account.

Details of the joint ventures are set out in Note 21.

g) Employee Entitlements

Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured as the amount unpaid atthe reporting date at current pay rates in respect of employees’ service up to that date.

h) Cash

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investmentsreadily convertible to cash within two working days, net of outstanding bank overdrafts.

i) Acquisition of Assets

The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets areacquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to theacquisition. Where shares are issued in an acquisition, the value of the shares is determined by reference to the fair valueof the assets acquired, including goodwill where applicable.

Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure,development properties or mine properties based on the stage of development reached at the date of acquisition. Assetsacquired may also include mineral reserves, mineral resources and unexplored and unevaluated acreage.

Where settlement of any part of a cash consideration is deferred, the amounts payable in the future are discounted to theirpresent value as at the date of acquisition. The discount rate used is the rate at which a similar borrowing could be obtainedunder comparable terms and conditions.

A liability for restructuring costs is recognised as at the date of acquisition of an entity or part thereof when there is ademonstrable commitment to a restructuring of the acquired entity and a reliable estimate of the amount of the liability canbe made.

j) Recoverable Amount of Non-Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising fromits continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to itsrecoverable amount. Where the net cash inflows are derived from a group of assets working together, recoverable amountis determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reverses a revaluationincrement previously credited to, and still included in the balance of the asset revaluation reserve, the decrement is debiteddirectly to that reserve. Otherwise the decrement is recognised as an expense in the profit and loss account.

The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to theirpresent values using a market-determined, risk adjusted discount rate.



k) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the economic entity prior to the end of thefinancial year and which are unpaid. These amounts are unsecured and are usually paid within 30 days of recognition.

l) Receivables and Revenue Recognition

Bills of Exchange

Bills of Exchange have been purchased in the market at a discount to face value. The Bills are carried at an amountrepresenting cost and a portion of the discount recognised as income on an effective yield basis. The discount broughtto account each period is accounted for as interest received.

m) Earnings per Share

i) Basic Earnings per Share

Basic earnings per Share is determined by dividing the operating profit/(loss) after income tax by the weightedaverage number of ordinary Shares outstanding during the financial year, adjusted for bonus elements in ordinaryShares issued during the year.

ii) Diluted Earnings per Share

Diluted earnings per Share adjusts the figures used in the determination of basic earnings per Share by taking intoaccount amounts unpaid on ordinary Shares and Options and any reduction in earnings per Share that will probablyarise from the exercise of Options outstanding during the financial year.

Economic Entity Parent Entity2000 1999 2000 1999

$ $ $ $

NOTE 2. OPERATING LOSS

The operating loss before income tax is arrived at after:

a) Charging as Expenses:

Depreciation 50,858 48,761 50,858 48,761

Loss on sale of tenements - 77,563 - 77,563

Employee entitlements 1,330 1,623 1,330 1,623

Exploration expenditure written off 29,354 - 29,354 -

b) Crediting as Income:

Interest received from other persons 156,718 81,787 156,718 81,787

c) Revenue:

Other revenue

Interest received 156,718 81,787 156,718 81,787

Proceeds from sale of tenements 15,000 67,500 15,000 67,500

171,718 149,287 171,718 149,287




$ $ $ $

NOTE 3. ABNORMAL ITEMS

Included in the operating loss after tax is the following abnormal item:

Exploration expenditure written off - 5,140,990 - 5,140,990

NOTE 4. INCOME TAX

Prima facie income tax benefit on operating loss reconciles to the income tax expense as follows:

Operating loss before tax (535,636) (5,680,473) (535,636) (5,680,473)

Prima facie tax at 36% (192,829) (2,044,970) (192,829) (2,044,970)

Non deductible items 62,492 1,728,904 62,492 1,728,904

Timing differences and tax losses not brought to account 130,337 316,066 130,337 316,066

Income tax expense - - - -

The Directors estimate the potential tax losses and section 330 exploration expenditure deduction entitlements available to theeconomic entity to be $7,748,391 (1999 : $5,119,000).

The future income tax benefit arising from tax losses has not been recognised as an asset because recovery is not virtuallycertain.

The tax benefits will only be obtained if:

a) The economic entity derives future assessable income of a nature and of an amount sufficient to enable the benefit from thedeductions for the losses to be realised;

b) The economic entity continues to comply with the conditions for deductibility imposed by tax legislation; and

c) No changes in tax legislation adversely affect the economic entity in realising the benefit from the deductions for losses.

NOTE 5. RECEIVABLES (CURRENT)

Accrued interest - 4,289 - 4,289

Goods & Services Tax Paid 6,661 - 6,661 -

6,661 4,289 6,661 4,289

NOTE 6. RECEIVABLES (NON CURRENT)

Loan to controlled entity - - 363,346 -

- - 363,346 -

NOTE 7. INVESTMENTS IN CONTROLLED ENTITIES

Shares in controlled entities – at cost (Note 22) - - 10 -

- - 10 -




$ $ $ $

NOTE 8. PROPERTY PLANT AND EQUIPMENT

Plant and equipment at cost 62,605 61,576 62,605 61,576

Accumulated depreciation (48,995) (31,480) (48,995) (31,480)

13,610 30,096 13,610 30,096

Office equipment & furniture at cost 24,251 22,925 24,251 22,925


9,626 15,244 9,626 15,244

Motor vehicles at cost 176,168 176,168 176,168 176,168


94,396 120,795 94,396 120,795

Total property, plant and equipment 117,632 166,135 117,632 166,135

NOTE 9. EXPLORATION AND EVALUATION COSTS CARRIED FORWARD

Balance at beginning of year 7,681,825 11,072,712 7,681,825 11,072,712

Acquisition costs 350,286 381,215 350,286 381,215

Exploration and evaluation costs incurred 2,260,843 1,513,951 1,897,497 1,513,951during the year

Exploration and evaluation costs of mining - (145,063) - (145,063)tenements disposed of

Exploration and evaluation costs written off (29,354) (5,140,990) (29,354) (5,140,990)

Balance at end of year 10,263,600 7,681,825 9,900,254 7,681,825

The ultimate recoupment of costs carried forward is dependant upon the successful development and/or commercialexploitation or alternatively, sale of respective areas of interest.

NOTE 10. ACCOUNTS PAYABLE (CURRENT)

Trade creditors and accruals 172,323 14,614 172,323 14,614

NOTE 11. PROVISIONS (CURRENT)

Employee entitlements 77,769 64,469 77,769 64,469




$ $ $ $

NOTE 12. SHARE CAPITAL

Issued Capital

90,958,872 (1999 : 69,600,000) ordinary Shares 21,676,342 15,830,001 21,676,342 15,830,001

Less: Capital Raising Expenses (306,841) - (306,841) -

21,369,501 15,830,001 21,369,501 15,830,001

Movements in issued and paid up capital of the parent entity during the year are as follows:

2000Number $

Balance at beginning of year 69,600,000 15,830,001

Issued during the year 10,440,000 3,132,000

Issued during the year 768,872 176,841

Issued during the year 10,150,000 2,537,500

Balance at end of year 90,958,872 21,676,342

On 17 September 1999 the Company entered into a Strategic Alliance Agreement with Centaur Mining & Exploration Limited.The Alliance supports the planned Stage II expansion of the Cawse Nickel Project to a production level of more than 40,000tonnes per annum of LME grade nickel. Pursuant to the Agreement the Company received $3,132,000 and granted CentaurMining & Exploration Limited an option, at no additional cost, to call for the issue of 10,440,000 Shares in the Company. On28 September 1999 Centaur Mining & Exploration Limited called for the issue of the 10,440,000 Shares, which Shares havesince been issued.

768,872 Shares were issued to a nominee of Carmichael First Capital Pty Ltd pursuant to the terms of a capital raisingmandate as a negotiated success fee, which was crystallised with the Heron-Centaur Strategic Alliance.

Options

10,000,000 Options expiring on 30 June 2000 exercisable at 25 cents were exercised during June 2000. Shares wereallotted and issued to Optionholders on 13 July 2000.

150,000 Options expiring on 15 December 2001 exercisable at 25 cents were exercised during June 2000. Shares wereallotted and issued to the Optionholder on 13 July 2000.

As at 30 June 2000 there were a total of 1,690,000 Options on issue as follows:


125,000 28 August 2001 25 cents

150,000 01 September 2001 25 cents

350,000 15 December 2001 25 cents

65,000 05 March 2002 25 cents

200,000 19 December 2002 25 cents

200,000 19 December 2002 35 cents

200,000 19 December 2002 45 cents

200,000 19 December 2002 55 cents

200,000 19 December 2002 65 cents




$ $ $ $

NOTE 13. STATEMENT OF CASH FLOWS

a) Reconciliation of operating loss after income tax to the net cash flows from operations

Operating loss after income tax (535,636) (5,680,473) (535,636) (5,680,473)

Add/(less)

Exploration and evaluation costs written off 29,354 5,140,990 29,354 5,140,990

Exploration and evaluation costs of mining tenements - 145,063 - 145,063disposed of

Depreciation 50,858 48,761 50,858 48,761

(Increase)/decrease in accrued interest 4,289 2,057 4,289 2,057

Increase/(decrease) in creditors and accruals 7,443 (36,272) 7,443 (36,272)

(443,692) (379,874) (443,692) (379,874)

b) Non-Cash Financing and Investing Activities

Issue of 768,872 Shares to a nominee of Carmichael First Capital Pty Ltd pursuant to a negotiated Success Fee, crystallised with the signing of the Strategic Alliance (Note 12). 176,841 - 176,841 -

Issue of Shares to purchase interests in mining tenements. - 30,000 - 30,000

c) Reconciliation of Cash

Cash on hand and at bank 2,431,839 1,286,067 2,431,829 1,286,067

Commercial Bills 1,493,457 - 1,493,457 -

Closing cash balance 3,925,296 1,286,067 3,925,286 1,286,067

NOTE 14. REMUNERATION OF DIRECTORS

Income paid or payable, or otherwise made available to Directors by the economic entity and related parties in connection with the management of affairs of the economic entity: 291,388 184,752 291,388 184,752

The numbers of the economic entity’s Directors whose income (including superannuation contributions) was within the specified bands are as follows:

2000 1999Number Number

$0 - $9,999 1 -

$20,000 - $29,999 2 1

$40,000 - $49,999 1 1

$110,000 - $119,999 - 1

$210,000 - $219,999 1 -



2000 1999$ $

NOTE 15. REMUNERATION OF EXECUTIVES

Income paid or payable, or otherwise made available to Executives by the economic entity and related partiesin connection with the management of affairs of the economic entity: 150,000 150,000

2000 1999Number Number

The numbers of the economic entity Executives whose income (including superannuation contributions) was within the specified bands are as follows:

$150,000 - $159,999 1 1

The economic entity employs a single Senior Executive, being the Exploration Manager.

The terms Director and Executive Officer have been treated as mutually exclusive for the purposes of this disclosure.

In the opinion of the Directors, remuneration paid to Directors and Executives is considered fair and reasonable.

NOTE 16. RELATED PARTY DISCLOSURES

a) The Directors of the parent entity during the financial year were:

Rodney Michael Evans

Ian James Buchhorn

Robert George Colville

Kenneth John Hellsten (appointed 17 September 1999, resigned 26 May 2000)

Peter James Lee (appointed 26 May 2000)

b) Related party transactions during the financial year were:

• Payment of $61,256 (1999 : $75,622) to parties related to Mr I J Buchhorn for the provision of office accommodationand secretarial services on normal commercial terms and conditions;

• Payment of $1,068 (1999 : $3,680) for residential accommodation secured by the economic entity for an employeefrom a party related to Mr I J Buchhorn on normal commercial terms and conditions;

• Payments of $75,000 (1999 : nil) for acquisition of mining tenements from parties related to Mr I J Buchhorn on normalterms and conditions;

• Information on remuneration of Directors and Executives of the economic entity is disclosed in Notes 14 and 15; and

• Interest-free loan of $363,346 (1999 : nil) was made by the parent entity to the controlled entity Balladonia Energy NL.

c) Transactions of Directors and Director related entities concerning Shares or Options were:

• Aggregate number of Shares and Options of the parent entity held directly, indirectly or beneficially by Directors orDirector-related entities at balance date:

2000 1999

Ordinary Shares held 31,609,855 22,109,856

Options over Ordinary Shares held 1,350,000 9,500,000

• During the year, Directors and Director related entities acquired 9,499,999 Shares of the Company of which 9,150,000were acquired by exercise of Options and the balance of Shares were acquired on the same basis as similar transactionswith other Shareholders;



• 1,000,000 Options were issued to I J Buchhorn during the year as approved by Shareholders at the 1999 AnnualGeneral Meeting on the following terms:


200,000 19 December 2002 25 cents

200,000 19 December 2002 35 cents

200,000 19 December 2002 45 cents

200,000 19 December 2002 55 cents

200,000 19 December 2002 65 cents

The value of Options is calculated to be $60,000. This amount has been included in the remuneration of Directors (Note 14).

d) No other benefits have been received or are receivable by Directors or Director related entities, other than those alreadydisclosed in the notes to the accounts.

e) Heron Resources NL is the ultimate parent entity. Ownership interest in the controlled entity is as set out in Note 22.

NOTE 17. FINANCIAL INSTRUMENTS

a) Terms, conditions and accounting policies

The economic entity’s accounting policies, including the terms and conditions of each class of financial asset, financialliability and equity instrument, both recognised and unrecognised at the balance date, are as follows:



Recognised Financial Balance Accounting Policies Terms and ConditionsInstruments Sheet Notes

i) Financial assets

11am Call Accounts 11am Call Accounts are carried at cost. The 11am Call Accounts are at callwith an interest rate of 5.75%(1999 : 4.5%).

Commercial Bills Commercial Bills are carried at an Commercial Bills have a termamount representing cost and a portion of 26 days with an interestof the discount recognised as rate of 6.15% (1999 : nil).income on an effective yield basis.

Environmental Bonds Environmental Bonds are carried at cost. Environmental Bonds are security term deposits with a 6 month term with an interest rate of 5.5% (1999 : nil).

ii) Financial liabilities

Trade creditors 10 Liabilities are recognised for amounts Trade liabilities are normally settledand accruals to be paid in the future for goods and on 30 day terms.

services received, whether or not billed to the economic entity.

iii) Equity

Ordinary Shares 12 Ordinary Share capital is recognised at Details of the Shares issued and thethe fair value of the consideration terms and conditions of the Optionsreceived by the economic entity. outstanding over ordinary Shares at

balance date are set out in Note 12.

b) Interest rate risk

The economic entity’s exposure to interest rate risks and the effective interest rates of financial assets and financial liabilities,both recognised and unrecognised at the balance date are as follows:

c) Net fair values

Total carrying amount as per Aggregate net fair value i)

balance sheet

2000 1999 2000 1999$ $ $ $

Financial assets

Cash at bank 1,866,425 209,376 1,866,425 209,376

Commercial Bills 1,493,457 - 1,493,457 -

11am Call accounts 539,454 1,076,691 539,454 1,076,691

Environmental Bonds 25,960 25,960

Total financial assets 3,925,296 1,268,067 3,925,296 1,268,067

Financial liabilities

Trade creditors and accruals 172,323 14,614 172,323 14,614

Total financial liabilities 172,323 14,614 172,323 14,614

i) The following methods and assumptions are used to determine the net fair values of financial assets and liabilities.

Recognised financial instruments:

Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short-term maturity.

Receivables and trade creditors: The carrying amount approximates fair value.



Financial Instruments Floating Fixed interest Total carrying Weighted average interest rate rate maturing in amount as per effective

1 year or less balance sheet interest rate

2000 1999 2000 1999 2000 1999 2000 1999$ $ $ $ $ $ % %

i) Financial assets

Cash at bank 1,866,425 209,376 - - 1,866,425 209,376 4.85 2.50

Commercial Bills - - 1,493,457 - 1,493,457 - 6.15 -

11am Call Accounts 539,454 1,076,691 - - 539,454 1,076,691 5.75 4.50

Environmental Bonds - - 25,960 - 25,960 - 5.50 -

Total financial assets 2,405,879 1,286,067 1,519,417 - 3,925,296 1,286,067 n/a n/a

Non-Interest Total carrying Weighted average Bearing amount as per effective

balance sheet interest rate

2000 1999 2000 1999 2000 1999$ $ $ $ % %

ii) Financial liabilities

Trade creditors and accruals 172,323 14,614 172,323 14,614 n/a n/a

Total financial liabilities 172,323 14,614 172,323 14,614 n/a n/a

NOTE 18. AUDITORS’ REMUNERATIONEconomic Entity Parent Entity2000 1999 2000 1999

$ $ $ $

Amounts received or due and receivable by the auditors for:- audit services 11,345 12,500 11,345 12,500- other services - 7,785 - 7,785

NOTE 19. COMMITMENTS FOR EXPENDITURE

Exploration Commitments

In order to maintain current rights of tenure to exploration and mining tenements, the economic entity has the followingdiscretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject torenegotiation upon expiry of the leases, are not provided for in the financial statements and are payable:


$ $ $ $Not later than 1 year 2,000,000 2,000,000 1,800,000 2,000,000Later than 1 year but not later than 2 years 2,000,000 2,000,000 1,800,000 2,000,000Later than 2 years but not later than 5 years 6,000,000 6,000,000 5,000,000 6,000,000

If the economic entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised in thebalance sheet may require review to determine the appropriateness of carrying values. The sale or farm-out of explorationrights to third parties will reduce or extinguish these obligations. Those amounts detailed above do not include expenditurecommitments which are the responsibility of joint venture partners (Note 21).

NOTE 20. SEGMENT INFORMATION

The economic entity operates in the mineral exploration industry in Australia.

NOTE 21. JOINT VENTURE AGREEMENTS

The economic entity has entered into or is negotiating the following joint venture agreements:

Project Operator Right to Farm-inEarn Expenditure

Menzies East Golden State Resources Limited 60% $250,000Laverton Metex Resources NL 70% $500,000Mt Morgans Metex Resources NL 70% $200,000Snake Hill Connemara Gold Mines Pty Ltd 70% $300,000Mungari Northwest Kundana Gold Pty Ltd 50% $3,000,000Southern Laverton Tectonic Zone Gutnick Resources NL 80% $1,200,000Edjudina and Laverton Croesus Mining NL 80% $1,000,000Bungalbin and Mount Jackson Portman Limited 100%* $250,000Karonie South WMC Resources Limited 80% $300,000Scotia Kanowna Delta Gold Ltd 70% $1,000,000Transline New Hampton Goldfields Limited 80% $800,000Binduli East AngloGold Australasia Limited 75% $500,000Widgiemooltha+ WMC Resources Limited 80% $300,000Kookynie+ Barminco Pty Ltd & Kookynie Resources NL 70% $750,000Kurnalpi In negotiation 80% $200,000Victory In negotiation 80% $100,000Frances Lesley In negotiation 100%** -Mineral Hill In negotiation 0%*** -

TOTAL $10,650,000* The Company has a royalty based on tonnes of iron ore sold by Portman Limited.** The Company retains all nickel rights. Another entity acquires all gold rights and maintains tenements in good standing.*** The Company acquires all nickel rights and maintains the tenements in good standing. Another entity retains all gold rights.+ Subject to final documentation.



NOTE 22. INVESTMENTS IN CONTROLLED ENTITIES

Name of Country of Class of Equity Holding Cost of Parent Entity’sEntity Incorporation Shares Investment

2000 1999 2000 1999$ $

Balladonia Energy NL Australia Ordinary 100% - 10 -

Balladonia Energy NL was incorporated to evaluate the economic potential of documented oil shale occurrences in the Balladonia areato contribute to the generation of the energy, sulphur and lime requirements of Heron’s Nickel Laterite projects. The corporate objectivehas been to introduce a technical partner with demonstrated oil shale expertise, to further advance the oil shale projects.

NOTE 23. CONTINGENT LIABILITIES

Native title claims have been made with respect to areas which include tenements in which the economic entity has interests.The economic entity is unable to determine the prospects for success or otherwise of the claims and, in any event, whether ornot and to what extent the claims may significantly affect the economic entity or its projects.

NOTE 24. EARNINGS PER SHARE2000 1999

$ $

Basic earnings per Share (0.0068) (0.0891)

Weighted average number of ordinary Shares outstanding during the year used in the calculation of basic earnings per Share. 77,925,300 63,757,808

As diluted earnings per Share is not materially different from basic earnings per Share it has not been disclosed.

NOTE 25. SUBSEQUENT EVENTS

Option Exercise

10,000,000 Options expiring on 30 June 2000 exercisable at 25 cents were exercised during June 2000. Shares were allottedand issued to Optionholders on 13 July 2000.

150,000 Options expiring on 15 December 2001 exercisable at 25 cents were exercised during June 2000. Shares wereallotted and issued to the Optionholder on 13 July 2000.

Tenement Plaints

Plaints for forfeiture have been lodged on six tenements. The Directors believe that the plaint action will not succeed.



5.0 Directors’ Declaration

In accordance with a resolution of the Directors of Heron Resources NL it is declared that:

a) The financial statements and notes comply with Accounting Standards, the Corporations Regulations and othermandatory professional reporting requirements; and

b) Give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2000 and of theirperformance, as represented by the results of their operations and their cash flows, for the financial year ended on thatdate.

In the Directors’ opinion:

a) The financial statements and notes are in accordance with the Corporations Law; and

b) At the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debtswhen they become due and payable.

On behalf of the Board

R G COLVILLEDirector


Directors’ Declaration5.0 Continued


6.0 Independent Audit Report

To the members of Heron Resources NL

Scope

We have audited the financial report of Heron Resources NL for the year ended 30 June 2000 as set out on pages 45 to 60.The Company’s Directors are responsible for the financial report which includes the financial statements of the Company and theconsolidated financial statements of the consolidated entity comprising the Company and the entities it controlled at the end of,or during, the financial year. We have conducted an independent audit of the financial report in order to express an opinion onit to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether thefinancial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supportingthe amounts and other disclosures in the financial report and the evaluation of accounting policies and significant accountingestimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial reportis presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements and statutoryrequirements, so as to present a view which is consistent with our understanding of the Company’s and the consolidated entity’sfinancial position and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Heron Resources NL is in accordance with:

a) The Corporations Law including:

i) Giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2000 and of theirperformance for the year ended on that date; and

ii) Complying with Accounting Standards and the Corporations Regulations; and

b) Other mandatory professional reporting requirements.

BUTLER SETTINERI COLIN BUTLERChartered Accountants Partner


Independent Audit ReportHeron Resources NL


7.0 Shareholder Information

SHAREHOLDER INFORMATION AT 13 SEPTEMBER 2000

1. Issued Shares and Options

a) Distribution of Shareholders:

Size of Holding Number of Holders Shares Held

1 - 1,000 46 33,851

1,001 - 5,000 512 1,670,350

5,001 - 10,000 467 3,992,663

10,001 - 100,000 651 18,775,360

100,001 - 63 66,486,648

1739 90,958,872

b) The twenty largest Shareholders hold 63.45% of the issued fully paid capital of the Company.

c) Substantial Shareholder who has notified the Company:

Holder Number of Shares %

Hazurn Pty Ltd 26,250,000 28.86

Centaur Nickel Investments Pty Ltd 15,890,310 17.47

d) Distribution of Optionholders:

The following Options were on issue:

i) 100,000 exercisable on or before 28 August 2001 payment of 25 cents per Option exercised;

ii) 150,000 exercisable on or before 01 September 2001 payment of 25 cents per Option exercised;

iii) 350,000 exercisable on or before 15 December 2001 payment of 25 cents per Option exercised;

iv) 50,000 exercisable on or before 05 March 2002 payment of 25 cents per Option exercised;

v) 200,000 exercisable on or before 19 December 2002 payment of 25 cents per Option exercised;

vi) 200,000 exercisable on or before 19 December 2002 payment of 35 cents per Option exercised;

vii) 200,000 exercisable on or before 19 December 2002 payment of 45 cents per Option exercised;

viii) 200,000 exercisable on or before 19 December 2002 payment of 55 cents per Option exercised;

ix) 200,000 exercisable on or before 19 December 2002 payment of 65 cents per Option exercised;

Size of Holding Number of Holders Options Held

1 - 1,000 0 0

1,001 - 5,000 0 0

5,001 - 10,000 0 0

10,001 - 100,000 1 50,000

100,001 - 5 1,600,000

6 1,650,000

e) There were 54 Shareholders who held less than a marketable parcel.

f) Nil securities have been classified by ASX as restricted.

Shareholder InformationHeron Resources NL


VOTING RIGHTS

In accordance with Regulation 18.1 of the Company’s Articles, voting rights are on the basis of a show of hands, one vote forevery registered holder and on a poll, one vote for each Share held by registered holders.

Twenty Largest Shareholders as at 13 September 2000

Number of Shares %

1. Hazurn Pty Ltd 26,250,000 28.86

2. Centaur Nickel Investments Pty Ltd 15,890,310 17.47

3. Koltai Holdings Pty Ltd 2,675,679 2.94

4. Buchhorn Ian James 2,447,857 2.69

5. Buchhorn Pamela Jean 1,519,998 1.67

6. Barminco Pty Ltd 1,000,000 1.10

7. GHK Mining Pty Ltd 990,000 1.09

8. Bronwen Pty Ltd 800,000 0.88

9. Overnight Nominees Pty Ltd 586,985 0.65

10. Jindabyne Pty Ltd 585,000 0.64

11. P K Trading (WA) Pty Ltd 582,198 0.64

12. Dolerite Investments Pty 580,000 0.64

13. Hawke Robert Lawrence 506,666 0.56

14. Kett Peter John 504,998 0.56

15. Goldenstate Holdings Pty Ltd 500,000 0.55

16. Blue Sky Pty Ltd 500,000 0.55

17. Erlup Nominee Pty Ltd 480,893 0.53

18. Everest William and Roseanne 450,000 0.49

19. Ufar Pty Ltd 430,000 0.47

20. Moate Investments Inc 428,900 0.47

TOTAL 57,709,484 63.45%

Optionholders as at 13 September 2000

Optionholders (Options exercisable on or before 28 August 2001) were:

Number of Options % of Issued Options

Crook Jennifer Anne 100,000 100.00

Optionholders (Options exercisable on or before 01 September 2001) were:


Red Oaks Pty Ltd 150,000 100.00

Optionholders (Options exercisable on or before 15 December 2001) were:


Whitebeach Pty Ltd 200,000 57.14

Colville Marilyn 150,000 42.86

TOTAL 350,000 100.00

Shareholder Information7.0 Continued


Optionholders (Options exercisable on or before 05 March 2002) were:


Rudd Mara 50,000 100.00

Optionholders (Options exercisable on or before 19 December 2002) were:


Buchhorn Ian James 1,000,000 100.00

Summary of Optionholders as at 13 September 2000


1. Buchhorn Ian James 1,000,000 60.61

2. Whitebeach Pty Ltd 200,000 12.12

3. Red Oaks Pty Ltd 150,000 9.09

4. Colville Marilyn 150,000 9.09

5. Crook Jennifer Anne 100,000 6.06

6. Rudd Mara 50,000 3.03

1,650,000 100.00

Shareholder Information7.0 Continued


8.0 Interest in Mining Tenements

Prospect Geographic Tenement Area Status InterestLocation Identifier km2 Held

CENTAUR MINING & EXPLORATION STRATEGIC ALLIANCE Goongarrie Nickel Project: Ni(-Au)Goongarrie South 75km NNW of Kalgoorlie E29/00148 30.80 G 100%1

M29/00272 A 100%1

M29/00278 A 100%1

Siberia 70km NW of Kalgoorlie E29/00356 4.78 G 100%1

Menzies South 109km NNW of Kalgoorlie E29/00433 11.20 A 100%1

Goongarrie 88km NNW of Kalgoorlie E29/00437 19.60 A 100%1

Comet Vale 90km NNW of Kalgoorlie E29/00462 89.60 A 100%1

Goongarrie Hill 87km NNW of Kalgoorlie M29/00167 1.09 G 100%1

Scotia Dam 65km NNW of Kalgoorlie P24/02749 1.28 G 100%1





M24/00542 A 100%1




M24/00541 A 100%1

Scotia North 75km NW of Kalgoorlie P24/03273 0.06 G 100%1

M24/00744 A 100%1

Scotia 68km NNW of Kalgoorlie P24/03479 0.28 G 100%1

M24/00798 A 100%1

Goongarrie West 88km NNW of Kalgoorlie P29/01338 2.00 G 100%1



M29/00202 A 100%1



Scotia North 74km NNW of Kalgoorlie P29/01636 1.16 G 100%1

Scotia North 74km NNW of Kalgoorlie P29/01637 1.16 G 100%1

Goongarrie 89km NNW of Kalgoorlie P29/01671 0.39 A 100%1

24 181.74

1 Heron has the right to process ore through the proposed Centaur Mining & Exploration Ltd Cawse Stage II plant, subject to afavourable BFS.

CENTAUR MINING & EXPLORATION STRATEGIC ALLIANCE Ghost Rocks Nickel Project: Ni(-Au)Ghost Rocks 146km NNW of Kalgoorlie E29/00147 84.00 G 100%1

Ghost Rocks 146km NNW of Kalgoorlie E29/00464 61.60 A 100%1

Ghost Rocks 145km NNW of Kalgoorlie E29/00465 61.60 A 100%1

3 207.20

1 Heron has the right to process ore through the proposed Centaur Mining & Exploration Ltd Cawse Stage II plant, subject to afavourable BFS.

Interest in Mining Tenements8.0 Continued



CENTAUR MINING & EXPLORATION STRATEGIC ALLIANCE Kalpini Nickel Project: Ni(-Au)Acra North 65km NE of Kalgoorlie E27/00076 1.14 G 100%1

M27/00349 A 100%1

Wellington East 65km NE of Kalgoorlie E27/00129 33.60 G 100%1

M27/00364 A 100%1

M27/00365 A 100%1

North Burton 58km NE of Kalgoorlie E27/00210 5.60 A 100%1

Kalpini Hill South 60km NE of Kalgoorlie E27/00211 2.80 A 100%1

Wellington 65km NE of Kalgoorlie E27/00223 162.40 A 100%1

Acra North 65km NE of Kalgoorlie E28/00426 36.99 G 100%1

M28/00199 A 100%1

M28/00200 A 100%1

M28/00201 A 100%1

M28/00202 A 100%1

Betsy Bore 65km NE of Kalgoorlie E28/00459 20.68 G 100%1

M28/00169 A 100%1

M28/00205 A 100%1

M28/00206 A 100%1

M28/00215 A 100%1

Grey Dam 70km NE of Kalgoorlie E28/00991 11.20 A 100%1

Kurnalpi Hill 87km NE of Kalgoorlie E28/01012 61.60 A 100%1

Betsy Bore 79km NE of Kalgoorlie E28/01100 173.60 A 100%1

Acra Chrysoprase 65km NE of Kalgoorlie M28/00127 0.32 A 100%1

Wellington North 70km NE of Kalgoorlie P27/01448 1.60 G 100%1



M27/00361 A 100%1



M27/00362 A 100%1


17 519.52

1 Heron has the right to process ore through the proposed Centaur Mining & Exploration Ltd Cawse Stage II plant, subjectto a favourable BFS.




SCOTIA KANOWNA PROVINCE Scotia Kanowna Project: Ni(-Au)Scotia 65km NW of Kalgoorlie E24/00113 5.60 A 100%Twin Hills 150km N of Kalgoorlie E29/00490 42.00 A 100%Vettersberg 60km NNW of Kalgoorlie M24/00453 1.84 A 100%Scotia 62km NNE of Kalgoorlie M24/00843 4.71 A 100%Silver Swan North 47km NNE of Kalgoorlie M27/00388 5.54 A 100%Vettersberg 59km NNW of Kalgoorlie P24/03695 1.95 A 100%Ghost Rocks 134km NNW of Kalgoorlie P29/01682 0.75 A 100%

7 62.39

SCOTIA KANOWNA PROVINCE Kurnalpi Nickel Project: NI(-Au)Kalpini 60km NE of Kalgoorlie M27/00350 4.28 A 100%Binti Binti South 80km NE of Kalgoorlie E27/00251 39.20 A 100%Kurnalpi East 100km NE of Kalgoorlie E28/00886 53.20 G 100%Kurnalpi Hill 88km NE of Kalgoorlie E28/01108 92.40 A 100%Binti Binti 82km NE of Kalgoorlie E31/00261 14.00 G 100%

M31/00297 A 100%

5 203.08

SCOTIA KANOWNA PROVINCE Menzies East JV Project: Au(-Ni)Menzies East 112km NNW of Kalgoorlie P29/01381 1.29 G 100%2

M29/00231 A 100%2

Menzies East 112km NNW of Kalgoorlie P29/01413 0.10 G 100%2

M29/00230 A 100%2







M29/00274 A 100%2

8 8.38

2 Golden State Resources Ltd right to earn 60%.

SCOTIA KANOWNA PROVINCE Gindalbie Terrain JV Project: Au-NiMulgarrie North 47km N of Kalgoorlie E24/00097 28.00 G 100%3

Gindalbie 50km NNE of Kalgoorlie E27/00145 47.60 G 100%3

Scotia East 60km N of Kalgoorlie E27/00169 108.40 G 100%3

Scotia East 55km NNW of Kalgoorlie M24/00799 9.53 A 100%3

Scotia East 55km NNW of Kalgoorlie M24/00800 6.41 A 100%3

Kanowna East 23km NE of Kalgoorlie M27/00272 2.01 A 100%3

6 201.95

3 Delta Gold Ltd right to earn 70% of gold rights.

SCOTIA KANOWNA PROVINCE Yindarlgooda Project: Ni(-Au)Clinker Hill 32km SE of Kalgoorlie E25/00250 58.80 A 100%

1 58.80




EMU FAULT PROVINCE Kurnalpi Gold Joint Venture Project: AuTap Rock Hill 90km E of Kalgoorlie E28/00927 190.40 A 100%4

Hampton 70km E of Kalgoorlie E28/01117 33.60 A 100%4

Hampton 73km E of Kalgoorlie E28/01118 5.60 A 100%4

Acra South 67km E of Kalgoorlie E28/01146 30.80 A 100%4

4 260.404 Farm-inee right to earn 80%.

EMU FAULT PROVINCE Kurnalpi Gold Project: AuTransline 72km E of Kalgoorlie E25/00234 53.20 A 100%Pipeclay Peaks 62km E of Kalgoorlie E25/00241 11.20 A 100%Lake Sloan 98km SSE of Kalgoorlie E25/00248 196.00 A 100%Yindi Dam 100km E of Kalgoorlie E28/00995 67.20 A 100%Gundockerta Hill 70km E of Kalgoorlie E28/01116 140.00 A 100%Sawmill Dam 77km E of Kalgoorlie E28/01129 19.60 A 100%Transline 86km E of Kalgoorlie E28/01136 14.00 A 100%Transline 90km E of Kalgoorlie E28/01137 33.60 A 100%Round Hill 107km SE of Kalgoorlie E28/01148 196.00 A 100%

9 730.80

EMU FAULT PROVINCE Kalpini Gold Project: AuYindarlgooda 52km NE of Kalgoorlie E25/00222 58.80 A 100%Mt McLeay 51km NE of Kalgoorlie E27/00243 16.80 A 100%Lindsays Find 55km NNE of Kalgoorlie M27/00305 1.20 A 100%Kalpini West 48km NE of Kalgoorlie M27/00371 3.37 A 100%Kalpini West 52km NE of Kalgoorlie M27/00372 1.64 A 100%Lindsays North 55km NNE of Kalgoorlie M27/00382 1.15 A 100%Gindalbie 45km NE of Kalgoorlie M27/00383 3.57 A 100%Garibaldi 48km NE of Kalgoorlie M27/00386 0.29 A 100%Lindsays Find 55km NNE of Kalgoorlie P27/01474 0.08 G 100%Garibaldi 48km NE of Kalgoorlie P27/01491 1.34 G 100%

10 88.23

EMU FAULT PROVINCE Transline Joint Venture Project: Au-NiGundockerta Hill 60km ESE of Kalgoorlie E25/00114 16.80 G 100%5

M25/00267 A 100%5

Gundockerta Hill 60km ESE of Kalgoorlie E25/00167 2.80 G 100%5

Gundockerta Hill 60km ESE of Kalgoorlie E25/00168 2.80 G 100%5

Trans Find North 60km ESE of Kalgoorlie E25/00179 89.60 G 100%5

Trans Find 60km ESE of Kalgoorlie E25/00184 53.20 G 100%5

Gundockerta Hill West 60km ESE of Kalgoorlie E25/00186 8.40 G 100%5

Seabrook Hills 60km ESE of Kalgoorlie E25/00189 2.80 G 100%5

Seabrook Hills 60km ESE of Kalgoorlie E25/00191 14.00 A 100%5

Trans Find 60km ESE of Kalgoorlie E25/00195 44.80 G 100%5

Hawke Hill 60km ESE of Kalgoorlie E25/00204 8.40 G 100%5

Pipeclay Peaks 62km E of Kalgoorlie E25/00216 120.40 A 100%5

Kim’s Dam 86km E of Kalgoorlie E28/01003 56.00 A 100%5

Randalls 60km ESE of Kalgoorlie P25/01580 1.00 A 100%5

13 421.00

5 New Hampton Goldfields Limited right to earn 80%.




KEITH KILKENNY PROVINCE Kookynie Joint Venture Project: Au-NiGlenorn Station South 45km SE of Leonora E31/00410 67.20 G 100%6

Friday Well 58km SE of Leonora E31/00484 16.80 G 100%6

Boomerang Lake 110km SSE of Leonora E31/00519 156.80 A 100%6

Desdemona North 20km S of Leonora E40/00122 2.80 A 100%6

Morapoi 55km S of Leonora E40/00132 5.97 A 100%6

Tampa 40km SSE of Leonora E40/00140 8.98 A 100%6

Tampa 40km SSE of Leonora E40/00141 2.99 A 100%6

Tampa 40km SSE of Leonora E40/00142 14.00 G 100%6

8 275.546 Barminco Pty Ltd and Kookynie Resources NL right to earn 70% of gold rights.

KEITH KILKENNY PROVINCE Kookynie Project: AuMount Melita East 36km SE of Leonora E40/00127 2.80 G 100%Malcolm East 25km SE of Leonora M37/00727 4.43 A 100%Malcolm East 25km SE of Leonora M37/00728 5.73 A 100%Malcolm East 25km SE of Leonora M37/00729 9.74 A 100%Malcolm East 25km SE of Leonora M37/00730 8.00 A 100%Alice Gold Mine 17km ESE of Leonora M37/00953 0.10 A 100%Eulaminna 50km SE of Leonora M39/00428 6.13 A 100%

7 36.93

KEITH KILKENNY PROVINCE Edjudina Nickel Project: Ni(-Au)Mt Catherine South 145km NNE of Kalgoorlie E31/00279 28.00 G 100%Boyce Creek East 150km NNE of Kalgoorlie E31/00304 11.20 G 100%

M31/00296 A 100%Mt Remarkable East 155km NNE of Kalgoorlie E31/00346 2.80 B 100%Claypan Dam 155km NNE of Kalgoorlie E31/00347 2.80 B 100%Yerilla Creek Dam 155km NNE of Kalgoorlie E31/00348 11.20 B 100%Mt Catherine East 145km NNE of Kalgoorlie E31/00372 5.60 B 100%Mt Catherine East 145km NNE of Kalgoorlie E31/00373 2.80 B 100%Yerilla 150km NNE of Kalgoorlie E31/00399 2.80 A 100%McAuliffe Well 155km NNE of Kalgoorlie E31/00518 50.40 A 100%Mt Catherine 145km NNE of Kalgoorlie E31/00529 2.80 A 100%Aubils Bore 175km NNE of Kalgoorlie E39/00345 33.60 G 100%Larkin Well 170km NNE of Kalgoorlie E39/00641 5.60 A 100%Kilmore Hill 175km NNE of Kalgoorlie E39/00648 26.93 G 100%Mount Percy 175km NNE of Kalgoorlie E39/00680 2.98 A 100%Mount Percy 175km NNE of Kalgoorlie E39/00681 2.98 A 100%Mount Percy 175km NNE of Kalgoorlie E39/00682 17.90 A 100%Kilmore Hill 175km NNE of Kalgoorlie E39/00694 42.00 G 100%Kilmore Hill 175km NNE of Kalgoorlie E39/00695 8.40 G 100%Lake Raeside 175km NNE of Kalgoorlie E39/00700 32.88 A 100%Lake Raeside 175km NNE of Kalgoorlie E39/00725 16.80 A 100%Kilmore Hill 175km NNE of Kalgoorlie E39/00758 2.80 G 100%Yerilla 150km NNE of Kalgoorlie M31/00105 2.40 G 100%Yerilla 150km NNE of Kalgoorlie M31/00110 7.20 G 100%Yerilla 150km NNE of Kalgoorlie M31/00278 0.70 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00656 1.48 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00657 4.44 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00658 1.48 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00659 1.48 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00660 1.48 A 100%Aubils Bore 175km NNE of Kalgoorlie M39/00662 2.96 A 100%Yerilla 150km NNE of Kalgoorlie P31/01538 1.11 G 100%

31 338.00




KEITH KILKENNY PROVINCE Laverton Tectonic Zone JV: AuYarri South 135km NE of Kalgoorlie E31/00235 5.60 G 100%7

Yilgangi East 140km NE of Kalgoorlie E31/00236 1.60 G 100%7

Yarri East 155km NE of Kalgoorlie E31/00312 68.41 A 100%7

Seddon Bore 155km NE of Kalgoorlie E31/00354 16.80 A 100%7

Webb Find West 145km NNE of Kalgoorlie E31/00374 14.00 G 100%7

Boyce Creek South 150km NNE of Kalgoorlie E31/00377 28.00 G 100%7

Duck Hill West 165km NNE of Kalgoorlie E31/00430 84.00 G 100%7

Lake Rebecca 116km NE of Kalgoorlie E31/00465 2.80 G 100%7

Lake Rebecca 115km NE of Kalgoorlie E31/00479 11.20 A 100%7

Mount Boyce 150km NNE of Kalgoorlie E31/00524 176.40 A 100%7

Camel Hump 55km N of Laverton E38/00945 9.06 G 100%7

Mount Varden West 55km N of Laverton E38/01152 117.60 G 100%7

Mount Varden West 55km N of Laverton E38/01153 19.60 G 100%7

Yabboo Hill East 156km NE of Kalgoorlie E39/00795 8.40 G 100%7

Edjudina South 135km NE of Kalgoorlie P31/01548 0.40 G 100%7

Yilgangi North 131km NNE of Kalgoorlie P31/01580 1.85 G 100%7



18 569.13

7 Croesus Mining NL right to earn 80%, Heron retains all nickel rights.

KEITH KILKENNY PROVINCE South Laverton Tectonic Zone JV: AuPinjin South 140km ENE of Kalgoorlie E28/00891 11.20 G 100%8

Patricia West 155km ENE of Kalgoorlie E31/00244 16.80 A 100%8

Pinjin 140km ENE of Kalgoorlie E31/00263 2.80 G 100%8

Stophanis East 155km ENE of Kalgoorlie E31/00265 2.80 G 100%8

Yarri North East 160km NE of Kalgoorlie E31/00313 2.80 G 100%8

Yarri North East 160km NE of Kalgoorlie E31/00315 2.80 G 100%8

Edjudina East 160km NE of Kalgoorlie E31/00317 38.65 G 100%8

Stophanis East 150km ENE of Kalgoorlie E31/00343 2.97 G 100%8

Broken Hill Bore 160km NE of Kalgoorlie E31/00352 2.86 A 100%8

Clymies Well 160km NE of Kalgoorlie E31/00353 37.46 A 100%8

Hobble Gap 160km NE of Kalgoorlie E31/00434 44.80 G 100%8

Patricia South 155km ENE of Kalgoorlie E31/00489 16.80 G 100%8

Deep Well South 170km NE of Kalgoorlie E39/00661 2.80 G 100%8

Deep Well North 170km NE of Kalgoorlie E39/00662 2.98 A 100%8

Deep Well 170km NE of Kalgoorlie E39/00663 2.98 A 100%8

Gairdiners Find 170km NNE of Kalgoorlie E39/00721 47.60 G 100%8

Mount Hornet 170km NNE of Kalgoorlie E39/00729 33.60 G 100%8

Gardiners Find 170km NNE of Kalgoorlie E39/00734 5.60 A 100%8

Crab Hill 135km ENE of Kalgoorlie P28/00923 1.38 G 100%8





Stophanis South 150km ENE of Kalgoorlie P31/01546 1.61 G 100%8

Stophanis South 150km ENE of Kalgoorlie P31/01547 1.20 A 100%8

Edjudina 160km NE of Kalgoorlie P31/01569 1.79 A 100%8







Gairdiners Find 170km NNE of Kalgoorlie P39/03691 2.00 G 100%8

33 302.76

8 Gutnick Resources NL right to earn 80%, Heron retains all nickel rights.




KEITH KILKENNY PROVINCE Edjudina Gold Project: AuCrab Hill 137km E of Kalgoorlie E28/01138 5.60 A 100%Outcamp Bore 155km NE of Kalgoorlie E31/00190 11.20 G 100%Oak Bore 155km NE of Kalgoorlie E31/00233 2.80 G 100%Oak Bore South 155km NE of Kalgoorlie E31/00234 2.80 G 100%Wallbrook Hill 125km NE of Kalgoorlie E31/00237 5.60 G 100%Yilgangi 155km NE of Kalgoorlie E31/00494 81.20 A 100%Gairdner West 170km NNE of Kalgoorlie E39/00642 2.80 A 100%Larkin West 170km NNE of Kalgoorlie E39/00643 5.60 A 100%Murphy Well 180km NNE of Kalgoorlie E39/00831 33.60 A 100%Banjo Well 145km NE of Kalgoorlie M31/00047 4.70 G 100%Yarri 145km NE of Kalgoorlie M31/00115 4.21 G 100%Yilgangi Castle 140km NE of Kalgoorlie M31/00173 0.34 A 100%Mt Catherine 145km NNE of Kalgoorlie M31/00249 0.58 A 100%Webb Find 145km NE of Kalgoorlie M31/00281 1.20 A 100%Yarri 145km NE of Kalgoorlie P31/01398 0.19 G 100%

M31/00141 A 100%Porphyry North 155km NE of Kalgoorlie P31/01537 0.85 G 100%

16 163.28

KEITH KILKENNY PROVINCE Mulgabbie Nickel Project: Ni(-Au)Lake Rebecca 110km NE of Kalgoorlie M31/00080 2.02 G 100%Lake Rebecca 110km NE of Kalgoorlie M31/00081 1.21 G 100%Lake Rebecca 110km NE of Kalgoorlie M31/00118 1.14 G 100%

3 4.37

KEITH KILKENNY PROVINCE Karonie South JV Project: Au(-Ni)Karonie South 140km SE of Kalgoorlie E28/00631 196.00 G 100%9

Karonie South 140km SE of Kalgoorlie E28/00638 14.00 G 100%9


Karonie South 140km SE of Kalgoorlie E28/00860 8.78 A 100%9

Karonie South 140km SE of Kalgoorlie E28/00861 58.54 A 100%9



Buningonia 156km SE of Kalgoorlie E28/01014 42.00 G 100%9

Fraser 168km SE of Kalgoorlie E63/00691 151.20 A 100%9

9 666.52

9 WMC Resources Limited right to earn 80%.

KEITH KILKENNY PROVINCE Karonie South Project : Au(-Ni)Karonie South 70km E of Norseman E63/00707 196.00 A 100%Karonie South 73km E of Norseman E63/00708 196.00 A 100%Karonie South 70km E of Norseman E63/00711 196.00 A 100%Karonie South 70km E of Norseman E63/00713 103.60 A 100%

4 691.60




MUNGARI PROVINCE Mungari NW JV Project: AuMungari Northwest 35km WNW of Kalgoorlie E15/00411 2.08 A 100%10

Mungari Northwest 35km WNW of Kalgoorlie E16/00146 0.34 G 100%10

2 2.42

10 Kundana Gold Pty Ltd right to earn 50%.

MUNGARI PROVINCE Mungari Platinum Project: Pt-AuMungari Northwest 35km WNW of Kalgoorlie E16/00121 25.20 G 100%Mungari Northwest 35km WNW of Kalgoorlie M16/00377 2.00 A 100%Balgarri South 35km WNW of Kalgoorlie M16/00414 2.00 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04416 0.33 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04417 1.88 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04418 2.00 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04419 1.86 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04420 1.87 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04421 1.86 A 100%Dryden’s Find 35km WNW of Kalgoorlie P15/04422 1.14 A 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01683 1.30 G 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01684 1.44 G 100%

M16/00378 A 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01685 1.40 G 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01686 1.91 G 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01696 1.99 G 100%Mungari Northwest 35km WNW of Kalgoorlie P16/01697 2.00 G 100%

M16/00379 A 100%

16 50.18




LEONORA LAVERTON PROVINCE Laverton Nickel Project: Ni-AuMineral Patch Hill 60km SE of Laverton E38/00931 196.00 G 100%11

Merolia 40km SE of Laverton E38/01179 196.00 G 100%11

Bandya Hill 107km NNW of Laverton E38/01270 36.40 A 100%Mulga Queen 124km N of Laverton E38/01329 2.80 A 100%Doris Well 60km N of Laverton E38/01368 22.40 A 100%Russell 72km N of Laverton E38/01369 11.20 A 100%King of Creation 54km N of Laverton E38/01375 2.80 A 100%Erlistoun 72km N of Laverton E38/01376 5.60 A 100%Mineshaft Well 72km N of Laverton E38/01380 25.20 A 100%Perseverance Well 60km NW of Laverton E39/00738 36.40 G 100%

10 534.80

11 Another entity has gold rights.

LEONORA LAVERTON PROVINCE Laverton JV Project: AuHawkes Nest 15km WSW of Laverton E38/00831 16.80 G 100%12

Hawkes Nest South 15km WSW of Laverton E38/00832 14.00 G 100%12

2 30.80

12 Metex Resources NL right to earn 70%.

LEONORA LAVERTON PROVINCE Mt Morgans JV Project: AuMt Morgans Northwest 40km WSW of Laverton P39/03454 1.56 G 100%13

M39/00754 A 100%13

Mt Morgans Northwest 40km WSW of Laverton P39/03455 1.95 G 100%13



M39/00755 A 100%13

Mt Morgans West 40km WSW of Laverton P39/03466 1.71 G 100%13




M39/00753 A 100%13

8 14.15

13 Metex Resources NL right to earn 70%.

LEONORA LAVERTON PROVINCE Victory Joint Venture Project: Au-NiDoyle Well 60km NW of Leonora E37/00406 16.80 G 100%14

M37/01088 A 100%14

Victory Gold Mine 55km NW of Leonora M37/00931 0.18 A 100%14

Victory 50km NW of Leonora P37/05830 1.95 G 100%14




6 23.76

14 Farm-inee right to earn 80%.

LEONORA LAVERTON PROVINCE Victory North Project: AuMount McClure 120km NNW of Leonora E36/00387 16.80 A 100%Mount McClure 120km NNW of Leonora E36/00388 5.60 G 100%Try Again Bore 123km NNW of Leonora E36/00432 19.60 A 100%

3 42.00




ILLAARA PROVINCE Lawrence Find Project: Cu-Zn-Au-Ni-SRanford Peak 326km NW of Kalgoorlie E29/00434 98.00 G 100%15

Mount Marmion 207km NW of Kalgoorlie E29/00435 95.20 G 100%15

Metzkes Find 213km NW of Kalgoorlie E29/00455 156.80 A 100%15

Lawrence Find 159km NW of Kalgoorlie E30/00203 208.52 A 100%15

Lawrence Find North 188km NW of Kalgoorlie E30/00226 196.00 G 100%15

Lawrence Find 176km NW of Kalgoorlie E30/00228 64.40 G 100%15

Illaara 198km NW of Kalgoorlie E30/00254 126.00 A 100%15

7 944.92

15 Farm-in proposal to earn 70% of gold rights.

IDA FAULT PROVINCE Snake Hill JV Project: Au(-Ni)Snake Hill North 140km NW of Kalgoorlie E29/00290 8.40 G 100%16

Mulline 140km NW of Kalgoorlie E30/00158 39.20 B 100%Snake Hill 140km NW of Kalgoorlie E30/00166 8.40 G 100%16

3 56.00

16 Connemara Gold Mines Pty Ltd right to earn 70%.

IDA FAULT PROVINCE Frances Lesley Project: NiFrances Lesley 90km NW of Kalgoorlie E16/00174 5.60 A 100%17

Frances Lesley 90km NW of Kalgoorlie E16/00192 86.80 A 100%17



Frances Lesley 90km NW of Kalgoorlie M16/00385 2.00 A 100%17

5 133.60

17 Another entity has gold rights.

IDA FAULT PROVINCE Blister Dam Project: Au-NiBlister Dam 70km NW of Kalgoorlie E24/00088 14.00 G 100%Blister Dam 70km NW of Kalgoorlie P24/03577 0.59 G 100%Blister Dam 70km NW of Kalgoorlie P24/03578 0.56 G 100%Blister Dam 70km NW of Kalgoorlie P24/03579 0.63 G 100%Blister Dam 70km NW of Kalgoorlie P24/03580 0.45 G 100%

M24/00844 A 100%Blister Dam 70km NW of Kalgoorlie P16/01842 1.98 G 100%Blister Dam 70km NW of Kalgoorlie P16/01843 2.00 G 100%Blister Dam 70km NW of Kalgoorlie P16/01847 1.70 G 100%Blister Dam 70km NW of Kalgoorlie P16/01848 1.36 G 100%

M16/00435 A 100%Blister Dam 70km NW of Kalgoorlie P24/03566 1.93 G 100%Blister Dam 70km NW of Kalgoorlie P24/03567 0.42 G 100%Blister Dam 70km NW of Kalgoorlie P24/03568 0.75 G 100%Blister Dam 70km NW of Kalgoorlie P24/03569 0.77 G 100%

M24/00842 A 100%

13 27.15




IDA FAULT PROVINCE Bullabulling Project: Ni-AuBullabulling 60km WSW of Kalgoorlie E15/00679 114.80 A 100%Bullabulling 60km WSW of Kalgoorlie E16/00172 11.80 A 100%Bullabulling-Dunnsville 60km W of Kalgoorlie E16/00181 2.80 A 100%Bullabulling-Dunnsville 60km W of Kalgoorlie E16/00182 14.00 A 100%Bullabulling-Carbine 60km W of Kalgoorlie E16/00195 44.80 A 100%

5 188.20

IDA FAULT PROVINCE Widgiemooltha Joint Venture Project: Ni-AuPioneer 120km SSE of Kalgoorlie E15/00573 47.60 A 100%18

Logans Find 76km S of Kalgoorlie E15/00689 100.80 A 100%18

Larkinville 76km S of Kalgoorlie P15/04213 1.22 A 100%18

Larkinville 76km S of Kalgoorlie P15/04214 1.21 A 100%18

4 150.8318 WMC Resources Limited right to earn 80%.

IDA FAULT PROVINCE Yilmia Hill Project: Ni-AuYilmia Hill 60km S of Kalgoorlie E15/00550 5.86 G 100%Spargoville 80km SSW of Kalgoorlie P15/04150 1.98 A 100%Spargoville 80km SSW of Kalgoorlie P15/04151 1.65 A 100%Spargoville 80km SSW of Kalgoorlie P15/04152 1.60 A 100%Spargoville 80km SSW of Kalgoorlie P15/04153 1.40 A 100%

5 12.49

IDA FAULT PROVINCE Mount Thirsty Project: Ni(-Au)Norseman Highway 9km NW of Norseman P63/01137 1.19 A 100%Norseman Highway 9km NW of Norseman P63/01138 1.43 A 100%Norseman Highway 8km NW of Norseman P63/01139 1.21 A 100%Norseman Highway 8km NW of Norseman P63/01140 1.21 A 100%Norseman Highway 9km NW of Norseman P63/01141 1.96 A 100%Norseman Highway 10km NW of Norseman P63/01142 1.21 A 100%Norseman Highway 9km NW of Norseman P63/01143 1.24 A 100%Norseman Highway 8km W of Norseman P63/01144 1.51 A 100%Norseman Highway 8km W of Norseman P63/01145 1.77 A 100%

9 12.74




KAMBALDA DOMAIN Binduli East JV Project: Au-NiMount Hunt 10km SW of Kalgoorlie E26/00081 14.00 A 100%19

Binduli East 10km SW of Kalgoorlie P26/02791 1.98 G 100%19










Binduli East 10km SW of Kalgoorlie P26/02904 1.84 A 100%19

Binduli East 10km SW of Kalgoorlie P26/02905 2.00 A 100%19


14 35.78

19 AngloGold Australasia Limited has the right to earn 75%.

KAMBALDA DOMAIN Kurramia Project: Au-NiGidji Roaster 15km N of Kalgoorlie E24/00111 64.40 A 100%Five Mill Hill 7km NE of Kalgoorlie M26/00736 7.04 A 100%Kanowna 15km NE of Kalgoorlie M27/00392 7.70 A 100%Kanowna 18km NE of Kalgoorlie M27/00393 8.02 A 100%Kanowna 17km NE of Kalgoorlie M27/00394 8.02 A 100%Kurramia 10km N of Kalgoorlie P26/02883 1.17 G 100%Kurramia 10km N of Kalgoorlie P26/02884 1.46 G 100%Kurramia 10km N of Kalgoorlie P26/02885 1.33 G 100%Kurramia 10km N of Kalgoorlie P26/02886 1.27 G 100%Kurramia 10km N of Kalgoorlie P26/02887 1.11 G 100%Kurramia 10km N of Kalgoorlie P26/02898 1.60 G 100%Kurramia South 10km N of Kalgoorlie P26/02977 0.89 G 100%Kurramia 10km N of Kalgoorlie P26/02985 1.93 A 100%

13 105.94

KAMBALDA DOMAIN Mount Martin Project: Au-NiCutters Luck 50km SSE of Kalgoorlie E26/00080 53.20 A 100%Cutters Luck 50km SSE of Kalgoorlie M26/00667 2.27 A 100%Mount Martin 40km SE of Kalgoorlie P26/02907 1.60 A 100%Mount Martin 40km SE of Kalgoorlie P26/02908 2.00 A 100%Mount Martin 40km SE of Kalgoorlie P26/02909 1.66 A 100%

5 60.73




SOUTHERN CROSS PROVINCE Bungalbin Project: Au-NiBungalbin 100km NNE of Southern Cross E77/00860 2.96 A 100%Mount Dimer 120km NNE of Southern Cross E77/00946 196.00 A 100%Timberfield 130km NNE of Southern Cross E77/00947 89.60 A 100%Yeeding Hill South 100km NNE of Southern Cross E77/00975 196.00 A 100%Yendilberin Hills 100km N of Southern Cross E77/00976 109.20 A 100%Yeeding Hill 110km N of Southern Cross E77/00978 5.60 G 100%Bungalbin 100km NNE of Southern Cross E77/01019 109.20 A 100%

7 708.56

SOUTHERN CROSS PROVINCE Bungalbin Iron Project: FeBungalbin 100km NNE of Southern Cross E77/00842 112.58 G 100%20

Mount Jackson 105km N of Southern Cross E77/00896 36.40 G 100%20

Mount Jackson 105km N of Southern Cross E77/00919 56.00 G 100%20

3 204.98

20 Portman Limited has an Option to acquire the Iron Ore rights through a Production Royalty payment. Heron holds all othermineral rights.

SOUTHERN CROSS PROVINCE Maggie Hays Hill Project: Ni-AuMaggie Hays Hill 140km SE of Southern Cross E63/00625 81.20 A 100%

1 81.20




BREMER-EUCLA PALAEODRAINAGE PROVINCE Balladonia Oil Shale Project: Oil Shale-Sulphur-LstThe Yates 142km S of Norseman E63/00731 196.00 A 100%21

Mt Beaumont 151km SE of Norseman E63/00732 196.00 A 100%21

Charlina Rocks 154km ESE of Norseman E69/01473 196.00 A 100%21

Balladonia 170km E of Norseman E69/01474 196.00 A 100%21

Boingaring Rocks 156km E of Norseman E69/01475 196.00 A 100%21

Afghan Rock 184km E of Norseman E69/01476 196.00 A 100%21

Balladonia West 156km E of Norseman E69/01477 196.00 A 100%21

Charlina South 150km ESE of Norseman E69/01478 196.00 A 100%21

Charlina West 142km ESE of Norseman E69/01479 196.00 A 100%21

Curnadinia Rock 162km ESE of Norseman E69/01480 196.00 A 100%21

Yalodinya Rock 157km ESE of Norseman E69/01481 134.40 A 100%21

Charlina East 164km ESE of Norseman E69/01482 81.20 A 100%21

Balladonia Central 170km E of Norseman E69/01483 39.20 A 100%21

Chidalinya Rock 185km E of Norseman E69/01492 106.40 A 100%21

Jerandilla 185km E of Norseman E69/01493 196.00 A 100%21

Eclipse Hill 185km SE of Norseman E69/01495 196.00 A 100%21

Bonnie Hill 175km SE of Norseman E69/01499 196.00 A 100%21

Florabell Hill 195km SE of Norseman E69/01500 196.00 A 100%21

Heinsman Rock 191km SE of Norseman E69/01582 196.00 A 100%21

Namelonia Rock 187km SE of Norseman E69/01583 196.00 A 100%21

20 3,497.20

21 Draft Memorandum of Understanding in preparation to develop Oil Shale resources. Heron holds all other mineral rights.

BREMER-EUCLA PALAEODRAINAGE PROVINCE Ravensthorpe-Norseman Oil Shale: Oil ShaleGeordie Rock 93km SSW of Norseman E63/00720 112.00 A 100%21

Lake Cowan 60km NE of Norseman E15/00570 204.01 A 100%Lake Cowan 60km NE of Norseman E15/00632 19.60 A 100%Balladonia West 9 20km NE of Norseman E15/00656 61.60 A 100%21

Balladonia West 7 65km E of Norseman E63/00709 196.00 A 100%21

Balladonia West 10km E of Norseman E63/00712 196.00 A 100%21

Lake Dundas 35km S of Norseman E63/00736 64.40 A 100%21

Lort River 110km SSW of Norseman E74/00278 151.20 A 100%21

Flower 170km SW of Norseman E74/00279 193.20 A 100%21

Lake Three Star 155km SW of Norseman E74/00280 193.20 A 100%21

Lake Sharpe 130km SW of Norseman E74/00281 196.00 A 100%21

Recruit Hill 93km SW of Norseman E74/00282 196.00 A 100%21

Lake Fitzgerald 92km SW of Norseman E74/00283 196.00 A 100%21

Mount Deans 10km S of Norseman M63/00417 9.87 A 100%21

Mount Deans 10km S of Norseman M63/00418 9.26 A 100%21

Lake Kirk 8km SW of Norseman P63/01114 1.69 G 100%21

Lake Kirk 10km SW of Norseman P63/01115 1.86 G 100%21

Lake Kirk 6km SW of Norseman P63/01116 1.95 A 100%21

Lake Cowan 5km SW of Norseman P63/01119 1.06 G 100%21




22 2,008.96

21 Draft Memorandum of Understanding in preparation to develop Oil Shale resources. Heron holds all other mineral rights.

TOTAL 419 14,919.00

A = Application G= Granted B = Exploration Licence Application in Ballot



“Aeromagnetic Survey” means a survey made from the air, recording variations in the earth’s magnetic field.

“Alteration” means rock-forming minerals which have been chemically changed.

“Anomaly” means a value higher or lower than expected, which outlines a zone of potential exploration interest but not necessarilyof commercial significance.

“Aircore drilling” means a rotary drilling technique which uses compressed air to cut a core sample and return core fragments tosurface inside the drill rods. The system has problems with the penetration of non-weathered bedrock.

“Au” means gold.

“Autoclave” means a reaction vessel in which ore is mixed with high temperature and pressure solutions to enable metals to enterinto solution as a precursor to extraction in metallic form. The autoclave is titanium lined, to prevent corrosion.

“BCM” means Bank Cubic Metre, which is a unit of volumetric measurement of undisturbed rock material.

“Co” means cobalt.

“Cu” means copper.

“Electrowinning” means a metallurgical process whereby metal is recovered from a metal bearing electrolyte solution throughdeposition onto a metal cathode.

“Feasibility Study” means:

A “Pre-feasibility Study” is an engineering and cost study of a mining operation, processing plant and plant infrastructure,which for the Goongarrie Nickel Project includes a flow sheet of the “Cawse” type that covers ore beneficiation, high pressureacid leach, Counter Current Decantation washing, solution purification, cobalt and nickel solvent extraction, formation of anintermediate precipitate and electrowinning to produce nickel metal. Included in the cost estimates will be infrastructure,tailings disposal, power supply, and owner’s costs. The plant design may change as a result of testwork analysis,optimisation studies and engineering improvements performed during execution of the Pre-feasibility Study. Operating andcapital cost estimates are to an accuracy of +/- 30%. In the case of the Goongarrie Nickel Project, the drill density would besuch that the resource status is Indicated Mineral Resource.

A “Bankable Feasibility Study” is an engineering and cost study addressing the same issues as a “Pre-feasibility Study”, butin such detail that it contains sufficient information to satisfy a bank, that it can rely on cash flows and earnings from the projectto repay any project loan, and that the assets of the project are suitable as collateral for the loan. The bank must feelcomfortable that on a worst case scenario the loan will be repaid. Engineering design concepts will have largely beenfinalised, and operating and capital cost estimates are to an accuracy of +/- 10%. In the case of the Goongarrie NickelProject, the drill density would be such that the resource status is Proved Ore Reserve.

“Geochemical Survey” means the systematic study of the variation of chemical elements in rocks or soils.

“Gossan” means the weathered oxidised iron-rich surface expression of a sulphide-bearing deposit.

“g/t” means grams per tonne, which normally relates to precious metals.

“Granitoid” means a family of coarse-grained igneous rocks that contain abundant quartz and feldspar.

“km” means kilometres.

“km2” means square kilometres.

“Komatiite” means an ultramafic rock with high magnesium content extruded from a volcano. Textural variations include:

“Orthocumulate” means a rock which exhibits a high proportion of crystallised trapped interstitial (“intercumulus”) liquid. Thesurrounded (“cumulus”) olivine crystals are subhedral to euhedral in form. This komatiite type is regarded as very prospectivefor nickel sulphide mineralisation.

“Mesocumulate” means a rock with cumulus crystals exhibiting extensive mutual boundary contact, but retaining somerecognisable interstitial material. This komatiite type is regarded as prospective for nickel laterite mineralisation.

“Adcumulate” means a rock with little or no intercumulus material and characterised dominantly by anhedral crystals. Thiskomatiite type is regarded as prospective for nickel laterite mineralisation.

“Limonite Ore” means nickel-cobalt laterite ore composed mainly of the iron minerals goethite-limonite (+40% Fe2O3), which is anoptimum ore type in terms of leaching rheology.

“m” means metres.

“Mineralisation” means, in economic geology, the introduction of valuable elements into a rock body.

“Ni” means nickel.

“Nickel Laterite” means nickel and cobalt occurring as an oxidised ferruginous clay assemblage overlying weathered ultramafic.

“Oil Shale” means a sedimentary rock containing low grade lignite coal and a hydrocarbon material termed kerogen.

“Olivine” means a magnesium-iron silicate mineral, often occurring in rocks prospective for nickel.

“Option” means a Share option to subscribe for fully paid ordinary Shares in Heron.

Glossary of TermsHeron Resources NL


“PAL” means Pressure Acid Leach, a nickel laterite processing technique in which ore is dissolved in hot high pressuresulphuric acid contained within a titanium-lined reaction vessel termed an autoclave, to release nickel and cobalt into solution,for precipitation as an intermediate product or pure metal.

“PGE” means Platinum Group Elements.

“prospect” means a target upon which exploration programs are planned or have commenced.

“project” means a grouping of prospects within a specific geographic location, often with a common geological setting.

“province” means a grouping of projects within a geological district defined by a major mineralised crustal structure.

“ppb” means parts per billion.

“ppm” means parts per million.

“RAB drilling” means the drilling technique in which a sample is returned to surface outside the rod string by compressed air.Sample quality is poor.

“RC drilling” means the drilling method employing a rotating or hammering action on a drill bit which returns a sample to thesurface inside the rod string by compressed air. Sample quality is very good, particularly if the drill hole is dry.

“Resource and Ore Reserve” means:

“Proved Ore Reserve” is the economically mineable part of a Measured Mineral Resource. It includes diluting materialsand allowances for losses which may occur when the material is mined. Appropriate assessments, which may includeFeasibility Studies, have been carried out, and include consideration of and modification by realistically assumed mining,metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessmentsdemonstrate at the time of reporting that extraction could reasonably be justified. The term “economic” implies thatextraction of the Ore Reserve has been established or analytically demonstrated to be viable and justifiable underreasonable investment assumptions. Proved Ore Reserve will require some degree of lateral continuity validation throughdiamond drilling, wide diameter (900mm) bulk sample drilling, trial mining, exploration winze or most likely for Goongarrie,10x10m pattern RC drilling.

“Measured Mineral Resource” is that part of a Mineral Resource for which tonnage, densities, shape, physicalcharacteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed andreliable exploration, sampling and testing information gathered through appropriate techniques from locations such asoutcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and/orgrade continuity. At the Goongarrie Nickel Project, Heron’s least dense drill RC pattern for Measured Mineral Resourcestatus is 20x20m.

“Indicated Mineral Resource” is that part of a Mineral Resource for which tonnage, densities, shape, physicalcharacteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based onexploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops,trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geologicaland/or grade continuity but are spaced closely enough for continuity to be assumed. At the Goongarrie Nickel Project,Heron’s least dense RC drill pattern for Indicated Mineral Resource status is 80x80m.

“Inferred Mineral Resource” is that part of a Mineral Resource for which tonnage, grade and mineral content can beestimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geologicaland/or grade continuity. It is based on information gathered through appropriate techniques from locations such asoutcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. At theGoongarrie Nickel Project, Heron’s least dense RC drill pattern for Inferred Mineral Resource status is 400x80m.

“ROM” means run of mine ore, referring to the grade and type of ore that is expected to be fed to the processing plant on aday to day basis.

“Rift” means a zone of crustal extension in which the predominant sediment deposition is conglomerate, and the predominantvolcanic activity is a bimodal basalt-rhyolite association which is intruded by co-magmatic granitoids. The high geothermalgradients of rifts are very favourable for gold deposits.

“Shear Zone” means a zone in which crushed rock has been produced by the action of a shearing stress as on a fault.

“SiCo” means a siliceous pyrolusite bearing Nickel Laterite Ore which typically assays in excess of 0.5% Mn, 0.2% Co and1.0% Ni. At Goongarrie South, “SiCo” Ore typically occurs at the top of ore zones.

“Specific Gravity” or “SG” means the mass per unit volume of material, usually in reference to ore and waste.

“Waste: Ore ratio” means BCM of waste + BCM of low grade sub-ore divided by BCM of ROM ore.

“Tectonic Zone” means a major structural feature characterised by deformation of several kilometres in width.

“Ultramafic” means rocks composed almost entirely of mafic minerals which are prospective for nickel mineralisation.

“VMS” means volcanogenic massive sulphide, which relates to base metal Cu-Zn-Pb-Au-Ag sulphide mineralisation.

“XRD” means X-ray Diffraction, which is an analytical means of identifying microscopic clay minerals.

Glossary of TermsContinued


COMPANY SECRETARYRoss James Arancini BBus, ACA - Company Secretary110 Hensman Street, South Perth, Western Australia, 6151Telephone: (08) 9367 1213 Facsimile: (08) 9367 7853Email: [email protected]

REGISTERED AND PRINCIPAL OFFICE21 Close Way, PO Box 1280, Kalgoorlie, Western Australia, 6430Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256Email: [email protected]: http://www.heronresources.com.au

AUDITORSButler Settineri Chartered Accountants35-37 Havelock Street, West Perth, Western Australia, 6005

SOLICITORS TO THE COMPANYMcKenzie Lalor74 Egan Street, Kalgoorlie, Western Australia, 6430

Pullinger Readhead Stewart46-50 Kings Park Road, West Perth, Western Australia, 6005

BANKERSChallenge Bank, 230-236 Hannan Street, Kalgoorlie, Western Australia, 6430

CORPORATE ADVISORCarmichael First Capital Pty LtdLevel 11, 77 St Georges TerracePerth, Western Australia, 6000

SHARE REGISTRYSecurity Transfer Registrars Pty Ltd Level 1, 168 Adelaide Terrace, Perth, Western Australia, 6000Telephone: (08) 9221 4200 Facsimile: (08) 9221 1581Email: [email protected]

STOCK EXCHANGEAustralian Stock Exchange Limited2 The Esplanade, Perth, Western Australia, 6000

ASX CODEHRR

SEAT ABBREVIATIONHeron

HOME BRANCHPerth

INDUSTRY CLASSIFICATIONOTHER METALS - 022 BASE METALS

RESEARCH SERVICE INDEX NUMBERMining H50

ISINAU000 000 HRR6

Corporate DirectoryHeron Resources NL

In the CommunityHeron Resources NL

All inset artistic contributions are from the students of East Kalgoorlie Primary School; See inside back cover.

All photographic page art was taken at Heron’s Goongarrie Nickel Project by Justin Madden, Reynolds Graphics Kalgoorlie.Heron sponsored an Art Prize and Exhibition for the students of East Kalgoorlie Primary School. Salena’s work was selected to feature on the front cover.

Other works featured throughout this report are testimony to the creative skills of the students of East Kalgoorlie Primary School.

Heron would like to thank the team at Reynolds Graphics for their expertise and professionalism in the design and production of this report.

Heron Resources NLExploration and Administration Office21 Close Way, West Kalgoorlie

Back Row, from left: Derrick Sceghi, Kenneth Jackson,

Wyvern Jackson, Kevin Banks,Teacher: Amber Lewington,

Merita Stevens, Naomi Ellis, Krystal Foley, Andrea Munmurrie

Front Row, from left:Natalia Tucker, Tony Champion,Shane Stokes, Leith Stevens,Salena Abdullah, Marika Smith, Kim-Thi Nguyen, Joelene TuckerAbsent: Charis Abdullah, Cheynne Graham,Andrew Abdullah

Project Geologist (and starwinger for Boulder Rugby

Union Football Club)Simon Gobbett and

Administration Manager Sue Geary.

Please telephone Sue on(08) 9091 9253

if you wish to discuss anyaspect of Heron’s operations.

Heron Hospitality TentIan Buchhorn, Pam Buchhornand Shyama Peebles, theCentenary EventsCo-ordinator.

East Kalgoorlie Primary SchoolGrades 3 to 7

The Artists:

The Heron Team at the Balzano Barrow Race.

Laverton Centenary Cricket Tournament

Doreen, Paula, Eva and Coral from NTP atthe new childrens health clinic

which Heron has helped to purchase.

Heron Resources NL

21 Close Way, West Kalgoorlie

PO Box 1280, Kalgoorlie,

Western Australia 6430

Telephone: (08) 9091 9253

Facsimile: (08) 9091 9256

Email: [email protected]

www.heronresources.com.au

Heron, with the Rotary Club of Hannans and Rotary Internationalsupports the special education needs of East KalgoorliePrimary School. One project involved minesite and bushexcursions, with the children’s impressions captured in their art.Salena Abdullah’s painting was chosen to featureon the cover of this report.

The title of Salena’s painting is “Binduli”.

“My painting is of the manmade and natural environment.In the background is the revegetated land.In front is a road that leads to the mine.The colour represents the earth”.

The accompanying photographic image of the HeronGoongarrie Project on the front cover can also be described bySalena’s words.

ABN 30 068 263 098

Reynold

s Grap

hics, Kalgoorlie 11839

mailto:[email protected]

http://www.heronresources.com.au

abn 30 068 263 098 heron resources nl€¦ · as at 30 june 2000, the total indicated and inferred...

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