for personal use onlyoct 31, 2007 · lau lebah zn-pb-ag dairi cow sarkea sipp 3 00'n o 2 55'n o 98...

EMERGING ZINC/LEAD PRODUCER

QUARTERLY REPORT SEPTEMBER 2007

HIGHLIGHTS

♦ Development

- Construction activities continue while awaiting forestry approval - Pre-feasibility work at Lae Jehe provides encouragement

♦ Exploration

- Lae Jehe drilling 13.9m @ 16.5% Zn, 9.5% Pb - Sinar Pagi drilling 27.5m @ 6.32% Pb, 18 g/t Ag, 0.96% Zn 2.2m @19.5% Pb, 170 g/t Ag, 0.39% Zn - Lae Puncu sampling 24.8% Zn, 11.0% Pb, 79 g/t Ag

www.herald.net.au

www.jaguarminerals.com.au

www.coronagold.com.au

31 October 2007

HERALD RESOURCES LIMITED ABN 15 008 672 071 Level 3, 50 Colin Street, West Perth Western Australia 6005 PO Box 893 West Perth Western Australia 6872

Tel +61 8 9322 2788 Fax +61 8 9481 1669 Email [email protected] Web www.herald.net.au

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HERALD RESOURCES DAIRI ZINC/LEAD PROJECT Herald 80% PT Antam 20% OVERVIEW Development activities at the Dairi zinc/lead project continued throughout the quarter. The Dairi Feasibility Study (“DFS”) is based solely on a 1Mtpa development of the high-grade Anjing Hitam deposit (diluted Reserves 6.6MT @ 15% Zn, 9% Pb) for an initial mine life of 7 years, although substantial other Resources also exist within the project area, e.g. Lae Jehe, where ongoing drilling has thus far delineated Resources of 6.5Mt @ 11.3% Zn & 6.1% Pb. FORESTRY APPROVAL PROCESS As previously advised, in order to proceed to full development at the Dairi Project the Company is awaiting forestry approval, which in turn it seems is dependent on a Presidential decree being issued allowing underground mining in forest areas generally. In relation to the Dairi application for forestry approval, a meeting was convened in Jakarta yesterday (30 October) between the Mines Dept, Forestry Dept, Environment Dept, the National Secretariat, the Foreign Investment Board, some of the expert panel who are advising on the draft Presidential decree above, and the Company's representatives. The Company gave a presentation to the meeting in regard to the impact (minimal) of the proposed mining operations on the forest, which was generally well received. However, slightly more detail in relation to certain areas was requested. To this end the Company will immediately undertake to prepare an additional report, basically by extracting the relevant details from the original feasibility study, plus additional environmental data and sampling collected subsequently, for re-presentation within a few weeks. A further meeting followed, at which the Company was not present, to hopefully finalise drafting of the Presidential decree.

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HERALD RESOURCES As the Company has never formally received any reason from the Forestry Dept why its application should not be approved, the Company continues to believe that approval will be forthcoming once the Presidential decree is signed, although the timing of this is obviously beyond the Company’s control. In the meantime the Company has continued with its development activities where possible to minimize the time to production once the approval is hopefully received. DEVELOPMENT ACTIVITIES EPCM Works / Capital costs The terms of the EPCM engineering contract have been negotiated. Formal signing of the contract will occur subject to Forestry permit approval which directly affects milestone completion dates to be written into the contract. Engineering Design In the previous quarter the decision was made to relocate parts of the process plant and infrastructure to a lower location north of the main plant area to reduce the plant footprint and earthworks in the narrower portion of the upper valley. This redesign work has been progressing well with revision to the layouts essentially completed. The relocated tailings facility has been redesigned with the capability to eventually hold more than double the capacity of the original location,, thereby not only accommodating the Anjing Hitam reserves but also future production from deposits such as Lae Jehe.

The port facility designs are nearing completion with the design and construct contractor. A design consultant has been selected to progress the container offloading and concentrate dumping equipment design at the port facility.

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HERALD RESOURCES Procurement and Contracts Transportation and importation of mill components and other major equipment is continuing. Prefabricated accommodation camp mess and wet buildings are on site awaiting installation. The section of access road up to the forest boundary inclusive of the camp area earthworks has been completed. The contract for the final section of access road and the complete process plant and infrastructure has been re-tendered and submissions received. The contractor engaged for the construction of the camp has been engaged. The contract for the construction of the ring road section of the Sidikalang to Parongil regional road has been awarded. Agreements Agreement is in place with the Public Works authority to allow upgrade of the road between Sidikalang and Parongil. Socialisation and negotiations for land acquisition have occurred for the inner ring road section. The lease agreement between the Company and the Port authority for use of the land and waters at Kuala Tanjung is in place. The port site AMDAL (EIS) is now approved, which should facilitate the issue of the full construction permit shortly. The Company has negotiated and signed an agreement with fellow port-user PT Inalum for use of the private access road to the port. Construction The regional road works that are to occur between Sidikalang and Parongil are divided into a new 4km ring road around Sidikalang and 22km of upgrade of existing road. The ring road works have been awarded. The contractor is mobilized and construction is scheduled for commencement shortly. The upgrade works on the 22km of existing road has effectively begun with the Company working on small sections of the road that have deteriorated due to lack of maintenance by the local authority. Finalisation of land acquisition activities has now turned to the 22km section of the road that requires upgrade. Tenders for the upgrade works have been put to the market and are due for submission shortly.

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HERALD RESOURCES Construction work on the access road up to the forestry boundary and the earthworks associated with the accommodation camp is now complete. Construction work on the accommodation camp has commenced. Clearing and contractor site establishment at the Kuala Tanjung port facility is complete. Temporary jetty facilities are being established. Plant Construction Schedule The date for commissioning of the process plant is dependent upon the granting of forestry approval to access the plant site area, and acquisition of the remaining land along the access corridor. Mining Contract and Planning The mining contractor has set up an office and store yard in Medan. The first Jumbo drill Rig has been imported and is in storage. Delivery of the other mining equipment that was due in 2007 will be postponed to 2008 when mining at the portal is expected to start. The detailed mine planning, scheduling, and geotechnical work was completed during the quarter. Detailed standards and safety parameters are in progress.

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ÃÃ

ÃÃ

Ã

Ã

Ã ÃÃ ÃÃÃ

ÃÃ

ÃÃ ÃÃEnggangMo-Fe-Zn

Basecamp

BululagaPb-Zn-Ag

Lae Puncu

Lubuk RayaPb-Zn-Ag

Sinar PagiPb-Ag

SitapitapiZn-Bi-Fe-Mo

Batu Kapur

Lae Lembara

Pb-Zn-Ag

Pondok Gambir

Lae MaromasPb-Zn

Anjing Hitam

Lae JeheBongkaras

Lae Rimoh

BasukiSopokomil Dome

Zn-Pb-AgProspects

Lae IkanPb-Zn-Ag

Lae MelasZn-Pb-Ag Lau Lebah

Zn-Pb-Ag

Dairi CoW

Sarkea SIPP

3 00'No

2 55'No

98 1

5'Eo

2 40'No

2 45'No

2 50'No

SIDIKALANG(REGENCY CAPITAL)

0 5 Kilometers

98 1

0'Eo

98 0

5'Eo

N

DAIRI AND SARKEA PROJECTSLOCATION OF MAIN PROSPECTS

Ã Prospect location with main commodities

%

PARONGIL

SOPOKOMIL

Prospect with published Mineral Resources

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HERALD RESOURCES EXPLORATION Lae Jehe Introduction The Lae Jehe prospect is located about 1.5km north of the main Anjing Hitam orebody and 800m north of the planned concentrator site. Lae Jehe is the most advanced target to provide future mill feed following the initial 7 year mine life at Anjing Hitam. The combined indicated and inferred resource at Lae Jehe stands at 6.5 Mt at 11.3% Zn, 6.1% Pb. Drilling continued through the quarter with either one or two drill rigs in operation. Two deep holes and one shallow hole were completed. One drill rig spent most of the quarter drilling geotechnical holes related to the proposed plant site construction. Drilling Drilling at the southern end of Lae Jehe Deeps on section 600N (see attached cross section and longitudinal section) intersected a narrow, fault affected M2 horizon in SOP271D, located between SOP229D and SOP240D. A flatter dipping hole, SOP259D, intersected multiple mineralised horizons within the Balga Fault. Assay results were received for the previously completed SOP256D which obtained a downhole intersection of 13.9m (estimated true width 11.9m) @ 16.5% Zn, 9.5% Pb. The previously reported apparent flattening of the mineralised horizon was caused by the approximate collar co-ordinates available at that time. The southern end of Lae Jehe was also targeted with the shallow drilling, and the 1 hole completed, SOP258D, intersected various thin, lower grade horizons (see table below). Assay results were received for the previously completed SOP257D which intersected thin, moderate to low grade mineralisation as shown in the table below.

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HERALD RESOURCES Lae Jehe Drill Intersections Hole North East Dip/

Azimuth (mag)

From m

To m

Width M

ETW m

Zn %

Pb %

Ag ppm

Horizon

SOP256D

700 1346 -65°/210° 518.20 532.10 13.90 11.88 16.50 9.50 4 M2

SOP257D* 10925 4900 -55°/307° 133.40136.40151.45164.70

134.40138.70152.45165.70

1.002.301.001.00

0.781.800.780.78

1.13 10.08

5.47 2.34

0.54 6.59 2.49 1.20

SO

P16

7D

DAIRI PROJECT

SO

P 9

D

SO

P25

6D

100806040200

4000

CROSS SECTION 800N

LAE JEHE SECTOR

SOPOKOMIL PROSPECT

SCALE 1:

BK

SO

JE

JU

DA

Down hole width @ Zn%/Pb%/ppm Ag

Base of moderate weathering

Fault/thrust zones

Massive dolostone

Shale and dolostone

MVT mineralised zones

Massive quartz veined dolomiteUpper/Lower Zones massive sulphide horizons

Carbonaceous shales

Siltstones/dolomitic siltstones

LEGEND

800mRL

700mRL700mRL

600mRL600mRL

500mRL500mRL

400mRL400mRL

300mRL300mRL

200mRL200mRL

100mRL100mRL

0mRL0mRL

13

00

E1

30

0E

12

00

E1

20

0E

11

00

E1

10

0E

10

00

E1

00

0E

90

0E

90

0E

80

0E

80

0E

70

0E

70

0E

SO

P217D

SO

P21

5D

SO

P171D

SOP

60D

SO

P 5

4D

SO

P 1

3D

SO

P 8

D

M6

M4M5

M6

M6

M1

M1M3

M2

M1

M3

M2

M3

M2

DA

JU

JU

Ju12

Ju12

Ju12?

SO JE

JE

DA

DA

[email protected]/9.5

[email protected]/1.4/9

[email protected]/[email protected]/3.9
















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40

0N

12

00

N

20016012080400

5000

Looking to 210 mag.(Grid West)

Upper Zone, M2 Horizon

LONGITUDINAL SECTIONLAE JEHE SECTOR

SCALE 1:

Massive Sulphide Outcrop

September Quarter Program & Results

Drillhole Pierce Point (est. true width @ %Zn/%Pb)

Downhole EM Anomaly

Published Resource Outline at +5% Zinc Equivalent

800mRL

600mRL

400mRL400mRL

200mRL200mRL

0mRL0mRL 12

00

N

10

00

N1

00

0N

80

0N

80

0N

60

0N

60

0N

40

0N

Target260D

Assays awaited

271D

[email protected]/4.8259D







253D


229D

[email protected]/1.3223D (faulted)


240D



223D


222D


221D

Fault Zone




173D

beneath the fault zone.

Potential exists for further resources

Fault Zone

[email protected]/21.9Sapurang Anton



205D


207D















54D


54D







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ÊÚ

ÊÚ

ÊÚ

#S

#S

#S#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S

#S#S

#S#S

#S

#S

#S#S

#S#S

#S

#S

#S

#S#S

#S#S

#S

#S

#S

#S

#S

#S

#S#S

#S

#S#S

#S

#S

#S

#S

#S

#S

5D

6D

7D

8D 9D

10D

11D

12D

13D 16D

17D

39D 40D

49D

52D

54D

57D

59D 60D

166D

167D

168D

169D

170D

171D 172D

186D

196D

205D

206D 207D

208D

209D

Rob 1

SaporangAnton

217D

221D

223D

219D

173D

218D 222D228D 240D

215D229D

256D

253D

254D 255D

257D

271D259D

258D

260D

"

1200N

1000N

800N

1000E

600N

Plan Projectionof Resources

Proposed Sitefor

Sopokomil JuluTreatment Plant

Figure 2

N

GAMBAR 5

10400 N

10600 N

10800 N

11000 N

11200 N

11400 N

11600 N

10400 N

10600 N

10800 N

11000 N

11200 N

11400 N

11600 N

4600

E

4800

E

5000

E

5200

E

4600

E

4800

E

5000

E

5200

E

Drill Hole ID206D! Drill Hole Trace

LEGEND

Massive SulphideOutcropÊÚ

Sedex TraceTracksRivers / streams

Peta Lokasi Lubang Bordi Prospek Lae Jehe

1:5000 0 50 100 Meters

LAE JEHEDRILL HOLE LOCATION PLAN

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HERALD RESOURCES Pre-Feasibility Program A geotechnical study was completed during the quarter by the same person who carried out the geotechnical study at Anjing Hitam. The geotechnical data available to date is being utilised in the Lae Jehe mine design which is in progress. Preliminary indications are that the dip of the ore body (~70°) is favourable to underground mining, although the ground conditions will require that stoping be limited to 25m level intervals and flatback cut and fill or bench and fill methods, with fibrecrete required in access development. The largest and highest grade mineralised horizons have been targeted. These areas have had ore drives and stopes designed around them. Realistic and practical mining rates have been determined for mining the horizons as a cut and fill method. The mining schedule for Lae Jehe is currently being built. This schedule will report critical information relating to the mining of the ore drives and stopes and will include development metres, diluted tonnes and grade, and contained metal. The metallurgical samples have been received by the laboratory and a programme of testwork is currently being designed. Sopokomil Exploration The main deposits identified at the Dairi Project to date (Anjing Hitam, Lae Jehe, Basecamp) are hosted by the Julu carbonaceous shale horizon on the eastern side of the large structure known as the Sopokomil Dome. Lae Puncu is 3 km southwest of Anjing Hitam and lies on the lightly explored SW flank of the Sopokomil Dome, where the prospective Julu shale horizon has been mapped and sampled for 4 km along strike between Lae Puncu and Lae Nteas. Work in the Lae Puncu area has located a 2.5-5.0m wide quartz-galena-sphalerite ± chalcopyrite vein/breccia hosted by Jehe dolostone. The vein/breccia so far has a strike length of 800m trending from 330°-355° and dipping moderately to the southwest. Rock chip samples have returned values of up to 24.8% Zn, 11.0% Pb and 79 g/t Ag all in the one sample, with a separate sample carrying 1.6% Cu. Follow up of these results will be carried out in the near future.

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HERALD RESOURCES Sinar Pagi Drilling continued throughout the quarter with hole SPA14D being completed on section 20,200E and holes SPA15D and SPA16D being completed on section 19,900E. The current drilling program is testing the Sinar Pagi lead-silver-zinc lode now intersected by SPA01D, SPA02D, SPA03D, SPA06D, SPA09D, SPA15D and SPA16D. Drill hole SPA14D was completed on the most eastern section drilled to date without intersecting any mineralisation. This does not necessarily close the lode off in this area and further drilling may be required on this cross section. Drill holes SPA15D and SPA16D tested down dip from successful holes SPA02D, SPA03D and SPA06D. SPA15D intersected from 182.90 down hole, a gossanous quartz breccia lode which assayed 27.5m @ 6.32% lead, 18 g/t silver and 0.96% zinc. A further zone of mineralisation, moderately oxidised but containing some galena and sphalerite, assayed 5.0m @ 0.70% lead, 63 g/t silver and 2.14% zinc. A deeper, narrow massive sulphide zone yielded 2.20m @ 19.5% lead, 170 g/t silver and 0.39% zinc. SPA16D also made a significant intersection of gossanous quartz breccia becoming more sulphidic near the base between 239.80m – 270.00m down the hole which assayed 30.20m @ 2.38% Pb, 5 g/t Ag and 0.21% Zn. Sinar Pagi Drill Intersections

Hole North East Dip/ Azimuth

(mag)

From m

To m

Width m

ETW m

Zn %

Pb %

Ag ppm

Remarks

SPA12D

29750 20100 -75°/45° Only very low base metal values were intersected

SPA13D 29750 20100 -56°/45°

Only very weak mineralisation intersected

SPA14D

29770 20200 -51°/45° No mineralisation intersected

SPA15D 29750 19900 -55°/40° 182.90 224.80 237.80

210.40 229.80 240.00

27.50 5.00 2.20

21.50 3.90 1.70

0.96 2.14 0.39

6.32 0.70

19.50

18 63

170

Oxide Ox/Sulph

Sulfide

SPA16D

29750 19900 -75°/40° 239.80 270.00 30.20 18.30 0.21 2.38 5 Oxide

(N.B. Azimuth 45° magnetic is equivalent to 5° Sinar Pagi Grid) Further drilling is planned for the December quarter to further test the Sinar Pagi galena lode.

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DAIRI PROJECT

[email protected]/2.8/2 (in surface trench)

[email protected]/3.0/4

15.4m @ 0.7/8.5/64

2.0m @6.4/8.6/332

4.5m @ 0.1/22.4/526.7m @ 3.4/1.1/101.5m @ 7.8/0.1/12

27.5m @ 1.0/6.3/18

5.0m @ 2.1/0.7/63

2.2m @ 0.4/19.5/170

30.2m @ 0.2/2.4/5

Fixed Loop TEM Anomaly

SP

A002D

SP

A003D

SP

A006D

SP

A007D

SP

A015D

SP

A016D

29

80

0N

29

80

0N

29

90

0N

29

90

0N

30

00

0N

30

00

0N

30

10

0N

30

10

0N

500mRL 500mRL

600mRL 600mRL

700mRL 700mRL

800mRL 800mRL

900mRL 900mRL

LEGEND

Mineralised zone

Dolostone

Siltstones/ shales

Down hole width @% Zn/%Pb/ppm Ag

Base of moderate weathering

SCALE 1:

SINAR PAGI PROSPECT

CROSS SECTION 19900E

2500

0 20 40 60 80 100

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HERALD RESOURCES SARKEA BASE METALS PROJECT Herald 100% This area is centred about 10km south of the Dairi Project’s Anjing Hitam deposit. It is held under a SIPP prospecting permit covering 9,606ha. An application has been lodged with the local government for a second year’s extension to the SIPP and it is hoped that the SIPP extension will be approved in October. Previously reported drilling has intersected narrow (1-3m) mineralised zones of up to: 13.7% zinc, 4500 ppm bismuth, 6010 ppm molybdenum, 1250 ppm tin and 3720 ppm tungsten. Broader zones (4 - 14m) of from 35.1 - 44.7% iron have also been intersected. These various mineralisation types are associated with skarns developed around the edges of two Sarkea Granite domes located at Sitapitapi and Bukit Enggang. No further work is planned on these prospects for the time being. Also at Sarkea, there is potential for Sedex style targets. Reconnaissance at Lae Lembara has identified a sphalerite-bearing breccia whilst at Lae Ikan follow up of pyritic silica float with 3% sphalerite veins identified a 12m wide outcrop of vuggy silica-pyrite rock within Tapanuli Group pyritic shale which has assayed at up to 1.5% Zn, 3.1% Pb and 50 g/t Ag. Follow up of these two prospects is planned in the coming quarters. MELUAK GOLD PROJECT Aceh Province Herald 26% via unlisted Corona Gold Ltd Meluak is contained within a 2,760ha SIPP prospecting permit issued by the Gayo Lues Regency. Discussions are continuing with the Regency authorities and the Mines Branch in Aceh about converting the SIPP to a Contract of Work, a much better form of title. Corona plans to resume exploration activities shortly, following up on previous exploration results such as 72m @ 0.54 g/t Au from 7m, including 8m @ 1.95 g/t Au. To this end, it has recently raised just under $1m via a placement of 7,800,000 shares at 12.5 cents.

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HERALD RESOURCES MONTAGUE GOLD PROJECT Herald 15% free carried Airport (M 57/98, M57/99) No work this quarter. A drilling programme is planned for the March 2007 quarter. N.B. The above information is based on reports provided by WCP Resources Ltd, manager of the Montague JV CRATER GOLD PROJECT Herald 20% free carried No work this quarter. Since the end of the quarter, WCP Resources Ltd has entered into a Deed of Variation whereby it has withdrawn from the two exploration licences which make up the Crater Gold Project. N.B. The above information is based on reports provided by WCP Resources Ltd, manager of the Montague JV.

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HERALD RESOURCES – CORPORATE CASH RESERVES At the date of writing, parent company Herald Resources Ltd held cash deposits of A$63M. M P WRIGHT Executive Director NOTE: Sections of information contained in this report that relate to Exploration Results and Mineral Resources were compiled or supervised by Mr B Kirkpatrick BSc, MAusIMM, MAIG who is a Member of The Australasian Institute of Mining and Metallurgy and a Member of the Australian Institute of Geoscientists. Mr Kirkpatrick, a full-time employee of Herald Resources Limited, has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Kirkpatrick consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

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HERALD RESOURCES - CORPORATE DIRECTORY

DIRECTORS BANKERS T M Allen, (Chairman) Societe Generale (Australia) M P Wright, BBus 400 George Street B J Hurley, AWASM, MAusIMM SYDNEY NSW 2000 J Dracopoulos, B.A. Acc, Grad Dip CSP, CPA COMPANY SECRETARY Challenge/Westpac M P Wright Banking Corporation 109 St Georges Tce SHARE REGISTRY PERTH WA 6000 Security Transfer Registrars Pty Ltd 770 Canning Highway AUDITORS APPLECROSS WA 6153 Stantons International 1 Havelock Street Telephone: 08 9315 0933 WEST PERTH WA 6005 Facsimile: 08 9315 2233 SOLICITORS AUSTRALIAN BUSINESS NUMBER Blakiston & Crabb 15 008 672 071 1202 Hay Street PERTH WA 6005 SHARE CAPITAL 196.8M shares REGISTERED OFFICE 5.2M options Level 3/50 Colin Street WEST PERTH WA 6005 Telephone: 08 9322 2788 Facsimile: 08 9481 1669 Email: [email protected]

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for personal use onlyoct 31, 2007 · lau lebah zn-pb-ag dairi cow sarkea sipp 3 00'n o 2 55'n o 98...

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