Heron Resources : New Mineral Resource on Shallow G2 Lens and Total Underground Resource Upgrade

Heron Resources Limited

ASX/TSX Release

13 November 2017

Level 7, 191 Clarence Street, Sydney NSW 2000

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ABN: 30 068 263 098

Heron's Woodlawn Project - New Mineral Resource on Shallow G2 Lens and Total Underground Resource Upgrade

• New Mineral Resource estimate provided for the first mineralisation (G2 Lens) to be accessed in the Woodlawn underground mine - expected to have a positive impact on early cash flow
• G2 Mineral Resource now has three defined domains: G2 Main (G2), G2 Hanging Wall (GH) and G2 Copper Zone (GC)
• Combined Mineral Resource for G2 now estimated at:
  • 139kt @ 10.1% ZnEq1 (4.5% Zn, 0.8% Cu, 2.3% Pb, 0.4g/t Au, 33g/t Ag) - Indicated Category
  • 58kt @ 13.3% ZnEq (4.0% Zn, 1.0% Cu, 2.2% Pb, 1.2g/t Au, 117 g/t Ag) - Inferred Category
• Total underground Mineral Resources for Woodlawn were recalculated as part of this update with separate cut- off grades used for polymetallic and copper domains resulting in a 9.1% increase in total tonnes and a slight lowering of the copper grades within the copper domains
• Importantly the total Measured and Indicated Mineral Resource for the underground has increased by 0.5Mt or 12% which has the potential to add to the total reserve base
• G2 Ore Reserve estimation, selected metallurgical testing and updating of early mine schedule is underway

Heron Resources Limited (ASX:HRR TSX:HER, "Heron" or the "Company") is pleased to report an upgrade to the Mineral Resource estimate for the shallow G2 Lens and a revision of the total underground Mineral Resources at its wholly- owned Woodlawn Zinc-Copper Project, located 250km south-west of Sydney, New South Wales, Australia. The resource upgrade follows on from the recently completed drilling program that focused on expanding the shallow G2 position, in areas close to the proposed box-cut and decline.

Commenting on the results, Heron Resources Managing Director and CEO, Mr Wayne Taylor, said:

"This significant upgrade to the G2 Lens and total underground Mineral Resources is an encouraging development for the early stages of the mine development and we are looking forward to incorporating this material into the mine plan. It is expected to have a positive impact on the early cash flows of the project as the G2 area did not contribute to the feasibility study projections and will be the first source of underground production. These results along with the remaining extensional positions continue to demonstrate the discovery potential and economic upside at Woodlawn."

G2 Lens

The G2 Lens is located to the south of the Kate Lens, and is adjacent to the planned route of the decline, 100-200m below the surface (see Figures 1-4). Recent drilling has targeted this area for its ability to add to the early mine inventory. A program of 22 diamond core holes for a total of 4,246m was recently completed to further define the resource. Three key mineralised horizons have been identified, namely G2 Main (G2), G2 Hanging-wall (GH) and the newly defined G2 Copper zone (GC).

The G2 Main was the primary target of the recent drilling campaign and consists of a zone of 5-10cm zinc sulphide-rich stringers crosscutting beds of coarse-grained volcanic breccia. The GH zone was discovered during the follow-up program and comprises very high-grade massive and stringer polymetallic sulphides occurring approximately 30 to 40m stratigraphically above the G2 Main zone hosted in mudstone. The GC zone is typical Woodlawn copper sulphide

1 ZnEq % used in this release refers to the calculated Zn equivalent grade based on the Zn, Cu, Pb, Au and Ag grades, the formula for which is provided at the end of this report.

mineralisation consisting of both sulphide stringer and some massive sulphide (pyrite/chalcopyrite) in a chlorite alteration zone. Full assay results from the recent drilling program are provided in Heron's ASX release dated 19 September 2017.

G2 Lens Mineral Resource Estimate

The G2 Lens Mineral Resource estimate was undertaken by Heron and verified by SRK Consulting. It has been estimated in accordance with the JORC Code (2012) and the NI 43-101 guidelines. Two distinct types of mineralisation have been modelled: 1) Polymetallic mineralisation and 2) Copper dominated mineralisation. Details of the estimation methodology used is provided below and within the JORC (2012) Table 1 at the end of this report.

G2 Mineral Resource Estimate 2017

Lens	Domain	Resource Category	Quantity (kt)	ZnEq (%)	Zn (%)	Cu (%)	Pb (%)	Au (g/t)	Ag (g/t)
G2	Polymetallic	Indicated	100	11.9	6.3	0.5	3.1	0.41	41
GC	Copper	Indicated	39	5.5	0.1	1.5	0.0	0.36	10
Total	Combined	Indicated	139	10.1	4.5	0.8	2.3	0.40	33

(Cut-off grades are 7% ZnEq for polymetallic, and 1% Cu for copper mineralization) Indicated Mineral Resources Inferred Mineral Resources

G2	Polymetallic	Inferred	25	11.9	6.1	0.4	3.2	0.76	46
GH	Polymetallic	Inferred	6	54.0	13.7	0.7	7.9	6.33	878
GC	Copper	Inferred	28	5.3	0.1	1.5	0.0	0.34	8
Total	Combined	Inferred	58	13.3	4.0	0.9	2.2	1.16	117

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 at the end of this report; 3) 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; 4) Some rounding related discrepancies may occur in the totals; 5) the Mineral Resource is reported in accordance with the the JORC Code (2012) and NI 43-101 43-101 guidelines; 6) further details of the Mineral Resources estimation are provided in the JORC Code (2012) Table 1 at the end of this report.

Total Woodlawn Underground Mineral Resource 2017

The total Woodlawn underground Mineral Resource was recalculated as part of the update process, now using a cut-off grade for the copper domain mineralisation of 1% Cu, which has led to a 9.1% increase in the total tonnes of the Mineral Resource with a slight reduction in the copper grades within the copper domains. The use of a separate and tailored cut-off grade for the copper mineralisation was deemed to be more reflective of the physical and commercial performance of this potential production source.

A review of the Ore Reserves and potential total mining inventory has commenced and is to be released in the coming weeks.

Woodlawn Total Underground Mineral Resource 2017

Tonnes Mt	ZnEq %	Zn %	Cu %	Pb %	Au g/t	Ag g/t
All Lenses	Polymetallic	Ind+Mea	2.7	21.6	10.9	1.5	4.0	0.7	79
All Lenses	Copper	Ind+Mea	1.9	9.7	0.7	2.6	0.1	0.2	14
Total	Combined	Ind+Mea	4.6	16.7	6.7	1.9	2.4	0.5	52

(7% ZnEq cog for Polymetallic and 1% Cu cog for Copper) Indicated + Measured Mineral Resource Inferred Mineral Resource

Tonnes Mt	ZnEq %	Zn %	Cu %	Pb %	Au g/t	Ag g/t
All Lenses	Polymetallic	Inf	1.9	16.9	7.3	1.5	3.0	0.8	61
All Lenses	Copper	Inf	0.7	9.2	0.7	2.5	0.1	0.2	12
Total	Combined	Inf	2.6	14.9	5.6	1.8	2.2	0.6	48

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 at the end of this report; 3) 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; 4) Some rounding related discrepancies may occur in the totals; 5) the Mineral Resource is reported in accordance with the the JORC Code (2012) and NI 43-101 43-101 guidelines; 6) further details of the Mineral Resources estimation are provided in the JORC Code (2012) Table 1 at the end of this report.

Mineral Resource Description and Methodology

The Woodlawn Volcanogenic Massive Sulphide (VMS) mineralisation is hosted in Late Silurian deep water marine mudstones and volcaniclastic debris flows associated with a rhyolitic volcanic centre within the Goulburn Basin. The Woodlawn deposit comprises of 12 known sulphide lenses which form three mineralised horizons locally disrupted by faulting. The Zn, Cu and Pb mineralisation occurs as massive and stringer sulphide lenses, interpreted to have formed both on the sea floor and as replacement mineralisation in coeval mudstones and volcanic breccia flows. The mineralisation is derived from hydrothermal fluids which emanated from the adjacent volcanic centre and is associated with an aerially extensive, zoned alteration envelope.

The G2 lens mineralisation is part of the broader G Lens complex, located at the southern end of the uppermost mineralised horizon. Mineralisation is hosted in both mudstones, and volcanic derived breccia flows. The G Lens was previously mined from the G1 and G2 Lenses, and the new mineralisation identified by Heron is a combination of extensions to the previously mined lenses and newly identified mineralisation positioned to the south of and below the known lenses.

The Mineral Resource at Woodlawn is defined by both historic and recent Heron diamond drilling, as well as underground mapping in previously mined areas. Drill intercept spacing varies from 15x15 m to 20x30 m across the modelled lens area.

The G2 Lens Mineral Resources were estimated using block models constrained within wire-framed domains defined mainly by interpreted geologic and structural contacts, using lower cut off grades based on population breaks of 4.0% Zn in polymetallic domains, and 1% Cu in copper domains. Where appropriate, some material of lower grade was included with the mineralised domains for purposes of continuity. Estimations were carried out using ordinary kriging for Zn, Cu, Pb, Fe, Ag and Au. Specific gravity (density) determinations collected from samples of drill cores were applied to blocks using grade- based regression equations.

Tonnages and grades were reported above 7.0% ZnEq for the polymetallic mineralisation as in keeping with previous Mineral Resource statements, and at a 1% Cu cut-off grade for the copper mineralisation. The Mineral Resource estimate has been separately classified for each individual lens based on both geological interpretation confidence and geostatistical variance of assay composites between drill holes into the following categories: Measured (15x15m spaced drilling with geological backs mapping); Indicated (up to 20x30m spaced drilling); and Inferred (greater than 20x30m spaced drilling). Mineral Resource estimation was undertaken for the entire G Lens complex, however, there were no material changes to the G1 and G3 domains and they are therefore, not separately reported here.

G2 Lens Mineral Resources are expected to be mined using underground mechanised underhand long-hole stoping with paste backfill. Extraction of separate Zn, Cu and Pb concentrates for sale is planned utilising a new processing facility which is currently under construction at the site.

Ore Reserve estimation, selected metallurgical testing and the updating of the early mine schedule has commenced on the new G2 resource and will be reported on separately.

Figure 1: Woodlawn G2 Lens (G2 & GC) long-section showing interpreted lens shape, piercements of recent drilling and the position of proposed decline.