Heron Resources Limited

TSX Release

29 June 2016

Suite 702, 191 Clarence St, Sydney NSW 2000, AUSTRALIA

[email protected] +61 2 9119 8111 / +61 8 6500 9200

ABN: 30 068 263 098

Heron Resources delivers Woodlawn Project Feasibility Study

Study supports project viability with compelling commercial case for immediate development

Expedited program launched to secure project funding and bring project online to meet global zinc supply shortfall

Heron Resources Limited ("Heron", "Company", ASX:HRR and TSX:HER) is pleased to announce the results of its Feasibility Study (FS) for its 100% owned and fully permitted high-grade Woodlawn Zinc-Copper Project in New South Wales, Australia. The A$11 million study prepared under the guidance of SRK Consulting (Australasia) Pty Ltd (SRK) supports the viability of the Starter Case to deliver quality zinc, copper and lead concentrates to market over a significant Reserves-based mine life. This study underpins the Board's decision to advance an accelerated program to secure project finance and bring the Woodlawn Project into production in 2018.

Feasibility Study Highlights:

• Initial Mineral Reserves:

  • Underground Polymetallic 1.8 Mt @ 16% ZnEq (8.1% Zn, 1.2% Cu, 2.9% Pb, 0.56g/t Au, 57g/t Ag)

  • Underground Copper 1.0 Mt @ 9% ZnEq (0.6% Zn, 2.4% Cu, 0.1% Pb, 0.23g/t Au, 14g/t Ag)

  • Reclaimed Tailings 9.5 Mt @ 6% ZnEq (2.2% Zn, 0.5% Cu, 1.3% Pb, 0.31g/t Au, 31g/t Ag)

• "Starter Case" 9.3-year mine life based upon the combined underground and tailings Mineral Reserves

• Inferred Mineral Resources defined in both the underground and tailings projects demonstrate excellent potential to extend mine life to more than 11 years

• Campaign processing rate of up to 1.0Mtpa from underground mining, and up to 1.5Mtpa from reclaiming tailings, processed through a common flotation facility

• Steady-state (2020-2023) annual production target of 40kt Zn, 10kt Cu, 12kt Pb, 900koz Ag and 4koz Au contained within zinc, copper, and lead concentrates

• Starter Case financials1:

  • Post tax net present value at a 8% discount (NPV) A$207M

  • Post tax internal rate of return (IRR) 32%

  • Payback 2.3 years

  • Peak cash requirement A$163M

  • Direct cash operating cost, net of by-product credits (C1) -US$0.06/lb payable zinc

• Significant leverage to the price outlook for zinc, which comprises approximately 48% of total payable metal value

• First production targeted early 2018 to meet projected favourable zinc market conditions

• Project is on granted Special Mining Lease SML20 - fully 'permitted', and 'mine ready'

• Utilising existing local and regional infrastructure to achieve significant reductions in development costs o Close proximity to large service and employment centres (Sydney, Wollongong, Canberra, Goulburn) o Strong local community and regulator support

For further information, refer to Heron's release of the 29 June 2016 titled "Heron Resources delivers robust Feasibility Study for Woodlawn Project" located on the Company's web site and SEDAR www.sedar.com (TSX:HER).

The complete NI 43-101 Technical Report in support of the FS study will be published on Heron's web site and SEDAR within 45 days of this news release. While summarised here, this Technical Report will contain expanded information with respect to key assumptions, parameters and risks associated with the results of the FS.

Please refer to page 10 for important Cautionary and Forward Looking Statements that are to be read in conjunction with this release.

1 Results reported using Mineral Reserves as estimated for the FS at an 8% post-tax real discount rate (approximately. 10% post-tax nominal), with AUD/USD FX 0.71, and with flat real commodity prices of US$1.01/lb Zn, US$3.00/lb Cu, US$0.91/lb Pb, US$17.80/oz Ag and US$1,200/oz Au. Other assumptions are detailed later in this release.

Heron Resources Managing Director and CEO, Mr. Wayne Taylor, said:

"The study presents a very compelling case for the development of the Woodlawn Project and confirms Heron's position as one of the most advanced Australian near term zinc producers. The resource and embedded low operating and competitive development costs due to existing site infrastructure all combine to make Woodlawn a clear choice amongst its peers.

From the outset it has been our aim to deliver a Reserve base that allows us to bring the project online quickly to take advantage of the significant opportunity that exists due to favourable zinc market fundamentals. The resulting economics place us in an ideal position to secure funding and target first production in 2018 with significant project upside still to be quantified.

I would like to recognise the tireless efforts of our employees and consultants who have helped deliver this study on time and under budget. It has been an enormous task which has been met with hard work and enthusiasm and is a credit to the individuals involved."

The Woodlawn deposit is a high-grade, Volcanogenic Massive-Sulphide (VMS) deposit situated in New South Wales, Australia, approximately 50km northeast of Canberra, and 250km southwest of Sydney.

The Woodlawn mine previously operated between 1978 and 1998 and reported production of 13.8Mt @ 9.1% Zn, 1.6% Cu, 3.6% Pb, 0.5g/t Au and 74g/t Ag.

The Woodlawn Project consists of two production sources, comprising underground and tailings ore, which will be processed through a single-sulphide flotation plant. The Woodlawn Project benefits from an existing granted mining lease (SML20) and major statutory project approvals. The mineral rights and production are 100%-owned by Heron.

The Woodlawn mining lease, SML 20, and surrounding larger exploration license, EL 7257 (179 sq km), contain the previously producing Currawang Mine located 9 km to the north-west of Woodlawn, and the Cowley Hills Mine located 2 km to the north. A further 503 square kilometres are held by Heron under exploration licenses within the district covering the highly prospective Woodlawn felsic volcanics, the host of the VMS mineralisation.

Mineral Resources

UNDERGROUND MINERAL RESOURCE

An updated underground Mineral Resource (Table 1) has been estimated in accordance with the JORC Code (2012) and the NI 43-101 guidelines which incorporates the results of recent drilling programs and an extensive review of historic data. The Mineral Resource has been reported undiluted to a lower cut-off grade of 7% ZnEq, a value that approximates the estimated lower cut-off grade for the mining and processing methods considered by the FS study.

Table 1: Woodlawn Underground Mineral Resource Estimate 2016

Reported at a 7% ZnEq lower cut-off grade

Notes: 1) Please refer to the end of this release for Qualified Persons statements; 2) ZnEq% refers to a calculated Zn equivalent grade the formula for which is stated in Appendix 1; Polymetallic Type refers to polymetallic massive sulphide mineralisation with high-grade Zn and Pb; Copper Type refers to Cu dominated massive and stringer sulphide mineralisation; Values are rounded to two significant numbers and some rounding related discrepancies may occur in the totals; the Mineral Resource is reported in accordance with the guidelines set out in the JORC Code (2012) and NI 43-101 Codes; further details of the Mineral Resources estimation are provided in the release of the 29 June 2016 titled "Heron Resources delivers robust Feasibility Study for Woodlawn Project" located on the Company's web site and SEDAR.

RECLAIMED TAILINGS MINERAL RESOURCE

The reclaimed tailings Mineral Resource estimate, Table 2 below, is restated here as part of this FS. It has been previously disclosed to the market via the ASX/TSX release titled "Heron confirms 10Mt (M+I) of High Grade Tailings at 6.2% ZnEq within Revised JORC 2012 Mineral Resource Estimate" and dated 20 October 2015. It is summarised here as a combined total for the three tailings dams, namely Tailings Dam North (TDN), Tailings Dam South (TDS) and Tailings Dam West (TDW), shown in Figure 4. The tailings consist of fine grained sulphides and some silicate minerals derived from the processing of the Woodlawn open-pit and underground mineralisation from the late 1970's through to 1998.

Table 2: Woodlawn Reclaimed Tailings Mineral Resource Estimate 2015

Reported with no cut-off grade applied

Notes: 1) The Mineral Resource estimate, originally published on Heron's website and SEDAR under the NI43-101 guidelines, is entitled Woodlawn Retreatment Project Mineral Resources Technical Report (NI43-101) with an effective date of 30th November 2015 and authored by Mr Robin Rankin (MAusIMM CP Geology) of independent consulting firm GeoRes Geological Resources. Heron confirms that it is not aware of any new information or data that materially affects the information included in this report and that the form and context in which the Mr Rankin's findings are presented have not been materially modified 2) ZnEq(%) refers to a calculated Zn equivalent grade the formula for which is stated in Appendix 1; 3) some rounded related discrepancies may occur in the totals.

Ore Reserves

UNDERGROUND MINERAL RESERVES

Based on the underground Mineral Resources block model, independent consultant SRK have developed a detailed mine plan to access and mine the resource blocks that meet the required resource classification (Measured or Indicated) and other parameters for inclusion in Reserves. The Mineral Reserves calculation is based upon the Resource block model, and incorporates stope designs, cut-off grades, geotechnical parameters, mine recovery and dilution (planned & unplanned). The Mineral Reserve is the basis of the 'Starter Case' for the financial modelling.

Table 3: Woodlawn Underground Mineral Reserve Estimate 2016

RECLAIMED TAILINGS MINERAL RESERVES

Mineral Reserves have been calculated for all three tailings storage dams; TDS, TDW and TDN. The conversion of Measured and Indicated Mineral Resources to Mineral Reserves has involved the inclusion of the following mining parameters; the loss of 400mm of retreatment tailings from the sides and base of all dams (recovery factor); and the addition of 200mm of zero grade material across the base of the dams as a dilution factor during recovery of the reclaimed tailings.

Table 4: Woodlawn Tailings Mineral Reserve Estimate 2016

Reported with no cut-off grade applied

Mining

UNDERGROUND

The deposit will be accessed via a box-cut located to the west of the existing open-pit, this allows early access to shallow underground material.

The mine plan for the underground has been developed by SRK with a summary of the applied mining methods presented in Table 5. The mine design plans for stopes to be filled with cemented paste fill.

Table 5: Mining Methods

Mining Method Area / Location for implementation

Ore and waste will be transferred to loading bays with LHD loaders and then loaded onto trucks (40t capacity) to be hauled to the surface via the decline. The ore will be conveyed overland to the processing plant run-of-mine (ROM) pad located 1.2km to the east via a 2.1km haul road south of the open pit.

RECLAIMED TAILINGS

Previous detailed mining studies undertaken on the tailings reclaim process concluded that there is no shortage of potential working faces around the dams and production rates of up to 2.0Mtpa are considered readily achievable. Economic considerations led to a determination that a mining rate of 1.5Mtpa provided an attractive basis for the tailings retreatment