Heron raises $17.2m in BHP placement

One week after Brazilian mining giant CVRD Inco agreed to fund further studies on Heron Resources' Kalgoorlie nickel project, Heron has done a deal with Australian mining giant BHP Billiton to raise extra capital for a second nickel project.

Heron will raise $17.2 million through a two-tranche placement to BHP Billiton, in a move expected to bolster the giant's stake in the company to 16.1 per cent.

Funds raised through the placement will be used to complete the trial mining and pre-feasibility studies at the company's Jump-up Dam project.

The move comes a few days after Brazilian giant Companhia Vale do Rio Doce's Australian subsidiary CVRD-Inco Ltd announced it would proceed to step three of the Kalgoorlie Nickel Project, its joint venture with Heron.

Both companies are significant shareholders in Heron, though today's placement will boost BHP's stake above that of CVRD.

Heron general counsel Robert Klug told WA Business News that both companies were focusing on Heron's future.

The full text of a Heron announcement is pasted below

Heron Resources Limited (ASX: HRR) is pleased to announce that agreement has been reached for the placement of 15,000,000 shares at $1.15 per share to BHP Billiton to raising $17.25 million. Issue of 3,000,000 (Second Tranche) of the 15,000,000 shares will be subject to Foreign Investment Review Board (FIRB) approval. Issue of 12,000,000 of the placement shares (First Tranche) is not subject to FIRB approval and these shares will be issued as soon as funds are received. Upon completion of issue of the First Tranche, BHP Billiton's shareholding in Heron will increase to 14.9% and upon completion of issue of the Second Tranche it will increase to 16.1% (assuming that no securities are issued prior to BHP Billiton being issued the Second Tranche).

The proceeds of the placement will be used for completion of the current Jump-up Dam Trial Mining and demonstration project, undertaking the Jump-up Dam definitive feasibility study, nickel sulphide and laterite exploration along with general working capital.

Heron's Managing Director, Mr Mathew Longworth, said "The continuing support of major shareholders is appreciated, providing funding to undertake the extensive study programs required to make decisions on the Jump-up Dam project and conducting regional exploration within Heron's significant landholding."