some important extracts from hrr half yearly

The Company raised $34.5 million at $1.15 through
placements to major shareholders BHP Billiton and
Vale Inco. The Company notes BHP Billiton announced
on market purchases of just over 2.4 million shares in
September 2007. BHP Billiton has also recently
completed the November Placement with the purchase
of a further 3 million shares taking BHP Billiton’s
ownership in the Company to a total of 35, 427,126
shares. Subsequent to the end of the reporting period
the company notes BHP purchased a further 2.15
million shares on market. BHP Billiton currently holds
37,577,126 shares and Vale Inco as at the date of this
report owns a total of 32,440,651 shares.

The ongoing support of the Company’s major
shareholders is acknowledged. The Company is in a
strong position to evaluate the application of
atmospheric leaching at the Jump-up Dam Project as
well as develop other project opportunities.
Directors exercised a total of 3,000,000 options during
the reporting period taking directors holdings to 46,849,403 shares.

Strategic Objectives.

1. KNP is the long term production asset, in
partnership with Vale Inco.

2. Jump-up Dam is the medium term production
asset currently undergoing a scoping study on
atmospheric leaching, the Company has a
technology licencing and product supply
agreement with BHP Billiton covering this project
and technology.

3. Looking at near term production opportunities in
fields where Heron has comparative advantage.
The Company subscribed to 2,972,973 shares in a
rights issue by Polaris Metals NL, taking Heron to a
25.77% holding in Polaris. Heron views this investment
as maintaining our strategic exposure to iron ore
developments to complement the core nickel business.

Technology Licencing and Product supply
agreement

The Company announced that it has entered into a
master technology licensing and product supply
agreement with BHP Billiton (Agreement). The
Agreement covers Jump-up Dam and other nickel
laterite projects that Heron develops in the Eastern
Goldfields, excluding the area of the Kalgoorlie Nickel
Project (KNP).
Under the Agreement, BHP Billiton has licensed to
Heron the relevant parts of its Intellectual Property
relating to Nickel Laterite Technology (Technology). In
return Heron has granted to BHP Billiton the right to
purchase at market the first 50% of any nickel product
generated from a Heron controlled project in the
Eastern Goldfields using the Technology.
A further right is accorded to BHP Billiton to match the
best offer received by Heron in the market for the
second 50% of any nickel product produced from that
project (including any financing terms). A license fee
will apply to any product not sold to BHP Billiton.
The Agreement only extends to nickel laterite projects
(excluding the KNP) that are developed in the Eastern
Goldfields with the Technology. To avail itself of the
licencing provisions of the Agreement, Heron must be a
majority owner and manager of the project to be licensed as at the time a decision to mine that project is taken.

The Agreement has a term of 15 years provided that
Heron commences construction of a licenced project
within 5 years from signing. BHP Billiton and Heron
have also agreed to share their respective background
Intellectual Property and knowledge relating to
extraction of nickel from nickel laterite ores. A technical
exchange environment will be established to help
reduce the technical risks and formulate new ideas and
methods in the emerging area of leaching of nickel
laterite ores.
Heron believes the agreement is an extremely exciting
development for the Company as BHP Billiton has
developed extensive nickel laterite heap and
atmospheric leach technology which is protected by
Australian and international patents.
Without legal access to the Technology, stand alone
heap leach projects and potentially atmospheric leach
run the risk of infringing these patents. Heron is very
pleased to be currently the only party in Australia with
legal access to these patents.

The Agreement will also allow Heron to further optimise
Jump-up Dam as it strives to complete a Pre-Feasibility
Study for that project by investigating the potential for
including atmospheric leach into the Jump-up Dam flow
sheet. Including atmospheric leach may potentially
increase resource utilisation and production efficiencies.

Heron will draw on opportunities presented by its
recently announced Technology Licensing and Product
Supply Agreement to fully evaluate Atmospheric Leach
as a processing option for Jump-up Dam and
surrounding deposits. Atmospheric leaching allows
beneficiation to provide a higher leach feed grade and
better utilisation of the resources within the Yerilla
District. Heron has gained specific experience in
laterite beneficiation during the past eight years and will
be applying this knowledge to the Jump-up Dam
Project.