Heron Resources : Ardea Resources - Kalgoorlie Nickel Project - Cobalt Zone

Heron Resources Limited

Suite 702, 191 Clarence St., Sydney, NSW 2000, Australia

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ASX/TSX Release

6 January 2017

ABN: 30 068 263 098

Ardea Resources Limited KNP Cobalt Zone - Australia's Premier Cobalt Resource

Heron Resources Limited (Heron or Company) is pleased to advise that its wholly owned subsidiary, Ardea Resources Limited (Ardea), has completed an independent Resource Statement for the cobalt-rich portions of the Kalgoorlie Nickel Project (KNP). The KNP Cobalt Zone is a key element of Ardea's IPO and listing on ASX, planned for February 2017.

The new estimate for the KNP Cobalt Zone is 49.7Mt at 0.12% cobalt and 0.86% nickel, occurring within three separate KNP centres (Table 1). The global cobalt resource for the full KNP remains unchanged at 805Mt at 0.05% cobalt and 0.7% nickel using a 0.5% Ni cut-off grade1.

Ardea completed a review of the KNP in late 2016, concluding that the KNP as a whole comprises Australia's and the

developed world's largest cobalt resource2.

The KNP Cobalt Zone is located 50-150km north and northeast of Kalgoorlie in Western Australia (Figures 1 & 2), a favoured investment jurisdiction with excellent infrastructure that can facilitate ethical cobalt production for green energy.

Independent firm Ridley Mineral Resource Consulting Pty Limited (RMRC) has reported the following Mineral Resources within the five cobalt-rich prospect areas based on identified zones of continuous elevated cobalt mineralisation using a

0.08 % Co cut-off in these areas:

Table 1 - KNP Cobalt Zone - Resource Statement from RMRC

Area	Prospect	Resource category	Cutoff (% Co)	Size (Mt)	Co Ni MgO* FeO* Al2O3* SiO2* CaO* Mn* Cr* (%) % % % % % % % %
Goongarrie	Goongarrie	Measured	0.08	3.4	0.14	1.19	1.6	47	6.3	17	0.16	1.02	1.27
	South	Indicated	0.08	11.2	0.11	0.92	1.8	43	6.2	23	0.78	0.71	1.20
	Inferred	0.08	1.4	0.11	0.76	1.8	39	5.9	30	0.32	0.74	1.20
	Big Four	Indicated	0.08	4.5	0.11	0.89	1.6	40	5.3	32	0.68	0.76	1.07
	Inferred	0.08	0.2	0.11	0.95	1.6	38	4.2	36	0.25	0.73	1.09

Scotia Dam Inferred 0.08 2.9 0.14 0.88 3.2 34 4.4

Goongarrie subtotal 23.6 0.12 0.94

Siberia	Black Range	Inferred	0.50(Ni)	20.1 0.10 0.75	7.9	28	6.7
Yerilla	Aubils	Inferred	0.08	6.0 0.15 0.90	6.4	33	4.7	31	4.57	0.91

KNP Cobalt Zone TOTAL 49.7 0.12 0.86

*Estimates for MgO, FeO, Al2O3, SiO2, CaO, Mn and Cr are provided for reference only and do not constitute Mineral Resources

Goongarrie South, Big Four and Scotia Dam are effectively a contiguous mineralized belt

1 See Annexures 1 and 2 for full KNP categories. The breakdown for the full KNP resource categories is as follows:

Resource Category	Quantity (Mt)	Co (%)	Ni (%)
Measured	9.6	0.081	1.02
Indicated	244.0	0.052	0.75
KNP Total Measured and Indicated	253.6	0.052	0.76
Inferred	551.7	0.046	0.68
KNP Total Resources	805.3	0.048	0.70

2 By contained cobalt metal. Source of data: SNL Metals & Mining database (www.snl.com)

Vale Inco3 completed a $34.5 million Pre-Feasibility Study (PFS) on the KNP in 2009 concluding that it is "one of the most prospective nickel laterite tenement packages in the world" and "the KNP tenements form one of the largest potential nickel laterite deposits in the world".

RMRC has prepared the 2017 updated Resource Statement using modified reporting criteria for cobalt abundances in existing resource models that were previously prepared by Snowden Mining Industry Consultants (Snowden) and Heron.

This update describes the current publicly reported Mineral Resources for five prospect areas within the KNP known to contain cobalt-rich mineralisation. Two of the estimates, completed by Snowden in 2004, formed part of Heron's early assessment of the Scotia Dam and Black Range prospect areas.

Estimates for the Goongarrie South and Big Four prospects were completed by Heron in 2009 as part of a KNP PFS update following an initial PFS completed by Vale Inco in 2009. The current estimate for Aubils was by Heron in 2008 as part of feasibility assessment of the Yerilla Nickel Project.

The KNP Cobalt Zone is associated with a distinctive geo-metallurgical type defined as "Clay Upper Pyrolusitic". Mineralogy is goethite, gibbsite and cobaltian pyrolusite (strictly "asbolite" or "cobaltian wad"). Each of the cobalt-rich zones typically occurs as a sub-horizontal body (Figure 4) at a palaeo-water table within the KNP (and developed as a late stage supergene enrichment). This material is particularly well developed at Goongarrie South, which will be the focus area for Ardea's cobalt development studies.

Figure 1 - Ardea Resources Limited, Kalgoorlie Nickel Project showing KNP Cobalt Zones reviewed by RMRC

3 Vale Inco has not consented to the use of the PFS in this announcement.

Figure 2 - Ardea Resources Limited, Project Locations showing KNP Cobalt Zones and regional infrastructure

Based on the contained cobalt metal within the deposit, the KNP is Australia's largest cobalt deposit (Table 2, Figure 3). By this measure, it is more than three times larger than Australia's second largest cobalt deposit. The newly-defined cobalt resource from the high-grade KNP Cobalt Zone is a subset within the larger KNP resource, and the subset by itself is Australia's fourth largest cobalt resource. The KNP Cobalt Zone also is amongst the highest cobalt grades in Australia (Tables 2 & 3). In terms of global cobalt resources, the KNP is the premier resource within stable western jurisdictions.

The updated resource reporting for cobalt-rich zones provides a basis for KNP remodelling work planned by Ardea that is focused on cobalt grade shells. Quantifying the cobalt-rich mineralisation at the KNP marks the first part of a refocussing for the KNP onto the cobalt component of the deposit.

Forthcoming drilling and metallurgical studies will move the KNP towards a PFS focussing on cobalt-nickel-manganese feedstocks for thelithium ion battery industry (Lithium Nickel Manganese Cobalt Oxide - LiNiMnCoO2 or NMC).

Table 2 - Ardea Benchmarks, ASX-listed companies ranked by contained cobalt metal

Company	Size (Mt)	Co (%)	Co metal (kt)	Project	Mineralisation style
1	Ardea Resources	805	0.05%	386.4	Kalgoorlie Nickel Project, WA	Laterite Ni-Co
2	CleanTeq Holdings	109	0.10%	114	Syerston, NSW	Laterite Ni-Co-Sc
3	GME Resources	108	0.06%	65.1	NiWest Project, WA	Laterite Ni-Co
4	Ardea Resources	50	0.12%	59.6	KNP Cobalt Zone, WA	Laterite Co-Ni-Mn
5	Conico Limited	32	0.12%	39.3	Mt Thirsty, WA	Laterite Ni-Co
6	Cobalt Blue Hlding	36	0.08%	30.0	Broken Hill, NSW	Co sulphide
7	Regal Resources	4	0.72%	29.1	Kalongwe, DRC	Cu-Co sulphide
8	Havilah Resources	18	0.10%	17.5	Mutooroo, NSW	Cu-Co sulphide
9	CuDeco Limited	57	0.03%	16.7	Rocklands, Qld	Cu-Au-Co sulphide
10	Mithril Resources	27	0.05%	13.4	Leaky Bore, NT	Cu-Co sulphide
11	Platina Resources	9	0.15%	12.6	Owendale, NSW	Laterite Ni-Co-Sc
12	Independence Gp	14	0.08%	11.4	Nova-Bollinger, WA	Ni-Cu-Co sulphide
13	Augur Resources	16	0.05%	8.2	Homeville, NSW	Laterite Ni-Co
14	Cougar Metals	10	0.07%	7.1	Pyke Hill, WA	Laterite Ni-Co
15	Hammer Metals	6	0.11%	6.5	Millenium, Qld	Cu-Au-Co sulphide

ARDEA RESOURCES

ARDEA RESOURCES

Figure 3 - Ardea Benchmarks, ASX-listed companies ranked by contained cobalt metal