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.
HRR Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held