Key points:

- The Feasibility Study is on track to release findings in the second quarter of calendar 2016, with excellent progress being made across all study areas
- The drilling results from the infill and extension programmes for the underground project ("WUP") have returned significantly greater thicknesses in Kate Lens than were expected
- Modelled DHEM plates under the Kate and C Lenses provide strong support for down-plunge extensions to the known mineralisation
- An updated JORC 2012 Mineral Resource for the tailings retreatment project ("WRP") will be released shortly, with an updated Mineral Resource and a maiden Mineral Reserve for the underground mining project ("WUP") and an updated Mineral Reserve for the WRP to be published as part of the Feasibility Study
- A Front End Engineering Design ("FEED") study update for the WRP has been completed by GR Engineering Services, showing potential for reductions in capital and operating costs compared to the assumptions in the Preliminary Economic Assessment ("PEA")
- Supporting studies have been initiated on mine access optimisation and geotechnical evaluation, WRP mine planning, paste-fill test work, metallurgical test work and tailings dam storage design
- Mine operating plans required under the project approval continue to be advanced with the lodgement of the Mine Operations Plan ("MOP") expected within the next few weeks. Modifications to the site layout will be presented for review and sign-off by regulators during the coming quarter
- Forecast zinc market fundamentals remain strong for the timing of project development despite the recent short term weakness experienced across the commodities complex

SYDNEY, AUSTRALIA / ACCESSWIRE / September 8, 2015 / Heron Resources Limited (ASX:HRR TSX:HER, "Heron" or the "Company") is pleased to provide an update on progress with the Feasibility Study for the Company's advanced Woodlawn Zinc-Copper Project ("Project"), which commenced immediately following the completion of Heron's highly successful Preliminary Economic Assessment [1] ("PEA") in June 2015 [2].

[1] IMPORTANT NOTE: A Preliminary Economic Assessment (PEA) is a formal study in standard form prescribed by Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") which includes an economic analysis of the potential viability of Mineral Resources, but which is not a pre-feasibility study or feasibility study.In accordance with Canadian requirements in relation to preliminary economic assessments, the Company advises that the preliminary economic assessment is preliminary in nature, that it includes some Inferred Mineral Resources considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorised as Mineral Reserves, and that there is no certainty that the economics set out in the preliminary economic assessment will be realised.Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

[2] Refer to the ASX/TSX release of 22nd April 2015 entitled 'Preliminary Economic Assessment Delivers Strong Business Case for the Woodlawn Zinc-Copper Project', and that of 2nd June 2015 entitled "Release of Woodlawn Preliminary Economic Assessment".

Feasibility Study Progress

The Feasibility Study will deliver a maiden Mineral Reserve statement for the Woodlawn Underground Project ("WUP") and an updated Mineral Reserve statement for the Woodlawn Retreatment Project ("WRP"), together with a combined mine plan, plant and infrastructure designs, capital and operating cost estimates, and environmental, social, and economic considerations. The Feasibility Study is geared towards achieving a low cost project that will facilitate an efficient funding structure for the Project via a combination of debt and equity.

Heron's recently appointed Chief Operating Officer, Andrew Lawry, said:

"I have been impressed with the quality of the work that the team has achieved during the PEA and this, together with the location advantages of the site, our symbiotic relationship with Veolia, and the large volume of advanced technical work which has previously been completed for the tailings project, is making the process of the combined Feasibility Study more straightforward than might normally be the case.

We are focused on achieving a bankable study outcome in as short a time as possible, and we are tailoring the technical work to deliver this. I am confident, given the base levels of study input into the Feasibility Study, that the outcomes and timescales are achievable and that Woodlawn will demonstrate very sound economics to a bankable level."

The Feasibility Study results are expected to be released to the market in the second quarter of calendar 2016.

Stage 2 Drilling

The Phase II drilling program (comprising approximately 19,000m of Diamond drilling) at Woodlawn is now 65% complete, with 12,400 metres having been completed, reflecting on-time and on-budget progress.

The objective of the Phase II drilling is to delineate sufficient Measured and Indicated Resources which can then be developed into a maiden Mineral Reserve within the Feasibility Study, allowing the Project to support commercial bank debt and, subject to funding, proceed with detailed engineering and construction. In undertaking this, the Company has focused on minimising the time and cost associated with the program by targeting relatively shallow positions with in-fill drilling required to upgrade a portion of the 6.5Mt underground Mineral Resource to Indicated Resources classification, as well as to test shallow mineralised positions that have the potential to provide ready-access production in the early part of the planned underground operations.

A large number of high grade intercepts have been recorded during the program to date, including:

Kate Lens Extensions:

- 7.1m @ 40.6% ZnEq from 340m, (16.1% Zn, 0.9% Cu, 11.3% Pb, 3.5g/t Au, 254g/t Ag), WNDD0029
- 4.8m @ 11.0% ZnEq from 324m (7.6% Zn, 0.4% Cu, 0.9% Pb, 0.7g/t Au, 37g/t Ag), WNDD0029
- 20.5m @ 20.7% ZnEq) from 383m (8.1% Zn, 2.4% Cu, 2.9% Pb, 0.8g/t Au, 68g/t Ag), WNDD0031
- 12.0m @ 13.7% ZnEq from 405m (4.7% Zn, 2.2% Cu, 0.8% Pb, 0.8g/t Au, 22g/t Ag), WNDD0032
- 34.0m @ 20.8% ZnEq from 326m (10.0% Zn, 1.1% Cu, 3.5% Pb, 1.6g/t Au, 97g/t Ag), WNDD0033
- 18.9m @ 7.8% ZnEq from 390m (0.4% Zn, 2.1% Cu, 0.6g/t Au, 8.0g/t Ag), WNDD0035 ;
- 35.5m @ 11.2% ZnEq from 348m (5.1% Zn, 0.8% Cu, 1.3% Pb, 0.9g/t Au, 62g/t Ag), WNDD0037;
- 19.8m @ 9.9% ZnEq from 376m (0.7% Zn, 2.6% Cu, 0.2% Pb, 0.7g/t Au, 8g/t Ag), WNDD0038.

Drill samples of several massive sulphide intercepts are progressing through the assay laboratory; with results pending.

H Lens Up-dip Extension:

- 1.7m @ 39.8% ZnEq from 108.7m (3.5% Zn, 6.8% Cu, 4.9% Pb, 3.9g/t Au, 213g/t Ag), WNDD0026
- 0.75m @ 51.5% ZnEq from 103.8m (5.6% Zn, 8.1% Cu, 6.8% Pb, 3.6g/t Au, 398g/t Ag), WNDD0027

E Lens Extension:

- 2.5m @ 11.7% ZnEq from 151.3m (1.9% Zn, 1.2% Cu, 0.3% Pb, 3.4g/t Au, 16.5g/t Ag), WNDD0025

Figure1: Kate Lens Long-Section looking east. Down-hole intercept thickness and ZnEq grade contoured to show relative accumulation of metals across the lens. Current resource outline is shown for reference.

To view the above image please click here.

The program has successfully confirmed the predicted up- and down-plunge extensions to the Kate Lens and, along with a number of contiguous wide drill intercepts, is expected to increase the volume of the known mineralisation within the Kate Lens. Partially offsetting this success, the deeper portion of G Lens has returned lesser volumes than expected.

Overall, the Company believes that the results for the lenses being drilled appear to be globally consistent with the expectations from the PEA.

Targets from DHEM Surveying

Downhole electromagnetic (DHEM) surveying continues to be used as a tool to develop drill targets and to refine existing drilling programs. Recent surveys as part of the Feasibility Study program have provided a large number of new EM plates that have been modelled within both shallow and deeper areas within the mine.

Figure2: Oblique Cross Section through the Woodlawn system showing the recently modelled DHEM plates and target zones.

To view the above image, please click here.

The shallow targets (

In addition, deeper targets, which have been refined from the surveys of drill hole WNDD0030 (approx. 700m), plus surveys from earlier drilled holes, provide exciting vectors for potential depth extensions to both the Kate Lens and the C Lens (Figure 2).

The majority of massive sulphide lenses in the Woodlawn system have substantial down-plunge components, and with the tenor of the known Kate Lens mineralisation, there is a strong possibility that this lens too continues at depth. The two EM plates identified, which occur around 60m in the footwall compared to the upper Kate Lens plane, and the copper rich mineralisation intersected in 2010 in drill hole WLTD010 which assayed 7m @ 2.1% Cu from 538m downhole, provide strong encouragement for this model. If proven, the Kate Lens down-plunge extensions could provide for significantly increased tonnes per vertical metre within the 500-700m range below surface, which is within the existing PEA mine plan design.

The new EM plates which sit directly below the current C Lens position also provide encouragement that this lens may continue at depth. Very little systematic exploration has been undertaken within the Woodlawn mineralised system to explore for extensions at depth (>700m). Previous, limited, exploration drilling at the immediate base of the current C Lens suggested that the system could be pinching out. The EM plates indicate that the lens may swell beyond that expected pinch point, which would be similar to the behaviour of the C Lens in shallower positions.

The footwall EM plate below the C Lens, together with other signs of footwall mineralisation further up the system, provides early encouragement for the potential discovery of new mineralisation to the south of the current C Lens.

Importantly, management holds the view that the "starter underground case" comprising approximately 7 years of underground plant feed which was presented in the PEA should be able to be significantly extended through continued exploration. The attractive EM targets at-depth provide evidence in support of this position.

Mineral Resources and Reserves Definition

Work on updated Mineral Resources for the WRP and WUP is under way.

For the WRP, a new JORC 2012 compliant Mineral Resource is in the final stages of being generated. The Mineral Resource estimation will incorporate all the historic drilling which was undertaken after the previous Mineral Resource and Mineral Reserve were published. These results will be published shortly via a NI 43-101 Technical Report.

An update to the WUP Mineral Resource will be undertaken following the completion of the Phase II drilling programme and will be published, along with the maiden Mineral Reserve for the WUP and an updated Mineral Reserve for the WRP, in the Feasibility Study.

Metallurgical Test Work

Testwork is ongoing at Australian Minmet Metallurgical Laboratories ("AMML"), supervised by GR Engineering Services Limited ("GRES") and Mr Rod Elvish, Heron's independent consultant. The program has a focus on variability test work and the testing of different blends of underground and tailings material which will be processed as part of the ramp-up of the plant and underground operations.

Process and Plant Engineering

GRES have now completed a report to update the 2012 Front End Engineering Design study ("FEED") capital and operating cost estimates for the Woodlawn Retreatment Project (the "2015 FEED Update"). This update considered a plant layout that could incorporate the additional equipment required for the co-treatment of underground ore at a later date and forms the basis for understanding the project development costs for a staged development option at Woodlawn. All estimates have been provided at +/-20%.

The capital estimates for the WRP components of the process plant have reduced slightly compared to the PEA estimates. A summary of the GRES estimates (with Heron additions as marked) is provided below. It is pleasing to note that the slight reduction in capital has been achieved despite a movement in the base AUD/USD exchange rate basis from 0.80 in the PEA to 0.73 in the 2015 FEED Update.

GRES have also confirmed that the plant operating costs have not materially changed since the 2012 FEED estimate, with a total operating cost of A$20.29 per tonne of tailings plant feed compared to the 2012 figure of A$19.61/t. For the PEA, an operating cost for the WRP plant feed of A$24.59/t was assumed, with an allowance made for the impact of lower throughput and for overheads. From a review of these costs, it does appear that there may be some scope to reduce the tailings processing costs assumed in the Feasibility Study compared to the PEA.

Following completion of the 2015 FEED Update, GRES continue to work on the plant design for the Feasibility Study as it relates to the underground and the combined treatment options.

TSF4 Design Update

The tailings storage strategy for the combined project is being based upon the work undertaken by Coffey International Limited ("Coffey") in 2008 as part of the previous WRP Feasibility Study. The strategy calls for the construction of a new tailings storage facility ("TSF4"), followed by the re-use of the existing Tailings Dam South ("TDS") facility once sufficient space has been freed following re-processing of the existing tailings material. Under the combined development scenario of the Feasibility Study, tailings production volumes are expected to be reduced by 30% or more based on the use of a portion of the tailings stream in the production of paste fill material to be used underground.

TSF4 was previously costed (2008) at $1.5 million for the initial construction, and envisaged two lifts over around a three year period. A tender has recently been issued for an updated design and costings for TSF4 which will feed into the Feasibility Study.

Geotechnical Studies

Under the PEA, Heron proposed a move in the location of the box cut and portal from the east side of the pit to the west side, which would facilitate early mining of the newly delineated shallow E and G Lens positions. Since completion of the PEA, Heron has been working with SRK Consulting to refine the location for the box cut and portal in conjunction with geotechnical advice received from consultants Beck Engineering ("Beck") and ongoing geotechnical and resource drilling.

To view the above image, please click here.

Beck has conducted an initial desktop review on the ground conditions for the proposed western box cut and decline, concluding that the site is "as good as any that could be found at the mine from a geotechnical perspective". Work is ongoing including geotechnical drilling and detailed design for the box cut and decline. This work includes drilling to understand and plan for the current condition of the existing underground workings. Drilling has indicated that the natural water table has re-established itself and, as part of the mine access planning, consideration will be given to advancing mine dewatering activities.

Operational Management Plans

The development of the various management plans required under the project approval have been further advanced. In particular the Mine Operations Plan (MOP) is in the final stages of drafting and will be lodged with the Division of Resources and Energy (DRE) in the next few weeks.

As part of the mine access optimisation, the proposed relocation of the portal will alter the site layout. The Company has received advice from the NSW Department of Planning and Environment ("DPE") that a modification to the existing project approval will be sufficient to address this change to the project plan.

The site layout change will be assessed as a s75W modification to the previous approval. The DPE has provided guidance to be considered in the modification assessment, including in particular interaction with Veolia and Veolia's operations, revised surface and groundwater assessments, and rehabilitation and contaminated materials management. The Company has now commenced this work prior to submitting the formal modification request.

Funding Options and Commodity Markets

Heron has been exploring options for the staged development of the Woodlawn Project, which contemplated accessing bridge-style funding allowing the commencement of construction of the plant whilst the Feasibility Study was completed.

Heron is pleased to report that the capital markets were highly supportive of this option, with workable non-binding term sheets received from debt providers, and excellent indications of support from a number of brokers in the Australian, Canadian and European markets.

The cornerstone strategic equity investment by Greenstone Resources LLP announced on 23rd July 2015, undertaken after lengthy due diligence and at a significant premium to market, ultimately reflects the success of this process.

Despite this market support, the Company has observed the recent volatility and general softening in global commodity markets and which Heron considers is likely to delay the closing of a suitable project funding arrangement for a staged development. As a result, the attractiveness of this option is reduced relative to undertaking a single financing incorporating both the WRP and WUP once the Feasibility Study has been completed.

Despite recent market conditions, forecasters and market commentators have retained their positive views around the zinc market fundamentals, based on a projected deficit supply to demand balance, and in particular supported by the closure of a number of globally significant operations. These closures, along with growing zinc consumption continue to provide a positive backdrop to this commodity market.

About Heron Resources Limited:

Heron is engaged in the exploration and development of base and precious metal deposits in Australia. Heron's primary development project is the high grade Woodlawn Zinc-Copper Project located 250km southwest of Sydney, New South Wales.

For further information, please visit www.heronresources.com.au or contact:

Australia:

Mr Wayne Taylor,
Managing Director and Chief Executive Officer:
Tel: +61 8 6500 9200
Email: heron@heronresources.com.au

Mr Jon Snowball
FTI Consulting
Tel: +61 2 8298 6100 or +61 477 946 068
Email: jon.snowball@fticonsulting.com

Canada:

Tel: +1 905 727 8688 (Toronto)

Notes: True width is an estimate of the actual thickness of the intercept based on interpreted lens orientation (approximately 80% of downhole width); grades are weighted average grades, weighted by length of samples intervals downhole, which are nominally 1 metre. No weighting was applied for differences in specific gravity which is most cases are relatively low. * Previously reported results.

Compliance Statement (JORC 2012 and NI43-101)

The technical information in this news release relating to the exploration results at the Woodlawn Project is based on information compiled by Mr David von Perger, who is a Member of the Australian Institute of Mining and Metallurgy (Chartered Professional - Geology). Mr von Perger is a full time employee of Heron Resources Limited and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the "Australasian Code for Reporting of Exploration Results and "qualified person" as this term is defined in Canadian National Instrument 43-101 ("NI 43-101"). Mr von Perger has reviewed this press release and consents to the inclusion in this news release of the information in the form and context in which it appears.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION

This news release contains forward-looking statements and forward-looking information within the meaning of applicable Canadian securities laws, which are based on expectations, estimates and projections as of the date of this news release. This forward-looking information includes, or may be based upon, without limitation, estimates, forecasts and statements as to management's expectations with respect to, among other things, the timing and amount of funding required to execute the Company's exploration, development and business plans, capital and exploration expenditures, the effect on the Company of any changes to existing legislation or policy, government regulation of mining operations, the length of time required to obtain permits, certifications and approvals, the success of exploration, development and mining activities, the geology of the Company's properties, environmental risks, the availability of labour, the focus of the Company in the future, demand and market outlook for precious metals and the prices thereof, progress in development of mineral properties, the Company's ability to raise funding privately or on a public market in the future, the Company's future growth, results of operations, performance, and business prospects and opportunities. Wherever possible, words such as "anticipate", "believe", "expect", "intend", "may" and similar expressions have been used to identify such forward-looking information. Forward-looking information is based on the opinions and estimates of management at the date the information is given, and on information available to management at such time. Forward-looking information involves significant risks, uncertainties, assumptions and other factors that could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors, including, but not limited to, fluctuations in currency markets, fluctuations in commodity prices, the ability of the Company to access sufficient capital on favourable terms or at all, changes in national and local government legislation, taxation, controls, regulations, political or economic developments in Canada, Australia or other countries in which the Company does business or may carry on business in the future, operational or technical difficulties in connection with exploration or development activities, employee relations, the speculative nature of mineral exploration and development, obtaining necessary licenses and permits, diminishing quantities and grades of mineral reserves, contests over title to properties, especially title to undeveloped properties, the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drill results and other geological data, environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins and flooding, limitations of insurance coverage and the possibility of project cost overruns or unanticipated costs and expenses, and should be considered carefully. Many of these uncertainties and contingencies can affect the Company's actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf of, the Company. Prospective investors should not place undue reliance on any forward-looking information. Although the forward-looking information contained in this news release is based upon what management believes, or believed at the time, to be reasonable assumptions, the Company cannot assure prospective purchasers that actual results will be consistent with such forward-looking information, as there may be other factors that cause results not to be as anticipated, estimated or intended, and neither the Company nor any other person assumes responsibility for the accuracy and completeness of any such forward-looking information. The Company does not undertake, and assumes no obligation, to update or revise any such forward-looking statements or forward-looking information contained herein to reflect new events or circumstances, except as may be required by law.

No stock exchange, regulation services provider, securities commission or other regulatory authority has approved or disapproved the information contained in this news release.

Appendix 1 - JORC 2012 Table 1 and 2.

To view Appendix1, please click here.

SOURCE: Heron Resources Limited