The Kalgoorlie Nickel Project (KNP) has achieved a significant milestone. Inco Limited, the world�fs second largest nickel producer, has agreed with Heron to form a joint venture to evaluate and, subject to feasibility studies, develop the KNP: �Ë Inco has the right to sole fund evaluation programs to the completion of a Bankable Feasibility Study, to earn 25% in the KNP Tenements.
Minimum estimated expenditure, subject to successful technical programs, is US$68 million. �Ë Inco may commit to project construction including securing of project finance to earn 60% in the KNP Tenements. �Ë Inco will have a right to 100% of Heron�fs off-take rights on commercial terms. �Ë Heron�fs contribution to project funding prior to the KNP becoming cash-flow positive will be capped at 4.5% of total capital expenditure. Inco will provide loan funding for the remainder of Heron�fs equity funding obligations.
Inco has agreed to negotiate with Heron a separate regional nickel sulphide joint venture. A term sheet is being finalised. �Ë Heron�fs extensive ultramafic tenement holding can now be explored by a single joint venture, with Inco able to develop both nickel laterite and any associated nickel sulphide mineralisation.
A placement of 16.5 million Shares at A$0.75 per Share was completed with Inco post reporting date, raising A$12.375 million. Inco is now Heron�fs second largest Shareholder.
The Heron cash position is particularly robust, with funds to provide working capital to: �Ë Generate Nickel Sulphide exploration projects. �Ë Explore for additional resources south of Goongarrie (Big Four to Vettersberg to Windanya), north of Goongarrie (Comet Vale to Highway to Ghost Rocks) and Bulong, for offering to Inco for potential inclusion in the KNP Feasibility Study.
The KNP 800m x 80m pattern RC drilling was completed in all proposed mining areas. Significant drill results include 50m at 1.5% Ni and 50m at 1.4% Ni Leach Feed Grade.
BHP Billiton acquired 15.9 million Heron Shares through a purchase from OMG Cawse Pty Limited. Following the Inco placement, BHP Billiton is now the third largest Shareholder.
HRR Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
