kalgoorlie nickel project

Kalgoorlie Nickel ProjectKalgoorlie Nickel ProjectA Partnership with Inco to create an

Internationally Significant Nickel Producer

19 October 2005

Ian BuchhornManaging Director

ASX: HRR

Disclaimer Forward Looking StatementThe material used in this presentation is intended to be a summary of selected geological data, current and proposed activities, as well as resource estimates based on information available to Heron Resources at the time. It does not include all available information and should not be used in isolation as a basis to invest in Heron Resources. Any potential investor should refer to Heron Resources’ ASX releases and statutory reports before considering investing in the company.

This presentation includes information relating to a completed independent scoping study, completed independent resource estimate and a feasibility study which is in progress and includes “forward looking statements” which include, without limitation, estimates of potential nickel in concentrate production based on mineral resources that are currently being evaluated. While the Company has a reasonable basis on which to express these estimates, any forward looking statement is subject to risk. Risks include, without limitation: nickel metal prices, foreign exchange rate movements, failure to meet joint venture milestones, project funding capacity, concentrate off-take contracts and estimates of future capital and operating costs.

The Company does not undertake to release publicly any revisions to forward looking statements included in this presentation to reflect events or results after the date of this presentation, except as may be required under applicable securities laws.

The Story so far:

HeronHeron’’s profile in developing s profile in developing the Kalgoorlie Nickel Projectthe Kalgoorlie Nickel Project

is one of persistence, persistence is one of persistence, persistence and then more persistenceand then more persistence

Overview of PresentationCompany Profile

Track Record and Nickel Focus

Kalgoorlie Nickel Projectthe right Partnerthe right Projectthe right Location

Sulphide Nickel Project

Nickel and Corporate Strategy

Company Profile – CorporateListed ASX August 1996

Focus on acquisition and explorationAim to develop a long life nickel mine

Capital Structure162m shares at A$0.62, mkt cap A$100mA$12 million cash at bank, debt free

Significant ShareholdersDirectors and associates 23.5%Inco Limited 10.2%BHP Billiton 9.9%

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Heron Avoca Pioneer

Company Profile

Scoping Study

Inco Letter of Intent and Placement

Inco Formal JV

2004 Ni Conference

The Story going forward:

Our partnership with Inco Our partnership with Inco positions thepositions the

Kalgoorlie Nickel Project Kalgoorlie Nickel Project to become an Australian nickel to become an Australian nickel

project of international project of international significancesignificance

Inco – the Right Partner for KNPInco selected following global searchA premier integrated nickel producer

Market Capitalisation US$8 billionEstimated net cash US$1.8 billion200,000tpa nickel, second largest producerProposed merger Falconbridge, No 1

World leader in nickel laterite projectsPT Inco – 60,000tpa Ni productionGoro – planned 60,000tpa Ni production

Inco Farm-in & JV Attractive TermsSubject to meeting technical milestones, Inco sole funds Feasibility Study

Pre-Feasibility, minimum US$18mFull Feasibility, minimum US$50m

Inco earn 60% on completion Feasibility and securing project funding

Inco procures all project debt fundingHeron equity fund cap 4.5% of total equityInco lends Heron its remaining equity funds

Inco JV – Funding Mechanisms Assumptions

$1.4 billion$1.4 billion project construction costDebt : equity = 70 : 30, $980m Debt, $420m Equity

Debt project finance procured by Inco

Equity financeKNP JV 60:40, Inco $252m, Heron $168mHeron capped at 4.5% of equity, $19m$19mInco lends Heron $149m, repay cashflow

Inco Farm-in -Timing Milestones Step 1, confirm 120mt at 1.5% Ni

Diamond drilling, screening studiesCompletion deadline July 2006

Step 2, flow sheet selectionBatch metallurgy and mini-pilot, Sep 2007

Step 3, resource and engineeringResource drill out, plant design, Jan 2009

Feasibility StudyBankable, completion deadline July 2011

Inco Farm-in - Step 1 & 2 Metallurgy

Run-of-mine siliceous ore

Consisting of yellow-brown limonite

and coarse silica0.8% Ni

Scrubbed slurryinto pilot plant

trommel screen deck

Screened rejectsSilica fragments 60%Reject grade 0.3% Ni

Screened slurryLimonite 40%

Leach feed grade 1.5% Ni

Screen Upgrade

Inco Farm-in - Step 3 Resources

6658500 mN

6657000 mNSIBERIA NORTH PROJECT

RECENT DRILLINGMAX LEACH FEED GRADE NICKEL (%)

75 MICRON SCREENED

Max Ni (%)

1.5 to 10,0001 to 1.50.75 to 10.5 to 0.750.25 to 0.50 to 0.25

West MineralisedZone

East MineralisedZone

Weighted average leach feed gradesshown using a 1.0% Ni cutoff

0 500 1000

Metres

Cross Section

1.86% Ni (Avg) 1.61% Ni (Avg)

1.45% Ni (Avg) 1.2% Ni (Avg)

1.57% Ni (Avg)

Weighted average leach feed gradesShown using a 1.0% Ni cutoff

KNP – the Right ProjectAmong largest undeveloped Ni projects

Heron’s vast KNP nickel footprint is uniqueFocus on Goongarrie-Siberia siliceous ore357mt at 0.7% Ni and 0.05% CoScreen beneficiation 1.5% Ni leach feedTarget 120mt leach feed, >4mtpa for 25 yrs

Limonite ore, premium metallurgyPressure Acid Leach (PAL) processingPAL proven at Moa Bay and Cawse

MINARA

BHP BILLITON

Heron’s substantial tenement holdings underpin resource base

Mainly 100% owned and unencumberedHistorically under-exploredInco’s funding means this will change

HERON

Ravensthorpe

KNP – the Right Project

Kalpini

Bulong

Goongarrie

KALGOORLIE

MurrinMurrin

ESPERANCE

LEONORA

KNP – Nickel Screen Upgrade321200mE

12m @0.57% Ni

8m @0.96% Ni 24m @

1.00% Ni 8m @2.21% Ni

321600mE

400RL

4m @1.13% Ni18m @

0.75% Ni

4m @1.02% Ni

321400mE 321800mE

6m @0.67% Ni

321000mE

GOOGARRIE HILL PROJECTSection 6678320N

Nickel Head GradeNote x 4 vertical exaggeration

24m @1.00% Ni

24 metres at 1.00%Nickel grade withoutscreening

nontronite ore,no upgrade

KNP – Nickel Screen Upgrade321200mE

12m @0.57% Ni1.05% Ni

LFG

8m @0.96% Ni1.65% Ni

LFG

24m @1.00% Ni1.72% Ni

LFG

8m @2.21% Ni1.22% Ni

LFG

321600mE

400RL

4m @1.13% Ni1.19% Ni

LFG

18m @0.75% Ni1.68% Ni

LFG

4m @1.02% Ni2.09% Ni

LFG

321400mE 321800mE

6m @0.67% Ni0.95% Ni

LFG

321000mE

GOOGARRIE HILL PROJECTSection 6678320N

Nickel Screen UpgradeNote x 4 vertical exaggeration

24m @1.72% Ni

LFG

24 metres at 1.72%Nickel Leach feed gradeafter screening at0.075mm, based onbottle roll testwork

nontronite ore,no upgrade

The Right Location

Infrastructure

KALGOORLIE

ESPERANCEKWINANA

RailGasRoadPorts

Esperance

Kalgoorlie

Leonora Laverton

Murrin MurrinRefinery

Kalpini

Bulong

Goongarrie

Proposed Sulphide Nickel ProjectExplore Heron’s ultramafic holding

Proposed that Inco will:Fund 100% of all exploration costsKeep KNP land holding in good standingRequire discovery of Inferred Min Resource

On Discovery, JV on Development AreaSimilar terms to the Laterite Joint VentureInco earns its 60% on Discovery only

GHOST ROCKS

0 40 80

Kilometres

WINDARRA

Laverton

MURRIN MURRINLeonora

CARR BOYD

CAWSE

Kalgoorlie

CARNILYA HILL

KAMBALDANEPEAN

WIDGIEMOOLTHA

GIBRALTAR

HIGHWAY

EMU LAKE

SNAKE HILL

LAKE REBECCA

PINNACLES SOUTH

YINDARLGOODA

ROE HILLS SOUTH

MINERAL PATCH

WILDARA NORTH

BARDOC

ACRA NORTH

Goongarrie

Bulong

Kalpini

Herontenements

Nickel mines

Yilgarn ultramafics

EMU LAKEHeronNi-SulphideProspect

Sulphide Laterite

Sulphide Nickel Project

Tenements and Nickel Sulphide

Targets

Wellington North - Sulphide Nickel♦ Eastern Komatiite

linear broad magnetics, nickel laterite target, focus of all Heron drilling.

♦ Western Komatiite“string of pearls”magnetic anomalies, Ni sulphide target, no Heron drilling.

♦ Image-Jubilee JV “Gossan Zone”2m at 6.2% Ni

♦ Heron “B Gossan”0.53% Ni, 0.10% Cu 235ppb Pt, 332ppb Pd

Ghost Rocks - Sulphide Nickel

From top left clockwise: copper stained mesocumulate

Gossan float approximate strike length 50m

Copper stained gossan float

Trans East - Sulphide Nickel♦ Previous drilling

identified anomalous regolith geochemistry over 10km of strike

♦ Under shallow cover

♦ Exploration to proceed via EM surveying and RC drilling

Mineral Patch - Sulphide Nickel

HERONE38/931

Max Ni in drilling

1.5 to 10,000 (1)1 to 1.5 (3)0.75 to 1 (6)0.5 to 0.75 (3)0.25 to 0.5 (1)0 to 0.25 (6)

0 1km

Scale

NickelSulphide

TargetNi-Cu-Pt-Pd

anomaly

Nickel and Corporate StrategyHeron investment offers a unique mix of

Milestone driven upside, associated with developmentof world class nickel project

Ability to invest alongside major nickel players Inco & BHPB

Exposure to strong long term

nickel market

Sulphide Nickel

blue sky

Fully funded path towards

40% interest in long-life 50,000 tpa Ni operation

Strong shareholder

returns

Strong shareholder

returns

fundamentals, & long-termnear-term

Ian BuchhornManaging Director

Phone: +61 8 9091 9253Email: ibuchhorn@heronresources.com.au

ASX: HRR