Heron Resources Quarterly Activities Report December 2019
Woodlawn Zinc-Copper-Lead Project
SHIPMENT OF LEAD CONCENTRATES CONTINUES – INVENTORIES OF COPPER AND ZINC READY TO SHIP
- Lead concentrate shipments of 2,350 tonnes during the quarter.
- Copper concentrate production increasing through the quarter with next shipment planned for February 2020.
- Zinc recovery improving with second 5,000 tonne shipment due in February 2020.
- Construction and commissioning activities complete, 12 month defects liability period running on all work portions
- Ramp up progressing with Crusher and Ball Mill having run at design “name-plate” throughputs of 175tph and 125tph respectively.
- Isa Mill and flotation circuits have also run at design “name-plate” throughputs of 190tph.
- Quarterly zinc concentrate production 35% lower than updated ramp up schedule (6,661 wmt actual) due to recovery issues. Improving recoveries in mid-January towards ramp up targets.
- First underground stope ore from high grade G2 lens processed in early December 2019.
- Tailings reclaim circuit performance improving with increasing plant utilisation and Isa Mill running at design throughput.
- Plant now alternating between campaigns of tailings reclaim and underground ore as ROM inventory is stockpiled from underground mining.
- Improving flotation recoveries with each campaign of underground ore despite lower grade development ore during the commissioning stage. Initial development ore from Kate lens planned for February 2020 with higher grade stope ore in March 2020.
- Plant utilisation increased to 83% through the quarter, up from 63% during the previous quarter.
- December 2019 concentrate production volume increased 65% compared to November 2019. January 2020 production on track for a further 40% improvement compared to December 2019.
- Underground contractor behind budget metres/tonnes for the quarter – action plan in place to remedy performance issues
- First underground ore from the high-grade G2 lens mined and delivered to ROM
- 4,192M of development completed by 31 December 2019
- Development progress made toward Kate lens, first ore due to be mined in February 2020
- 45,000 tonnes of underground ore crushed and processed during the quarter.
TAILINGS RETREATMENT & UNDERGROUND ORE
- Hydraulic mining operation ramped up and running to design capacities.
- 195k tonnes reclaimed during the quarter.
- A down-hole electromagnetic survey is scheduled for the March 2020 quarter on the four diamond core holes drilled in 2019 directly north of Woodlawn which intersected a number of significant zones of indicative alteration.
- Sky Metals completed its first on-ground exploration programme at Heron’s Cullarin Project, 30 kilometres north of Woodlawn.
- Cash: Heron held A$59.25 million in cash (including bonds of A$7.88 million) at 31 December 2019.
Capital Raise: On 4 October 2019, Heron announced a A$91 million funding package in response to a projected cash shortfall due to delays in construction and production ramp-up prior to the quarter. On 8 October 2019, the Company announced the successful completion of the Institutional component of the entitlement offer which raised approximately A$11.5M. On 25 October 2019, the Company announced the successful completion of the Retail component of the entitlement offer raising a further A$23.9M bringing the total capital raised to that date to A$35.4M. Shareholders approved the final component of the funding package, being US$34.9M in Convertible Notes, at Heron’s AGM on 5 December 2019. All funds from the funding package were received by 31 December 2019.
Following underperformance in the quarter against the updated ramp up plan, the Company has also initiated pre-emptive discussions with its lender, key shareholders and other capital providers regarding additional potential sources of finance.
- Appointment of new CEO: On 15 January 2020, Heron announced the appointment of Mr. Tim Dobson as the new Chief Executive Officer. Mr. Dobson is currently Senior Vice President Metals for Sherritt International in Canada and former President of Ambatovy in Madagascar. He has over 30 years’ technical and executive experience in organisations such as Placer Dome, Lihir Gold and Polymetals. He holds a BSc in Extractive Metallurgy from the WA School of Mines. Mr. Dobson will begin his employment at Heron effective from 23 March 2020.