Heron rounds the next bend in the road

IAN Buchhorn is unsure of the immediate future, but he likes it that way.

While he’s comfortable with the uncertainty surrounding Heron Resources’ part in the wash-up of Centaur Mining, Heron’s managing director just offers: “You never know what’s around the corner in this industry”.

Like at an aerobics class one evening last February, when a woman approached to tell him Centaur would make a bid for the company the following morning.

Unlike others who thought Heron had just found a lucky hole or two, Centaur was indeed serious and made the 30-cent bid come morning, as predicted.

After an independent valuation of 86 cents and not one share changing hands, however, Centaur abandoned its offer just three months later.

Mr Buchhorn appears convinced outcomes for Heron will always be as good.

Part of the calm originates from a day-trip out bush to some gold leases, to do the right thing by a bored visiting relative. The rest comes from the assuring flow of good news ever since.

On the Goongarrie trip with Aunt Sylvia in 1998, Mr Buchhorn noticed some promising nickel laterite territory and, on the spot, pegged four leases over two separate areas.

Determined to gain a continuous holding linking the two pegged regions, Heron began wooing another company (that held the in-between land) for gold. Heron won its prize, successfully convincing the company to swap the Goongarrie land for 60 Heron tenements in a different region that had become vital to the other company’s interests.

But Heron was clearly not the only company excited about its Goongarrie holdings, with Centaur pumping $3 million into the local junior to fund a drilling program some days after it had commenced.

The interest and excitement remained contagious. One day while drilling in the linking territory, geo-logist Simon Gobbett independently chose to extend his sampling beyond the program given to him, past the conventional prime target area.

“It was a very courageous thing to do for a young geologist,” Mr Buchhorn explains.

And a fortuitous one. Up came indications of 100 million tonnes of nickel laterite.

A few weeks on and Mr Buchhorn was waiting across from the fax machine as the lab results started coming in.

“Normally I run to the fax and watch the stuff coming off, but this time I thought, ‘this is going to be something pretty good, so I’ll make the moment last’. I actually waited for the fax to finish, went and got it very slowly, opened up the first page and it was just a page of absolutely fantastic results.”

The following pages told exactly the same story – the best results for nickel laterite, by grade, depth and thickness, seen in the eastern Goldfields.

Subsequent infill drilling in the same territory has confirmed high grade and very deep ore bodies with “spectacular intersections”.

And in good limonite ore, processing will be much less troublesome than the clay ores supplying the Bulong and Murrin Murrin operations.

Centaur’s receivership has dampened neither Heron’s enthu-siasm nor its intention to process its ore at Centaur’s Cawse facility just south of Goongarrie.

Centaur owns 16 million Heron shares, so if Heron doesn’t buy Cawse or if a consortium including Heron doesn’t buy Cawse, whoever else does will at the same time be buying Heron into the outcome.

“There are a whole lot of people wanting to buy Cawse – it’s a very well built plant. And we have an ore body better than anyone else’s,” Mr Buchhorn said.

“We’ll be part of the equation and we have systems in place to go to the next stage.”

So confident is the company that Heron has already contracted a management consultant to look at executive appointments.

Floated in 1996 on the back of husband-and-wife nickel sulphide interests and 60 leases, Heron has always been operated like a much larger company.

“We’re not a company that just happens to be lucky,” Mr Buchhorn emphasises. “A huge amount of groundwork goes into it.”

In addition to the usual regulatory company reports and minute taking, vast spreadsheets combined with weekly and monthly corporate and operative reports could be considered almost obsessive in scope and detail, containing weekly diaries and geologist reports and assessing drilling results, market trends, heavyweight competitor positions and financial outlooks in all market scenarios.

Each month chairman Rodney Evans and directors Robert Colville and Peter Lee (also Centaur’s company secretary) receive much of this information in a document regularly exceeding 30 pages.

The company’s sole executive administrator, Mr Buchhorn is emphatic Heron must hold its own among bigger players, including WMC, Anaconda, Rio Tinto and Anglo, and is confident the company is ready for any Centaur outcome.

“We have systems in place that allow us to compete with anyone. There is no job or company out there out of our reach,” he said.

So while Heron is banking on its Goongarrie nickel laterite deposits to provide the company’s major cashflow and, as the potential major supplier to Centaur’s Cawse processing plant, to underpin its opportunity to own at least a part interest in the facility, it is anticipating a much larger future.

It may not have the same access to finance as international players in the region, but with 450 leases, interests in iron ore and oil shale and its gold subsidiary Avoca Resources, Heron is unlikely to run out of contingency plans.

p More resources, page 23.


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Share Price

Closing price for the last 90 trading days
Source: Morningstar

Total Shareholder Return as at 29/06/18

1 year TSR5 year TSR
15thHeron Resources788%-12%
312thMetals Australia25%-19%
473rdEclipse Metals-0%6%
564thBarra Resources-13%52%
722 WA (and selected non WA) listed companies ranked by 1 year TSR relative to other companies with similar revenue
Source: Morningstar

Share Transactions

$13k Bought
$0 Issued
$0 Issued
Total value as at the date of the transaction
Source: Morningstar


217th↓Heron Resources$140k
259th↑Metals Australia$56k
260th↓Barra Resources$55k
263rd↑Eclipse Metals$50k
507 listed resources companies ranked by revenue.
Source: Morningstar

Remuneration from Heron Resources

164thWayne Taylor$590k
301stCharlie Kempson$377k
521stSimon Smith$237k
Ranked by total remuneration from all listed WA companies

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