Heron Resources Limited (“Heron” or the “Company”) (ASX:HRR
TSX:HER) is pleased to advise that a Financial News Network
interview with Heron’s Managing Director, Mr. Wayne Taylor,
covering the recent Woodlawn Project financing package is now
available on the Heron website. The interview can be accessed at
www.heronresources.com.au
Highlights:
- Heron secures complete A$240 million funding package1 for
development of its Woodlawn Zinc-Copper Project
- Heron to be fully funded through construction and ramp-up at
Woodlawn
- US$60 million2 senior secured loan facility, US$16 million
silver stream prepayment and A$29 million3 equity investment from
Orion Mine Finance
- A$32 million raised from new and existing investors in
oversubscribed placement
- Up to A$5 million Share Purchase Plan to allow eligible
existing retail shareholder participation
- Transaction is subject to various conditions precedent
including Heron shareholder approval and Castlelake FIRB approval
- Heron’s Independent Directors unanimously recommend
shareholders vote in favour of all resolutions at a planned General
Meeting on 17 August 2017
- Heron to commence construction works immediately with first
production targeted during late 2018
--------------------------------------------------
1 Assumes full take-up of the A$5 million SPP and exchange rate
of AUD/USD 0.76
2 Plus interest capitalised during a 15 month period from first
drawdown
3 Assumes exchange rate of AUD/USD 0.76
-----------------------------------------------
Finance News Network interview:
Jessica Amir: Hello I’m Jessica
Amir for the Finance News Network. Joining me from Heron Resources
Limited (ASX:HRR/TSX:HER) is Managing Director and CEO, Wayne
Taylor. Wayne welcome to Finance News Network.
Wayne Taylor: Thank you
Jessica.
Jessica Amir: First up Wayne,
can you give us an introduction to Heron Resources?
Wayne Taylor: Heron is a
resource company with a project, the Woodlawn project, which is
zinc-copper located in New South Wales. The project, high-grade
polymetallic project principal commodities are zinc-copper, but
also appreciable lead, silver and gold. Current market cap’s around
$32 million.
Jessica Amir: You’re seeking a
shareholder approval for a $240 million funding package. What does
it contain?
Wayne Taylor: It contains both debt and equity.
In the debt we have two components, a $USD60 million senior secured
loan and a $USD16 million silver pre-payment. On the equity side we
have cornerstone investments to the tune of $AUD104 million, a
private placement to the tune of $AUD31 million and a $5 million
share purchase plan.
Jessica Amir: What does the
proposed funding package mean for the project and existing
shareholders?
Wayne Taylor: The proposed
funding package provides us with full project funding, through
construction, through commissioning and through into full
production. So this is realising a goal that we’ve set out for
ourselves three years ago, when we merged with TriAusMin Limited
(ASX:TRO/TSX:TOR). So the shareholders are seeing us bring to
fruition what was outlined some years ago.
Jessica Amir: And you’ve already
got some private equity providers. So who’s supporting the
project?
Wayne Taylor: We have three,
Greenstone who’s currently our largest shareholder. Between
Greenstone and their partners, they’ll be contributing around $42
million. We have Orion Mine Finance with their debt, silver and
equity components, contributing about $130 million. And then we
have Castlelake, a more diverse fund and they’ll be contributing
around $33 million.
Jessica Amir: And of course,
what’s the Board recommending?
Wayne Taylor: The Board is
recommending that all shareholders support all resolutions, to give
effect to the funding package and allow us to start construction
immediately.
Jessica Amir: Now to the
Woodlawn project in a little bit more detail. Can you tell us about
the timeline, the resource and the economics?
Wayne Taylor: Woodlawn is a
project that consists of two production sources. We have the
high-grade underground, around 6.5 million tonnes in resources,
which through our conversion process, produces about 2.8 million
tonnes of reserves. It is what we consider a starter case on the
underground, given that all we’ve done is outlined enough to get
the project financed, at this point in time. The other production
source is the tailings. We have 11 million tonnes in resources
there, around about six per cent zinc equivalent, about 9.5 million
tonnes reports to reserves. That will be processed through a single
process plant to produce zinc, lead and copper concentrates with
some precious metal credits.
In terms of the economics, we’ve produced a
feasibility study around 12 months ago. That generated 9.3-year
mine life on reserves only, over $400 million in post-tax free cash
and an IRR post-tax of 32 per cent. A cost base, which should see
us in the lower half of the producer cost curve. From a revenue
perspective, around 52 per cent of our revenue from zinc, 23 from
copper, 15 from lead and around 10 from the precious metals.
Looking at the timeline, we expect to be into production at the
tail end of 2018/early 2019, which is a good time in terms of
delivery of zinc into the marketplace at the moment.
Jessica Amir: A more general
question now Wayne. Can you tell us about your outlook for copper
and zinc prices and what type of interest you’ve had from offtake
partners, say commodity traders?
Wayne Taylor: Zinc is the
strongest in terms of supply demand fundamentals in the base metal
complex. There is a shortage of supply at the moment and that’s
been driven by a lack of investment in zinc mines, for quite a
number of years. And for that reason with consumption growing,
we’ve got a gap and that is drawing on stocks, and giving good
support to the price. We do expect that to continue for the short
to medium term and that’s a part of the market that we want to go
and enjoy being in.
Copper, probably not quite as strong
fundamentally at the moment, but in the medium to long-term it’s
still looking very, very good, driven by everything that’s
electric. And we see that being a good space to be involved in, as
Woodlawn progresses. Offtake, we’ve signed up an agreement with
Louis Dreyfus Metals Company after a very competitive process, with
quite a number of off takers. And it just showed that there is a
shortage of material. The terms we’ve got are very attractive and
we’re very pleased with that result.
Jessica Amir: Last question now
Wayne. What’s your goal for the next 12 months and what’s your
long-term ambition for the company?
Wayne Taylor: Our objectives
for the next 12 months are very clear. We’ve got the construction
of Woodlawn to see through and get that into production. Beyond
that we have a great portfolio of projects or tenements around
Woodlawn, where we can see some more organic growth coming from.
And once we’ve got Woodlawn bedded down, well then we’re quite
happy to look beyond that. Probably of note, we cleaned up our
project portfolio earlier this year, through the spinout of our
non-Woodlawn assets into Ardea Resources Limited (ASX:ARL), which
became an IPO listing in February, so we were able to return,
through an in species distribution, shares to our shareholders.
That means that we’re now able to fully focus our time and effort
on Woodlawn.
Jessica Amir: Wayne Taylor,
thanks so much for the update and good luck with the funding
proposal.
Wayne Taylor: Thank you
Jessica.
ENDS
About Heron Resources Limited
Heron’s primary focus is the development of its 100% owned, high
grade Woodlawn Zinc-Copper Project located 250km southwest of
Sydney, New South Wales, Australia.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
INFORMATION
This report contains forward-looking statements
and forward-looking information within the meaning of applicable
Canadian securities laws, which are based on expectations,
estimates and projections as of the date of this report. This
forward-looking information includes, or may be based upon, without
limitation, estimates, forecasts and statements as to management’s
expectations with respect to, among other things, the timing and
amount of funding required to execute the Company’s exploration,
development and business plans, capital and exploration
expenditures, the effect on the Company of any changes to existing
legislation or policy, government regulation of mining operations,
the length of time required to obtain permits, certifications and
approvals, the success of exploration, development and mining
activities, the geology of the Company’s properties, environmental
risks, the availability of labour, the focus of the Company in the
future, demand and market outlook for precious metals and the
prices thereof, progress in development of mineral properties, the
Company’s ability to raise funding privately or on a public market
in the future, the Company’s future growth, results of operations,
performance, and business prospects and opportunities. Wherever
possible, words such as “anticipate”, “believe”, “expect”,
“intend”, “may” and similar expressions have been used to identify
such forward-looking information. Forward-looking information is
based on the opinions and estimates of management at the date the
information is given, and on information available to management at
such time. Forward-looking information involves significant risks,
uncertainties, assumptions and other factors that could cause
actual results, performance or achievements to differ materially
from the results discussed or implied in the forward-looking
information. These factors, including, but not limited to,
fluctuations in currency markets, fluctuations in commodity prices,
the ability of the Company to access sufficient capital on
favourable terms or at all, changes in national and local
government legislation, taxation, controls, regulations, political
or economic developments in Canada, Australia or other countries in
which the Company does business or may carry on business in the
future, operational or technical difficulties in connection with
exploration or development activities, employee relations, the
speculative nature of mineral exploration and development,
obtaining necessary licenses and permits, diminishing quantities
and grades of mineral reserves, contests over title to properties,
especially title to undeveloped properties, the inherent risks
involved in the exploration and development of mineral properties,
the uncertainties involved in interpreting drill results and other
geological data, environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins and flooding,
limitations of insurance coverage and the possibility of project
cost overruns or unanticipated costs and expenses, and should be
considered carefully. Many of these uncertainties and contingencies
can affect the Company’s actual results and could cause actual
results to differ materially from those expressed or implied in any
forward-looking statements made by, or on behalf of, the Company.
Prospective investors should not place undue reliance on any
forward-looking information. Although the forward-looking
information contained in this report is based upon what management
believes, or believed at the time, to be reasonable assumptions,
the Company cannot assure prospective purchasers that actual
results will be consistent with such forward-looking information,
as there may be other factors that cause results not to be as
anticipated, estimated or intended, and neither the Company nor any
other person assumes responsibility for the accuracy and
completeness of any such forward-looking information. The Company
does not undertake, and assumes no obligation, to update or revise
any such forward-looking statements or forward-looking information
contained herein to reflect new events or circumstances, except as
may be required by law. No stock exchange, regulation
services provider, securities commission or other regulatory
authority has approved or disapproved the information contained in
this report.
For further information regarding Heron please visit www.heronresources.com.au or contact:
Heron Resources
Mr Wayne Taylor
Managing Director and CEO Heron Resources Ltd
Tel: +61 2 9119 8111
Email: heron@heronresources.com.au
Heron (Canada)
Tel: +1 647-862-1157(Toronto)