Heron Resources : Share Purchase Plan Offer

ABN 30 068 263 098 SHARE PURCHASE PLAN OFFER

This Offer closes at 7:00 pm (AEDT) on Tuesday, 29 August 2017

This is an important document.

This Offer is made without taking into account the individual investment objectives, financial position, taxation situation or particular needs of each Eligible Shareholder. Accordingly, before making a decision on whether or not to accept the Offer, you should consult with your financial or other professional advisor.

If you have any questions in relation to the Offer or how to complete the application form, please do not hesitate to contact the Company Secretary, Heron Resources Limited, on [phone].

This document is not a prospectus or other disclosure document under the Corporations Act.

All $ amounts are Australian dollars unless stated otherwise. NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES OR TO US PERSONS

ABN: 30 068 263 098

18 July 2017

Dear Shareholder

Invitation to Participate in Heron Resources Limited's Share Purchase Plan Introduction

Heron Resources Limited (ACN 068 263 098) (Heron or the Company) invites eligible shareholders to participate in a share purchase plan (SPP), to subscribe for ordinary fully paid shares (Shares) in the Company on the Terms and Conditions enclosed with this document to acquire Shares at a price of $0.07 per Share (Offer).

The SPP is being conducted as part of a wider fund raising exercise that includes funds to be raised by way of a placement to certain institutional investors, including Greenstone Management (Delaware) LLC (or one or more of its affiliates) (Greenstone), Orion Mine Financing Fund II LP (or one or more of its affiliates) (Orion) and Castlelake III L.P. SPV and Castlelake IV, L.P. SPV (or one or more of their respective affiliates) (Castlelake) (Placements) of up to 2,001,652,231 fully paid ordinary shares at a placement price of $0.07 to raise $140 million, assuming full participation under the Offer. The SPP will only proceed if the Placements are successfully completed.

Funds raised from the SPP and the Placements will be used to develop the Company's high grade Woodlawn Zinc-Copper Mine located 250 km southwest of Sydney in New South Wales (Woodlawn Project) and for general working capital purposes.

Existing shareholders are now being invited to participate in helping to support the future of Heron.

The SPP gives eligible shareholders the opportunity to increase their Heron shareholding without paying brokerage fees or other transaction costs, irrespective of the size of their shareholding, to purchase blocks of shares in various increments starting at $500 worth of Shares up to a maximum of $15,000 worth of Shares at $0.07 per Share.

The Board recommends this Offer under the SPP and welcomes your ongoing support.

Should you wish to discuss any information contained in this letter further, do not hesitate to contact the Company Secretary, Simon Smith, on [phone].

Yours faithfully

Stephen Dennis Chairman HERON RESOURCES LIMITED FREQUENTLY ASKED QUESTIONS

1. What is the SPP?

   The SPP provides each eligible shareholder with an opportunity to subscribe for new Shares, (subject to any scale back at the Board's absolute discretion), without paying any brokerage fees, commissions or other transaction costs, at the issue price of $0.07 per Share (Issue Price) for a total application price not exceeding $15,000.

   The volume weighted average market price of the Shares on the Australian Securities Exchange (ASX) during the 30 trading days immediately prior to the announcement date of the Offer was $0.08. The issue price under the SPP is $0.07, being a 12.5% discount to the above volume weighted average price. Shareholders considering subscribing for Shares under the SPP should be aware of the risk that the market price may change between the date of this Offer and the date that the Shares under the SPP are issued.

   Details of the Offer are set out in the Terms and Conditions. An Entitlement and Acceptance Form and replay paid envelope are also included in this package

2. Who is an Eligible Shareholder?

   The right to participate in the SPP is optional and is only available to shareholders who are registered as holders of fully paid ordinary shares in the capital of Heron at 5:00pm (AEDT) on the record date of 29 June 2017 (Record Date) and whose registered address is in Australia or New Zealand (Eligible Shareholders).

   Heron will not issue new Shares to an applicant if those shares, either alone or in conjunction with the issue of Shares under other applications received by Heron would contravene any law or the ASX Listing Rules.

3. How much can I invest under the SPP?

   Under the SPP, Eligible Shareholders may subscribe for new Shares in parcels starting at $500 worth of Shares (being 7,143 Shares at the Offer price of $0.07 per Share) up to a maximum of $15,000 worth of Shares (being 214,286 Shares at the Offer price of $0.07 per Share).

   The Company is only offering Shares up to a maximum investment by any Eligible Shareholder of $15,000 even if they receive more than one Offer (whether in respect of a joint holding or because they have more than one holding under a separate account).

   Heron has the absolute discretion to scale back applications. Should this happen, the balance of any application monies that are not applied to acquire new Shares under the SPP will be refunded to you, without interest, except where the amount is less than $2, in which instance it will be retained by Heron and donated to charity.

4. Subscription and Application procedure?

Eligible Shareholders may participate by selecting one of the following Offers to subscribe for Shares under the SPP:

Offer	Subscription Price
Offer A:	$500
Offer B:	$1,000
Offer C:	$2,500
Offer D:	$5,000
Offer E:	$7,500
Offer F:	$10,000
Offer G:	$15,000

No. of Shares

7,143

14,286

35,714

71,428

107,143

142,857

214,286

If you would like to participate in the Offer, please either, (i) pay the subscription monies for the Shares you wish to acquire by BPAY or, (ii) return your completed Entitlement and Acceptance (enclosed), together with your cheque (payable to Heron Resources Limited - SPP) for the subscription monies for the Shares you wish to acquire to:

By Post By Hand Delivery
Heron Resources Limited c/- Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross 6153, Western Australia	Heron Resources Limited c/- Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross 6153, Western Australia

Applications (together with payment) must be received on or before 7:00 pm (AEDT) on 29 August 2017 (Closing Date). No late applications will be accepted. Once an application has been made, it cannot be revoked. All valid applications shall be deemed accepted if received before the Closing Date.

If you elect to pay by BPAY, you do not need to return the Entitlement and Acceptance Form but you will need to make the payment by 7:00 pm (AEDT) on 29 August 2017 in accordance with the instructions on the Entitlement and Application Form.

Please refer to the SPP Terms & Conditions for details of the certification you will be deemed to provide when you participate in the Offer by returning an Entitlement and Acceptance Form or when paying by BPAY.

1. What are the key dates?

   Record Date (5:00pm AEDT) 29 June 2017

   Announcement Date 30 June 2017

   Section 708A "Cleansing Notice" lodged with ASX

   4 July 2017

   Dispatch SPP booklet to shareholders 18 July 2017

   Opening Date 19 July 2017

   Closing Date 29 August 2017

   Issue of Shares under the SPP early September 2017

   Lodge Appendix 3B early September 2017

   Dispatch date for holding statements early September 2017

   Quotation of Shares on ASX (anticipated) mid September 2017

   These dates are indicative only. The Company may vary the dates and times of the Offer without notice. Accordingly, Eligible Shareholders are encouraged to submit their Entitlement and Acceptance Forms as early as possible.

2. How will custodians, trustees and nominees be treated under the SPP?

If you are an Eligible Shareholder and hold Shares as a custodian (as defined in ASIC Class Order CO 09/425 (refer below) (Custodian) or in any more specific ASIC relief granted to the Company in relation to the SPP), you may apply for up to the maximum number of new Shares for each beneficiary for whom you act as custodian, provided you annexe to your Entitlement and Acceptance Form a certificate to the Company (Custodian Certificate).

Please refer to the SPP Terms and Conditions for information on the eligibility for custodian, trustee and nominee shareholders.