Next Investors logo grey

Growth Portfolio: Heron Resources Ltd (ASX: HRR)

Published 05-MAY-2016 00:00 A.M.


2 minute read

Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.

In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.

The below articles were written under our previous business model. We have kept these articles online here for your reference.

Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.

Click Here to View Latest Articles

Overview: Heron Resources Ltd ("Heron", "the Company") is an Australian minerals company with operations in NSW and WA. Its most advanced asset is the Woodlawn Zinc-Copper Project ("Woodlawn"), 50km NE Canberra. Previously mined between 1978-1998, Heron has completed a Preliminary Economic Assessment ("PEA") of a renewed mining operation. Woodlawn hosts a Measured and Indicated tailings resource of 9.8Mt @ 6.2% Zn eq and an underground Indicated and Inferred resource of 3.1Mt @ Zn eq grade exceeding 15%.

Catalysts: Last year’s 15-year mining lease renewal over Woodland allows Heron to rapidly advance into production as zinc markets tighten and technical studies progress. Heron is funded through a Decision to Mine following its August 2015 placement to Greenstone Resources LP. Its Feasibility Study into an 11-year tailings retreatment and underground mining operation are due H2 2016. The 2015 PEA estimated the project to generate a Net Present Value between $192million and $300million.

Hurdles: There is no guarantee existing resources at Woodlawn can be converted into reserves. The polymetallic nature of the resource may incur processing and metallurgical challenges. Heron is reliant on external capital and there is no guarantee it can procure the funds necessary to develop a mining operation at Woodlawn. The PEA was based on metal prices higher than prevailing spot markets and there is no guarantee prices can recover.

Investment View: Heron offers speculative exposure to the zinc mining industry. We are attracted to the Company's licensing and funding position, the high-grade nature of Woodland’s resources, and the asset’s ability to be rapidly taken into production. Whilst endurance of existing metal prices and project finance are principal risks, major zinc mine closures are laying foundations for a price recovery. With Heron positioned as the only licensed independent developer, we initiate coverage with a ‘speculative buy‘.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

Publication Notice and Disclaimer

The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.

This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.