ANNUAL REPORT 2001 - Heron Resources LimitedAt average 15 year historical metal prices, this resource alone is able to support a Goongarrie-Cawse 0.5 million tonne per annum (“mtpa”)

Heron Resources Limited21 Close Way, West Kalgoorlie PO Box 1280, Kalgoorlie, Western Australia, 6433

Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256 Email: [email protected]

A N N U A L R E P O R T 2 0 0 1

CORPORATE DIRECTORY SHAREHOLDER REVIEWHERON RESOURCES LIMITED

“So this run-of-mine ore is worth $100 atonne, and Heron’s got 400 million tonnes!”Local Kalgoorlie businessmen andmajor Heron Shareholders Dean Willis,Rino Borromei and Brett Nazzariwith David Crook.

Kalgoorlie businessman Nigel Byrd atGoongarrie with some of the high grade

“$600 a tonne revenue value” drill samples. Very encouraging when you’re a major

Heron Shareholder.

“A rose between two thorns....”Alan Rudd, Libby Willis and

Simon Gobbett atthe Heron shed.

Jack Otway.“There’s miles and

miles of that Lateriteat Perrinvale.”

Courtesy of Eileen

and

Doug

Krep

p

Footsteps ofBill, Keith and Harry

across Lake Yindarlgooda.

Sue Geary, Administration Manager.Easily the neatest office at Heron Kalgoorlie.

Please telephone Sue on (08) 9091 9253if you have any enquiries.

David Crook (far right) explaining the Pamela Jean Deeps to a very demandingaudience of Kalgoorlie-based Shareholders and the Board.

Any Shareholder visiting Kalgoorlie is encouraged to drop in to the office and see howit all works.

Usually a field trip to Goongarrie can be arranged with Pam Buchhorn, your mostcapable tour guide.

COMPANY SECRETARY

Ross Arancini BBus, ACACompany Secretary110 Hensman StreetSOUTH PERTH WA 6151Telephone: (08) 9367 1213Facsimile: (08) 9367 7853Email: [email protected]

REGISTERED AND PRINCIPAL OFFICE21 Close WayPO Box 1280KALGOORLIE WA 6433Telephone: (08) 9091 9253Facsimile: (08) 9091 9256Email: [email protected]: http://www.heronresources.com.au

SHARE REGISTRY

Security Transfer Registrars Pty LtdLevel 1, 168 Adelaide TerracePERTH WA 6000Telephone: (08) 9221 4200Facsimile: (08) 9221 1581Email: [email protected]

Front Cover: Holding high grade blackGoongarrie Ore, assaying 3% Ni and 2% Co.

Background montage of the explorationjournals of Keith Quartermaine(Order of Australia), a Scientist and Historian.

AUDITORS

Butler Settineri Chartered Accountants35-37 Havelock StreetWEST PERTH WA 6005

BANKERS

Challenge Bank230-236 Hannan StreetKALGOORLIE WA 6430

CORPORATE ADVISER

Carmichael First Capital Pty LimitedLevel 11, 77 St Georges TerracePERTH WA 6000

SOLICITORS TO THE COMPANY

McKenzie Lalor74 Egan StreetKALGOORLIE WA 6430

Pullinger Readhead Stewart46-50 Kings Park RoadWEST PERTH WA 6005

STOCK EXCHANGE

Australian Stock Exchange Limited2 The EsplanadePERTH WA 6000

ASX CODEHRR

SEAT ABBREVIATIONHeron

HOME BRANCHPerth

INDUSTRY CLASSIFICATIONOther Metals 022 Base Metals

RESEARCH SERVICE INDEX NO.Mining H50

ISINAU000 000 HRR6

Keith Quartermaine led his friends on expeditions into theHeron, Avoca and Balladonia exploration country.Between 1951 and 1976, Keith wrote 26 journals and tookover 10,000 photographs on his exploration of theNullarbor and Goldfields - exploring, recording andresearching the history, flora, fauna, caves, meteorites,tektites and geological features of the region.

Keith began writing up his journals at the request of hisfather who wanted to share in his activities in these remotelocations.

On these trips Keith was variously accompanied by HarryWheeler, John Carlisle (Order of Australia), Bill Cleverly,Tom Bateman and Ross and Beverly Quartermaine.

As Heron works in the same country, we take thisopportunity to acknowledge Keith Quartermaine,a true Goldfields explorer.

All sepia images in this Report are fromKeith Quartermaine’s volumes.

All photographic page art by Justin Madden,

Reynolds Graphics, Kalgoorlie.

DIRECTORS

Rodney Michael EvansFCA, FCIS, FCIM, AlArbAChairman (Non Executive)21 Close Way, Kalgoorlie, Western Australia, 6430

Ian James BuchhornBSc (Hons), Dipl Geosci, MAusIMMManaging Director (Executive)21 Close Way, Kalgoorlie, Western Australia, 6430

Robert George ColvilleAssocRMIT, MAusIMMDirector (Non Executive)Level 1, 1 Sleat Road, Applecross, Western Australia, 6153

HERON RESOURCES L IMITED

CO

NTE

NTS 1.0 Chairman’s Review...............................................................................................3

2.0 Operations Review ...............................................................................................4

3.0 Corporate Profile ................................................................................................30

4.0 Directors’ Report ................................................................................................32

5.0 Financial Statements........................................................................................36

Statement of Financial Performance......................................................36

Statement of Financial Position.................................................................37

Statement of Cash Flows ..............................................................................38

Notes to and Forming Part of the Accounts ......................................39

Directors’ Declaration......................................................................................50

6.0 Independent Audit Report .............................................................................51

7.0 Shareholder Information ................................................................................52

8.0 Interest in Mining Tenements ......................................................................55

Glossary of Terms ..............................................................................................67

A N N U A L R E P O R T 2 0 0 1

Page 1

Goongarrie Country

Avoca Country

Heron hasacquired aquality projectportfolio covering19,000 km2 ofArchaean Nickeland Goldmineralisedterrain.

Heron’s aim inpegging is tobuild upcontiguoustenementholdingscovering several100km2 offavourablegeologicalstructure.

Only projectswith knownmineral resourcepotential or welldefined drillingtargets areacquired.

Page 2

Heron, Avoca and Balladonia Tenements

FIG.1: EASTERN GOLDFIELDS PROJECT LOCATIONS

HeronTenure

AvocaTenure

BalladoniaTenure

CHAIRMANS REVIEW1.0

Explorationsuccess during

2001 at theGoongarrie

Nickel Projecthas resulted in

Heron identifyingthe premium

Australian NickelLaterite deposit

in terms ofgrade, thickness

and metallurgy.

The Avoca IPOaims to derive

value for Heronshareholdersfrom Heron’s

quality PreciousMetal assets.

Together, Heronand Avoca

control some4,500km2 of thetenement area

within a 100kmradius of

Kalgoorlie, being14.3% of the

available ground.

It is with pleasure that I present the sixth Annual Report of Heron Resources Limited ("Heron"). During 2001the Company has significantly advanced its high quality assets in the Nickel and Precious Metal sectors,while maintaining its strong cash position.

During the year, A$2.8 million was raised through a placement, resulting in A$3.1 million in cash at year’send.

Heron Nickel Assets

Resource Definition Reverse Circulation drilling continued almost non-stop during 2001, with 67,017m in1,335 holes now having been completed at Goongarrie.

Drilling results at the Pamela Jean Zone have been consistently exceptional, and validate the tenacityand professionalism of the Heron team in exploring this project. Drill intercepts during 2001 include:

• GSRC1022 111m at 1.37% Ni and 0.07% Co

• GSRC1025 118m at 1.31% Ni and 0.12% Co

• GSRC1030 104m at 1.33% Ni and 0.09% Co

Discussions are continuing with parties involved in the sale and re-structuring of Cawse Nickel Operations.Your Board is optimistic that the final outcome of these negotiations will be beneficial for your Company.

All key Mining Leases at Goongarrie have been granted. Heron is preparing a Notice of Intent tocommence mining at Goongarrie. I wish to specifically compliment the efforts of David Crook as Heron’sExploration Manager and Brian Wyatt representing the Goldfields Land Council for the good spirit shown innegotiating the Native Title Land Access Deeds and State Deeds which will facilitate Goongarrie mining.

A substantial area of future infrastructure sites was acquired to the immediate west of Goongarrie. Heronnow has contiguous tenement coverage from Goongarrie southwest towards the Cawse plant site.

As at 30 June 2001, the total Measured, Indicated and Inferred Mineral Resource above a 0.75% Ni cut-offfor Goongarrie-Kalpini and satellite nickel projects was 180.1 million tonne at 1.05% Ni and 0.08% Co.

The Measured, Indicated and Inferred Mineral Resource above a 0.50% Ni cut-off for the Goongarrie-Kalpini and satellite nickel projects was 406 million tonne at 0.8% Ni and 0.06% Co.

During the year, Centaur variously nominated Peter Lee and Stephen Dennis to the Heron Board, both ofwhom have now retired. I thank them for their contribution.

Avoca Precious Metal Assets

Planning is advanced to "spin-off" Heron’s non-nickel assets into a listed company known asAvoca Resources Limited ("Avoca"). Heron plans to transfer to Avoca 216 tenements in 23 projects,including 15 Joint Ventures with an aggregate of A$9.2 million in farm-out expenditure and a substantialroyalty portfolio. Newly acquired projects to be owned 100% by Avoca will include:• Powder Sill Platinum Group Element (“PGE”) Project, PGE soil geochemical targets.

• Jimberlana PGE Project, three advanced stage PGE-Ni-Cu sulphide layered mafic complex targets.

• Mungari Gold Project, south along strike on the Zuleika Shear from the Frog’s Leg gold discovery.• Wiluna South Gold Project, 129km2 immediately SE of the Wiluna gold mining centre on Lake Way.

Should the listing proceed in the currently intended form, it is proposed to issue to Heron Shareholders oneAvoca share for every five Heron Shares held, for no payment to the Company.

Your Board looks forward to the continued support of its Shareholders. The Board again acknowledgesthe enthusiastic efforts and technical professionalism of its management and staff, and expresses itssincere thanks.

ROD EVANSChairman

Page 3 HERON RESOURCES L IMITED

The commodityemphasis for

Heron isunequivocally

Nickel Laterite,and the project

emphasis isGoongarrie,

specifically thePamela Jean

Zone.

HERON TECHNICAL ACTIVITY DURING 2001

Drilling Activity

High grade drilling results were continuously obtained throughout 2001, such that Heron expended $3.0 million on exploration:

• Goongarrie South 382 Reverse Circulation ("RC") holes for 22,172m to confirm resource continuity.

• Goongarrie Hill 83 RC holes for 2,177m, to close off the ore body to the west.

• Scotia Dam 113 RC holes for 4,835m to outline resources and confirm geology.

• Siberia 12 RC holes for 417m to outline resources.

• Ghost Rocks 81 RC holes for 2,299m to outline resources and confirm geology.

• Kalpini 53 RC holes for 1,355m, to confirm ore body lateral continuity.

• Mineral Patch Hill 51 RC holes for 1,923m to define the ultramafic stratigraphy.and Merolia

Drill-out of High Grade Ore

Heron is aiming for a mining head grade exceeding 1.5% Ni, which requires a 1.25% Ni cut-off grade.When determining cut-off grade, Heron views that a Nickel Laterite operation should stand alone on itsnickel grade, and cobalt should be considered as an additional bonus. The Goongarrie South 1.25% Nicut-off resource, occurring in three pits, is listed by ore category

At average 15 year historical metal prices, this resource alone is able to support a Goongarrie-Cawse 0.5million tonne per annum (“mtpa”) scale of operation for a 30 year mine life. More significantly, the resourcecan potentially facilitate early project payback for a Goongarrie-Cawse 4mtpa scale of operation.

Production Opportunities Identified by Heron

• The Cawse Nickel Operation Stage One ("CNO I") is for sale. Following de-bottlenecking to 1mtpa,and using Heron’s high grade Goongarrie Goethite Ore feed, CNO I has a potential production of upto 13,000tpa nickel as metal and intermediate product.

• Heron alone has sufficient mineral resources for a 30 year mine life 4mtpa Nickel Laterite operation,such as that proposed for the Cawse Nickel Operation Stage Two ("CNO II").

• A Scoping Study has commenced for a joint venture evaluation involving the production of ferro-nickelfrom the High Grade Saprolite Ore that underlies Heron’s Goethite Ore.

Ore Processing Objective

The strategy is to process Nickel Laterite through an existing plant using 1.25% Ni cut-off Goethite Ore witha Leach Feed Grade (“LFG”) of 1.6% Ni. This can be supplemented with 1.0% Ni cut-off Siliceous Ore,screen upgrading to a 1.6% Ni LFG. Based on current financial models, this blend is the preferred NickelLaterite feed stock for a Cawse Stage One processing operation.

Goongarrie Goethite Ore has a remarkable chemical consistency, which is a great advantagewhen operating a complex chemical plant such as a Pressure Acid Leach (“PAL”), whichrequires a consistent feedstock.

OPERATIONS REVIEW2.0

Goongarrie hasbeen the focus ofdrill exploration,with patternsnow at a pre-mine level ofdetail at40x20m.

GoongarrieGoethite isundoubtably thepremium NickelLaterite ore feed.

Goongarrie isone of thestrategic keys tothe long termand successfuldevelopment ofan EasternGoldfields NickelLaterite industry.

There is marketrecognition thatGoongarrie is aunique andexceptionalnickel deposit,with excellentearly cash flowpotentialresulting fromthe high grades.

Page 4

Mineral Resource Inventory by Category, 1.25% Ni Cut Off

Category Million Tonne % Ni % Co % Ni4Co SG Proportion

Inferred 4.7 1.61 0.13 2.11 1.4 27%

Indicated 8.7 1.54 0.18 2.25 1.4 54%

Measured 3.2 1.53 0.16 2.15 1.4 19%

Total 16.6 1.56 0.16 2.19 1.4 100%

TABLE 1: GOONGARRIE NICKEL PROJECT

Bill Cleverly, smoko at Mount Remarkable.

Simon Gobbett logging drillsamples. The task is demanding,

requiring intense concentrationfrom sunrise to sunset. Methodical

drilling practice is the only way todiscover world class ore bodies.

OPERATIONS REVIEW2.0 CONTINUED

Heron hasnegotiated $2.8

million in capitalraisings since

March 2001.

The insolvency ofCentaur resulted

in the Centaur-Heron Strategic

Alliance beingterminated.

Heron is nowreviewing new

corporateopportunities

involving majorbase metal

producers andmarketers.

The quality of theAvoca Precious

Metal portfolio isa testament to

the tenementacquisition skills

of Heron.

HERON CORPORATE ACTIVITY DURING 2001

Capital Raising

The Company’s working capital position is robust at A$3.1 million (at 30 June 2001), and is such that thecash demands of the proposed 2002 drilling programs are well accommodated. This position has arisenthrough the placement of 10.0 million Shares at $0.28 in March 2001 to raise A$2.8 million.

Additional strategic capital raising discussions are current.

Avoca Resources Limited Precious Metal Spin-off

Subject to completion of due diligence, Heron intends to assign its non-nickel assets to Avoca ResourcesLimited ("Avoca") in exchange for the issue to Heron of 20,191,745 fully paid shares in Avoca or such otherconsideration as the Board may determine.

Following the completion of this transaction, and subject to market conditions, Heron proposes to make a1 for 5 share distribution of ordinary shares in the capital of Avoca to Heron Shareholders with no paymentto the Company. It is envisaged that Heron Shareholders will in addition have a priority right to subscribeto Avoca shares in the Initial Public Offer (“IPO”) capital raising.

Avoca has developed an active tenement pegging program, having acquired an outstanding PreciousMetal tenement portfolio since incorporation in June 2001. Avoca is the registered holder of 37 tenements.

Avoca is most pleased to announce the appointment of Rohan Williams as its founding Managing Director.Rohan is a professional geologist of 14 years experience and was Chief Geologist of WMC’s St Ives GoldOperation. He has been based in Canada researching layered complex Ni-Cu-PGE mineralisation, andwas a joint developer of the metallogenic model responsible for the discovery by WMC of the WestMusgrave Ni-Cu-PGE mineralisation.

Termination of the Strategic Alliance Agreement with Centaur Mining & Exploration Limited

Under the terms of the September 1999 Strategic Alliance Agreement ("SAA"), Centaur had the right tocomplete a Bankable Feasibility Study ("BFS") for a Cawse Stage Two expansion (“CNO II”) on or before19 August 2001 in order to secure toll milling entitlements in relation to Heron’s Goongarrie, Ghost Rocksand Kalpini Projects.

Heron was advised on 14 March 2001 that its Strategic Alliance partners, Centaur Nickel Pty Ltd("Centaur") and Centaur Mining & Exploration Limited ("CME") had appointed Administrators, and that theCawse Bondholders had subsequently appointed Receivers and Managers. Heron was entitled toterminate the SAA as a result of the occurrence of an Insolvency Event on 90 days written notice.

On 30 April 2001, Heron served a 90 days Notice of Termination on the Centaur and CME Administratorsand Receivers and Managers to terminate the SAA. The nominated SAA Practical Termination Date was30 July 2001.

On 27 June 2001, the Receivers and Managers gave notice to Heron of a dispute or difference concerningthe right of Heron to terminate the SAA. There has been no further action involving this alleged dispute.

Heron agreed to extend the Notice of Termination period to 31 August 2001, to allow various commercialmatters to be further discussed with the Receivers and Managers.

There was no presentation to Heron of a BFS for CNO II on or before 19 August 2001 as required by the SAA.

The Receivers and Managers to Centaur and CME are seeking to sell Cawse. This has generated considerablecorporate interest from several parties in Heron’s Goongarrie Nickel Project.


Calweld wide diameter drilling was carried out at theGoongarrie Nickel Project to obtain bulk samples fordensity determinations and for metallurgical test work.

The bulk samples confirmed that the run-of-mineGoongarrie Goethite Ore is homogenous and showsexcellent materials handling properties.

Penetration rate for the Calweld drilling was fast,suggesting Goongarrie Goethite will be free-digging.

THE NICKEL LATERITE SECTOR DURING 2001Heron’s Corporate Strategy

With all manner of media coverage during 2001 concerning the Murrin Murrin and Cawse "First Generation" Nickel Lateriteprojects, it is appropriate to clarify the industry position of Heron, a "Second Generation" Nickel Laterite.

Heron is focussed on deriving Shareholder value from the acquisition and development at minimal risk of highquality Nickel Laterite assets. Heron has one of the largest 100%-owned, unencumbered tenement portfolioswithin Eastern Goldfields Nickel Laterite Province.

Heron’s preference is to develop its tenement base and be an "upstream" ore supplier, rather than take on thedebt service risk of being a "downstream" ore processor. However, subject to appropriate terms, the sale ofCawse provides an opportunity to merge the Goongarrie and Cawse Nickel Laterite assets. Any mergermechanism must minimise debt service risk to Heron. This may be achieved either through Heron ore supply orby Heron membership in a purchase consortium.

Strategic Role of Heron’s Goongarrie Nickel Project

The combined Goongarrie and Cawse Nickel Laterite resource base is some 0.7 billion tonne at 0.7% Ni at a0.5% Ni cut-off, with Heron controlling more than half of the combined resource. Such a resource base couldpotentially support a 30 year 4 to 10mtpa Nickel Laterite processing operation.

In the March 2000 Independent Expert’s Report by PricewaterhouseCoopers Securities Pty Ltd addressing the thenCentaur bid for Heron, it was stated that without Goongarrie "there is insufficient reserve tonnages on Centaur’sown tenements" to support the Cawse Stage II expansion. More specifically, the Independent Expert statedthat "it appears unlikely that Cawse Stage II would proceed without access to Heron’s ore in onemanner or another". This is the longterm basis for seeking to merge the Goongarrie and Cawse nickel assets.

The strategic significance of Goongarrie has become even more critical since July 2001, when the world nickelprice cycle moved towards the lower part of its historical range. At current nickel prices of around US$2.30 perpound, only the highest grade and lowest cost operations within a given sector are likely to be viable. The highnickel-cobalt grade of Goongarrie delivers considerable strategic advantage to Heron, particularly to weather lowmetal price cycles.

Implications of the Ravensthorpe Nickel Laterite Sale and Indicative Resource Valuations

In March 2001, Billiton (now BHP Billiton) purchased the 50% of the Ravensthorpe Nickel Project which it did notalready own, for a cash and share consideration of approximately $34 million (a 100% interest valued at $68 million).

The Heron nickel projects and Ravensthorpe comparative resource position is:

Heron’s Future in the Nickel Laterite Industry

Heron’s preferred position is to develop its nickel assets as a consortium in association with a major base metalcompany. The established infrastructure and the absence of sovereign risk in Western Australia is a significantadvantage for Heron’s strategy. The preferred scale of operation for a major base metal company would be 4mtpaor more, such as that proposed for Cawse Stage Two.

Of key importance for commissioning a major Nickel Laterite project is pilot plant test work. The existing Cawseplant can operate as a large-scale pilot plant suitable for metallurgical testing for future Goongarrie-Cawse "CNO IIscale" expansions. A firm foundation exists for Heron’s future as a Second Generation Nickel Laterite ore supplier.


Heron’s low riskstrategy is to bean ore supplier toestablishedNickel Lateriteplants.

Goongarrie is a“companymaker” and aworld classdiscovery. Its high gradeallows resiliencein times of lowmetal prices.

UsingRavensthorpeas a yardstick,Heron’s 406million tonneresource is amost valuableasset.

Heron’s NickelLaterite mineralresource baseprovides thepathway to afuture 4 to 10 mtpaNickel Lateriteoperation basedin the Kalgoorlieregion, andproducing up to10% of theworld’s nickel.

Page 6

Resource Status Heron Resources Limited Billiton Ravensthorpe

million tonne % Ni % Co million tonne %Ni %Co

Measured, Indicated 108.6 0.8 0.06 169.4 0.8 0.03

Inferred 297.0 0.8 0.06 - - -

Total 405.6 0.8 0.06 169.4 0.8 0.03

Tektites found by Keith atMcAuliffe’s Soak, Avoca country.

Goongarrie Nickel Project.There are 50,000 drill chip trays

catalogued at the HeronKalgoorlie office within Heron’s

drill chip archive system.


Heron’s tenementportfolio is

without equal foran emergent

resourcecompany.

Even with its large tenement

holding, Heron’s DMPR

expenditurecommitment is

managed at$1.2m per

annum, throughjoint venture.

HERON MANAGEMENT

Tenement Management

Joint venturing is a key component of Heron’s non-nickel tenement management strategy. Heron has inoperation, or has offers on the table, for some 16 Joint Ventures involving Gold, Base Metals and Iron Ore.These industry associations cover some 136 tenements and will see a minimum Department of Mineralsand Petroleum Resources ("DMPR") commitment of $1.4 million spent by our partners annually. In additiona minimum total outlay of $9.675 million can be spent on Heron’s joint ventured tenements whilst Heron isfree-carried. By this process Heron retains free equity in its gold and non-nickel developments, and interms of risk-minimisation and success optimisation, the Heron non-nickel portfolio provides a low risk andlow cost means of asset creation. These assets are now the basis of the Avoca Initial Public Offer.

*DMPR WA Department of Minerals and Petroleum Resources

Heron in the Community

The Company appreciates the assistance provided by the Goongarrie, Gindalbie, Hampton Hill and MountVetters pastoral stations in terms of field camp sites, drill site preparation and rehabilitation. These stationshave a long established land care ethic, under which Heron works at all times.

Heron is an equal opportunity employer, committed to the community of Kalgoorlie-Boulder. It hassupported Work for the Dole programs, and several Aboriginal training schemes. The Company is proudto be a long term sponsor of Ngunytju Tjitji Pirni Aboriginal Corporation ("NTP"), an organisation committedto Aboriginal mother and children’s health in the Eastern Goldfields. Heron’s funding of NTP is part of itsNative Title access arrangement. The funding assistance provided by Heron has helped NTP achieve anation-wide recognition as a leader in indigenous pediatrics, for which Heron is most proud. Well done toJenny, Coral, Paula and dedicated staff and committee members.

Heron, as do all Australian mineral explorers, works within the framework of Native Title. The Company iscommitted to a policy of cultural respect and negotiation with the Aboriginal custodians of our explorationland. To the claimants of this land and the Goldfields Land Council, we once again express ourappreciation of their patient negotiation, and ongoing site clearance field work.

The Heron Team

During year, Senior Geologist Alan Rudd and Mara had their third child, a son Ben Diesel. Project GeologistSimon Gobbett and Olivia married. Long term stalwart, Doug Krepp from Karlkurla Environmental has fullyrecovered from major surgery. Exploration Manager Dave Crook became president of the Hannans-Kalgoorlie Rotary Club.

Geoff Collis and Des Steel joined the team during 2001 with Geoff as Exploration Manager of Avoca, andDes as Tenement Manager of Heron. Their impact has been immediate, with the impressive Avoca projectlist largely due to their efforts.


Summary of 100%-Owned and Joint Venture Tenements

Pending Granted Total km2 HRR JV Total

Heron NickelHeron 100% - owned 121 35 156 4,607 0.92 0.00 0.92

Avoca Precious MetalAvoca 100% - owned 84 12 96 4,089 0.16 0.00 0.16

Joint Venture Current 39 89 128 3,809 0.00 1.42 1.42

JV Negotiations 8 0 8 83 0.00 0.00 0.00

Avoca sub-total 131 101 232 7,981 0.16 1.42 1.58

Balladonia Oil ShaleHeron 100% - owned 33 7 40 5,246 0.04 0.00 0.04

Yilgarn RegionalHeron 100% - owned 40 8 48 1,222 0.06 0.00 0.06

TOTAL 325 151 476 19,056 1.18 1.42 2.60

Number of TenementsDMPR*

Expenditure Commitment$million

Project Area

TABLE 2: HERON RESOURCES LIMITED

Heron has at alltimes attempted

to respectIndigenous

Culture in thecourse of itsexploration.

RESOURCE STATUS OF NICKEL LATERITE PROJECTSDetailed resource estimation incorporating the 2001 Pamela Jean Zone exploration successes is current.On the basis of 40x20m pre-mine drilling (Measured Mineral Resource), 80x80m resource definition drilling(Indicated Mineral Resource) and 400x80m reconnaissance drilling (Inferred Mineral Resource), the totalHeron resource inventory as at January 2001 at a 0.75% Ni cut-off is detailed below. Updated resourceestimates will be completed once recent drilling results are fully interpreted and validated.

* “Ni4Co%” is %Ni plus 4 times %Co, and is an “equivalent” nickel grade. The multiplier factor reflects the priceof cobalt generally being around four times that of nickel.

OPERATIONS REVIEW

During 2001,Heron hasconverted themajority of itsGoongarrie Southmineral resourcesto the Measuredand Indicatedstatus requiredfor FeasibilityStudies.

2.0 CONTINUED

Page 8

Indicated and Inferred Mineral Resource Inventory, 0.75% Ni Lower Cut-Off

Project Pit Strike Width Tonne Ni Co Ni4Co*km km Million % % %

Goongarrie Hill GN1 5.80 0.20 17.7 1.08 0.06 1.31Goongarrie South GN2 7.00 0.60 62.4 1.08 0.10 1.47Scotia Dam GN3 2.40 0.30 6.2 1.07 0.11 1.52Siberia SB1 1.60 0.24 4.3 1.04 0.08 1.34Ghost Rocks GR1 3.00 0.08 5.8 0.91 0.12 1.39Ghost Rocks GR2 4.50 1.00 12.3 1.02 0.06 1.26

Total Goongarrie 108.6 1.06 0.09 1.41

Acra North KA1 1.60 0.12 8.5 1.04 0.06 1.29Acra North KA2 0.40 0.20 2.3 1.02 0.09 1.37Wellington East KA3 0.40 0.12 3.9 1.04 0.08 1.35Wellington East KA4 1.90 0.20 8.1 1.17 0.07 1.45Wellington East KA5 1.70 0.16 1.4 1.23 0.10 1.63Wellington East KA6 0.50 0.08 9.8 1.04 0.07 1.32Wellington East KA8 0.50 0.08 5.0 0.96 0.09 1.31Wellington Fold KA9 2.50 0.20 1.3 0.85 0.08 1.15Wellington North KA10 3.60 0.16 1.4 0.87 0.05 1.09Binti Binti BB1 2.40 0.16 2.8 0.91 0.09 1.28Wyo Well WW1 1.00 0.16 0.7 0.83 0.04 0.99Acra AA1 0.70 0.30 0.5 0.75 0.04 0.91

Total Kalpini 45.7 1.03 0.07 1.33

KALGOORLIE REGION SUB-TOTAL 154.3 1.05 0.08 1.39

Lake Rebecca LR1 2.20 0.30 11.6 1.15 0.08 1.46Lake Rebecca LR2 1.10 0.15 2.1 1.03 0.03 1.16

Total Lake Rebecca 13.6 1.13 0.07 1.41

Boyce Creek YE1 1.00 0.20 6.4 0.93 0.09 1.27Lady Byron YE2 0.60 0.20 2.8 1.11 0.05 1.30Aubils YE3 0.80 0.20 2.9 0.99 0.10 1.37

Total Yerilla 12.1 0.99 0.08 1.30

KEITH KILKENNY LAVERTON SUB-TOTAL 25.7 1.06 0.08 1.36

HERON TOTAL 180.1 1.05 0.08 1.38

TABLE 3: HERON RESOURCES LIMITED NICKEL PROJECTS


The priorityduring the 2001

Financial Yearhas been to drillout the various

Goongarrie Southresources to a

40x20m pattern,and complete an8 hole Diamond

Drill program formetallurgy and

ore genesisstudies.

GoongarrieGoethite has the

best documentedbench scale

metallurgicalperformance for anEastern Goldfields

Laterite, notablythe low acid

consumption.

FutureGoongarrie

mining operationsshould not be

impacted byground water

flow.

KALGOORLIE NICKEL PROVINCE

Ore Genesis Studies

Detailed research studies were completed at the Pamela Jean Zone to elucidate the controls onGoongarrie mineralisation, particularly bedrock controls.

There is a strong correlation of ore zone mineralogy with ore grades and metallurgical performance. Thepremium ore is dominantly goethite with subordinate gibbsite and kaolin, and is termed"Goongarrie Goethite" (CUP, subordinate CUF ore types, refer Table 4). The ore zones have aremarkably uniform mineralogy, related to three separate cycles of weathering and duricrust formation:

The Pamela Jean Zone deep drilling has encountered brecciated and sulphide-bearing ultramaficbedrock. This mineralogy has promoted particularly intense weathering conditions, leading to the formationof exceptionally thick laterite.

Brecciation is related to fault splays of the Bardoc Tectonic Zone, which occurs at the eastern contact ofthe mineralised Goongarrie ultramafic unit.

The breccia zones provide a conduit for ground water, allowing oxidising fluids to percolate below the limitof normal near-surface weathering. The groundwater has also removed oxidation products, such asdolomite/magnesite and silica, leaving behind a residual nickel-cobalt bearing goethite.

Metallurgy

Metallurgical assessment was completed on 14 drill core samples by Lakefield Oretest of Perth.

Pyrolusitic Ore, which is the dominant ore type at the Pamela Jean Zone, is confirmed as a premiumproduct with high metal recovery, low acid consumption, good ore slurry density and fast settling from theslurry. More importantly, the Goongarrie Goethite Ore displays remarkable continuity in mineralogy andchemistry, which is a critical feedstock parameter. At a 1.25% Ni cut-off grade, Goongarrie Goethiteconsistently assays in excess of 1.5% Ni, 0.15% Co and 40% FeO, with less than 0.5% MgO.

Hydrological Studies

Hydrological studies are well advanced, with a detailed drill hole piezometer array having been installed forwater level monitoring. A confined aquifer is present below 60m at the base of the main Goethite Oreprofile, associated with Lower Siliceous Ore. Water quality is 38,000-50,000 mg/l TDS, which iscomparable to the process water currently in use at Cawse. The good water quality indicates the aquiferis not being recharged from surrounding hypersaline lake systems.

The shallow Goethite Ore zones do not carry significant ground water, and there should be minimal wetmining difficulties.


Duricrust Cycle Associated Ore Type Mineralogy

Upper Carbonate Cycle not applicable calcite-ankerite-quartz

Middle Ferricrete Cycle Laterite Ferruginous LF goethite-alunite-kaolin

Lower Goethite Cycle Clay Upper CU gibbsite-goethite

Lower Goethite Cycle Clay Upper Pyrolusitic CUP goethite-gibbsite

Lower Goethite Cycle Clay Upper Ferruginous CUF goethite-kaolin-maghemite

Lower Goethite Cycle Clay Upper Siliceous CUS quartz-maghemite-goethite

Magnesia Discontinuity Clay Lower Siliceous CLS antigorite-chlorite-talc-quartz

TABLE 4: ORE TYPE MINERALOGY

Ore Type Screen Nickel Cobalt Acid Slurry SettlingUpgrade Recovery Recovery Consume Density Rates

% % % kg/tonne w/w% minutes

Clay Upper Pyrolusitic CUP Nil 97.5% 95.0% 283 31% 2.15

Clay Upper Ferruginous CUF Nil 96.7% 82.9% 285 28% 84.50

Clay Upper Siliceous CUS 55% 95.9% 92.3% 389 32% 10.83

Clay Lower Siliceous CLS 28% 92.5% 78.5% 616 32% 27.25

TABLE 5: METALLURGICAL PERFORMANCE


Page 10

In Nickel Lateritemines,15 Ni4Co.m% isan acceptableore body. At thePamela JeanZone,100 Ni4Co.m% isconsistentlyrecorded.

The spectacularNi-Co grades andsubstantial orezone thicknessunderpins theprofitability of thefuture Goongarriemining operation.

* Ni4Co m.% for a drill intercept is the value of %Ni plus 4 times %Co of the interval multiplied by the intercept in metres.

TABLE 6: GOONGARRIE SOUTH PROJECT

RC Drilling Significant Intersections, 0.75% Ni Cut-off, 2001 Drilling

Hole North East From To Interval Ni Co Ni4Co* Ni4Co*Number m m m m m % % % m.%

GSRC672 70,637 2,855 49 91 42 1.25 0.223 2.14 90.06GSRC724 71,440 2,454 10 33 23 1.65 0.325 2.95 67.83including at a 1.25% Ni cutoff 12 33 21 1.71 0.354 3.13 65.63GSRC870 69,356 3,236 20 63 43 1.39 0.187 2.14 91.96GSRC876 69,397 3,236 12 58 46 1.48 0.111 1.93 88.59including at a 1.25% Ni cutoff 17 56 39 1.57 0.122 2.06 80.31GSRC891 69,377 3,237 17 57 40 1.51 0.115 1.97 78.66GSRC898 69,680 3,140 67 106 39 1.42 0.253 2.43 94.92including at a 1.25% Ni cutoff 75 105 30 1.52 0.232 2.44 73.28GSRC901 69,640 3,180 29 97 68 1.15 0.073 1.44 97.85GSRC902 69,640 3,140 39 117 78 1.11 0.094 1.49 115.91GSRC907 69,600 3,140 35 124 89 1.19 0.131 1.71 152.17GSRC912 69,560 3,140 38 124 86 1.23 0.081 1.55 133.71GSRC916 69,520 3,140 29 94 65 1.11 0.088 1.46 95.16GSRC924 69,440 3,220 21 52 31 1.62 0.212 2.47 76.49GSRC942 69,200 3,220 21 64 43 1.34 0.112 1.78 76.61including at a 1.25% Ni cutoff 24 52 28 1.54 0.203 2.35 65.81GSRC966 69,000 3,140 18 57 39 1.13 0.291 2.30 89.56including at a 1.25% Ni cutoff 42 50 8 2.03 1.147 6.62 52.96GSRC970 68960 3140 21 46 25 1.30 0.425 2.99 74.86including at a 1.25% Ni cutoff 32 45 13 1.54 0.775 4.64 60.36GSRC973 68920 3220 22 41 19 1.58 0.315 2.84 53.97including at a 1.25% Ni cutoff 25 38 13 1.81 0.424 3.50 45.54GSRC990 69,380 3,200 17 94 77 1.32 0.084 1.66 127.52GSRC992 69,360 3,200 18 66 48 1.41 0.127 1.92 92.24GSRC1001 69,720 3,140 42 112 70 1.30 0.152 1.90 133.18including at a 1.25% Ni cutoff 77 112 35 1.59 0.245 2.57 90.05GSRC1008 69,800 3,100 38 101 63 1.23 0.057 1.46 91.93GSRC1012 69,840 3,060 30 97 67 1.28 0.076 1.58 106.08GSRC1020 69,680 3,120 29 103 74 1.29 0.077 1.59 118.02including at a 1.25% Ni cutoff 43 80 37 1.55 0.110 1.99 73.66GSRC1022 69,600 3,120 30 141 111 1.37 0.070 1.65 183.15including at a 1.25% Ni cutoff 66 121 55 1.85 0.111 2.30 126.38GSRC1023 69,560 3,120 30 87 57 1.28 0.101 1.68 96.04GSRC1025 69,640 3,120 26 144 118 1.31 0.123 1.80 212.64including at a 1.25% Ni cutoff 118 139 21 1.82 0.393 3.39 71.10GSRC1030 69,720 3,120 40 144 104 1.33 0.087 1.68 174.51including at a 1.25% Ni cutoff 73 128 55 1.59 0.129 2.10 115.76GSRC1032 69,680 3,160 37 118 81 1.24 0.197 2.03 164.55GSRC1034 69,640 3,160 36 107 71 1.39 0.150 1.98 140.91including at a 1.25% Ni cutoff 66 106 40 1.60 0.208 2.44 97.41GSRC1036 69,600 3,160 33 82 49 1.47 0.141 2.03 99.62including at a 1.25% Ni cutoff 44 82 38 1.59 0.175 2.29 87.09GSRC1037 69,560 3,200 34 82 48 1.37 0.124 1.86 89.46GSRC1039 69,520 3,200 26 85 59 1.33 0.126 1.83 108.05GSRC1040 69,520 3,160 29 122 93 1.33 0.141 1.89 176.14including at a 1.25% Ni cutoff 31 98 67 1.49 0.182 2.22 148.89GSRC1049 69,440 3,200 20 52 32 1.62 0.208 2.45 78.33including at a 1.25% Ni cutoff 21 50 29 1.67 0.222 2.56 74.10GSRC1052 69,380 3,160 20 76 56 1.33 0.042 1.50 84.17GSRC1100 68,960 3,160 16 62 46 1.30 0.254 2.31 106.48including at a 1.25% Ni cutoff 36 62 26 1.58 0.408 3.21 83.41GSRC1106 69,000 3,160 17 58 41 1.17 0.194 1.95 79.91GSRC1126 69,200 3,240 19 63 44 1.39 0.198 2.18 95.99including at a 1.25% Ni cutoff 27 49 22 1.68 0.314 2.93 64.49


2.1.1 Goongarrie Nickel ProjectHeron 100% Nickel (- gold).

The 521km2 project area covering 44 tenements is located 50-130km NNW of Kalgoorlie along the easternflank of the Goongarrie Dome. The western flank of this structure hosts the Cawse Nickel Laterite mine.The lithological precursor of the Goongarrie and Cawse Nickel Laterite mineralisation is the Walter WilliamsFormation komatiite.

Goongarrie South Nickel Prospect

During 2001, Heron completed 382 RC drill holes at Goongarrie South for 22,172m.

Exploration has concentrated on 40x20m pre-mine drilling at the Pamela Jean Zone, being the likelystarter pit for future Goongarrie mining operations. The Pamela Jean Zone is characterised by:

• N-S strike length of 2,000m at a 1.25% Ni cut-off.

• Mineralisation width typically 80-200m at a 1.25% Ni cut-off.

• Shallow depth to the top of the ore envelope, typically 12 to 25m, generating exceptionally lowstripping ratios. The overburden is amenable to low cost scaper mining.

• Depths to the base of ore consistently exceeding 100m vertical, with the deepest high gradeintercepts at 144m in the Pamela Jean Deeps.

• Metallurgically uniform Goongarrie Goethite assaying less than 0.5% MgO, with low acid consumption.

• Good ore zone continuity at high grade. A selected test area was drilled on a 20x20m grid to producecontinuity data for ore reserve modelling. The target area (GSRC036) had a block grade of 1.08% Niand 0.08% Co. The in-fill drilling returned a block grade of 1.25% Ni and 0.11% Co with a significantlyhigher tonnage estimate.

Within the central Pamela Jean Zone, RC drilling has defined a discrete zone of exceptionally deepweathering. Drill holes have been completed to depths of up to 160m, still in ore grade saprolite. Theseholes confirm complete alteration and weathering of the ultramafic host rock into limonitic clay to depths ofup to 144m (GSRC1025, 1030). This zone, termed the Pamela Jean Deeps, has now been definedover a strike length of 800m and remains open to the north and south.

The final hole of the 2001 drilling campaign confirmed the Deeps are open to the south, having been offsetto the west by a previously unidentified fault. The necessity for 40x20m detailed drill patterns wasreinforced by this latest Deeps discovery.

The ultramafic bedrock underlying the Pamela Jean mineralisation contains a structurally complex zone ofbrecciation and shearing. Discrete zones of talc-carbonate and talc-chlorite schist separated by bleachedbut otherwise undeformed olivine adcumulate are present. Disseminated and stringer sulphidemineralisation (typically 5%) has been identified within the shear zones. ElectroMagnetic (“EM”) surveyswere completed by Curtin University testing potential Nickel Sulphide targets. Interpretations are awaited.

Having elucidated the mineralisation controls at the Pamela Jean Deeps, it is now apparent that a numberof earlier Goongarrie 80x80m drill holes have not gone to sufficient depth. In order to screen for suchunder-tested areas, trial gravity and EM surveys were completed to map the base of mineralisation.Interpretations are awaited.

Heron has received several joint venture expressions of interest to explore for Nickel Sulphides beneath thePamela Jean Deeps. At the current time however, Heron wishes to retain a 100% unencumbered interestat Goongarrie, to help facilitate the potential rationalisation of the Goongarrie and Cawse nickel assets.

Page 11

The continuityand thickness ofhigh grade ore at

Goongarrie iswithout parallel

in AustralianNickel Laterite

deposits.

Sulphides occur within the

ultramaficbedrock

underlying thePamela Jean

Zone.

Detailed EMsurveying and

diamond drillingis required in

order to defineNickel Sulphide

targets.

The priority ishowever to

continue to blockout the Pamela

Jean NickelLaterite ore body.


Simon Gobbett (left) and Geoff Collis (right) during the Goongarrie piezometer installation, for

monitoring the ground water levels.

Doug Krepp was responsible for setting up thepiezometer field management.

Page 12

The high grade1.5% Ni drillholes showexcellentclustering intospecific orezones. These arefuture Stage Ipits, being thePamela Jean,Elsie Tynan andPatricia AnneZones.

The PamelaJean, Elsie Tynanand PatriciaAnne most likelyrepresent themain centralchannel of anancient komatiitelava flow, and theDaphne Mina,Sylvia Virginiaand Mavis Irenerepresent floodplain subsidiarylava flows.

Goongarrie South Ore Zones

FIG.2: GOONGARRIE NICKEL PROJECT

Drill section interpretations,Goongarrie South.

Page 13

Ghost Rocks is afurther resource

of screen-upgrade

Siliceous Ore,suitable for a

CNO II scale ofoperation.


Siberia is thenorthern strike

extension of theCawse laterite

deposits, suitablefor a CNO II

scale ofoperation.

Scotia Dam contains

exceptional cobalt grades in

Goethite Ore,suitable forimmediate

processing in aCNO I scale of

operation.

Goongarrie Hillcontains a large

tonnage ofscreen-upgrade

Siliceous Oresuitable for

processing in aCNO II scale of

operation.


Goongarrie Hill Prospect

During 2001, Heron completed 83 RC drill holes at Goongarrie Hill for 2,177m, closing off low grade orepositions on the western side of the ore body.

The ore type is uniformly shallow Cawse-style Siliceous Ore, with excellent screen upgrade characteristics.The current Goongarrie Hill drilling is almost entirely on a 400x80m pattern, with a major 80x80m infill drillingprogram required. The Goongarrie South 40x20m RC drilling currently has priority.

Scotia Dam Prospect

During 2001, Heron completed 113 RC drillholes at Scotia Dam for 4,835m. Significant intercepts include:

The Scotia Dam ore is relatively shallow, and uniformly cobalt-rich. Detailed 40x20m pre-mine drilling willbe completed once mining leases are granted.

Siberia Prospect

During 2001, Heron completed 12 RC drillholes at Siberia for 417m. Significant intercepts include:

Siberia is dominantly Siliceous Ore, entirely comparable to “run-of-mine” Cawse ore.

Ghost Rocks Prospect

During 2001, Heron completed 81 RC drillholes at Ghost Rocks for 2,299m. Significant intercepts include:

Ghost Rocks is dominantly Siliceous Ore, entirely comparable to “run-of-mine” Cawse ore.


Hole North East From To Interval Ni Co Ni4Co Ni4CoNumber m m m m m % % % m.%

GWRC150 76,456 1,656 6 13 7 1.24 0.111 1.46 10.25GWRC124 76,356 1,656 5 11 6 1.19 0.171 1.53 9.16GWRC174 76,577 1,574 4 11 7 1.14 0.056 1.25 8.75

TABLE 7: GOONGARRIE HILL PROSPECT



GSRC759 58,638 6,457 18 53 35 1.10 0.206 1.92 67.34GSRC767 58,801 6,375 17 56 39 1.10 0.072 1.39 54.34GSRC788 59,278 6,216 15 35 20 1.15 0.142 1.72 34.36GSRC792 59,442 6,138 14 31 17 1.19 0.137 1.74 29.58GSRC802 59,599 6,130 15 30 15 1.54 0.376 3.04 45.67

TABLE 8: SCOTIA DAM PROSPECT



SBRC003 62,758 4,496 5 56 51 1.03 0.076 1.33 68.03SBRC007 62,358 4,496 2 9 7 1.26 0.074 1.56 10.89SBRC009 62,358 4,656 4 14 10 1.05 0.072 1.34 13.35SBRC010 62,358 4,736 10 16 6 0.78 0.169 1.46 8.74

TABLE 9: SIBERIA PROSPECT

RC Drilling Significant Intersections, 0.75% Ni Cut-Off, 2001 Drilling


GRRC145 31,758 3,095 2 14 12 1.01 0.071 1.30 15.57GRRC158 30,958 3,495 16 20 4 1.33 0.083 1.66 6.63GRRC166 30,158 4,375 4 12 8 1.30 0.089 1.65 13.22GRRC168 30,158 4,215 8 16 8 1.12 0.127 1.63 13.02

22 28 6 1.00 0.048 1.19 7.13

TABLE 10: GHOST ROCKS PROSPECT

OPERATIONS REVIEW

These four drillSections areregularly spacedat 200m N-S,and show theconsistency of“run-of-mine”drilling results atthe Pamela JeanZone.

The Pamela JeanZone has ashallowoverburden of12-25m, andthick ore zone of20-118m. Thisresults in a lowstripping ratio,which underpinsthe profitability ofthe futureGoongarriemining operation.

Strip ratios arealso minimiseddue to pit wallbatter anglesnaturallyfollowing the orebody shape.

The continuity ofhigh grade ore(>1.25%Ni) isremarkable, bothwithin andbetweensections.

Flitch plans(which arehorizon sectionsthrough the orebody) also showremarkablecontinuity, andconfirmindividual1.5% Ni miningore blocks toconsistentlyexceed 400x40m.

2.1 CONTINUED

Page 14

Showing RC Drill Intersections and Pamela Jean Zone Proposed Pit Outline

FIG.3: GOONGARRIE CROSS SECTIONS

Page 15

Heron hasone of the

largest ultramafictenement holdings

in the EasternGoldfields.As well as

hosting NickelLaterite, these

ultramafics haveexcellent

potential forNickel Sulphide

targets.

WhereasGoongarrie is

a Goethite Orewith low Mg andhigh Co, Kalpini

tends to be aSaprolite Ore

with higher Mgand relatively

low Co.The Kalpini ore

type is suited tothe production offerro-nickel in an

arc furnace.

2.1.2 Kalpini Nickel ProjectHeron 100%.Nickel (- gold).

The 1,041km2 project area covering 39 tenements is located 65km NE of Kalgoorlie. Infrastructure is good.Kalpini is 75km E of the Cawse processing plant, and 45km NE of the Bulong Nickel Operation. Four keyMining Leases have been granted, and subject to Notice of Intent, are open to mining.

Several new tenements have been acquired, such that Heron now has a near contiguous landholding fromKookynie in the north to Transline in the south, an ultramafic strike of 150km. This includes from north tosouth the Boomerang, Binti Binti, Kalpini, Acra, Transline and Cowarna Rocks Nickel Laterite deposits andof particular significance, two recorded Nickel Sulphide occurrences at Binti Binti and Acra. Thedemonstrated sulphide endowment of the Kalpini belt is an important exploration guide for Nickel Sulphide.

In-fill drilling on an 80x40m pattern to confirm ore continuity was completed at Kalpini, with 53 RC drill holesfor 1,355m.

A geological evaluation of basal komatiite nickel-copper sulphide targets was completed, with theWellington East Prospect laterite resources at Zones 4 to 6 emerging as the prime Nickel Sulphidetargets. Soil geochemistry within the Nickel Sulphide target area has coincident anomalies of 114-602ppmCu and 788-1,941ppm Ni, notably at the Zone 4 Western Ultramafic. A soil anomaly of 50-230ppb Pdoccurs at Zone 6, again indicating a potentially favourable Nickel Sulphide setting.

The Acra Nickel Sulphide Prospect immediately south of Acra North Laterite Zone 1 consists of threeseparate steeply dipping komatiite horizons, interlayered with mafic and felsic volcanics. The uppermostAcra komatiite unit hosts Nickel Sulphide mineralisation.

Metallurgical Scoping Studies were commenced to evaluate the viability of a ferro-nickel smelting operationat Kalpini. Previous metallurgical results from Kalpini have been re-evaluated, and on initial studies, confirma suitable ferro-nickel smelter feed stock.

2.1.3 Widgiemooltha Nickel Project Heron 100%.Nickel - gold.

The 185km2 Widgiemooltha project area covering 7 tenement applications is located 120km SSE ofKalgoorlie within the southern extension of the Kunanalling and Zuleika Shear systems.

The project area covers the Mariners-Dordie Rocks Nickel Sulphide-hosting komatiite succession. Anadvanced stage Nickel Sulphide target has been generated at the Pioneer Prospect. Field checking hasconfirmed a felsite-sulphidic black shale footwall contact overlain by sulphide-bearing komatiite. Streamgeochemistry is anomalous, with 700ppm Ni and 16ppb Pd.

Aeromagnetic interpretation at Pioneer confirms three well defined ultramafic units striking N-S. Theeastern-most ultramafic correlates with the highly mineralised Mariners-Redross Nickel Sulphide line. Thewestern-most ultramafic unit is a well exposed ridge of tremolite-actinolite-chlorite-biotite schist. Significantrock-chip anomalism indicative of Nickel Sulphide settings was identified, with up to 0.23% Ni, 0.03% Cu,25ppb Pt and 18ppb Pd.





WNRC015 52,400 7,240 27 35 8 0.98 0.107 1.40 11.24WNRC016 52,400 7,280 24 41 17 0.87 0.054 1.09 18.46WERC362 37,760 15,720 14 23 9 1.42 0.048 1.61 14.49WERC364 37,760 15,640 4 12 8 1.03 0.077 1.34 10.70ANRC114 28,477 7,576 3 12 9 0.99 0.04 1.15 10.35ANRC116 28,477 7,656 3 20 17 0.92 0.042 1.09 18.496ANRC117 28,477 7,696 13 59 46 1.10 0.057 1.33 61.09including at a 1.25% Ni cutoff 14 32 18 1.52 0.096 1.90 34.27ANRC123 25,357 9,576 19 34 15 1.02 0.096 1.40 21.06including at a 1.25% Ni cutoff 21 23 2 1.57 0.29 2.73 5.46

TABLE 11: KALPINI PROJECT

SOUTHERN CROSS NICKEL PROVINCENICKEL LATERITE EXPLORATION, IRON PRODUCTION ROYALTY

2.2.1 Bungalbin Nickel Project Heron 100%.Nickel - gold.

The 983km2 project area covering 10 tenement applications is located 100-130km NNE of SouthernCross. Dominant lithology is ultramafic, basalt and banded iron formation (BIF).

Nickel Exploration

High priority Siliceous Nickel Laterite targets are indicated from Heron’s literature reviews. Follow up of thenickel targets will commence once tenements are granted.

Previous nickel exploration at Bungalbin was directed towards ground EM targeting of Nickel Sulphides,with very few drill holes completed. Heron plans to carry out systematic RC drilling of the Nickel Lateritehorizons. The aim is to identify a stand alone Nickel Laterite operation.

Gold Exploration

Mafic-hosted gold mineralisation targets are indicated from Heron’s literature research. Historic goldproduction from the eastern project area is recorded from the excised Mount Dimer mine which produced126,000 ounces of gold at a head grade of 7.5g/t Au, along with 189,000 ounces of silver. Goldmineralisation occurs within an enriched laterite profile developed above quartz stockwork systems. Thereis a major NW trending structural corridor that controls mineralisation in the Mount Dimer area. Thestructure is 1km wide and has been traced over a strike length of 5.5km within Heron’s project area.

At the Marda gold mining centre in the western project area, located 5km NW along strike of Heron’sground, recent exploration success has resulted in the definition of a gold resource of 2.49 million tonnesat a grade of 1.99g/t Au. The Marda deposits occur within intensely folded BIF and mineralisation isassociated with the most deformed and structurally thickened BIF zones. The ore zones are steeplyplunging and rich in sulphide mineralisation.

2.2.2 Bungalbin Iron Ore ProjectHeron 100%. Portman Limited right to acquire Iron Ore rights by providing a Royalty.Heron retains all other mineral rights, notably Nickel-Gold.

The 202km2 project area covering 3 granted tenements is located 105km N of Southern Cross and 60kmN of the Portman Koolyanobbing Iron Ore operation. Dominant lithology is an E-W trending ridge of BIF.The project area includes an Iron Ore Inferred Mineral Resource estimated from Heron’s open file studyat 65.7 million tonne at 57.9% Fe, with a calcined grade of 64.1% Fe. Within this global resource, thereis good potential for smaller structurally controlled high grade iron-low phosphorus ore positions. The totalprospective BIF strike extent within the project area is 40km.

Portman has commenced exploration within the Royalty tenements. Initial drilling at the Mount Jackson J4deposit amounted to 1,400m within 12 wide spaced drill holes. Limonite-goethite mineralisation wasroutinely intersected yielding an average grade of 57.2% Fe when using a lower cutoff of 55% Fe. Acomprehensive costeaning program is planned to evaluate the eluvial deposits (kankar) recently identifiedat Bungalbin.

An updated Inferred Mineral Resource is currently being estimated and all information will be incorporatedinto a feasibility study by Portman. This study may include planning for a railway spur-line into the Bungalbinand Mount Jackson deposits to supplement an enlarged Koolyanobbing Iron Ore operation. TheEsperance Port Authority has completed dredging of the harbour to accommodate full loading of 75,000tPanamax vessels for shipping Iron Ore.


Heron controls a40km strikelength ofultramafic rock atBungalbin, totallycovered bysurficial laterite.This represents asignificant newNickel Lateritetarget.

The currentfeasibilityschedule byPortman is forpossible miningat Bungalbin in2003, providingHeron with acash flow to helpfund future NickelLateritedevelopments.

John Carlisle’s camp, atouch of style in theBalladonia bush.

Not much style but a shovelmakes a good hotplate for the

lunch time barbecue. Page 16

Heron’sKeith Kilkenny

Province nickeltenements cover

a 400km strikelength sequence

which includesrift-related

ultramafic rocks.The ultramafics

host documentedNickel Laterite

occurrences andinclude highly

prospectiveNickel Sulphide

settings.

Page 17


KEITH KILKENNY-LAVERTON NICKEL PROVINCENICKEL LATERITE EXPLORATIONHeron’s Keith Kilkenny Province Nickel Laterite projects are associated with discrete rift-related ultramaficolivine mesocumulate channels, in contrast to the more sheet-like olivine adcumulates of the KalgoorlieNickel Province Walter Williams Formation. The Keith Kilkenny ultramafic lava channels are consideredprospective for Silver Swan style Nickel Sulphide mineralisation. Heron’s exploration to date has howeverbeen restricted to Nickel Laterite.

2.3.1 Edjudina Nickel Project Heron 100%.Nickel (- gold).

The 706km2 project area covering 35 tenements is located 145-175km NNE of Kalgoorlie within the KeithKilkenny Tectonic Zone. This rift structure contains ultramafic complexes from north to south at Aubils,McAuliffe West, Boyce Creek and Lake Rebecca. The ultramafic flows are located on the rift marginsinterbedded with basalt, with the rift axes containing coarse sediments.

Nickel targets include the Boomerang Prospect, a series of komatiite mega-channels localised withinthe Emu Fault, in an analogous geological setting to the Silver Swan Nickel Sulphide deposit. At theMonks Well Prospect, Heron has identified Nickel Laterite.

In the course of field work at the Yerilla Prospect, Nickel Sulphide settings were identified, with gossanassays of up to 0.23% Ni, 0.17% Co, 0.04% Cu, 8ppb Pt and 18ppb Pd. Additionally, semi-massive pyritefloat was located in felsic volcanics. A Teutonic Bore - style VMS setting has been identified, which isconfirmed by anomalous regional lag samples of 203ppm Cu and 395ppm Zn. Gossan assays of up to0.23% Co, 0.05% Cu and 0.14% Zn are associated with the soil Cu-Zn anomaly.

2.3.2 Mulgabbie Nickel ProjectHeron 100%.Nickel (- gold).

The 4km2 project area covering 2 tenements is located 110km NE of Kalgoorlie. The project area coversrift-related mafic to ultramafic units striking NNW along the southwest shore of Lake Rebecca.

Advanced discussions are current and previous metallurgical work has been re-assessed indicatingSaprolite Ore at Lake Rebecca may be suited to smelter ferro-nickel production. The ore chemistry iscomparable to Nickel Saprolite Ores being smelted in the Pacific Rim region.

2.3.3 Laverton Nickel ProjectHeron 100% Nickel.MPI Gold Pty Ltd has the Gold rights for Merolia and Mineral Patch Hill.

The 448km2 project area covering 4 tenements is located 50km ESE of Laverton. The main nickel targetis at the Merolia-Mineral Patch Hill Prospects adjoining and immediately north along strike of theCoglia Well-Irwin Hills Nickel Laterite prospects.

Detailed aeromagnetic coverage has been acquired, and interpretation completed to define zones witholivine adcumulate units. An 800x80m RC stratigraphic drilling program was completed at Merolia-MineralHill, confirming low grade ore occurrences.

On the basis of intersected lithologies and komatiite styles, it isapparent that the Laverton Prospects are more prospective forNickel Sulphide mineralisation. Reconnaissance ground EMsurveying is planned.




MPRC003 90,800 8,940 63 70 7 0.82 0.028 0.93 6.54MPRC007 89,520 8,140 66 72 6 0.89 0.078 1.20 7.20

TABLE 12: LAVERTON PROJECT

Drilling at Laverton,March to July, 2001.

JIMBERLANA PLATINUM PROVINCEThe Jimberlana Dyke is a layered mafic to ultramafic intrusion emplaced into the granite-greenstone terrainof the Yilgarn Craton. The Dyke is Lower Proterozoic in age and exhibits many similarities to the Great Dykeof Zimbabwe, which hosts PGE resources of over 300 million ounces. Similarities to the Great Dykeinclude host rocks, age, strike length, width, cross sectional lopolith shape, magmatic stratigraphy andPGE anomalism documented at the mafic-ultramafic boundary.

2.4.1 Cowan PGE ProjectHeron 100%. Avoca assignment of all mineral rights. PGE-nickel-copper (-gold).

The 209km2 project area covering 10 tenements is located 12km N of Norseman. Previous drill testing ofultramafic units during gold exploration programs has intersected up to 10m at 0.8% Ni.

The Cowan Complex of the Jimberlana Dyke was explored for PGE mineralisation by Barrier Explorationin the early 1970s. The economically significant Lower Layered Series mafic-ultramafic contact is exposednear Lake Cowan, however most of this Complex is covered by ferruginous laterite and residual soil. Deepauger sampling by Barrier identified significant Cu-Ni anomalism within the centre of the Dyke as well asalong its margins. Values exceeding 2,000ppm Cu (background 100ppm Cu) and 9,000ppm Ni(background 500ppm Ni) are common within the anomalous areas. Nickel, copper and chromium areexcellent pathfinder elements used in the search for PGE mineralisation.

Barrier drilled two diamond holes in the centre of the Dyke and three along its margins. The central holespassed through 80m of heavily weathered ultramafic rock before entering the Lower Layered Seriesgabbro-norite sequence. Drill logs recorded considerable limonite staining, possibly after sulphidemineralisation and a 12m intercept near the base of the ultramafic contained massive bands of magnetite(-chromite). The best recorded intercept is 1.52m at 0.39g/t Pt and 2.7 g/t Pd, although not all drill corewas sampled. The mineralisation is associated with zones of disseminated sulphide mineralisation locatedwithin a layered dunite-norite sequence.

2.4.2 Dundas Hills PGE ProjectHeron 100%. Avoca assignment of all mineral rights. PGE-nickel-copper (-gold).

The 6km2 Dundas Hills project area covering 4 tenements is located at the western end of theNorcott Complex and has been explored by both Central Norseman Gold Corporation and WMC atdifferent times since the early 1970s. Detailed geological mapping shows a completely differentiated rocksuite ranging from serpentinised dunite at the base, through pyroxenite and gabbro, to anorthosite at thetop. Numerous zones of copper mineralisation are present immediately below the mafic-ultramafic contactwithin the prospective PGE zone. Rock chip samples from this horizon returned a maximum assay of9,250ppm Cu.

Detailed soil geochemistry was completed. Coincident copper, platinum and palladium anomalies aredefined over a strike length of 4km and are open to the east. The threshold contours define an arcuateanomaly coincident with the mapped location of the prospective mafic-ultramafic contact.

A bulk sample of soil and saprock was collected from the peak of the anomalous area andconcentrated using a jig. The concentrate assayed 540ppb Pt, 61ppb Pd and 2.1% Cr.An igneous stratigraphy endowed with PGEs is confirmed.


The JimberlanaDyke PGEProvince is theclosest Australiananalogy to theGreat Dyke ofZimbabwe, oneof the world’sforemost PGEresources.

Avoca’sJimberlana fieldreconnaissancehas confirmedgeologicalsettings identicalto the Great Dykeof Zimbabwe.

The Dundas Hillsplatinum-palladium targetzone ishighlighted byanomalous Cu-Ni-Pt-Pd soilgeochemistry,and has not beentested byprevious drilling.

Page 18

PROPOSEDAVOCARESOURCESASSET

Soil Anomalism

Element Background Threshold PeakCu (ppm) 15-20 50 295Pt (ppb) <10 20 90Pd (ppb) <5 30 440

TABLE 13: DUNDAS HILLS PROJECT

Bill Cleverly with driedclay at Lake Raesidecrossing, Avoca country.

Exploration ManagerDavid Crook,

Nickel Laterite Clay,Goongarrie.

Reconnaissancesoil geochemistry

at Fraser Rangehas confirmed

favourableVoisey’s Bay

style geologicalsettings.

The NorcottComplex has

demonstratedPGE occurrences

within sulphidehorizons.

Avoca planssystematic drill

exploration of thegenerally soilcovered PGE

target horizon.



2.4.3 Mount Norcott PGE ProjectHeron 100%. Avoca assignment of all mineral rights. PGE-nickel-copper (-gold).

The 518km2 Mount Norcott Project covering 3 tenements is located in the central part of theNorcott Complex approximately 25km ENE of Norseman. Newmont Holdings explored a 20km sectionof this Complex in the late1980s. Detailed geological mapping defined a strongly differentiated mafic-ultramafic sequence termed the Upper Layered Series conformably overlying gabbro-norite of the LowerLayered Series. Numerous copper mineralised outcrops were rock chip sampled with maximum assaysof 0.49g/t Pt and 1.20g/t Pd.

Newmont drilled a single vertical diamond hole through the basal section of the Upper Layered Serieslocating patchy sulphides near the top of the gabbro-norite unit. Only two samples were collected, beingfrom the more sulphidic zones :

Again, significant PGE endowment is confirmed, with immediate drill targets available to Avoca.

2.4.4 Fraser Range PGE ProjectHeron 100%. Avoca assignment of all mineral rights. PGE-nickel-copper (-gold).

The 784km2 Fraser Range Project covering 4 tenements is located 170km ENE of Norseman north of theEyre Highway.

A research project was completed by Heron for the Albany-Fraser Province which aimed to identify Voisey’sBay style nickel-copper-PGE sulphide targets (comparable in age and geological setting to the WMC WestMusgrave discovery). The Heron study has identified a deep crustal structural corridor containing adiscrete suite of magnetic features interpreted as packages of Proterozoic ultramafics within the FraserRange Complex. The corridor is marked by elevated Cu, Ni, Co, Cr, Au and Pd soil geochemistryassociated with interpreted anorthosite and troctolite.

The metallogenic concept is the localisation of nickel-copper-PGE sulphides within structurally preparedtargets. Heron has pegged four exploration licence applications to cover these and other targets.

Previous explorers in the project area have confirmed chromite-bearing ultramafic rocks assaying up to20% Cr and 800 ppb Pt, with drilling returning up to 16m at 1.3% Ni in saprolite.

WMC Sampling of Newmont Diamond Core

Hole From To Interval Cu Pt+Pdm m m % g/t

ND1 67.50 67.55 0.05 0.48 0.83ND1 72.80 72.85 0.05 1.12 1.57

TABLE 14: MOUNT NORCOTT PROJECT

Idealised Geological Cross Section through the Jimberlana Dyke

FIG.4: JIMBERLANA DYKE

ILLAARA PROVINCEVOLCANOGENIC MASSIVE SULPHIDE EXPLORATION

2.5.1 Perrinvale Joint Venture ProjectHeron 100%. Subject to Agreement, proposed assignment of Precious and Base Metal rights to Avoca. Mount Burgess Mining NL right to earn 70% through spending $0.5m.Copper-zinc-gold.

The 945km2 contiguous project area covering 7 tenements and applications islocated 170-290km NW of Kalgoorlie. The project covers the Illaara GreenstoneProvince over a continuous strike of 120km. Heron retains Nickel and Sulphur rights.

A review of all available exploration data within the area has identified several targetareas, including a 30km strike of a multi-element soil anomaly and a 50m thickpossible massive "VMS" gossan. Several under-explored gold occurrences occurthroughout the project area, and a copper occurrence was drilled previously withinthe northern project area.

Upper cycle felsic volcanic exhalative units are extensive, and include chert, BIFand muscovite schist. Three target areas have to date been identified whichwarrant follow-up drill exploration:

• Day Rock Prospect Possible Volcanogenic massive sulphide Cu-Zn-Au

• Central Felsic Volcanic Complex Possible Volcanogenic massive sulphide Cu-Zn-Au

• Regional As-Sb-Bi-Se anomalies Multi-element target

Since the establishment of the Mount Burgess joint venture, work completedincludes a review of previous exploration, the acquisition and interpretation ofaeromagnetic and Landsat 7 data, field mapping and re-sampling of holes drilledby previous explorers. A soil sampling program is current.


Page 20

PROPOSEDAVOCARESOURCESASSET

Gold prospecting, dryblowing spoil heaps atPennyweight Point, inAvoca country.

Nickel Laterite drill samplepiles. The dark earthy

material is the high grade ore.

Jack Otwayis a ‘legend’ in the ranksof Kalgoorlie prospectors.

Jack is our 19th largestShareholder, and is always puttingHeron onto likely prospects suchas Perrinvale.

On his last solo trip to Perrinvale inthe trusty ‘Landie’, Jack had 22punctures.

Jack has now donated the ‘Landie’as an exhibit to the Museum of theGoldfields, Kalgoorlie.

Ian Buchhorn and Jack Otway, at Jack’s office

Aeromagnetics

FIG.5: PERRINVALE JOINT VENTURE

PROPOSEDAVOCA

RESOURCESASSET



ZULEIKA SHEAR ZONE PROVINCEPRECIOUS METALS EXPLORATION JOINT VENTURES

2.6.1 Snake Hill Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.Barra Resources Limited right to earn 70% of Gold rights through spending $0.3m.Gold (-nickel).

The 14km2 project area covering 2 tenements is located 140km NW of Kalgoorlie immediately west of theIda Fault. Nickel and gold soil geochemical targets have been defined for RAB drill testing. Explorationexpenditure to date is $0.2 million.

2.6.2 Blister Dam Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights.Placer Dome Asia Pacific right to earn 70% through spending $1.2m. Heron retains Nickel rights.Gold-nickel.

The 120km2 project area covering 8 tenements is located 70km NW of Kalgoorlie on the Zuleika ShearZone. The area consists of an extensive sand cover between the Dunnsville, Hawkins Find, Carbine andChadwin gold mining centres.

The northern tenement area covers part of the Walter Williams and Siberia Formation ultramafics. Additionalultramafics are associated with the Zuleika - Kunanalling Shear Zones, and occur at Blister Dam as well asFrances Lesley and adjacent Heron tenements. These are prospective for Nickel Sulphide and Heronaccordingly retains all nickel rights

Aircore, RC and diamond drilling was completed by Heron and its previous joint venture partners at BlisterDam, testing beneath previously discovered supergene gold mineralisation. Broad zones of low ordermineralisation (0.1-0.3g/t Au) suggest the presence of a large bedrock alteration system, with a peak intercept of 14m at 2.89g/t Au. Sub-vertical zones of altered feldspar-phyric basalt, with up to 10%sulphide (pyrite, pyrrhotite and arsenopyrite), silica flooding and textural destruction within mylonitic zonesall confirm a favourable gold mineralised setting.

2.6.3 Powder Sill ProjectHeron 100%. Avoca assignment of all mineral rights. PGE-gold.

The 47km2 project area covering 7 tenements is located 45km WNW of Kalgoorlie within the Zuleika ShearZone.

The central tenement area contains extensive outcrop of the Powder Sill gabbro. The Powder Sill is a highlyfractionated layered mafic intrusion that is hosted within the Black Flag Group sediments. The sill, a south-east plunging syncline reaches a maximum width of 2.8km within the Heron project area.

Gold occurrences in the Powder Sill region are generally associated with the two major NW trendingregional structures, being the Kunanalling and the Zuleika Shear Zones. Additionally, a NNE trending brittlefault system traverses the entire project area, being the Black Flag-Royal Standard Faults. These structureslocalise the Mount Pleasant gold mining centre 15km NNE.

Detailed geochemistry has been completed with 4,591 auger samples generating a number of coherentAu and Au-As anomalies.

Gold targets have been partially tested with 590 RAB drill holes completed for a total drill advance of22,513m. In addition, 400 Aircore holes for 20,000m were completed. Anomalous intersections include12m at 0.46g/t Au from 36m, 4m at 0.36g/t Au from 52m, and 4m at 0.35g/t Au from 56m, confirmingalteration systems are present, but as yet no ore grade mineralisation. It should be noted that goldmineralisation in the district is characterised by minimal dispersion halos.

In terms of PGE targets, a well defined PGE soil anomaly is associated with the lower Powder Sill layeredsequence, peaking at 41ppb Pt with coincident 16ppb Pd. Avoca’s Powder Sill PGE exploration target isconsidered to be a "Lac des Iles" brecciated gabbro PGE system.

The ZuleikaShear Zone is

one of the primegold mineralisedstructures of the

EasternGoldfields, with

intense corporateactivity aimed at

expandingcontrol of theKundana goldmining centre.

Avoca has asignificant

100% owned,unencumbered

tenement holdingon the Zuleika

Shear Zone.

Placer Dome AsiaPacific has been

attracted as ajoint venture

partner atBlister Dam.

2.6.4 Mungari Gold ProjectHeron 100%. Avoca assignment of all mineral rights. Gold.

The 35km2 project area covering 11 tenements is located 45km WNW of Kalgoorlie in the Kundana goldmining centre associated with the Zuleika Shear Zone.

Avoca has lodged tenement applications 10km SSE along strike from the Frogs Leg gold discovery on theore hosting Zuleika Shear Zone. This is a prime structural setting, hosting from north to south the Kundana,Raleigh, Kurrawang, Rubicon, Hornet and Frogs Leg gold deposits.

The Avoca Mungari Prospect is interpreted from aeromagnetics as a dolerite sill intruding felsicvolcaniclastics. Avoca mapping confirms abundant quartz vein float. The Mungari geological setting isentirely comparable to that of Frog’s Leg, in respect of the Zuleika Shear structural association. There havebeen a series of major new gold discoveries at the Kundana gold mining centre which together with pastproduction represent a total endowment for this area of over 4 million ounces of gold. The major recentdiscoveries are:

• The ABC Line is the continuation of the Strzelecki structurecurrently being exploited by Goldfields Ltd at Kundana.Exploration along this line-of-lode is on-going and resourcescurrently stand at 971,000 ounces of gold at a grade of 6.6 g/tAu, divided between the Pegasus, Rubicon and Hornetdeposits. A thin laminated quartz reef emplaced along alithological contact hosts the mineralisation.

• The White Foil gold discovery at Mungari West is now ownedby Mines and Resources Australia Pty Ltd and Goldfields Ltd.At both White Foil and Avoca’s Mungari Project, the prospectivegeological setting is dolerite units occurring between the ZuleikaShear Zone to the east and Kunanalling Shear Zone to the west.Resources at White Foil are currently quoted as 11.8mt at 2.4g/tAu for a total endowment of 915,000 ounces of gold.

• The Raleigh deposit is a laminated quartz vein emplaced alonglithological contacts. The structure trends parallel to theStrzelecki-ABC line and can be traced for the full length ofAvoca’s project area, a distance of 4.5km. The current Raleighresource is 0.747mt at 41.7 g/t Au for a total endowment of1,002,000 ounces of gold.

• The Frog’s Leg discovery by Mines and Resources Pty Ltd-Dioro Exploration NL is a continuation of the ABC line.Exploration is on-going and the deposit is open in all directions,including south towards Avoca’s tenements. Resourcescurrently stand at 5.07mt at 4.6g/t Au for a total endowment of750,000 ounces of gold.

Exploration by Heron and its former Joint Venture partner on Avoca’snorthern project area between 1998 and 2000 included a comprehensive program aimed at locatingextensions to the Kundana gold deposits. High resolution aeromagnetic surveys confirmed similarlithologies and structural settings to both the Kundana and White Foil deposits. Auger soil geochemistrydefined six significant gold-anomalous targets, all coincident with dilatant structural sites identified using thegeophysical data. Four of these targets were RAB drill tested, defining 100ppb Au gold-in-saprockanomalism. Deep follow-up of these anomalies was not undertaken. These targets will be re-evaluated in light of recent exploration success at Raleigh, which comprises a very small targetand is not accompanied by a large dispersion halo.


Bill Cleverly, shavingday at Billy Goat Donga,east of Balladonia.

Field Supervisor, Fred Andrei, at the

Goongarrie field camp.Page 22

FIG.6: ZULEIKA SHEAR PROJECTS

Prospect Locations and Targets

PROPOSEDAVOCA

RESOURCESASSET



AVOCA SHEAR PROVINCEGOLD EXPLORATION JOINT VENTURES

2.7.1 Gindalbie Terrain Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Delta Gold NL right to earn 70% in respect of gold through spending $1.0m. Heron retains Nickel rights.Gold-nickel.

The 200km2 project area covering 5 tenements is located 25-60km NE of Kalgoorlie on the eastern flankof the Scotia Kanowna Anticline. The main structural control of the project area is the Moriaty Shear Zone,a bifurcation of the intensely gold-mineralised Boorara Shear Zone, which occurs on the western flank ofthe Scotia Kanowna Anticline. The Gindalbie Terrain adjoins the Golden Cities-Federal granitoid goldprovince.

Joint venture partner Delta has completed a 800x100m Vacuum drill soil program, to target the northernextension of the Mulgarrie East gold mine structure. A 40ppb gold anomaly was identified. Ultramaficrocks are clearly identified by elevated nickel-chrome-copper values. Data interpretation and in-fill samplingis current.

2.7.2 Gidgi ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.Gold-nickel.

The 98km2 project area covering 7 tenements is located 10-30km N of Kalgoorlie associated with felsicvolcaniclastics and lateritised ultramafic within the Boorara Shear Zone.

The Roaster Prospect is located 15km N of Kalgoorlie associated with the Boorara Shear Zone.Previous exploration of the tenement area includes aeromagnetics, airborne EM, gravity, geological andregolith mapping, auger sampling, several phases of follow up RAB and RC drilling at the Roaster andPenghana Prospects, and regional Aircore-RAB drilling traverses. The geological setting outlined by thisexploration is highly prospective for Kanowna Belle style gold mineralisation.

The Kanowna South Prospect islocated 3km S of Kanowna, some 20kmNE of Kalgoorlie. Previous RAB drillingincludes intersections of up to 1m at0.95g/t Au. Regional Aircore drilling andlimited RC drilling produced up to 4m at2.35g/t Au at the Phoenix Prospect. Inview of the deep surface depletion zone,further drill testing is required. Thesimilarity of the geological setting to that ofthe nearby Kanowna Belle gold minemeans that very detailed drill exploration iswarranted once the tenements aregranted.

At the Kurramia South Prospect,several extremely large old gold mineshafts are present on two separate NWtrending lines of lode. Of interest, sixseparate sulphide gossans were located.Peak assays were 0.5% Ni, 0.6% Co,22ppb Pt and 31ppb Pd. Interestingly, thehost lithology for the gossans is a siliceousbreccia, rather than the ultramafic rocknormally associated with nickel gossans.Avoca has now generated severalEastern Goldfields PGE targets in "non-traditional" host rocks.

Gold joint venture discussions areadvanced.

The GindalbieTerrain was

previouslyexplored by

Heron for NickelSulphides.

Importantly,there are major

regionalstructures

present in theAvoca Shear

Province,favourable for

large scale goldsystems.

At the GidgiProject, Avoca

controls 98km2 ofprime gold

mineralisedground on the

north andnortheast

outskirts ofKalgoorlie, the

world’s greatestgold mining

centre for the lastCentury.

FIG.7: GINDALBIE-GIDGI PROJECTS

Prospect Locations and Targets

2.7.3 Roe Hills Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights.Delta Gold NL right to earn 80% in Gold through spending $1.0m. Heron retains Nickel rights.Gold-nickel.

The 403km2 project area covering 6 tenements is located 60-90km E of Kalgoorlie, adjoining Heron’sTransline Joint Venture Project. Following a GIS data review and target generation by Heron, a farm-outhas been agreed whereby Delta Gold may earn 80%, with Heron free-carried to decision to mine.

There is a major suite of ultramafic rocks with documented Nickel Laterite occurrences within the projectarea. Heron retains all Nickel rights.

A further 9 tenement applications covering 730km2 are currently subject to farm-out negotiation. Thisproject area has an excellent structural setting, covering the Emu-GMQ-Avoca Fault System. The dominantoutcrop lithology is felsic volcaniclastics and lateritised meta-sediments. From data reviews, several goldtargets have been generated for drill follow-up once the tenements are granted.

2.7.4 Transline Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.Harmony Gold Limited right to earn 80% through spending $0.8m.Gold-nickel.

The 558km2 contiguous project area covering 14 tenements is located 60km ESE of Kalgoorlie on theBulong Anticline straddling the Emu Fault. The project area is partly underlain by the Juglah Monzogranitewhich intrudes felsic volcanics. Gold mineralisation is extensively developed, and includes the adjoiningJuglah, Trojan and Transfind gold mining centres.

Heron previously generated several +50ppb gold in soil targets associated with the GMQ Shear Zone,following which a tenement acquisition program was carried out. GIS compilations were subsequentlycompleted, identifying from previous exploration several +1g/t Au RAB anomalies, peaking at 6g/t Au.

Harmony has commenced systematic pedogenic carbonate sampling, with 1,500 samples collected.Several coherent soil gold anomalies have been defined, peaking at 45ppb Au. Reconnaissance drillingprograms have commenced, with initial results including 4m at 1.24g/t Au.

2.7.5 Avoca ProjectHeron 100%. Avoca assignment Precious Metal rights. Heron retains Nickel rights.Gold - nickel.

The 818km2 project area covering 14 tenements is located 80km ESE of Kalgoorlie associated with felsicvolcaniclastic and lateritised ultramafic associated with the Avoca Shear Zone.

The Avoca Shear Zone is a zone of deformation which bisects and runs the entire length of the project area.This is a major crustal structure controlling gold mineralisation along its length. Gold deposits associatedwith the Avoca Shear Zone include Success, Kurnalpi Consols, Scottish Lass, Old Harriett, Rising Sun andGessners Find.

The Avoca Shear Zone divides the project into two separate stratigraphic sequences. The westernlithologies consist of sediments that have a significant component of ultramafic units. The eastern areacontains a mixture of felsic volcaniclastics, sediments and banded iron formation. In the southern projectarea the Avoca Shear Zone can be traced beneath recent sediments of Lake Randall using aeromagneticdata. This area is totally unprospected.

The Avoca Shear Zone is in fact covered by recent lake sediments, aeolian sand and transported colluviumfor much of its length. This lack of exposure largely renders historic prospecting activities ineffective, aswell as the more modern surface geochemical based exploration. The focus of exploration in the Avocaarea has previously been towards VMS style base metal deposits and hence exploration for gold has onlybeen cursory.


The Avoca ShearProvincecontains belts ofNickel Lateritebearingultramafics.

The ultramaficsare associatedwith majorcrustal structuresbeing theEmu-GMQ-AvocaFaults. These structureslocaliseregional goldmineralisation.

To help retaintenure on theNickel Laterites,Heron has jointventured out theGold rights, toassist in meetingexpenditurecommitments.

The Gold JointVentures are nowto be assigned toAvoca, but Heronwill retain theNickel Laterites.

This strategyallows Heron tocontrol over2,000km2 ofNickel Lateriteterrain in theAvoca ShearProvince, andprovide AvocaResourcesLimited with afree carriedinterest in goldexploration.

Page 24

Tektite, found by Keith Quartermaine nearYerilla, Avoca country.

Typical GoongarrieGoethite Ore.

2.8

The KeithKilkenny Tectonic

Zone ranksequally with the

Zuleika Shearand BoulderLefroy Fault

as a majorcontrol on gold

mineralisation inthe EasternGoldfields.

Heron controlssome 1,900km2

of theKeith Kilkenny

Province, largelyfarmed out with

free carry tomining.

Heron isassigning this

free-carried goldasset to Avoca.

KEITH KILKENNY PROVINCEGOLD EXPLORATION JOINT VENTURE

2.8.1 Wiluna South ProjectAvoca 100%.Gold.

The 129km2 tenement is located 15km SSE of the currently operating Wiluna gold mining centre.

The project area is largely covered by Lake Way which has precluded systematic modern exploration. Avoca’sexploration will be based on aeromagnetic interpretation, and will require specialist lake drilling rigs.

The NNW trending sequence of basalts and dolerites that hosts the Wiluna gold mining centre is presentover a strike of 12km within the project area, associated with the Wiluna ore-hosting fault system.

Wiluna South is one of the prime gold exploration plays in Western Australia. NormandyExploration has recently announced exceptional drilling results on Lake Way to the immediate north andwest of Avoca’s project area, highlighting Lake Way as an Avoca project of great potential.

2.8.2 Wildara North ProjectHeron 100%. Avoca assignment of all mineral rights.Gold.

The 56km2 project area covering 5 tenements is located 120km N of Leonora within the western margin ofthe Keith Kilkenny Tectonic Zone.

The project area is largely a soil covered basalt and felsic volcanic terrain occurring between theBronzewing gold mining centre to the north and the recent Thunderbox gold discovery to the south. Strikeparallel structures occur along the western contact of the greenstone belt, and link a number of significantgold deposits, including from north to south Bronzewing, Mount McClure, Success, Parmellia, Challengerand Thunderbox.

The Thunderbox gold deposit was discovered in 1999, and is located 40km S along strike of the Avocaproject area. Thunderbox has a resource of 30mt at 2.2g/t gold for a total of 2.1 million ounces.

Avoca has completed a GIS target generation study, with field mapping confirming favourable structuralsites. At the Mount McClure South Prospect a small internal circular granite plug has been intrudedinto the western structural corridor. The intersection of strike-parallel gold-bearing structures with the plugis interpreted to create significant dilatancy sites with gold deposition potential.

2.8.3 Victory Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.WMC Resources Ltd right to earn 80% through spending $0.125m.Gold - nickel.

The 24km2 project area covering 6 tenements is located 50-120km NW of Leonora, adjoining the Victoryand Bannockburn gold mining centres. WMC has completed a GIS review, followed by field validation.

2.8.4 Kookynie Joint Venture ProjectAvoca 100% of Precious Metal rights.Newcrest Operations Limited right to earn 75% in Gold through spending $0.8m, subject to completion of formal documentation. Heron retains Nickel rights.Gold-nickel.

The 87km2 project area covering 3 tenements is located 20-60km SE of Leonora within the western marginof the Keith Kilkenny Tectonic Zone.

The project area is largely soil covered basalt and felsic volcanics occurring along strike from the Apollo Hillgold occurrence. Lateritic nickel targets are present, associated with rift margin ultramafics. Heron retains allnickel rights.

Newcrest has completed a data review and GIS target generation study. The main regional target in the projectarea is the Ulster Prospect, an historic gold mine. Sulphidic quartz float is present, linking a series of oldshafts that extend over a strike length exceeding 300m. The mineralisation strikes E-W, which is significant inthat regionally the Butterfly-Tampa gold mineralisation is hosted by similar trending flat lying shears.

At the Tampa and Mount Melita East Prospects, residual laterite with quartz vein float is present. Lagsample anomalism is present in Heron’s sampling on a 400x400m grid pattern.


PROPOSEDAVOCA

RESOURCESASSET

2.8.5 Edjudina-Laverton Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.Croesus Mining NL right to earn 80% in respect of Gold through spending $1.0m.Gold.

The 562km2 joint venture area covering 13 tenements is located within two separate areas. The southernjoint venture Edjudina area is 120-160km NE of Kalgoorlie immediately northwest and east of the Porphyrygold mine within the Keith Kilkenny Tectonic Zone. Gold mineralisation dominantly occurs as quartzstockworks within felsic and granitoid host rocks.

The northern joint venture Laverton area is 55km N of Laverton within the Laverton Tectonic Zone. Majorgold mining centres in the area are generally associated with BIF, and from north to south includeRosemont, King of Creation and Corktree Well.

Croesus has expended $0.5 million on exploration to date, with in excess of 12,000m of drilling completed.Several mineralised intercepts have been recorded, but as yet, none of economic potential.

2.8.6 Southern Laverton Tectonic Zone Joint Venture ProjectHeron 100%. Subject to Agreement, proposed assignment of Precious Metal rights to Avoca.Heron retains Nickel rights.Gutnick Resources NL right to earn 80% in respect of Gold through spending $1.2m.Gold.

The Southern Laverton Tectonic Zone Project is located 150km NE of Kalgoorlie. Heron’s project areacomprises 34 tenements covering 305km2. Heron’s tenements within the Tectonic Zone extend 100km,from the Red October gold mine (340,000oz) in the north to the Anglo-Saxon gold mine (170,000oz) in thesouth. This structural zone hosts gold mineralisation from north to south at Laverton, Sunrise Dam, RedOctober, Safari Bore, Edjudina and Pinjin.

A drill program has been designed to test the Yundamindera Flash Prospect, generated from a 1,500sample regional auger program. This target is defined by a threshold value of 15ppb Au against abackground of <4ppb. Significant soil spikes consistent with near surface gold development are present,with peak soil gold values to 290,000ppb. Two significant N-S anomalies have been defined over 5km.The western anomaly represents northern extension to the historic Gardners Find workings, which are gold-mineralised strike parallel shears. Heron sampling of old workings yielded gold values to 6.4g/t.

2.8.7 Karonie South Joint Venture ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.WMC Resources Ltd right to earn 80% through spending $0.30m.Gold (- nickel).

The 653km2 contiguous project area covering 8 tenements is located 140-170km SE of Kalgoorlie associatedwith the Keith Kilkenny Tectonic Zone. This structure hosts gold mineralisation from Old Plough Dam in thenorth, through to Carosue Dam, Karonie and French Kiss in the south.

Following start up of the Joint Venture, WMC has completed a high resolution aeromagneticsurvey and a 474 station 1x1km grid gravity survey. These have provided excellent differentiationof the mafic and sedimentary packages of the Roe Hills and Karonie Greenstone Belts.

The entire project area has broad spaced soil geochemical coverage and ultra-detailed 50m linespacing aeromagnetics. Several high priority follow-up gold targets have been generated:• HSK1 Prospect, 1.2km soil gold anomaly, peak 29ppb Au against a <2ppb

background, dolerite setting.• HSK2 Prospect, 4.6x2.5km soil gold anomaly, peak 27ppb Au against a <2ppb

background, dolerite-sediment contact in a major regional structural setting.• HSK3 Prospect, 2.5km soil gold anomaly, peak 30ppb Au against a <2ppb

background, granite contact.


Heron’s previouswork in the KeithKilkennyProvinceconcentrated onNickel LateriteRC drilling.

Now that theAvoca IPO is intrain, ExplorationManager Geoff Collishas beensystematicallycompletingreconnaissancePrecious Metalsoil and rockchip sampling ofthe project areas.

Severaladvanced stagePrecious Metaland VMS targetshave beengenerated, whichwill become adrilling focusonce Avoca haslisted on ASX.

Page 26

Gnamma hole east ofKaronie, Avoca country.

Avoca’s ExplorationManager, Geoff Collis

PROPOSEDAVOCA

RESOURCESASSET


The Laverton-Celia Tectonic

Zone is thedominant

metallogenicstructure of the

NortheasternGoldfields.

Heron acquiredNickel Lateritetargets on the

Tectonic Zone,and will assign

the PreciousMetal rights to

Avoca.

Page 27

LAVERTON-CELIA TECTONIC ZONE PROVINCEGOLD JOINT VENTURES

2.9.1 Erlistoun ProjectHeron 100%. Avoca assignment of Precious Metal rights. Heron retains Nickel rights.Gold.

The 212km2 project area covering 12 tenements is located from Laverton to 50km N, between the CeliaTectonic Zone in the west and Laverton Tectonic Zone in the east. GIS data compilation is current, awaitingtenement grant.

The historical Euro gold mining centre was recently acquired by Avoca. Extensive alluvial gold workings arepresent, with potential bedrock gold sources having had minimal exploration.

2.9.2 Mount Zephyr ProjectAvoca 100%. Heron retains Nickel rights.Gold - nickel.

The 154km2 contiguous project area covering 4 tenements is located 35km NW of Laverton.

An aeromagnetic target is located in the southern project area overlain by sheetwash. Sparse subcropincludes komatiite with silica cap. Heron field mapping identified a Nickel Laterite profile, with RABintercepts in previous drilling of up to 8m at 1.2% Ni. Heron will retain these Nickel Rights, while Avoca willhold Gold rights.

Gold prospectivity is high, due to the presence of the Celia Tectonic Zone (hosts the Mount Morgans goldmining centre 60km SE).

2.9.3 Laverton Joint Venture ProjectHeron 100%. Avoca assignment of all mineral rights.Metex Resources Limited right to earn 70% through spending $0.5m.Gold.

The 31km2 contiguous project area covering 2 tenements is located 15km WSW of Laverton immediatelywest of the Chatterbox Shear Zone. The project area surrounds the Hawks Nest-Mt Gooses gold miningcentres.

Metex advises that reinterpretation of gravity and aeromagnetic data has been completed and a number oftargets generated. Expenditure to date has been $0.3 million.

2.9.4 Mount Morgans Joint Venture ProjectHeron 20%. Avoca assignment of all mineral rights.Metex Resources Limited 80%, Heron non-contributing and free-carry at 20%.Gold.

The 14km2 project area covering 8 tenements is located 40km WSW of Laverton immediately west of theCelia-Mount Morgans-Korong Shear Zone. The main prospects are 5km NW along strike from the MountMorgans gold mining centre, associated with an intra-greenstone granitoid.

Aeromagnetic, DEMs, open file and geological compilations have been completed, and vacuum and RABdrilling carried out to quantify the regolith profile. Expenditure to date has been $0.2 million, with Metexhaving now earnt their equity.


Des Steel (Tenement Manager) - left and Alan Rudd (Senior Geologist) - right

administer Heron’s substantialtenement portfolio, with check audit by

Resource Mapping Pty Ltd, Perth.

Heron’s excellent tenement acquisitionrecord reflects the monitoring procedures

implemented by Des and Alan.

BREMER-EUCLA PALAEODRAINAGE PROVINCEOIL SHALE SCOPING STUDY

2.10.1 Balladonia and Ravensthorpe-Norseman Oil Shale ProjectsHeron 100%.Oil shale - lignite - sulphur - limestone - heavy mineral sands - kaolin - vanadium.

The 3,648km2 Balladonia project area covering 21 tenement applications is located 20-180km E ofNorseman. The 1,597km2 Ravensthorpe-Norseman project area covering 19 tenement applications islocated from Norseman and SW to Ravensthorpe.

Energy

Lignite deposits with high oil yields havebeen identified in Heron’s literaturereviews. Resource estimates arequalitative at best, but from reviewingprevious 1980s exploration data,there is a stated resource potential of2.6 billion tonne at a Fischer OilYield of 133 litre per tonne and a stripratio of 4:1. The Balladonia lignite has ahigher ash content and lower specificenergy values than Victorian Tertiarybrown coals, but is comparable to theLeigh Creek deposits being activelymined in South Australia. All of theBremer-Eucla lignite resources have ahigh oil yield, being up to 190 litre pertonne. The oil yields are comparable toOil Shale deposits in Queensland, whichare now in production. The Bremer-EuclaOil Shales do not have the environmentalissues related to the Queenslandprojects operating in proximity to theGreat Barrier Reef.

Sulphuric Acid

The Bremer-Eucla lignite is strongly pyritic. Following flotation, this pyrite would be suitable for sulphuricacid manufacture. Sulphuric acid is a major feedstock in nickel laterite processing. This sulphurrequirement was the prime reason for Heron acquiring the Bremer-Eucla Oil Shale tenements.

Corporate

The long term corporate objective is for Heron’s Oil Shale assets to be spun off into Balladonia Energy.Heron will seek to introduce a technology joint venture partner to the Oil Shale projects.

IAN BUCHHORNManaging DirectorThe information is based on, and accurately reflects, information compiled by Ian James Buchhorn, who is a Member of the Australasian Institute of Mining and Metallurgy.


Page 28

John Carlisle on the beach south ofBalladonia.

The Heron Board, Rod Evans, Bob Colville, and

Ian Buchhorn in the bush.

PROPOSEDBALLADONIAENERGYASSET

Resource Occurrences

FIG.8: BALLADONIA


3.0 CORPORATE PROFILE 30

CORPORATE GOVERNANCE PRACTICES 30

4.0 DIRECTORS’ REPORT 32

5.0 FINANCIAL STATEMENTS 36

STATEMENT OF FINANCIAL PERFORMANCE 36

STATEMENT OF FINANCIAL POSITION 37

STATEMENT OF CASH FLOWS 38

NOTES TO AND FORMING PART OF THE ACCOUNTS 39

DIRECTORS’ DECLARATION 50

6.0 INDEPENDENT AUDIT REPORT 51

7.0 SHAREHOLDER INFORMATION 52

8.0 INTEREST IN MINING TENEMENTS 55

CORPORATE DIRECTORY

Page 29

Jurandah rock hole, IsraeliteBay

Grevillea mill, NarinaMary’s Pool, Kookynie

Nullarbor sunset

3.0 Corporate Profile

HERON RESOURCES LIMITED is a Kalgoorlie-based exploration and development company. The corporate aim is tobecome a profitable mining company through the development of mineral deposits. Heron is focused on the exploration anddevelopment of its Nickel Laterite projects in the Eastern Goldfields of Western Australia.

The Company undertakes cost-effective exploration based on literature reviews, aeromagnetic interpretation, and ore resourcedrill testing of targets so generated.

The management of the Company is based in Kalgoorlie. Accordingly, the Company has excellent access to tenementacquisition opportunities, and to specialist contractor services. Administrative overheads are also maintained at lower levels dueto the Kalgoorlie base.

The Company is managed and staffed by a team of six professional geoscientists with extensive industry experience. Specialistconsultants are used as required, particularly in disciplines where due diligence may be required. Field programs such as drill rigaccess, drill site rehabilitation and hydrological monitoring are implemented under long-term contracts to experienced operators.

OBJECTIVES

a) To convert the existing Nickel Laterite mineral resources into profitable mining operations for the Company;

b) To increase the value of the Company through the continued acquisition, exploration and development of mineral resources;

c) To establish mining cash flows that increase the Company's market capitalisation and value to Shareholders;

d) To conduct operations in a safe and environmentally responsible manner, to offer employment opportunities to those wholive in the exploration provinces, and to respect and nurture the Indigenous culture of the exploration provinces; and

e) Manage the risk in all exploration, development and corporate endeavours.

STRATEGY

a) Acquire the maximum available equity in Nickel Laterite and associated commodity projects through pegging, optioning oroutright purchase, concentrating within the Eastern Goldfields of Western Australia;

b) Focus on cost-effective drill exploration to convert exploration targets into mineral resources;

c) Location of the corporate base at Kalgoorlie within the principal area of operation;

d) Active acquisition and testing of new exploration concepts and targets, such as the Avoca PGE projects;

e) Use of best management, technical and financial control techniques; and

f) Utilise farm-outs where appropriate to spread exploration and commodity risk.

CORPORATE GOVERNANCE PRACTICES

General

The Company does not have any formally constituted committees of the Board of Directors. The Company is not of a size norare its affairs of such complexity to justify the formation of separate or special committees. The Board as a whole is able toaddress the governance aspects of the full scope of the Company's activities and to ensure that it adheres to appropriate ethicalstandards.

Composition of the Board

At the date of this statement the Board comprises three Directors, two of whom are non executive Directors. The names,qualifications and relative experience of each Director are included in the Directors' Report, Section 4.0.

The Company's Constitution provides that the number of Directors shall not be less than three and not more than ten (Clause11.1.1). There is no requirement for any Share holding qualification although it is preferable that Directors will become significantShareholders. An Employee Option Plan has been in operation to encourage Directors to take significant Shareholdings.

As the Company's activities increase in their size, nature and scope, the size of the Board will be reviewed periodically and theoptimum number of Directors required to adequately supervise the Company's activities determined within the limitations imposedby the Constitution and as circumstances demand.

CORPORATE DIRECTORY

Page 30


Board Membership

The membership of the Board, its activities and composition is subject to periodic review. The criteria for determining theappointment of a suitable candidate for the Board shall include the quality of the individual, experience and achievement,compatibility with other Board members, credibility within the Company's scope of activities and the mining industry, intellectualability to contribute to the Board's duties and physical ability to undertake the Board's duties and responsibilities.

Under the Company's Constitution the tenure of the Directors (other than the Managing Director) is subject to re-appointment byShareholders not later than the third anniversary following their last appointment (Clause 11.1.3). The Board does not subscribeto the principle of a retirement age and there is no maximum period of service as a Director.

Appointment to Other Boards

Directors are required to take into consideration any conflicts when accepting appointment to other boards. Accordingly,Directors wishing to accept appointment to other boards must first seek approval from the Board, approval of which will notunreasonably be withheld.

Directors' Remuneration

At the date of this statement the maximum per annum total amount payable to Directors as Director's fees was set byShareholders at a general meeting on 21 June 1996 at $100,000.

No Director's fees are paid to the Managing Director, who receives a salary approved by the Board.

Independent Support

The Board has determined that individual Directors may in appropriate circumstances engage outside advisers at the Company'sexpense. The engagement of an outside adviser is subject to the prior approval of the Board, approval of which will notunreasonably be withheld.

Compensation Arrangements

The Board is responsible for reviewing compensation arrangements (including superannuation and other benefits) for theManaging Director and other senior executives.

Continuous Review of Corporate Governance

Directors consider on an ongoing basis how management information is presented to them and whether such information issufficient to enable them to discharge their duties as Directors of the Company. Such information must be sufficient to enableDirectors to determine appropriate operating and financial strategies from time to time in light of changing circumstances andeconomic conditions.

The Directors recognise that mineral exploration has inherent risks and that operational strategies adopted should,notwithstanding, be directed towards improving the value of the net worth of the Company.

3.0 Corporate Profile cont

Page 31

4.0 Directors’ ReportThe Directors submit their Report on the operations of the Company and its controlled entities for the year ended 30 June 2001including the accounts for the financial year ended on that date in accordance with a resolution of the Directors of the Company.

DIRECTORS

The names and details of the Directors of the Company in office at any time during or since the end of the year are:

Director Rodney Michael Evans - FCA, FCIS, FCIM, AIArbA

Appointed 26 March 1996

Position Chairman (Non-Executive)

Rod Evans is a chartered accountant and consultant who has had wide experience in corporate administration andfinance. Mr Evans is a Director and Chairman of RAC WA Holdings Pty Limited and RAC Finance Limited, and apast Chairman of Clark Kenneth Leventhal a world-wide association of accounting firms, the Australian AutomobileAssociation, and a number of publicly listed companies involved in mining and exploration in Australia.

Director Ian James Buchhorn - BSc (Hons), Dip Geosci, MAusIMM

Appointed 17 February 1995

Position Managing Director

Ian Buchhorn is a Mineral Economist and Geologist. He has worked on nickel, gold, lead-zinc and diamondprojects in southern Africa. In Australia, Mr Buchhorn has worked on bauxite and industrial mineral mining andexploration, gold and base metal project generation, gold mine operation and in corporate evaluations. He has 28years' experience as an economic geologist, and for the last 15 years, has acquired and developed projectsthroughout the Eastern Goldfields of Western Australia, commissioned several open cut gold mines, and has beena Registered Mine Manager. Mr Buchhorn is responsible for the day to day technical management of theCompany. He is active within the local community, serving as a Councillor for the City of Kalgoorlie-Boulder.

Director Robert George Colville - AssocRMIT, MAusIMM

Appointed 09 December 1996

Position Director (Non-Executive)

Bob Colville has over 29 years' exploration experience predominantly within the Eastern Goldfields of WesternAustralia. Mr Colville has held a number of senior and executive positions with both major companies and juniorexplorers. He has been associated with the discovery and development of mines at Ranger Uranium (NT), andNew Celebration, Goongarrie and Davyhurst (Eastern Goldfields WA). Mr Colville is an executive director ofBarminco Pty Limited, the largest private underground mining contractor in Australia, and Managing Director ofBarra Resources Limited, a publicly listed company involved in gold exploration in Australia.

Director Craig Leslie Readhead - B.Juris. LL.B. (alternate for R M Evans)

Appointed 03 September 2001


Craig Readhead is a lawyer with 25 years' legal and corporate advisory experience with specialisation in theresources sector. Mr Readhead is a partner of the law firm Pullinger Readhead Stewart and is a director of anumber of listed and unlisted public companies involved in mining and exploration in Australia.

Directors who have resigned during the reporting period are:

Director Peter James Lee

Appointed Resigned 20 October 2000; Re-appointed 29 November 2000; Resigned 31 August 2001


Director Stephen Bruce Dennis

Appointed Appointed 20 October 2000; Resigned 20 November 2000


Director Richard Monti (alternate for S B Dennis)

Appointed Appointed 20 October 2000; Resigned 20 November 2000


Page 32


PRINCIPAL ACTIVITIES

The principal activities of the consolidated entity during the year were:

a) Nickel Laterite mineral exploration and development;

b) Various Heron non-nickel mineral exploration activities, often implemented through farm-out; and

c) De-merger of the Heron non-nickel assets into Avoca Resources Limited.

There has been no significant change in the nature of these activities during the year.

OPERATING RESULTS

The loss of the consolidated entity for the 2001 financial year after income tax of nil (2000 : nil) was $558,500 (2000 : $535,636).

DIVIDENDS

No dividends were paid during the year and the Directors do not recommend the payment of a dividend.

OPERATIONS REVIEW

The detailed review of operations of the consolidated entity for the year is contained in Section 2.0 of this Annual Report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

Other than noted below there were no significant changes in the state of affairs of the consolidated entity during the year.

During the year 9,999,855 shares were placed at $0.28 each raising $2,799,960 (less costs) to fund exploration activities andfor additional working capital.

On 8 June 2001 the subsidiary entity Avoca Resources Limited ("Avoca") was registered. Avoca was registered to allow a spin-off of the non-nickel exploration assets of Heron Resources Limited ("Heron"), to enable the Company to focus on its NickelLaterite assets and allow more appropriate resources to be devoted to the development of the non-nickel assets.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

Other than noted, at the date of this Report there is no matter or circumstance which has arisen since 30 June 2001 that hassignificantly affected or may significantly affect:

a) The operations, in the financial years subsequent to 30 June 2001, of the consolidated entity;

b) The results of those operations; or

c) The state of affairs, in the financial years subsequent to 30 June 2001, of the consolidated entity.

As announced on 3 September 2001, subject to certain conditions precedent (including approval by the shareholders of HeronResources Limited) to be satisfied or waived on or before 15 October 2001 or such later date as may be agreed, it has beenagreed to make a private placement to Resource Capital Fund II L.P. of 10 million ordinary shares in the capital of the Companyat $0.30 per share, to raise $3,000,000, together with 10 million three year options to subscribe for Heron shares at $0.35 pershare (issued for no consideration).

OPTIONS

No Options in the Company were exercised during the year.

1,670,000 Options were issued by the Company during the year.

290,000 Options expired during the year and to the date of this Report.

As at the date of this report the Company had the following Options on issue:

Number Issued Expiry Date Exercise Price350,000 15 December 2001 $0.2550,000 05 March 2002 $0.25

200,000 19 December 2002 $0.25200,000 19 December 2002 $0.35200,000 19 December 2002 $0.45200,000 19 December 2002 $0.55200,000 19 December 2002 $0.65100,000 04 February 2004 $0.25785,000 19 October 2004 $0.35785,000 19 October 2004 $0.50

3,070,000

4.0 Directors’ Report cont

Page 33

LIKELY DEVELOPMENTS

The Company will continue its core nickel development activities through sole funded exploration and joint ventures whereappropriate. It is proposed to spin-off of the Heron Resources Limited non-nickel exploration assets into Avoca ResourcesLimited, which will enable Heron to focus on its Nickel Laterite assets and allow more appropriate resources to be devoted to thedevelopment of the non-nickel assets.

The Company is continually assessing commercial opportunities for corporate growth. Because of the unpredictable nature ofthese opportunities, developments could occur at short notice.

Further information is not included on the likely developments in the operations of the consolidated entity and the expected resultsof those operations, as it is the opinion of the Directors that this would prejudice the interests of the consolidated entity if includedin this Report.

DIRECTORS’ BENEFITS

Disclosure of benefits provided to Directors during the financial year is made in Notes 15 and 17 of the financial statements, inaccordance with ASIC class order 98/2395.

DIRECTORS’ INTEREST IN CONTRACTS WITH THE COMPANY

There are no material contracts involving Directors’ interests at the end of the financial year nor have any been entered into sincethe end of the previous financial year not otherwise disclosed in this Report.

DIRECTORS’ SHAREHOLDING IN THE COMPANY

As at the date of this Report the interests of the Directors in the Shares of the Company were:

Director Ordinary Shares Options over Ordinary SharesDirect Indirect Direct Indirect

R M Evans - 800,000 - 200,000

I J Buchhorn 2,447,857 33,793,155 1,000,000 -

R G Colville - 140,000 - 150,000

DIRECTORS MEETINGS

During the year the Company held 12 meetings of Directors. The attendance of the Directors at meetings of the Board were:

Director Meetings held Number ofwhile a Director meetings

attended

R M Evans 12 12

I J Buchhorn 12 12

R G Colville 12 12

PJ Lee 11 10

R Monti (alternate for S B Dennis) 1 1

EMOLUMENTS OF DIRECTORS AND SENIOR EXECUTIVES

Executive remuneration and other terms of employment are reviewed by the Board on an ongoing basis having regard toperformance against goals set at the start of the year, the relevant comparative information and independent expert advice.Remuneration packages are set at levels that are intended to attract and retain executives capable of managing theconsolidated entity’s operations.

Page 34


Director Salary Directors Superannuation Other Options Fees

$ $ $ $ $

R M Evans - - 43,200 - -I J Buchhorn 130,000 - 20,000 - -R G Colville - 20,000 1,600 - -S B Dennis - 1,667 133 - -P J Lee - 18,333 1,467 - -

Senior Executive $ $ $ $ $

D J Crook 90,500 - 29,500 25,600 12,500

Mr Crook is the only employee of the consolidated entity qualifying as a Senior Executive.

500,000 Options in the parent entity were issued to entities associated with D J Crook during the year:

Number Issued Expiry Date Exercise Price

250,000 19 October 2004 $0.35250,000 19 October 2004 $0.50

The value of the 500,000 19 October 2004 Options issued to DJ Crook is estimated to be $12,500.

AUDIT COMMITTEE

At the date of this Report the Company has not formed an Audit Committee, and as such the Board effectively acts as the AuditCommittee. The Directors discuss the Company’s activities with the auditors throughout the year. Due to the size and nature ofoperations, it has not been considered necessary to form an Audit Committee of the Board of Directors.

INSURANCE OF OFFICERS

During the financial year the Company has paid an insurance premium in respect of a Directors’ and Officers Liability InsuranceContract. The insurance premium relates to liabilities that may arise from an officer’s position, with the exception of conductinvolving a wilful breach of duty or improper use of information or position to gain personal advantage.

The officers covered by the insurance policies are the Directors and the Company Secretary.

CORPORATE GOVERNANCE

In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of Heron ResourcesLimited support and have adhered to the principles of corporate governance. The consolidated entity’s corporate governancestatement is contained in the Corporate Profile section of the Annual Report.

ENVIRONMENTAL REGULATION

The consolidated entity is subject to and compliant with all aspects of environmental regulation in respect of its explorationactivities. The Directors are not aware of any environmental regulation which is not being complied with.

ABORIGINAL CULTURE AND HERITAGE

The consolidated entity is subject to and compliant with all aspects of Aboriginal Heritage regulation in respect of its explorationand development activities. The Directors are not aware of any regulation which is not being complied with. The Directors arecommitted to cultural respect and Indigenous Reconciliation.

Signed in accordance with a resolution of Directors

R G COLVILLEDirector

Perth, 28 September 2001

Page 35

STATEMENT OF FINANCIAL PERFORMANCE

FOR THE YEAR ENDED 30 JUNE 2001

Consolidated Entity Parent EntityNotes 2001 2000 2001 2000

$ $ $ $

REVENUES FROM ORDINARY ACTIVITIES 2 179,149 171,718 179,149 171,718

Administration expenses from ordinary activities (581,213) (678,000) (548,264) (678,000)

Mineral exploration expenditure written off (156,436) (29,354) (154,643) (29,354)

LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX 3 (558,500) (535,636) (523,758) (535,636)

INCOME TAX RELATING TO ORDINARY ACTIVITIES 4 - - - -

LOSS FROM ORDINARY ACTIVITIES AFTER INCOME TAX (558,500) (535,636) (523,758) (535,636)

NET LOSS (558,500) (535,636) (523,758) (535,636)

Basic earnings per share 25 $(0.0059) $(0.0068)

Diluted earnings per share is not materially different from basic earnings per share

The accompanying notes form part of these financial statements

5.0 Financial Statements

Page 36


STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2001


$ $ $ $

CURRENT ASSETS

Cash assets 3,130,967 3,925,296 3,130,947 3,925,286

Receivables 5 119,554 6,661 116,885 6,661

TOTAL CURRENT ASSETS 3,250,521 3,931,957 3,247,832 3,931,947

NON-CURRENT ASSETS

Receivables 6 - - 436,320 363,346

Investments 7 - - 20 10

Property, plant and equipment 8 126,511 117,632 126,511 117,632

Exploration and evaluation costs carried forward 9 13,126,872 10,263,600 12,727,963 9,900,254

TOTAL NON-CURRENT ASSETS 13,253,383 10,381,232 13,290,814 10,381,242

TOTAL ASSETS 16,503,904 14,313,189 16,538,646 14,313,189

CURRENT LIABILITIES

Payables 10 256,885 172,323 256,885 172,323

Provisions 11 93,829 77,769 93,829 77,769

TOTAL CURRENT LIABILITIES 350,714 250,092 350,714 250,092

TOTAL LIABILITIES 350,714 250,092 350,714 250,092

NET ASSETS 16,153,190 14,063,097 16,187,932 14,063,097

EQUITY

Contributed equity 12 24,018,094 21,369,501 24,018,094 21,369,501

Accumulated losses 13 (7,864,904) (7,306,404) (7,830,162) (7,306,404)

TOTAL EQUITY 16,153,190 14,063,097 16,187,932 14,063,097


5.0 Financial Statements cont

Page 37

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2001


$ $ $ $

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 179,149 161,007 179,149 161,007

Proceeds from sale of tenements - 15,000 - 15,000

GST Paid (112,893) - (110,224) -

Payments to suppliers (442,570) (619,699) (409,621) (619,699)

NET CASH OUTFLOWS FROM OPERATING ACTIVITIES 14(a) (376,314) (443,692) (340,696) (443,692)

CASH FLOWS FROM INVESTING ACTIVITIES

Exploration expenditure (3,013,211) (2,454,234) (2,975,855) (2,090,888)

Acquisition of plant & equipment (53,407) (2,355) (53,407) (2,355)

NET CASH OUTFLOWS FROM INVESTING ACTIVITIES (3,066,618) (2,456,589) (3,029,262) (2,093,243)

CASH INFLOWS FROM FINANCING ACTIVITIES

Loan to controlled entities - - (72,974) (363,346)

Proceeds from issue of Shares 2,799,970 5,669,510 2,799,960 5,669,500

Share issue costs (151,367) (130,000) (151,367) (130,000)

NET CASH FLOWS FROM FINANCING ACTIVITIES 2,648,603 5,539,510 2,575,619 5,176,154

NET INCREASE / (DECREASE) IN CASH HELD (794,329) 2,639,229 (794,339) 2,639,219

Cash at the beginning of the financial year 3,925,296 1,286,067 3,925,286 1,286,067

CASH AT THE END OF THE FINANCIAL YEAR 14(c) 3,130,967 3,925,296 3,130,947 3,925,286

Non-cash financing and investing activities 14(b) - 176,841 - 176,841



Page 38


NOTES TO AND FORMING PART OF THE ACCOUNTSFOR THE YEAR ENDED 30 JUNE 2001

NOTE 1. STATEMENT OF ACCOUNTING POLICIES

The financial report is a general purpose financial report which has been prepared in accordance with applicable AccountingStandards and other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) and theCorporations Act 2001. The financial report has been prepared on the basis of historical costs and does not take into accountchanging money values or, except where stated, current valuations of non-current assets. The accounting policies have beenconsistently applied, unless otherwise stated.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financialstatements.

a) Principles of Consolidation

The consolidated accounts comprise the accounts of Heron Resources Limited (the parent entity) and its controlled entities.A controlled entity is any entity controlled by Heron Resources Limited. Control exists where Heron Resources Limited hasthe capacity to dominate the decision making in relation to the financial and operating policies of another entity so that theother entity operates with Heron Resources Limited to achieve the objectives of Heron Resources Limited. A list of controlledentities is contained in Note 23.

The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistentaccounting policies.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits orlosses, have been eliminated on consolidation.

Where controlled entities have entered or left the consolidated entity during the year, their operating results have beenincluded from the date control was obtained or until the date control ceased.

b) Income Tax

The consolidated entity adopts the liability method of tax-effect accounting whereby the income tax expense shown in theprofit and loss account is based on the operating profit before income tax adjusted for any permanent differences.

Timing differences which arise due to the different accounting periods in which items of revenue and expense are includedin the determination of operating profit before income tax and taxable income are brought to account as either a provisionfor deferred income tax or an asset described as future income tax benefit at the rate of income tax applicable to the periodin which the benefit will be received or the liability will become payable.

Future income tax benefits are not brought to account unless realisation of the asset is assured beyond any reasonabledoubt. Future income tax benefits in relation to tax losses are not brought to account unless there is virtual certainty of therealisation of the benefit.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that noadverse change will occur in income tax legislation and the anticipation that the Company will derive sufficient futureassessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

c) Exploration, Evaluation, Development and Restoration Costs

Exploration, evaluation and development expenditure incurred is accumulated in respect of each identifiable area of interest.

Accumulated costs are only carried forward to the extent that they are expected to be recouped through the successfuldevelopment of the area, or by its sale, or where the activities in the area have not reached a stage which permits areasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision toabandon the area is made.

Accumulated costs are not carried forward in respect of any area of interest unless rights to tenure of that area are current.

Restoration costs that are expected to be incurred are provided for as part of the cost of the exploration, evaluation anddevelopment phases that give rise to the need for restoration.

d) Investments

Investments are brought to account at cost or at Directors’ valuation. The carrying amount of investments is reviewedannually by Directors to ensure it is not in excess of the recoverable amount of these investments.


Page 39

e) Property, Plant and Equipment

Plant and equipment is measured at cost.

Depreciation is calculated on a straight line or diminishing value basis to write off the net cost of each item of property, plantand equipment over its expected useful life. Major depreciation periods for plant and equipment are 5 to 15 years.

f) Interests in Joint Ventures

The consolidated entity’s share of the assets, liabilities, revenue and expenses of joint ventures is included in the appropriateitems of the balance sheet and the profit and loss account.

Details of the joint ventures are set out in Note 22.

g) Employee Entitlements

Liabilities for wages and salaries, annual leave and sick leave are recognised and are measured as the amount unpaid atthe reporting date at current pay rates in respect of employees’ service up to that date.

h) Cash

Cash on hand and in banks and short-term deposits are stated at the lower of cost and net realisable value.

For the purposes of the statement of cash flows, cash includes cash on hand and in banks, and money market investmentsreadily convertible to cash within two working days, net of outstanding bank overdrafts.

i) Acquisition of Assets

The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets areacquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to theacquisition. Where shares are issued in an acquisition, the value of the shares is determined by reference to the fair valueof the assets acquired, including goodwill where applicable.

Costs relating to the acquisition of new areas of interest are classified as either exploration and evaluation expenditure,development properties or mine properties based on the stage of development reached at the date of acquisition. Assetsacquired may also include mineral reserves, mineral resources and unexplored and unevaluated acreage.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to theirpresent value as at the date of acquisition. The discount rate used is the rate at which a similar borrowing could be obtainedunder comparable terms and conditions.

A liability for restructuring costs is recognised as at the date of acquisition of an entity or part thereof when there is ademonstrable commitment to a restructuring of the acquired entity and a reliable estimate of the amount of the liability canbe made.

j) Recoverable Amount of Non-Current Assets

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising fromits continued use and subsequent disposal.

Where the carrying amount of a non-current asset is greater than its recoverable amount the asset is revalued to itsrecoverable amount. Where the net cash inflows are derived from a group of assets working together, recoverable amountis determined on the basis of the relevant group of assets. To the extent that a revaluation decrement reverses a revaluationincrement previously credited to, and still included in the balance of, the asset revaluation reserve, the decrement is debiteddirectly to that reserve. Otherwise the decrement is recognised as an expense in the profit and loss account.

The expected net cash flows included in determining recoverable amounts of non-current assets are discounted to theirpresent values using a market-determined, risk adjusted discount rate.

k) Trade and Other Payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid inthe future for goods and services received, whether or not billed to the consolidated entity. These amounts are unsecuredand are usually paid within 30 days of recognition.


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l) Receivables and Revenue Recognition

Bills of Exchange

Bills of Exchange have been purchased in the market at a discount to face value. The Bills are carried at an amountrepresenting cost and a portion of the discount recognised as income on an effective yield basis. The discount brought toaccount each period is accounted for as interest received.

Interest

Interest is recognised on control of the right to receive the interest payment.

m) Earnings per Share

i) Basic Earnings per share

Basic earnings per share is determined by dividing the profit from ordinary activities after related income tax expense by theweighted average number of ordinary Shares outstanding during the financial year.

ii) Diluted Earnings per share

Diluted earnings per share is determined by dividing the profit from ordinary activities after related income tax expenseadjusted for the effect of earnings on potential ordinary shares, by the weighted average number of ordinary shares (bothissued and potentially dilutive) outstanding during the financial year.

Consolidated Entity Parent Entity2001 2000 2001 2000

$ $ $ $

NOTE 2. REVENUE FROM ORDINARY ACTIVITIES

Revenues from operating activities Proceeds from sale of tenements - 15,000 - 15,000

Revenues from non-operating activitiesInterest received – other persons/corporations 179,149 156,718 179,149 156,718

Total revenues from ordinary activities 179,149 171,718 179,149 171,718

NOTE 3. EXPENSES

Depreciation and amortisation expenses (44,529) (50,858) (44,529) (50,858)

Salaries and employee benefits expense (77,867) (64,517) (67,117) (64,517)

Other expenses from ordinary activities (458,817) (562,625) (436,618) (562,625)

Mineral exploration expenditure written off (156,436) (29,354) (154,643) (29,354)

NOTE 4. INCOME TAX

Prima facie income tax benefit on loss from ordinary activities reconciles to the income tax expense as follows:

Loss from ordinary activities (558,500) (535,636) (523,758) (535,636)

Prima facie tax at 34% (2000 : 36%) (189,890) (192,829) (178,078) (192,829)

Non deductible items 12,281 62,492 5,121 62,492

Timing differences and tax losses not brought to account 177,609 130,337 172,957 130,337

Income tax expense - - - -

The Directors estimate the potential tax losses and section 330 exploration expenditure deduction entitlements available to theconsolidated entity to be $11,662,896 (2000 : $7,748,391).

The future income tax benefit arising from tax losses has not been recognised as an asset because recovery is not virtuallycertain.

The tax benefits will only be obtained if:

a) The consolidated entity derives future assessable income of a nature and of an amount sufficient to enable the benefit fromthe deductions for the losses to be realised;

b) The consolidated entity continues to comply with the conditions for deductibility imposed by tax legislation; and

c) No changes in tax legislation adversely affect the Company in realising the benefit from the deductions for losses.


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$ $ $ $

NOTE 5. RECEIVABLES (CURRENT)

Goods & Services Tax Paid 119,554 6,661 116,885 6,661

119,554 6,661 116,885 6,661

NOTE 6. RECEIVABLES (NON CURRENT)

Loan to controlled entities (Note 17) - - 436,320 363,346

- - 436,320 363,346

NOTE 7. INVESTMENTS IN CONTROLLED ENTITIES

Shares in controlled entities – at cost (Note 23) - - 20 10

- - 20 10

NOTE 8. PROPERTY PLANT AND EQUIPMENT

Plant and equipment at cost 85,448 62,605 85,448 62,605

Accumulated depreciation (60,540) (48,995) (60,540) (48,995)

24,908 13,610 24,908 13,610

Office equipment & furniture at cost 32,730 24,251 32,730 24,251


11,536 9,626 11,536 9,626

Motor vehicles at cost 198,254 176,168 198,254 176,168


90,067 94,396 90,067 94,396

Total property, plant and equipment 126,511 117,632 126,511 117,632

Consolidated Entity Parent Entity2001 2001

$ $Reconciliation

Plant and equipment:

Carrying amount at 1 July 2000 13,610 13,610

Additions 22,843 22,843

Disposals - -

Depreciation Expense (11,545) (11,545)

Carrying value at 30 June 2001 24,908 24,908

Office equipment and furniture:


Additions 8,478 8,478

Disposals - -



Motor vehicles:


Additions 22,086 22,086

Disposals - -




Page 42



$ $ $ $

NOTE 9. EXPLORATION AND EVALUATION COSTS CARRIED FORWARD

Balance at beginning of year 10,263,600 7,681,825 9,900,254 7,681,825

Acquisition costs 138,027 350,286 138,027 350,286

Exploration and evaluation costs incurred during the year 2,881,681 2,260,843 2,844,325 1,897,497

Exploration and evaluation costs written off (156,436) (29,354) (154,643) (29,354)

Balance at end of year 13,126,872 10,263,600 12,727,963 9,900,254

The ultimate recoupment of costs carried forward is dependant upon the successful development and/or commercialexploitation or alternatively, sale of respective areas of interest.

NOTE 10. PAYABLES (CURRENT)

Trade creditors and accruals 256,885 172,323 256,885 172,323

Trade creditors are non-interest bearing and are normally settled on 30 day terms.

NOTE 11. PROVISIONS (CURRENT)

Employee entitlements 93,829 77,769 93,829 77,769

NOTE 12. CONTRIBUTED EQUITY

Issued and paid up capital

100,958,727 (2000 : 90,958,872) Ordinary Shares fully paid 24,476,302 21,676,342 24,476,302 21,676,342

Less: Capital Raising Expenses (458,208) (306,841) (458,208) (306,841)

24,018,094 21,369,501 24,018,094 21,369,501

Movements in issued and paid up capital of the parent entity during the year are as follows:

2001Number $

Balance at beginning of year 90,958,872 21,676,342

Issued during the year 9,999,855 2,799,960

Balance at end of year 100,958,727 24,476,302

9,999,855 Shares were issued during March 2001 at $0.28 per share to fund exploration activities and for additional workingcapital.

Ordinary shares have the right to receive dividends as declared and, in the event of winding up the Company, to participate inthe proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held.

Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the Company.

Options

No Options in the Company were exercised during the year.

1,670,000 Options were issued by the Company to employees during the year.

40,000 Options expired during the year.


Page 43

As at 30 June 2001 the Company had the following Options on issue:

Number Issued Expiry Date Exercise Price

100,000 28 August 2001 $0.25

150,000 01 September 2001 $0.25

350,000 15 December 2001 $0.25

50,000 05 March 2002 $0.25

200,000 19 December 2002 $0.25

200,000 19 December 2002 $0.35

200,000 19 December 2002 $0.45

200,000 19 December 2002 $0.55

200,000 19 December 2002 $0.65

100,000 4 February 2004 $0.25

785,000 19 October 2004 $0.35

785,000 19 October 2004 $0.50

3,320,000


$ $ $ $

NOTE 13. ACCUMULATED LOSSES

Balance at the beginning of the year 7,306,404 6,770,768 7,306,404 6,770,768

Net Loss 558,500 535,636 523,758 535,636

Balance at end of the year 7,864,904 7,306,404 7,830,162 7,306,404

NOTE 14. STATEMENT OF CASH FLOWS

a) Reconciliation of loss from ordinary activities after income tax to the net cash flows from operations

Loss from ordinary activities after income tax (558,500) (535,636) (523,758) (535,636)

Add/(less)

Exploration and evaluation costs written off 156,436 29,354 154,643 29,354

Depreciation 44,529 50,858 44,529 50,858

(Increase)/decrease in accrued interest - 4,289 - 4,289

Increase/(decrease) in creditors, accruals and receivables (18,779) 7,443 (16,110) 7,443

(376,314) (443,692) (340,696) (443,692)

b) Non-Cash Financing and Investing Activities

Issue of 768,872 shares to a nominee of Carmichael - 176,841 - 176,841First Capital Pty Limited pursuant to a negotiated success fee which crystallised with the signing of the Strategic Alliance with Centaur Mining & Exploration Limited on 17 September 1999

c) Reconciliation of Cash

Cash on hand and at bank 3,130,967 2,431,839 3,130,947 2,431,829

Commercial bills - 1,493,457 - 1,493,457

Closing cash balance 3,130,967 3,925,296 3,130,947 3,925,286

Environmental Bonds of $25,960 (2000 : $25,960) are included in Cash on hand and at bank. This amount is held as securityterm deposits and is not available to the Company for ordinary activities.


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$ $ $ $

NOTE 15. REMUNERATION OF DIRECTORS

Income paid or payable, or otherwise made available to Directors by the consolidated entity and related parties in connection with the management of affairs of the Company: 236,400 291,388 236,400 291,388

The numbers of the consolidated entity’s Directors whose income (including superannuation contributions) was within the specified bands are as follows: 2001 2000

Number Number

$0 - $9,999 2 1

$10,000 - $19,999 1 -

$20,000 - $29,999 1 2

$40,000 - $49,999 1 1

$150,000 - $159,999 1 -

$210,000 - $219,999 - 1

NOTE 16. REMUNERATION OF EXECUTIVES2001 2000

$ $

Income paid or payable, or otherwise made available to Executives by the consolidated entity and related parties in connection with the management of affairs of the Company: 158,100 150,000

The numbers of the Company’s Executives whose income (including superannuation contributions) was within the specified bands are as follows: 2001 2000

Number Number

$150,000 - $159,999 1 1

The consolidated entity employs a single Senior Executive, being the Exploration Manager.

The terms Director and Executive Officer have been treated as mutually exclusive for the purposes of this disclosure.

In the opinion of the Directors, remuneration paid to Directors and Executives is considered fair and reasonable.

NOTE 17. RELATED PARTY DISCLOSURES

a) The directors of the parent entity during the financial year were:Rodney Michael EvansIan James BuchhornRobert George ColvillePeter James Lee (resigned 20 October 2000, re-appointed 29 November 2000, resigned 31 August 2001)Stephen Bruce Dennis (appointed 20 October 2000, resigned 20 November 2000)Richard Monti (alternate for S B Dennis - appointed 20 October 2000, resigned 20 November 2000)

b) Related party transactions during the financial year were:• payment of $60,000 (2000 : $60,000) to parties related to Mr I J Buchhorn for the provision of office accommodation

on normal commercial terms and conditions;• payment of $nil (2000 : $1,068) for residential accommodation secured by the Company for an employee from a party

related to Mr I J Buchhorn on normal commercial terms and conditions;• payment of $2,228 (2000 : $1,256) to parties related to Mr I J Buchhorn for the provision of secretarial services and

temporary staff on normal commercial terms and conditions;• payments of $nil (2000 : $75,000) for acquisition of mining tenements from parties related to Mr I J Buchhorn on

normal commercial terms and conditions; • information on remuneration of Directors and Executives of the consolidated entity is disclosed in Notes 15 and 16;• Interest-free loan of $366,192 (2000 : $363,346) was made by the parent entity to the controlled entity Balladonia Energy NL;• Interest-free loan of $70,128 (2000 : $nil) was made by the parent entity to the controlled entity Avoca Resources Limited.


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c) Transactions of Directors and Director related entities concerning Shares or Options were:

• Aggregate number of Shares and Options of the parent entity held directly, indirectly or beneficially by Directors orDirector-related entities at balance date:

2001 2000

Ordinary Shares held 34,233,155 31,609,855

Options over Ordinary Shares held 1,350,000 1,350,000

• During the year Directors and Director related entities Share transactions resulted in an increase in their Shareholding of2,623,300 shares which were acquired on the same basis as similar transactions with other Shareholders;

d) No other benefits have been received or are receivable by Directors or Director related entities, other than those alreadydisclosed in the notes to the accounts.

e) Heron Resources Limited is the ultimate parent entity. Heron Resources Limited is a company that is incorporated anddomiciled in Australia. During the year the Company changed its status from a no liability company to a company limited byshares. Ownership interest in the controlled entities is as set out in Note 23.

NOTE 18. FINANCIAL INSTRUMENTS

a) Terms, conditions and accounting policies

The consolidated entity’s accounting policies, including the terms and conditions of each class of financial asset, financialliability and equity instrument, both recognised and unrecognised at the balance date, are as follows:

Recognised Financial Balance Accounting Policies Terms and ConditionsInstruments Sheet Notes

i) Financial assets

11am Call Accounts 11am Call Accounts are carried at cost. The 11am Call Accounts are at callwith an interest rate of 4.75%(2000 : 5.75%).

Commercial Bills Commercial Bills are carried at an Commercial Bills have a termamount representing cost and a portion of 26 days with an interestof the discount recognised as rate of 4.75% (2000 : 6.15%).income on an effective yield basis.

Environmental Bonds Environmental Bonds are carried at cost. Environmental Bonds are security term deposits with a 6 month term with an interest rate of 4.9% (2000 : 5.5%).

ii) Financial liabilities

Trade creditors 10 Liabilities are recognised for amounts Trade liabilities are normally settledand accruals to be paid in the future for goods and on 30 day terms.

services received, whether or not billed to the economic entity.

iii) Equity

Ordinary Shares 12 Ordinary Share capital is recognised at Details of the Shares issued and thethe fair value of the consideration terms and conditions of the Optionsreceived by the Company. outstanding over ordinary Shares at

balance date are set out in Note 12.


Page 46


b) Interest rate risk

The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financialliabilities, both recognised and unrecognised at the balance date are as follows:

Financial Instruments Floating Fixed interest Total carrying Weighted average interest rate rate maturing in amount as per effective

1 year or less balance sheet interest rate

2001 2000 2001 2000 2001 2000 2001 2000$ $ $ $ $ $ % %

i) Financial assets

Cash at bank 35,502 1,866,425 - - 35,502 1,866,425 4.00 4.85

Commercial Bills - 1,493,457 - - - 1,493,457 - 6.15

11am Call Accounts 3,069,505 539,454 - - 3,069,505 539,454 4.75 5.75

Environmental Bonds 25,960 25,960 - - 25,960 25,960 4.90 5.50

Total financial assets 3,130,967 3,925,296 - - 3,130,967 3,925,296 n/a n/a

Floating Total carrying Weighted average Interest Rate amount as per effective

balance sheet interest rate2001 2000 2001 2000 2001 2000

$ $ $ $ % %

ii) Financial liabilities

Trade creditors and accruals 256,885 172,323 256,885 172,323 n/a n/a

Total financial liabilities 256,885 172,323 256,885 172,323 n/a n/a

c) Net fair values Total carrying amount as per Aggregate net fair valuebalance sheet

2001 2000 2001 2000$ $ $ $

Financial assets

Cash at bank 35,502 1,866,425 35,502 1,866,425

Commercial Bills - 1,493,457 - 1,493,457

11am Call accounts 3,069,505 539,454 3,069,505 539,454

Environmental Bonds 25,960 25,960 25,960 25,960

Total financial assets 3,130,967 3,925,296 3,130,967 3,925,296

Financial liabilities

Trade creditors and accruals 256,885 172,323 256,885 172,323

Total financial liabilities 256,885 172,323 256,885 172,323

d) The following methods and assumptions are used to determine the net fair values of financial assets and liabilities.

Recognised financial instruments:

Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short-term maturity.

Receivables and trade creditors: The carrying amount approximates fair value.

NOTE 19. AUDITORS’ REMUNERATIONConsolidated Entity Parent Entity2001 2000 2001 2000

$ $ $ $

Amounts received or due and receivable by the auditors for:

- audit services 10,175 11,345 10,175 11.345

- other services 4,638 - 4,638 -


Page 47

NOTE 20. COMMITMENTS FOR EXPENDITURE

Exploration Commitments

In order to maintain current rights of tenure to exploration and mining tenements, the consolidated entity has the followingdiscretionary exploration expenditure requirements up until expiry of leases. These obligations, which are subject to renegotiationupon expiry of the leases, are not provided for in the financial statements and are payable:


$ $ $ $

Not later than 1 year 2,000,000 2,000,000 1,500,000 1,800,000

Later than 1 year but not later than 5 years 8,000,000 8,000,000 6,000,000 6,800,000

Later than 5 years - - - -

If the consolidated entity decides to relinquish certain leases and/or does not meet these obligations, assets recognised in thebalance sheet may require review to determine the appropriateness of carrying values. The sale, transfer or farm-out ofexploration rights to third parties will reduce or extinguish these obligations. Those amounts detailed above do not includeexpenditure commitments which are the responsibility of joint venture partners (Note 22).

NOTE 21. SEGMENT INFORMATION

The consolidated entity operates in the mineral exploration industry in Australia.

NOTE 22. JOINT VENTURE AGREEMENTS

The consolidated entity has entered into or is negotiating the following joint venture agreements:

Project Operator Right to Farm-inEarn Expenditure

Laverton Metex Resources Limited 70% $500,000Mt Morgans Metex Resources Limited 70% $200,000Snake Hill Barra Resources Limited 70% $300,000Southern Laverton Tectonic Zone Gutnick Resources NL 80% $1,200,000Edjudina and Laverton Croesus Mining NL 80% $1,000,000Bungalbin and Mount Jackson Portman Limited 100%* $250,000Karonie South WMC Resources Limited 80% $300,000Scotia Kanowna Delta Gold NL 70% $1,000,000Transline Harmony Gold Limited 80% $800,000Binduli East AngloGold Australasia Limited 75% $500,000Victory WMC Resources Limited 80% $125,000Perrinvale Mt Burgess Mining NL 70% $500,000Kookynie Newcrest Operations Limited 75% $800,000Blister Dam Place Dome Asia Pacific 70% $1,200,000Roe Hills Delta Gold NL 80% $1,000,000

TOTAL $9,675,000

* The Company has a royalty based on tonnes of Iron Ore sold by Portman Limited.

NOTE 23. INVESTMENTS IN CONTROLLED ENTITIES

Name of Country of Class of Equity Holding Cost of Parent Entity’sEntity Incorporation Shares Investment

2001 2000 2001 2000$ $

Balladonia Energy NL Australia Ordinary 100% 100% 10 10Avoca Resources Limited Australia Ordinary 100% - 10 -

Balladonia Energy NL was registered to evaluate the potential of documented Oil Shale occurrences in the Balladonia area tocontribute to the generation of the energy, sulphur and lime requirements of Heron’s Nickel Laterite projects. The corporate objectivehas been to introduce a technical partner with demonstrated Oil Shale expertise, to further advance the Oil Shale projects.

Avoca Resources Limited was registered to spin-off the Heron Resources Limited non-nickel exploration assets in order to enableHeron to focus on its Nickel Laterite assets and allow more appropriate resources to be devoted to the development of non-nickel assets.


Page 48


NOTE 24. CONTINGENT LIABILITIES

Native title claims have been made with respect to areas which include tenements in which the consolidated entity has interests.The consolidated entity is unable to determine the prospects for success or otherwise of the claims and, in any event, whetheror not and to what extent the claims may significantly affect the consolidated entity or its projects. Agreement is being reachedwith native title claimants regarding certain areas in which the consolidated entity has interests.

NOTE 25. EARNINGS PER SHARE2001 2000

$ $

Basic earnings per Share (0.0059) (0.0068)

Weighted average number of ordinary Shares outstanding during the year used in the calculation of basic earnings per Share. 94,070,707 77,925,300

As diluted earnings per Share is not materially different from basic earnings per Share it has not been disclosed.

NOTE 26. EMPLOYEE ENTITLEMENTS


$ $ $ $

a) Employee Entitlements:

The aggregate employee entitlement is comprised of:

Provisions (Current) 93,829 77,769 93,829 77,769

b) Employee Share Scheme

An employee share option plan has been established for Heron Resources Limited, where employees, directors and officers ofthe consolidated entity are issued with Options over ordinary Shares of Heron Resources Limited. The Options, issued for noconsideration, are in general exercisable at any time during the period commencing 12 months after the commencement dateand ending on the expiry date. There are currently nine employees, directors and officers eligible for this scheme. The Options cannot be transferred and will not be quoted on the ASX.

During the year 1,670,000 Options were issued, 40,000 Options expired and no Options were exercised under the scheme.As at 30 June 2001 options on issue under this scheme were:

Number Expiry Date Exercise Issued Price100,000 28 August 2001 $0.25150,000 01 September 2001 $0.25350,000 15 December 2001 $0.2550,000 05 March 2002 $0.25

100,000 4 February 2004 $0.25785,000 19 October 2004 $0.35785,000 19 October 2004 $0.50

2,320,000

c) The consolidated entity employed seven employees as at 30 June 2001 (2000 : six employees).

NOTE 27. SUBSEQUENT EVENTS

As announced on 3 September 2001, subject to certain conditions precedent (including approval by the Shareholders ofHeron Resources Limited) to be satisfied or waived on or before 15 October 2001 or such later date as may be agreed, it hasbeen agreed to make a private placement to Resource Capital Fund II L.P. of 10 million ordinary Shares in the capital of theCompany at 30 cents per Share, to raise $3,000,000, together with 10 million three year Options to subscribe for HeronShares at 35 cents per Share (issued for no consideration).


Page 49

5.0 Directors’ Declaration

In accordance with a resolution of the Directors of Heron Resources Limited it is declared that:

a) The financial statements and notes comply with Accounting Standards, the Corporations Regulations 2001 and othermandatory professional reporting requirements; and

b) Give a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2001 and of theirperformance, as represented by the results of their operations and their cash flows, for the financial year ended on that date.

In the Directors’ opinion:

a) The financial statements and notes are in accordance with the Corporations Act 2001; and

b) At the date of this declaration there are reasonable grounds to believe that the Company will be able to pay its debts whenthey become due and payable.

On behalf of the Board

R G COLVILLEDirector


Page 50


6.0 Independent Audit Report

To the members of Heron Resources Limited

Scope

We have audited the financial report of Heron Resources Limited for the year ended 30 June 2001 as set out on pages 36 to50, including the Directors’ Declaration. The Company’s Directors are responsible for the financial report which includes thefinancial statements of Heron Resources Limited and the consolidated financial statements of the consolidated entity comprisingthe Company and the entities it controlled at the end of, or during, the financial year. We have conducted an independent auditof the financial report in order to express an opinion on it to the members of the Company.

Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether thefinancial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supportingthe amounts and other disclosures in the financial report and the evaluation of accounting policies and significant accountingestimates. These procedures have been undertaken to form an opinion as to whether, in all material respects, the financial reportis presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements and statutoryrequirements, in Australia, so as to present a view which is consistent with our understanding of the Company’s and theconsolidated entity’s financial position and performance as represented by the results of their operations and their cash flows.

The audit opinion expressed in this report has been formed on the above basis.

Audit Opinion

In our opinion, the financial report of Heron Resources Limited is in accordance with:

a) the Corporations Act 2001 including:

i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2001 and of theirperformance for the year ended on that date; and

ii) complying with Accounting Standards and the Corporations Regulations 2001; and

b) other mandatory professional reporting requirements.

BUTLER SETTINERI COLIN BUTLERChartered Accountants Partner


Page 51

7.0 Shareholder Information

SHAREHOLDER INFORMATION AT 05 SEPTEMBER 2001

1. Issued Shares and Options

a) Distribution of Shareholders:

Size of Holding Number of Holders Shares Held

1 - 1,000 41 28,990

1,001 - 5,000 476 1,557,278

5,001 - 10,000 429 3,701,315

10,001 - 100,000 687 22,460,317

100,001 - 76 73,210,827

1709 100,958,727

b) The twenty largest Shareholders hold 59.35% of the issued fully paid capital of the Company.

c) Substantial Shareholder who has notified the Company:

Holder Number of Shares %

Hazurn Pty Ltd 25,750,000 25.51

Centaur Nickel Investments Pty Ltd 15,890,310 15.74

d) Distribution of Optionholders:

The following Options were on issue:

i) 350,000 exercisable on or before 15 December 2001 payment of $0.25 per Option exercised;

ii) 50,000 exercisable on or before 05 March 2002 payment of $0.25 per Option exercised;

iii) 200,000 exercisable on or before 19 December 2002 payment of $0.25 per Option exercised;

iv) 200,000 exercisable on or before 19 December 2002 payment of $0.35 per Option exercised;

v) 200,000 exercisable on or before 19 December 2002 payment of $0.45 per Option exercised;

vi) 200,000 exercisable on or before 19 December 2002 payment of $0.55 per Option exercised;

vii) 200,000 exercisable on or before 19 December 2002 payment of $0.65 per Option exercised;

viii) 100,000 exercisable on or before 04 February 2004 payment of $0.25 per Option exercised;

ix) 785,000 exercisable on or before 19 October 2004 payment of $0.35 per Option exercised;

x) 785,000 exercisable on or before 19 October 2004 payment of $0.50 per Option exercised;

Size of Holding Number of Holders Options Held

1 - 1,000 0 0

1,001 - 5,000 0 0

5,001 - 10,000 0 0

10,001 - 100,000 3 175,000

100,001 - 7 2,895,000

10 3,070,000

e) There were 179 Shareholders who held less than a marketable parcel.

f) Nil securities have been classified by ASX as restricted.

VOTING RIGHTS

In accordance with the Company’s Constitution, voting rights are on the basis of a show of hands, one vote for every registeredholder and on a poll, one vote for each Share held by registered holders.

Page 52


Twenty Largest Shareholders as at 05 September 2001

Number of Shares %

1. Hazurn Pty Ltd 25,750,000 25.51

2. Centaur Nickel Investments Pty Ltd 15,890,310 15.74

3. Koltai Holdings Pty Ltd 2,675,679 2.65

4. Buchhorn Ian James 2,447,857 2.42

5. Buchhorn Pamela Jean 1,519,998 1.51

6. Killoran NL 1,480,074 1.47

7. National Nominees Limited 1,217,605 1.21

8. Dolerite Investments Pty 1,100,000 1.09

9. Baracus Pty Ltd 1,000,000 0.99

10. Commonwealth Custodial Pty Ltd 1,000,000 0.99

11. Bronwen Pty Ltd 800,000 0.79

12. Kett Peter John 701,300 0.69

13. Overnight Nominees Pty Ltd 621,985 0.62

14. GHK Mining Pty Ltd 600,000 0.59

15. Ufar Pty Ltd 560,000 0.55

16. Jayleaf Holdings Pty Ltd 550,000 0.54

17. Hawke Robert Lawrence 506,666 0.50

18. Goldenstate Holdings Pty Ltd 500,000 0.50

19. Otway John Percival 500,000 0.50

20. Yengage Pty Ltd 500,000 0.50

TOTAL 59,921,474 59.35

Optionholders as at 5 September 2001

Optionholders (Options exercisable on or before 15 December 2001) were:

Number of Options % of Issued Options

Whitebeach Pty Ltd 200,000 57.14

Colville Marilyn 150,000 42.86

TOTAL 350,000 100.00

Optionholders (Options exercisable on or before 05 March 2002) were:


Rudd Mara 50,000 100.00

TOTAL 50,000 100.00

Optionholders (Options exercisable on or before 19 December 2002) were:


Buchhorn Ian James 1,000,000 100.00

TOTAL 1,000,000 100.00

Optionholders (Options exercisable on or before 4 February 2004) were:


Gobbett Simon 25,000 25.00Geary Susan 25,000 25.00Rudd Alan 50,000 50.00

TOTAL 100,000 100.00

7.0 Shareholder Information cont

Page 53

Optionholders (Options exercisable on or before 19 October 2004) were:


Geary Peter 150,000 9.55Gobbett Simon 320,000 20.38Parkway Superannuation Fund 500,000 31.85Rudd Alan 500,000 31.85Arancini Sandra 100,000 6.37

TOTAL 1,570,000 100.00

Summary of Optionholders as at 05 September 2001


1. Buchhorn Ian James 1,000,000 32.57

2. Rudd Alan 550,000 17.92

3. Parkway Superannuation Fund 500,000 16.29

4. Gobbett Simon 345,000 11.24

5. Whitebeach Pty Ltd 200,000 6.51

6. Colville Marilyn 150,000 4.89

7. Geary Peter 150,000 4.89

8. Arancini Sandra 100,000 3.26

9. Rudd Mara 50,000 1.63

10. Geary Susan 25,000 0.81

3,070,000 100.00

7.0 Shareholder Information cont

Page 54


8.0 Interest in Mining Tenements

Prospect Geographic Tenement Area Status InterestLocation Identifier km2 Held

HERON RESOURCES LIMITED NICKEL PROVINCES

KALGOORLIE NICKEL PROVINCE Goongarrie Nickel Project Ni(-Au)Scotia 65km NW of Kalgoorlie E24/00113 5.60 A 100%Goongarrie West 73km NW of Kalgoorlie E24/00116 98.00 A 100%Goongarrie West 66km NNW of Kalgoorlie E24/00117 126.00 A 100%Goongarrie 70km NNW of Kalgoorlie E24/00119 2.80 A 100%Goongarrie South 75km NNW of Kalgoorlie E29/00148 14.00 G 100%

75km NNW of Kalgoorlie M29/00283 A 100%75km NNW of Kalgoorlie M29/00303 A 100%84km NNW of Kalgoorlie M29/00304 A 100%

Siberia 70km NW of Kalgoorlie E29/00356 4.78 G 100%Menzies South 109km NNW of Kalgoorlie E29/00433 11.20 G 100%Goongarrie 88km NNW of Kalgoorlie E29/00437 19.60 A 100%Comet Vale 90km NNW of Kalgoorlie E29/00462 89.60 A 100%Twin Hills 150km N of Kalgoorlie E29/00490 42.00 A 100%Comet Vale 96km NNW of Kalgoorlie E29/00508 8.40 A 100%Scotia Dam 65km NNW of Kalgoorlie M24/00542 7.18 A 100%Scotia North 75km NNW of Kalgoorlie M24/00744 0.06 G 100%Vettersberg 50km NNW of Kalgoorlie M24/00749 9.37 A 100%Vettersberg 55km NNW of Kalgoorlie M24/00750 4.48 A 100%Scotia East 68km NNW of Kalgoorlie M24/00798 0.26 G 100%Scotia 62km NNE of Kalgoorlie M24/00843 4.71 A 100%Goongarrie West 87km NNW of Kalgoorlie M29/00167 1.09 G 100%GoongarrieWest 86km NNW of Kalgoorlie M29/00202 5.95 G 100%Menzies East 122km NNW of Kalgoorlie M29/00231 1.29 A 100%Goongarrie South 77km NNW of Kalgoorlie M29/00272 5.94 G 100%Canegrass 74km NNW of Kalgoorlie M29/00278 8.14 G 100%Ghost Rocks 148km NNW of Kalgoorlie M29/00289 8.96 A 100%Ghost Rocks 147km NNW of Kalgoorlie M29/00290 5.97 A 100%Ghost Rocks 145km NNW of Kalgoorlie M29/00291 8.96 A 100%Scotia Dam 65km NNW of Kalgoorlie P24/02754 1.82 G 100%Scotia Dam 66km NNW of Kalgoorlie P24/02755 2.00 G 100%Scotia Dam 67km NNW of Kalgoorlie P24/02756 1.28 G 100%

M24/00541 A 100%Vettersberg 59km NNW of Kalgoorlie P24/03695 1.95 A 100%

M24/00691 A 100%Vetters North 59km NNW of Kalgoorlie P24/03734 1.84 A 100%Camperdown 78km NW of Kalgoorlie P24/03748 1.62 A 100%Camperdown 78km NW of Kalgoorlie P24/03749 1.87 A 100%Camperdown 78km NW of Kalgoorlie P24/03750 1.82 A 100%Goongarrie 73km NW of Kalgoorlie P24/03763 1.79 A 100%Menzies East 112km NNW of Kalgoorlie P29/01413 0.10 G 100%

M29/00230 A 100%Menzies East 112km NNW of Kalgoorlie P29/01500 1.20 G 100%Menzies East 112km NNW of Kalgoorlie M29/00274 6.76 A 100%Goongarrie West 82km NNW of Kalgoorlie P29/01634 1.84 G 100%Goongarrie West 82km NNW of Kalgoorlie P29/01635 1.39 G 100%

M29/00292 A 100%Goongarrie 99km NNW of Kalgoorlie P29/01671 0.39 A 100%Ghost Rocks 134km NNW of Kalgoorlie P29/01682 0.75 A 100%Yunndaga 116km NNW of Kalgoorlie P29/01734 1.89 A 100%Yunndaga 116km NNW of Kalgoorlie P29/01735 1.21 A 100%

44 521.05

KALGOORLIE NICKEL PROVINCE Frances Lesley Nickel Project NiFrances Lesley 95km NW of Kalgoorlie E16/00174 5.60 G 100%Frances Lesley 100km NW of Kalgoorlie E16/00192 86.80 A 100%Frances Lesley 88km NW of Kalgoorlie E16/00239 36.40 A 100%Frances Lesley 90km NW of Kalgoorlie E16/00240 2.80 B 100%Frances Lesley 98km NW of Kalgoorlie M16/00385 2.00 A 100%Saddle Dam 94km NW of Kalgoorlie P16/02123 1.75 A 100%Saddle Dam 94km NW of Kalgoorlie P16/02124 1.86 A 100%Saddle Dam 94km NW of Kalgoorlie P16/02125 1.30 A 100%

8 138.51

Page 55


KALGOORLIE NICKEL PROVINCE Kalpini Nickel Project Ni(-Au)Lake Emu West 68km NE of Kalgoorlie E27/00188 16.80 A 100%Binti Binti South 77km NE of Kalgoorlie E27/00251 39.20 A 100%Emu Lake 72km NE of Kalgoorlie E27/00260 2.80 A 100%Sampson 66km NE of Kalgoorlie E27/00273 176.40 A 100%Grey Dam 66km NE of Kalgoorlie E28/00991 11.20 G 100%Betsy Bore 79km NE of Kalgoorlie E28/01100 173.60 A 100%Mooree Hill 75km NE of Kalgoorlie E28/01187 28.00 A 100%Jubilee 61km NE of Kalgoorlie E28/01191 64.40 A 100%Acra 61km NE of Kalgoorlie E28/01223 109.20 A 100%Wellington North 63km NE of Kalgoorlie E28/01224 196.00 A 100%Boomerang Lake 103km NE of Kalgoorlie E31/00519 156.80 A 100%Mt Ballona 87km NE of Kalgoorlie E31/00575 67.20 A 100%Jungle Hill 140km NE of Kalgoorlie E31/00579 81.20 A 100%Boomerang North 122km NE of Kalgoorlie E31/00581 78.40 A 100%Acra North 67km NE of Kalgoorlie M27/00349 1.14 A 100%Kalpini 60km NE of Kalgoorlie M27/00350 4.28 A 100%Wellington North 68km NE of Kalgoorlie M27/00361 6.17 A 100%Wellington North 70km NE of Kalgoorlie M27/00362 7.46 A 100%Wellington East 69km NE of Kalgoorlie M27/00364 2.14 A 100%Wellington East 70km NE of Kalgoorlie M27/00365 8.09 A 100%Wellington North 68km NE of Kalgoorlie M27/00395 2.61 A 100%Wellington North 72km NE of Kalgoorlie M27/00402 1.55 A 100%Binti Binti South 77km NE of Kalgoorlie M27/00408 8.90 A 100%Binti Binti South 74km NE of Kalgoorlie M27/00409 5.94 A 100%Binti Binti South 74km NE of Kalgoorlie M27/00410 8.90 A 100%Acra Chrysoprase 62km NE of Kalgoorlie M28/00127 0.32 A 100%Wellington East 70km NE of Kalgoorlie M28/00169 1.48 A 100%Acra North 65km NE of Kalgoorlie M28/00199 9.76 A 100%Acra North 62km NE of Kalgoorlie M28/00200 8.43 A 100%Acra North 65km NE of Kalgoorlie M28/00201 9.63 A 100%Acra North 60km NE of Kalgoorlie M28/00202 9.17 A 100%Betsy Bore 66km NE of Kalgoorlie M28/00205 8.50 A 100%Betsy Bore 68km NE of Kalgoorlie M28/00206 8.88 A 100%Wellington East 67km NE of Kalgoorlie M28/00215 3.30 A 100%Barton Dam 59km NE of Kalgoorlie M28/00259 3.41 A 100%Acra 62km NE of Kalgoorlie M28/00260 9.03 A 100%Binti Binti 81km NE of Kalgoorlie M31/00297 8.90 A 100%Binti Binti 80km NE of Kalgoorlie M31/00305 5.93 A 100%Jubilee 66km NE of Kalgoorlie P28/00980 1.01 A 100%

39 1040.93

KALGOORLIE NICKEL PROVINCE Widgimooltha Nickel Project Ni-AuPioneer 125km SSE of Kalgoorlie E15/00573 47.60 G 100%Larkinville 73km SSE of Kalgoorlie E15/00689 100.80 A 100%Pioneer 136km SSE of Kalgoorlie E63/00753 33.60 A 100%Larkinville 75km SSE of Kalgoorlie P15/04213 1.22 G 100%Larkinville 75km SSE of Kalgoorlie P15/04214 1.21 G 100%Logans 65km SSE of Kalgoorlie P15/04464 0.22 A 100%Widgiemooltha 86km SSE of Kalgoorlie P15/04475 0.04 A 100%

7 184.69

KALGOORLIE NICKEL PROVINCE Bulong South Project Ni-AuClinker Hill 32km SE of Kalgoorlie E25/00250 58.80 A 100%Wombola North 44km SE of Kalgoorlie P26/03090 1.41 A 100%Wombola North 44km SE of Kalgoorlie P26/03091 1.08 A 100%

3 61.29

8.0 Interest in Mining Tenements cont

Page 56



SOUTHERN CROSS NICKEL PROVINCE Bungalbin Nickel Project Ni(-Au)Mount Dimer 112km NNE of Southern Cross E77/00946 170.80 G 100%Timberfield 123km NNE of Southern Cross E77/00947 89.60 A 100%Yeeding Hill South 95km N of Southern Cross E77/00975 196.00 A 100%Yendilberin Hills 104km NNE of Southern Cross E77/00976 109.20 A 100%Helena 98km NNE of Southern Cross E77/01067 184.80 A 100%Mount Dimer 107km NNE of Southern Cross E77/01068 8.40 A 100%Yeeding Hill 108km N of Southern Cross E77/01071 22.40 A 100%Bungalbin Hill 97km NNE of Southern Cross E77/01076 123.20 A 100%Bungalbin Hill 109km NNE of Southern Cross E77/01077 28.00 A 100%Bungalbin Hill 96km NNE of Southern Cross E77/01082 50.40 A 100%

10 982.80

SOUTHERN CROSS NICKEL PROVINCE Bungalbin Iron Ore Project FeBungalbin 102km NNE of Southern Cross E77/00842 112.58 G 100% 1

Mount Jackson 106km NNE of Southern Cross E77/00896 36.40 G 100% 1

Mount Jackson 105km NNE of Southern Cross E77/00919 53.20 G 100% 1

3 202.181 Portman Limited right to acquire Iron Ore rights through spending $0.25m, and

providing Heron with an Iron Ore Production Royalty. Heron retain all other minerals.

SOUTHERN CROSS NICKEL PROVINCE Mount Elvire Project Ni-AuLake Barlee 242km NNE of Southern Cross E29/00503 16.80 A 100%Lake Barlee 219km NNE of Southern Cross E30/00267 92.40 A 100%Elvire Rock 196km NNE of Southern Cross E30/00268 128.80 A 100%

3 238.00

SOUTHERN CROSS NICKEL PROVINCE Maggie Hays Hill Project Ni-AuMaggie Hays Hill 140km SE of Southern Cross E63/00625 81.20 A 100%

1 81.20

KEITH KILKENNY-LAVERTON NICKEL PROVINCE Edjudina Nickel Project Ni(-Au)Mount Catherine South 145km NNE of Kalgoorlie E31/00279 14.00 G 100%Mount Remarkable 155km NNE of Kalgoorlie E31/00346 2.80 B 100%Claypan Dam 158km NNE of Kalgoorlie E31/00347 2.80 B 100%Yerilla Creek Dam 155km NNE of Kalgoorlie E31/00348 11.20 B 100%Mount Catherine East 143km NNE of Kalgoorlie E31/00372 5.60 B 100%Mount Catherine East 138km NNE of Kalgoorlie E31/00373 2.80 B 100%Yerilla 1149km NNE of Kalgoorlie E31/00399 2.80 A 100%Duck Hill South 1151km NE of Kalgoorlie E31/00415 81.20 B 100%Claypan Well 141km NNE of Kalgoorlie E31/00446 8.40 A 100%McAuliffe Well 150km NNE of Kalgoorlie E31/00518 50.40 B 100%Mount Catherine 141km NNE of Kalgoorlie E31/00529 2.80 A 100%Westward Ho Well 140km NNE of Kalgoorlie E31/00576 30.80 A 100%Yerilla 142km NNE of Kalgoorlie E31/00584 47.60 A 100%Wallbrook Hill 118km NE of Kalgoorlie E31/00586 86.80 A 100%Kilmore Hill 177km NNE of Kalgoorlie E39/00694 14.00 G 100%Kilmore Hill 170km NNE of Kalgoorlie E39/00695 2.80 G 100%Lake Raeside 165km NNE of Kalgoorlie E39/00700 32.88 B 100%Lake Raeside 166km NNE of Kalgoorlie E39/00725 16.80 B 100%Aubils 166km NNE of Kalgoorlie M39/00658 1.48 A 100%Aubils 166km NNE of Kalgoorlie M39/00659 1.48 A 100%Lake Raeside 171km NNE of Kalgoorlie E39/00726 8.40 B 100%Murphy Well 177km NNE of Kalgoorlie E39/00831 33.60 B 100%Mount Percy 163km NNE of Kalgoorlie E39/00883 196.00 A 100%Yerilla 145km NNE of Kalgoorlie M31/00105 2.40 G 100%Yerilla 148km NNE of Kalgoorlie M31/00110 7.20 G 100%Boyce Creek 142km NNE of Kalgoorlie M31/00278 0.70 A 100%Boyce Creek 142km NNE of Kalgoorlie M31/00296 5.80 A 100%Boyce Creek 142km NNE of Kalgoorlie M31/00300 1.11 A 100%Aubils 170km NNE of Kalgoorlie M39/00656 1.48 A 100%Aubils 168km NNE of Kalgoorlie M39/00657 4.44 A 100%Aubils 170km NNE of Kalgoorlie M39/00660 1.48 A 100%Aubils 169km NNE of Kalgoorlie M39/00662 2.96 A 100%Aubils 170km NNE of Kalgoorlie M39/00805 5.98 A 100%Aubils 170km NNE of Kalgoorlie M39/00806 5.98 A 100%Aubils 166km NNE of Kalgoorlie M39/00807 8.97 A 100%

35 705.93


Page 57


KEITH KILKENNY-LAVERTON NICKEL PROVINCE Mulgabbie Nickel Project Ni(-Au)Lake Rebecca 114km NE of Kalgoorlie M31/00080 2.02 G 100%Lake Rebecca 114km NE of Kalgoorlie M31/00081 1.21 G 100%

M31/00312 A 100%

2 3.23

KEITH KILKENNY-LAVERTON NICKEL PROVINCE Laverton Nickel Project NiMineral Patch Hill 75km SE of Laverton E38/00931 196.00 G 100% 2

Merolia 50km SE of Laverton E38/01179 196.00 G 100% 2

Jasper Hill 168km SE of Laverton E39/00880 30.80 G 100% 2

Jasper Hills 120km SE of Laverton E39/00907 25.20 A 100% 2

4 448.002 MPI Gold Pty Ltd own the Gold rights.

AVOCA RESOURCES LIMITED PRECIOUS METAL PROVINCES

JIMBERLANA PLATINUM PROVINCE Cowan Project PGE-Ni-CuBronzite Ridge 40km W of Norseman E63/00797 196.00 A 100%Norseman Highway 9km NW of Norseman P63/01137 1.19 A 100%Norseman Highway 9km NW of Norseman P63/01138 1.43 G 100%Norseman Highway 8km NW of Norseman P63/01139 1.21 A 100%Norseman Highway 7km NW of Norseman P63/01140 1.21 A 100%Norseman Highway 9km NW of Norseman P63/01141 1.96 A 100%Norseman Highway 10km NW of Norseman P63/01142 1.21 A 100%Norseman Highway 9km NW of Norseman P63/01143 1.24 A 100%Norseman Highway 8km W of Norseman P63/01144 1.51 A 100%Norseman Highway 8km W of Norseman P63/01145 1.77 A 100%

10 208.74

JIMBERLANA PLATINUM PROVINCE Dundas Hills Project PGE-Ni-CuNorseman 5km N of Norseman P63/01160 1.17 A 100%Norseman 5km N of Norseman P63/01161 1.22 A 100%Jimberlana 8km NNE of Norseman P63/01162 1.87 A 100%Jimberlana 8km NNE of Norseman P63/01163 1.92 A 100%

4 6.18

JIMBERLANA PLATINUM PROVINCE Mount Norcott Project PGE-Ni-CuHeartbreak 39km NE of Norseman E63/00709 196.00 A 100%Heartbreak 52km NE of Norseman E63/00712 196.00 A 100%Mount Norcott 21km ENE of Norseman E63/00798 126.00 A 100%

3 518.00

JIMBERLANA PLATINUM PROVINCE Ten Mile Rock Project PGE-Ni-CuFrasers Range West 75km NE of Norseman E63/00631 36.40 G 100%Heartbreak 1 76km E of Norseman E63/00707 196.00 A 100%Heartbreak 2 70km NE of Norseman E63/00708 196.00 A 100%Heartbreak 82km E of Norseman E63/00711 196.00 A 100%Heartbreak 81km NE of Norseman E63/00713 103.60 A 100%Woodline Hills 77km NE of Norseman E63/00795 162.40 A 100%

6 786.80

JIMBERLANA PLATINUM PROVINCE Fraser Range Project PGE-Ni-CuFraser Range 163km NE of Norseman E28/01162 196.00 A 100%Fraser Range 177km NE of Norseman E28/01163 196.00 A 100%Fraser Range 164km NE of Norseman E28/01164 196.00 A 100%Fraser Range 154km NE of Norseman E28/01165 196.00 A 100%

4 784.00


Page 58



ILLAARA PROVINCE Perrinvale Joint Venture Project VMS-Au-NiRanford Peak 231km NW of Kalgoorlie E29/00434 98.00 G 100% 3

Mount Marmion 208km NW of Kalgoorlie E29/00435 95.20 G 100% 3

Metzkes Find 208km NW of Kalgoorlie E29/00455 156.80 A 100% 3

Lawrence Find 160km NW of Kalgoorlie E30/00203 208.52 A 100% 3

Lawrence Find North 188km NW of Kalgoorlie E30/00226 196.00 G 100% 3

Lawrence Find 176km NW of Kalgoorlie E30/00228 64.40 G 100% 3

Illaara 196km NW of Kalgoorlie E30/00254 126.00 A 100% 3

7 944.923 Mount Burgess Mining NL right to earn 70% through spending $0.5m.

Heron retains Nickel and Sulphur rights.

ZULEIKA SHEAR ZONE PROVINCE Snake Hill Joint Venture Project: Au(-Ni)Snake Hill North 174km NW of Kalgoorlie E29/00290 5.60 G 100% 4

M29/00310 A 100% 4

Snake Hill 168km NW of Kalgoorlie E30/00166 8.40 G 100% 4

2 14.004 Barra Resources Limited right to earn 70% through spending $0.3m.

ZULEIKA SHEAR ZONE PROVINCE Blister Dam Joint Venture Project Au-NiDunnsville 61km NW of Kalgoorlie E16/00181 2.80 G 100% 5

Dunnsville 62km NW of Kalgoorlie E16/00182 14.00 A 100% 5

Carbine 66km NW of Kalgoorlie E16/00195 44.80 G 100% 5

Carbine 63km NW of Kalgoorlie E16/00254 0.02 A 100% 5

Chadwin 77km NW of Kalgoorlie E16/00264 5.60 A 100% 5

Lake Carnage 70km NW of Kalgoorlie E24/00115 42.00 A 100% 5

Blister Dam 73km NW of Kalgoorlie M16/00435 6.84 A 100% 5

Blister Dam 76km NW of Kalgoorlie M24/00842 3.87 A 100% 5

8 119.935 Place Dome Asia Pacific right to earn 70% through spending $1.2m.

Heron retains Nickel rights.

ZULEIKA SHEAR ZONE PROVINCE Powder Sill Project PGE-Ni-Cu-AuMungari Northwest 27km W of Kalgoorlie E15/00411 2.08 A 100%Mungari Northwest 33km NW of Kalgoorlie E16/00121 25.20 G 100%Mungari West 30km NW of Kalgoorlie E16/00146 5.60 G 100%

M16/00446 A 100%Mungari Northwest 44km NW of Kalgoorlie M16/00377 2.00 A 100%Mungari Northwest 42km NW of Kalgoorlie M16/00378 2.74 A 100%Mungari Northwest 37km NW of Kalgoorlie M16/00379 7.30 A 100%Mungari Northwest 44km NW of Kalgoorlie M16/00414 2.00 A 100%

7 46.92

ZULEIKA SHEAR ZONE PROVINCE Mungari Gold Project AuMungari 20km WNW of Kalgoorlie E15/00726 19.60 A 100%Mungari 19km WNW of Kalgoorlie M15/01350 1.55 A 100%Dryden's Find 26km WNW of Kalgoorlie P15/04416 0.33 A 100%Dryden's Find 27km WNW of Kalgoorlie P15/04417 1.88 A 100%Dryden's Find 26km WNW of Kalgoorlie P15/04418 2.00 A 100%Dryden's Find 25km WNW of Kalgoorlie P15/04419 1.86 A 100%Dryden's Find 27km WNW of Kalgoorlie P15/04420 1.87 A 100%Dryden's Find 27km WNW of Kalgoorlie P15/04421 1.86 A 100%Dryden's Find 28km WNW of Kalgoorlie P15/04422 1.14 A 100%Dryden's Find 26km WNW of Kalgoorlie P15/04425 1.87 A 100%Mungari 20km WNW of Kalgoorlie P15/04472 1.12 A 100%

11 35.08


Page 59


ZULEIKA SHEAR ZONE PROVINCE Binduli East Joint Venture Project AuMount Hunt 16km S of Kalgoorlie E26/00081 14.00 A 100% 6

Binduli East 8km SSW of Kalgoorlie P26/02791 1.98 G 100% 6




M26/00751 A 100% 6


Binduli East 10km S of Kalgoorlie P26/02802 1.73 G 100% 6

M26/00762 A 100% 6

Binduli East 7km SW of Kalgoorlie P26/02803 1.96 G 100% 6

M26/00750 A 100% 6



M26/00763 A 100% 6



Binduli East 20km S of Kalgoorlie P26/02972 1.96 G 100% 6

13 34.746 AngloGold Australasia Limited right to earn 75% through spending $0.5m.


AVOCA SHEAR PROVINCE Gindalbie Terrian Joint Venture Project Au-NiMulgarie North 50km N of Kalgoorlie E24/00097 28.00 G 100% 7

Gindalbie 48km N of Kalgoorlie E27/00145 47.60 G 100% 7

Scotia East 62km N of Kalgoorlie E27/00169 108.40 G 100% 7

Scotia East 60km N of Kalgoorlie M24/00799 9.53 A 100% 7

Scotia East 55km N of Kalgoorlie M24/00800 6.41 A 100% 7

5 199.947 Delta Gold NL right to earn 70% in respect of gold through spending $1.0m.


AVOCA SHEAR PROVINCE Gidgi Project Au-NiGidji Roaster 14km N of Kalgoorlie E24/00111 64.40 A 100%Five Mill Hill 6km NNE of Kalgoorlie M26/00736 7.04 A 100%Kanowna 15km NW of Kalgoorlie M27/00392 7.70 A 100%Kanowna 17km NW of Kalgoorlie M27/00393 8.02 A 100%Kanowna 16km NW of Kalgoorlie M27/00394 8.02 A 100%Kurramia 8km NE of Kalgoorlie P26/02898 1.60 G 100%Kurramia South 10km NE of Kalgoorlie P26/02977 0.89 G 100%

7 97.67

AVOCA SHEAR PROVINCE Roe Hills Joint Venture Project Au-NiKurnalpi East 85km NE of Kalgoorlie E28/00886 53.20 G 100% 8

Tap Rock Hill 88km NE of Kalgoorlie E28/00927 190.40 A 100% 8

Kurnalpi Hill 88km NE of Kalgoorlie E28/01012 53.20 G 100% 8

Jumungie Hill 82km NE of Kalgoorlie E28/01013 8.40 B 100% 8

Kurnalpi Hill 88km NE of Kalgoorlie E28/01108 92.40 A 100% 8

Hampton 90km NE of Kalgoorlie E28/01166 5.60 A 100% 8

6 403.208 Delta Gold NL right to earn 80% in respect of gold through spending $1.0m.



Page 60



AVOCA SHEAR PROVINCE Transline Joint Venture Project Au-NiGundocketa Hill 65km ESE of Kalgoorlie E25/00114 16.80 G 100% 9

M25/00267 A 100% 9

Gundocketa Hill 62km ESE of Kalgoorlie E25/00167 2.80 G 100% 9

Gundocketa Hill 66km ESE of Kalgoorlie E25/00168 2.80 G 100% 9

Trans Find North 54km E of Kalgoorlie E25/00179 89.60 G 100% 9

Trans Find 51km ESE of Kalgoorlie E25/00184 53.20 G 100% 9

Gundockerta Hill West 49km E of Kalgoorlie E25/00186 8.40 G 100% 9

Seabrook Hills 67km SE of Kalgoorlie E25/00189 2.80 G 100% 9

Seabrook Hills 67km SE of Kalgoorlie E25/00191 14.00 B 100% 9

Trans Find 58km ESE of Kalgoorlie E25/00195 42.00 G 100% 9

Hawke Hill 68km ESE of Kalgoorlie E25/00204 8.40 G 100% 9

Pipeclay Peaks 68km ESE of Kalgoorlie E25/00216 120.40 A 100% 9

Kim's Dam 84km E of Kalgoorlie E28/01003 56.00 G 100% 9

Gundocketa Hill 66km ENE of Kalgoorlie E28/01116 140.00 A 100% 9

Randalls 66km SE of Kalgoorlie P25/01580 1.00 A 100% 9

14 558.209 Harmony Gold Limited right to earn 80% through spending $0.8m.

AVOCA SHEAR PROVINCE Avoca Project Au-NiTransline 73km ESE of Kalgoorlie E25/00234 53.20 B 100%Pipeclay Peaks 66km ESE of Kalgoorlie E25/00241 11.20 A 100%Lake Sloan 96km SE of Kalgoorlie E25/00248 196.00 A 100%Trans East 72km ESE of Kalgoorlie E28/01079 44.80 A 100%Hampton 71km E of Kalgoorlie E28/01117 33.60 A 100%Hampton 72km ENE of Kalgoorlie E28/01118 5.60 A 100%Sawmill Dam 77km ESE of Kalgoorlie E28/01129 19.60 B 100%Transline 73km ESE of Kalgoorlie E28/01136 14.00 B 100%Transline 73km ESE of Kalgoorlie E28/01137 33.60 B 100%Round Hill 106km SE of Kalgoorlie E28/01148 196.00 A 100%Pineapple Dam 66km E of Kalgoorlie E28/01188 11.20 A 100%Lake Yindarlgooda 59km ENE of Kalgoorlie E28/01192 8.40 A 100%Avoca Downs 83km ESE of Kalgoorlie E28/01199 165.20 A 100%Adelaide Dams 78km E of Kalgoorlie E28/01207 25.20 A 100%

14 817.60

KEITH KILKENNY PROVINCE Yandal Project AuWiluna South 30km SE of Wiluna E53/1010 128.80 A 100%

1 128.80

KEITH KILKENNY PROVINCE Victory Joint Venture Project Au-NiDoyle Well 59km NW of Leonora E37/00406 16.80 G 100% 10

M37/01088 A 100% 10

Victory Gold Mine 50km NW of Leonora M37/00931 0.18 A 100% 10

Victory 53km NW of Leonora P37/05830 1.95 G 100% 10




6 23.7610 WMC Resources Limited right to earn 80% through spending $0.125m.

KEITH KILKENNY PROVINCE Wildara North Project Au-NiMount McClure 135km NNW of Leonora E36/00387 16.80 A 100%Mount McClure 128km NNW of Leonora E36/00388 5.60 G 100%Try Again Bore 123km NNW of Leonora E36/00432 19.60 A 100%Table Hill 102km NNW of Leonora E36/00458 5.60 A 100%Table Hill East 97km NW of Leonora E36/00459 8.40 A 100%

5 56.00

KEITH KILKENNY PROVINCE Kookynie Joint Venture Project Au-NiGlenorn Station South 59km SW of Leonora E31/00410 67.20 G 100% 11

Friday Well 47km SW of Leonora E31/00484 16.80 G 100% 11

Mount Melita East 38km SW of Leonora E40/00127 2.80 G 100% 11

3 86.8011 Newcrest Operations Limited right to earn 75% in respect of Gold through spending $0.8m.



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KEITH KILKENNY PROVINCE Kookynie Project Au-NiDesdemona North 21km SSE of Leonora E40/00122 2.80 A 100%Morapoi 57km S of Leonora E40/00132 5.97 A 100%Tampa 30km SSE of Leonora E40/00140 8.98 A 100%Tampa 33km SSE of Leonora E40/00141 2.99 A 100%Tampa 35km SSE of Leonora E40/00142 14.00 G 100%Mt Melita 30km SE of Leonora E40/00186 58.80 A 100%Malcolm East 22km ESE of Leonora M37/00727 4.43 A 100%Malcolm East 21km ESE of Leonora M37/00728 5.73 A 100%Malcolm East 23km ESE of Leonora M37/00729 9.74 A 100%Malcolm East 22km ESE of Leonora M37/00730 8.00 A 100%Alice Gold Mine 17km ESE of Leonora M37/00953 0.10 A 100%Eulaminna 46km ESE of Leonora P39/04127 1.20 A 100%Eulaminna 47km ESE of Leonora P39/04128 1.20 A 100%Eulaminna 47km ESE of Leonora P39/04129 1.20 A 100%Eulaminna 46km ESE of Leonora P39/04130 1.20 A 100%Eulaminna 46km ESE of Leonora P39/04131 1.28 A 100%

16 121.54

KEITH KILKENNY PROVINCE Edjudina Laverton Joint Venture Project Au-NiYarri South 133km NW of Kalgoorlie E31/00235 5.60 G 100% 12

Yarri East 139km NW of Kalgoorlie E31/00312 68.41 A 100% 12

Seddon Bore 136km NW of Kalgoorlie E31/00354 16.80 B 100% 12

Webb Find West 134km NW of Kalgoorlie E31/00374 14.00 G 100% 12

Boyce Creek South 139km NW of Kalgoorlie E31/00377 28.00 G 100% 12

Duck Hill West 154km NW of Kalgoorlie E31/00430 84.00 G 100% 12

Lake Rebecca 116km NW of Kalgoorlie E31/00465 2.80 G 100% 12

Lake Rebecca 118km NW of Kalgoorlie E31/00479 11.20 B 100% 12

Mount Boyce 134km NW of Kalgoorlie E31/00524 176.40 A 100% 12

Camel Hump 49km N of Laverton E38/00945 9.06 G 100% 12

Mount Varden West 55km N of Laverton E38/01152 117.60 G 100% 12

Mount Varden West 55km N of Laverton E38/01153 19.60 G 100% 12

Yabboo Hill East 155km NW of Kalgoorlie E39/00795 8.40 G 100% 12

13 561.8712 Croesus Mining NL right to earn 80% in respect of gold through spending $1.0m.


KEITH KILKENNY PROVINCE Sth Laverton Tectonic Zone JV Project Au-NiPinjin South 155km NW of Kalgoorlie E28/00891 11.20 G 100% 13

Patricia West 146km NW of Kalgoorlie E31/00244 16.80 A 100% 13

Pinjin 139km NW of Kalgoorlie E31/00263 2.80 G 100% 13

M31/00280 A 100% 13

M31/00313 A 100% 13

Stophanis East 150km NW of Kalgoorlie E31/00265 2.80 G 100% 13

Yarri North East 150km NW of Kalgoorlie E31/00313 2.80 G 100% 13

Yarri North East 152km NW of Kalgoorlie E31/00315 2.80 G 100% 13

Edjudina East 144km NW of Kalgoorlie E31/00317 38.65 G 100% 13

Stophanis East 151km NW of Kalgoorlie E31/00343 2.97 G 100% 13

Broken Hill Bore 150km NW of Kalgoorlie E31/00352 2.86 A 100% 13

Clymies Well 147km NW of Kalgoorlie E31/00353 37.46 A 100% 13

Hobble Gap 155km NW of Kalgoorlie E31/00434 44.80 G 100% 13

Patricia South 150km NW of Kalgoorlie E31/00489 16.80 G 100% 13

Deep Well South 168km NW of Kalgoorlie E39/00661 2.80 G 100% 13

Deep Well North 174km NW of Kalgoorlie E39/00662 2.98 A 100% 13

Deep Well 173km NW of Kalgoorlie E39/00663 2.98 A 100% 13

Gardners Find 170km NW of Kalgoorlie E39/00721 47.60 G 100% 13

Mount Hornet 177km NW of Kalgoorlie E39/00729 33.60 G 100% 13

Gardners Find 174km NW of Kalgoorlie E39/00734 5.60 A 100% 13

Crab Hill 135km NW of Kalgoorlie P28/00923 1.38 G 100% 13





M28/00261 A 100% 13


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KEITH KILKENNY PROVINCE Sth Laverton Tectonic Zone JV Project cont Au-NiStophanis South 143km NW of Kalgoorlie P31/01546 1.61 G 100% 13

Stophanis South 143km NW of Kalgoorlie P31/01547 1.20 G 100% 13

Edjudina 150km NW of Kalgoorlie P31/01569 1.79 A 100% 13







Gardners Find 171km NW of Kalgoorlie P39/03691 2.00 G 100% 13

M39/00812 A 100% 13

34 304.7613 Gutnick Resources NL right to earn 80% in respect of gold through spending $1.2m.


KEITH KILKENNY PROVINCE Karonie South Joint venture Project Au-NiKaronie South 161km SW of Kalgoorlie E28/00631 196.00 G 100% 14

Karonie South 152km SW of Kalgoorlie E28/00665 67.20 G 100% 14

M28/00248 A 100% 14

M28/00249 A 100% 14

M28/00250 A 100% 14

M28/00251 A 100% 14





Buningonia 155km SW of Kalgoorlie E28/01014 42.00 G 100% 14

Fraser 168km SW of Kalgoorlie E63/00691 151.20 A 100% 14

8 652.5214 WMC Resources Limited right to earn 80% through spending $0.3m.

CELIA-LAVERTON TECTONIC ZONE PROVINCE Erlistoun Project Au-NiCorktree Well South 29km N of Laverton E38/00947 5.60 B 100%Corktree Well West 36km N of Laverton E38/00948 30.80 B 100%Bandya Hill 107km NNW of Laverton E38/01270 36.40 A 100%Mulga Queen 125km NNW of Laverton E38/01329 2.80 A 100%Doris Well 60km N of Laverton E38/01368 22.40 A 100%King of Creation 53km N of Laverton E38/01375 2.80 A 100%Mineshaft Well 72km N of Laverton E38/01380 25.20 A 100%Hackwell 90km N of Laverton E38/01404 22.40 A 100%Ingi-Jingi Hill 119km NNW of Laverton E38/01418 22.40 A 100%Perseverance Well 53km WNW of Laverton E39/00738 36.40 G 100%Euro 10km S of Laverton M38/00404 2.88 G 100%Euro 10km S of Laverton M38/00405 1.77 G 100%

12 211.85

CELIA-LAVERTON TECTONIC ZONE PROVINCE Mount Zephyr Project Au-NiMount Zephyr 79km NE of Leonora E39/00538 50.40 G 100%Mount Zephyr 71km NE of Leonora E39/00927 25.20 A 100%Mount Zephyr 71km NE of Leonora E39/00928 19.60 A 100%Mount Zephyr 72km NE of Leonora E39/00940 58.80 A 100%

4 154.00

CELIA-LAVERTON TECTONIC ZONE PROVINCE Laverton Joint Venture Project Au-NiHawkes Nest 14km WSW of Laverton E38/00831 16.80 G 100% 15

Hawkes Nest South 20km WSW of Laverton E38/00832 14.00 G 100% 15

2 30.8015 Metex Resources Limited right to earn 70% through spending $0.5m.


Page 63


CELIA-LAVERTON TECTONIC ZONE PROVINCE Mount Morgans Joint Venture Project Au-NiMount Morgans Northwest 40km WSW of Laverton P39/03454 1.56 G 20% 16

M39/00754 A 20% 16

Mount Morgans Northwest 39km WSW of Laverton P39/03455 1.95 G 20% 16



M39/00755 A 20% 16

Mount Morgans West 44km WSW of Laverton P39/03466 1.71 G 20% 16




M39/00753 A 20% 16

8 14.1516 Metex Resources Limited have earnt 70% through spending $0.5m.

Heron free carry to mining at 20%.

BALLADONIA ENERGY NL OIL SHALE PROVINCES

BREMER_EUCLA PALAEODRAINAGE PROVINCE Balladonia Oil Shale Project Oil-SulphurThe Yates 146km S of Norseman E63/00731 196.00 A 100%Mount Beaumont 154km SSE of Norseman E63/00732 196.00 A 100%Charlina Rocks 153km ESE of Norseman E69/01473 196.00 A 100%Balladonia 168km ESE of Norseman E69/01474 196.00 A 100%Boingaring Rocks 156km ESE of Norseman E69/01475 196.00 A 100%Afghan Rock 185km ESE of Norseman E69/01476 196.00 A 100%Balladonia West 153km ESE of Norseman E69/01477 196.00 A 100%Charlina South 147km ESE of Norseman E69/01478 196.00 A 100%Charlina West 143km ESE of Norseman E69/01479 196.00 A 100%Curnadinia Rock 163km ESE of Norseman E69/01480 196.00 A 100%Yalodinya Rock 159km ESE of Norseman E69/01481 134.40 A 100%Charlina East 162km ESE of Norseman E69/01482 81.20 A 100%Balladonia Central 164km ESE of Norseman E69/01483 39.20 A 100%Chidalinya Rock 193km ESE of Norseman E69/01492 106.40 A 100%Jerandilla 190km ESE of Norseman E69/01493 196.00 A 100%Eclipse Hill 189km SE of Norseman E69/01495 196.00 A 100%Bonnie Hill 178km SE of Norseman E69/01499 196.00 A 100%Florabell Hill 190km SE of Norseman E69/01500 196.00 A 100%Balladonia 184km E of Norseman E69/01717 196.00 A 100%Balladonia Central 169km ESE of Norseman E69/01742 179.20 A 100%Balladonia Central 166km ESE of Norseman E69/01743 168.00 A 100%

21 3648.40

BREMER_EUCLA PALAEODRAINAGE PROVINCE Ravensthorpe-Norseman Oil-SulphurOil Shale Project

Lake Cowan 44km NNE of Norseman E15/00570 204.01 A 100%Heartbreak 9 46km NNE of Norseman E15/00656 61.60 A 100%Geordie Rock 87km SSW of Norseman E63/00720 112.00 A 100%Lake Dundas 34km SSW of Norseman E63/00736 64.40 A 100%Lort River 110km SSW of Norseman E74/00278 151.20 A 100%Flower 161km SW of Norseman E74/00279 193.20 A 100%Lake Three Star 147km SW of Norseman E74/00280 193.20 A 100%Lake Sharpe 112km SW of Norseman E74/00281 196.00 A 100%Recruit Hill 92km SSW of Norseman E74/00282 196.00 A 100%Lake Fitzgerald 101km SSW of Norseman E74/00283 196.00 A 100%Mount Deans 12km SSW of Norseman M63/00417 9.87 A 100%Mount Deans 15km SSW of Norseman M63/00418 9.26 A 100%Lake Kirk 8km SSW of Norseman P63/01114 1.69 G 100%Lake Kirk 9km SSW of Norseman P63/01115 1.86 G 100%Lake Kirk 6km SSW of Norseman P63/01116 1.95 G 100%Lake Cowan 5km SSW of Norseman P63/01119 1.06 G 100%Lake Cowan 4km SSW of Norseman P63/01122 1.77 G 100%Lake Cowan 7km SSW of Norseman P63/01123 1.80 G 100%Lake Cowan 5km SSW of Norseman P63/01124 0.49 G 100%

19 1597.36


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HERON RESOURCES LIMITED NICKEL AND PRECIOUS METAL PROVINCES

ILLAARA PROVINCE Lawrence Find Project Ni-AuMeninga Soak 157km NW of Kalgoorlie E30/00262 81.20 A 100%

1 81.20

IDA FAULT PROVINCE Ida Fault Project Ni-AuMulline 133km NW of Kalgoorlie E30/00158 39.20 B 100%Mulline 139km NW of Kalgoorlie E30/00159 28.00 B 100%Morleys 144km NW of Kalgoorlie E30/00247 61.60 B 100%

3 128.80

IDA FAULT PROVINCE Bullabulling Project Ni-AuBullabulling 71km SW of Kalgoorlie E15/00679 114.80 A 100%Bullabulling 74km WNW of Kalgoorlie E16/00172 11.80 A 100%Jaurdie Hills 66km WNW of Kalgoorlie E16/00265 50.40 A 100%Jaurdie Hills 70km WNW of Kalgoorlie E16/00269 100.80 A 100%Londonderry 55km SW of Kalgoorlie P15/04435 1.62 A 100%Londonderry 55km SW of Kalgoorlie P15/04436 1.90 A 100%Londonderry 57km SW of Kalgoorlie P15/04437 1.87 A 100%Londonderry 56km SW of Kalgoorlie P15/04438 1.92 A 100%Londonderry 56km SW of Kalgoorlie P15/04439 2.00 A 100%Londonderry 56km SW of Kalgoorlie P15/04440 0.27 A 100%

10 287.39

KAMBALDA DOMAIN PROVINCE Mount Martin Project Ni-AuCutters Luck 32km SSE of Kalgoorlie E26/00080 53.20 A 100%Cutters Luck 48km SSE of Kalgoorlie M26/00667 2.27 A 100%Cutters Luck 29km SSE of Kalgoorlie P26/02907 1.60 A 100%Cutters Luck 27km SSE of Kalgoorlie P26/02908 2.00 A 100%Cutters Luck 44km SSE of Kalgoorlie P26/02909 1.66 A 100%

5 60.73

EMU FAULT PROVINCE Garibaldi Project Ni-AuYindarlgooda 46km E of Kalgoorlie E25/00222 58.80 A 100%Lake Yindarlgooda 52km ENE of Kalgoorlie E25/00251 8.40 A 100%Qeen Lapage 50km ENE of Kalgoorlie E25/00254 28.00 A 100%Qeen Lapage 50km ENE of Kalgoorlie E25/00256 28.00 A 100%Mt Mcleay 50km NE of Kalgoorlie E27/00243 16.80 B 100%Mayday North 53km NE of Kalgoorlie E27/00264 14.00 A 100%Lindsays Find 51km NNE of Kalgoorlie M27/00305 1.20 A 100%Kalpini West 50km NE of Kalgoorlie M27/00371 3.37 A 100%Kalpini West 53km NE of Kalgoorlie M27/00372 1.64 A 100%Lindsays North 53km NNE of Kalgoorlie M27/00382 1.15 A 100%Gindalbie 45km NE of Kalgoorlie M27/00383 3.57 A 100%Garibaldi 48km NNE of Kalgoorlie M27/00386 0.29 A 100%Silver Swan North 46km NNE of Kalgoorlie M27/00388 5.54 A 100%Mount Magnetic 37km ESE of Kalgoorlie P25/01720 1.20 A 100%Mount Magnetic 37km ESE of Kalgoorlie P25/01721 1.20 A 100%Mount Magnetic 37km ESE of Kalgoorlie P25/01722 1.04 A 100%Lindsays Find 50km NNE of Kalgoorlie P27/01474 0.08 G 100%Garibaldi 48km NE of Kalgoorlie P27/01491 1.34 G 100%

18 147.61


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KEITH KILKENNY PROVINCE Yarri Project AuMulgabbie 112km NE of Kalgoorlie E28/00823 8.40 B 100%Mulgabbie West 99km NE of Kalgoorlie E28/00976 8.40 B 100%Rebecca East 134km ENE of Kalgoorlie E28/01082 5.60 B 100%Crab Hill 137km ENE of Kalgoorlie E28/01138 5.60 A 100%Oak Bore 144km NE of Kalgoorlie E31/00233 2.80 G 100%Oak Bore South 144km NE of Kalgoorlie E31/00234 2.80 G 100%Yilgangi East 130km NE of Kalgoorlie E31/00236 1.60 G 100%Yilgangi 130km NE of Kalgoorlie E31/00494 81.20 A 100%Deenya Hill 130km NE of Kalgoorlie E31/00582 8.40 A 100%Yarri 137km NE of Kalgoorlie M31/00141 0.20 A 100%Yilgangi Castle 129km NE of Kalgoorlie M31/00173 0.34 A 100%Mt Catherine 142km NNE of Kalgoorlie M31/00249 0.58 A 100%Webb Find 153km NE of Kalgoorlie M31/00281 1.20 A 100%Banjo Well 141km NE of Kalgoorlie M31/00310 4.70 A 100%Yarri 136km NE of Kalgoorlie M31/00314 440.00 A 100%Yilgangi North 131km NE of Kalgoorlie P31/01580 1.85 G 100%Yilgangi North 131km NE of Kalgoorlie P31/01581 1.76 G 100%Yilgangi North 131km NE of Kalgoorlie P31/01582 1.65 G 100%

18 577.09

TOTAL 476 19,056.00

A = Application G= Granted B = Exploration Licence Application in Ballot


Page 66


"Alteration" means rock-forming minerals which have been chemically changed.

"Ankerite" means Carbonate of Calcium, Iron, Magnesium and Manganese.

"Anomaly" means a value higher or lower than expected, which outlines a zone of potential exploration interest but not necessarilyof commercial significance.

"Antigorite" means a platy green Magnesium Silicate of the serpentine group, derived from the weathering of olivine. AtGoongarrie, antigorite is diagnostic in the lowermost ore profile.

"Au" means gold.

"Autoclave" means a reaction vessel in which ore is mixed with high temperature and pressure solutions to enable metals to enterinto solution as a precursor to extraction in metallic form.

"Breccia" means a broken fragmental rock, usually related to fault zones. Due to the open spaces within a breccia, such rocksare a favourable site for groundwater movement.

"Chlorite" means a platy green Magnesium Aluminosilicate resembling the mica group, derived from the weathering of antigorite.At Goongarrie, chlorite is diagnostic in the lower ore profile.

"Co" means cobalt.

"Cu" means copper.

"Dunite" means peridotite where the mafic mineral is olivine.

"Duricrust" means a hard weathering crust which is typically ferruginous and aluminous.

"Feasibility Study" means:

A "Pre-feasibility Study" is an engineering and cost study of a mining operation, processing plant and plant infrastructure,which for the Goongarrie Nickel Project includes a flow sheet of the "Cawse" type that covers ore beneficiation, high pressureacid leach, CCD washing, solution purification, cobalt and nickel solvent extraction, formation of an intermediate precipitateand electrowinning to produce nickel and cobalt metal. Included in the cost estimates will be infrastructure, tailings disposal,power supply, and owner's costs. The plant design may change as a result of testwork analysis, optimisation studies andengineering improvements performed during execution of the Pre-feasibility Study. Operating and capital cost estimates areto an accuracy of ± 30%. In the case of the Goongarrie Nickel Project, the drill density would be such that the resourcestatus is Indicated Mineral Resource.

A "Bankable Feasibility Study" is an engineering and cost study addressing the same issues as a "Pre-feasibility Study", butin such detail that it contains sufficient information to satisfy a bank, that it can rely on cash flows and earnings from theproject to repay any project loan, and that the assets of the project are suitable as collateral for the loan. The bank mustfeel comfortable that on a worst case scenario the loan will be repaid. Engineering design concepts will have largely beenfinalised, and operating and capital cost estimates are to an accuracy of ± 10%. In the case of the Goongarrie Nickel Project,the drill density would be such that the resource status is Proved Ore Reserve.

"Felsic" means light coloured feldspar and silica rich igneous rock.

"Gabbro" means a dark colored mafic intrusive rock consisting dominantly of feldspar and pyroxene.

"Geochemical Survey" means the systematic study of the variation of chemical elements in rocks or soils.

"Gibbsite" means Aluminium Hydroxide, a principal component of bauxite. At Goongarrie, gibbsite is diagnostic in the uppermostore profile.

"Goethite" means Iron Hydroxide, being a yellow, red and brown ochre. At Goongarrie, goethite occurs throughout the total upperore profile.

"Goethite Ore" means nickel-cobalt laterite ore composed mainly of the iron mineral goethite (+40% Fe2O3), which is an optimumore type.

"Gossan" means the weathered oxidised surface expression of a sulphide-bearing deposit, and consists predominantly ofhydrated iron oxides.

"g/t" means grams per tonne.

"km" means kilometres.

"km2" means square kilometres.

"Komatiite" means an ultramafic rock with high magnesium content extruded from a volcano. Textural variations include:

"Orthocumulate" means a rock which exhibits a high proportion of crystallised trapped interstitial ("intercumulus") liquid. Thesurrounded ("cumulus") olivine crystals are subhedral to enhedral in form. This komatiite type is regarded as prospective forNickel Sulphide mineralisation (e.g. Kambalda nickel mine).

"Mesocumulate" means a rock with cumulus crystals exhibiting extensive mutual boundary contact, but retaining somerecognisable interstitial material. This komatiite type is regarded as prospective for Nickel Laterite mineralisation.

"Adcumulate" means a rock with little or no intercumulus material and characterised dominantly by anhedral crystals. Thiskomatiite type is regarded as prospective for Nickel Laterite mineralisation.

"m" means metres.

"Maghemite" means a strongly magnetic form of hematite, an Iron Oxide.

"Mineralisation" means, in economic geology, the introduction of valuable elements into a rock body.

"Ni" means nickel.

"Nickel Laterite" means nickel and cobalt occurring as an oxidised hydrated iron oxide and ferruginous clay assemblage overlyingweathered ultramafic rock.

"Nickel Sulphide" means nickel and copper occurring as an un-oxidised sulphide assemblage associated with fresh ultramaficrock.

Glossary of Terms

Page 67

"Norite" means a form of gabbro where hypersthene is the mafic material.

"Oil Shale" means a sedimentary rock containing low grade lignite coal and a hydrocarbon material termed kerogen.

"Olivine" means a magnesium-iron silicate mineral, often occurring in rocks prospective for nickel.

"Option" means a Share option to subscribe for fully paid ordinary Shares in Heron.

"PAL" means Pressure Acid Leach, a nickel laterite processing technique in which ore is dissolved in hot high pressure sulphuricacid contained within a titanium-lined reaction vessel termed an autoclave, to release nickel and cobalt into solution, forprecipitation as an intermediate product or electroplating as a pure metal.

"Pedogenic" means pertaining to soil formation.

"Peridotite" means an ultramafic rock consisting of olivine and pyroxene, with minimal feldspar.

"PGE" means Platinum Group Elements.

"prospect" means a target upon which exploration programs are planned or have commenced.

"project" means a grouping of prospects within a specific geographic location, often with a common geological setting.

"province" means a grouping of projects within a geological district defined by a major mineralised crustal structure.

"ppb" means parts per billion.

"ppm" means parts per million.

"Precious Metals" means gold, silver and the Platinum Group Elements, ruthenium, rhodium, palladium, osmium, iridium andplatinum. The metals are chemically inert, malleable, dense and used in jewellery, and are of high unit value.

"RAB drilling" means the drilling technique in which a sample is returned to surface outside the rod string by compressed air.Sample quality is poor.

"RC drilling" means the drilling method employing a rotating or hammering action on a drill bit which returns a sample to thesurface inside the rod string by compressed air. Sample quality is very good, particularly if the drill hole is dry.

"Resources and Ore Reserves" means:

"Proved Ore Reserve" is the economically mineable part of a Measured Mineral Resource. It includes diluting materials andallowances for losses which may occur when the material is mined. Appropriate assessments, which may include FeasibilityStudies, have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical,economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the timeof reporting that extraction could reasonably be justified. The term "economic" implies that extraction of the Ore Reservehas been established or analytically demonstrated to be viable and justifiable under reasonable investment assumptions.Proved Ore Reserve will require some degree of lateral continuity validation through diamond drilling, wide diameter (900mm)bulk sample drilling, trial mining, exploration winze or most likely for Goongarrie, 10x10m pattern RC drilling.

"Measured Mineral Resource" is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics,grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration,sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits,workings and drill holes. The locations are spaced closely enough to confirm geological and/or grade continuity. At theGoongarrie Nickel Project, Heron’s least dense drill RC pattern for Measured Mineral Resource status is 40x20m.

"Indicated Mineral Resource" is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics,grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling andtesting information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings anddrill holes. The locations are too widely or inappropriately spaced to confirm geological and / or grade continuity but arespaced closely enough for continuity to be assumed. At the Goongarrie Nickel Project, Heron’s least dense RC drill patternfor Indicated Mineral Resource status is 80x80m.

"Inferred Mineral Resource" is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimatedwith a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and / or gradecontinuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches,pits, workings and drill holes which may be limited or of uncertain quality and reliability. At the Goongarrie Nickel Project,Heron’s least dense RC drill pattern for Inferred Mineral Resource status is 400x80m.

"ROM" means run of mine ore, referring to the grade and type of ore that is expected to be fed to the processing plant on a dayto day basis.

"Rift" means a zone of crustal extension in which the predominant sediment deposition is conglomerate, and the predominantvolcanic activity is a bimodal basalt-rhyolite association which is intruded by co-magmatic granitoids. The high geothermalgradients are very favourable for gold mineralisation.

"Shear Zone" means a zone in which crushed rock has been produced by the action of a shearing stress as on a fault.

"Saprolite" means strongly weathered clay-rich rock, often retaining original rock textures. Nickel Laterite ore is restricted to thesaprolite zone of weathering.

"Specific Gravity" or "SG" means the mass per unit volume of material, usually in reference to ore and waste.

"Waste: Ore ratio" means BCM of waste + BCM of low grade sub-ore divided by BCM of ROM ore.

"Tectonic Zone" means a major structural feature characterised by deformation of several kilometres in width.

"Ultramafic" means rocks composed almost entirely of mafic minerals which are prospective for nickel mineralisation.

"VMS" means volcanogenic massive sulphide, which relates to base metal Cu-Zn-Pb-Au-Ag sulphide mineralisation.

"Volcaniclastics" means sedimentary rocks derived from fragmental volcanic rocks.

"XRD" means X-ray Diffraction, which is an analytical means of identifying microscopic minerals.

Glossary of Terms cont

Page 68

CORPORATE DIRECTORY SHAREHOLDER REVIEWHERON RESOURCES LIMITED

“So this run-of-mine ore is worth $100 atonne, and Heron’s got 400 million tonnes!”Local Kalgoorlie businessmen andmajor Heron Shareholders Dean Willis,Rino Borromei and Brett Nazzariwith David Crook.

Kalgoorlie businessman Nigel Byrd atGoongarrie with some of the high grade

“$600 a tonne revenue value” drill samples. Very encouraging when you’re a major

Heron Shareholder.

“A rose between two thorns....”Alan Rudd, Libby Willis and

Simon Gobbett atthe Heron shed.

Jack Otway.“There’s miles and

miles of that Lateriteat Perrinvale.”

Courtesy of Eileen

and

Doug

Krep

p

Footsteps ofBill, Keith and Harry

across Lake Yindarlgooda.

Sue Geary, Administration Manager.Easily the neatest office at Heron Kalgoorlie.

Please telephone Sue on (08) 9091 9253if you have any enquiries.

David Crook (far right) explaining the Pamela Jean Deeps to a very demandingaudience of Kalgoorlie-based Shareholders and the Board.

Any Shareholder visiting Kalgoorlie is encouraged to drop in to the office and see howit all works.

Usually a field trip to Goongarrie can be arranged with Pam Buchhorn, your mostcapable tour guide.

COMPANY SECRETARY

Ross Arancini BBus, ACACompany Secretary110 Hensman StreetSOUTH PERTH WA 6151Telephone: (08) 9367 1213Facsimile: (08) 9367 7853Email: [email protected]

REGISTERED AND PRINCIPAL OFFICE21 Close WayPO Box 1280KALGOORLIE WA 6433Telephone: (08) 9091 9253Facsimile: (08) 9091 9256Email: [email protected]: http://www.heronresources.com.au

SHARE REGISTRY

Security Transfer Registrars Pty LtdLevel 1, 168 Adelaide TerracePERTH WA 6000Telephone: (08) 9221 4200Facsimile: (08) 9221 1581Email: [email protected]

Front Cover: Holding high grade blackGoongarrie Ore, assaying 3% Ni and 2% Co.

Background montage of the explorationjournals of Keith Quartermaine(Order of Australia), a Scientist and Historian.

AUDITORS

Butler Settineri Chartered Accountants35-37 Havelock StreetWEST PERTH WA 6005

BANKERS

Challenge Bank230-236 Hannan StreetKALGOORLIE WA 6430

CORPORATE ADVISER

Carmichael First Capital Pty LimitedLevel 11, 77 St Georges TerracePERTH WA 6000

SOLICITORS TO THE COMPANY

McKenzie Lalor74 Egan StreetKALGOORLIE WA 6430

Pullinger Readhead Stewart46-50 Kings Park RoadWEST PERTH WA 6005

STOCK EXCHANGE

Australian Stock Exchange Limited2 The EsplanadePERTH WA 6000

ASX CODEHRR

SEAT ABBREVIATIONHeron

HOME BRANCHPerth

INDUSTRY CLASSIFICATIONOther Metals 022 Base Metals

RESEARCH SERVICE INDEX NO.Mining H50

ISINAU000 000 HRR6

Keith Quartermaine led his friends on expeditions into theHeron, Avoca and Balladonia exploration country.Between 1951 and 1976, Keith wrote 26 journals and tookover 10,000 photographs on his exploration of theNullarbor and Goldfields - exploring, recording andresearching the history, flora, fauna, caves, meteorites,tektites and geological features of the region.

Keith began writing up his journals at the request of hisfather who wanted to share in his activities in these remotelocations.

On these trips Keith was variously accompanied by HarryWheeler, John Carlisle (Order of Australia), Bill Cleverly,Tom Bateman and Ross and Beverly Quartermaine.

As Heron works in the same country, we take thisopportunity to acknowledge Keith Quartermaine,a true Goldfields explorer.

All sepia images in this Report are fromKeith Quartermaine’s volumes.

All photographic page art by Justin Madden,

Reynolds Graphics, Kalgoorlie.

Heron Resources Limited21 Close Way, West Kalgoorlie PO Box 1280, Kalgoorlie, Western Australia, 6433

Telephone: (08) 9091 9253 Facsimile: (08) 9091 9256 Email: [email protected]

A N N U A L R E P O R T 2 0 0 1

Documents

ANNUAL REPORT 2001 - Heron Resources LimitedAt average 15 year historical metal prices, this resource alone is able to support a Goongarrie-Cawse 0.5 million tonne per annum (“mtpa”)