Heron Resources Limited (ASX:HRR) Managing Director and CEO, Wayne Taylor, provides an update on construction at the company's Woodlawn Copper-Zinc Project.
Rachael Jones: Hello. I'm Rachael Jones with the Finance News Network. Joining me today from Heron Resources Limited (ASX:HRR) is Managing Director and CEO Wayne Taylor. Wayne, welcome back to FNN.
Wayne Taylor: Thank you Rachael.
Rachael Jones: Now Heron Resources Limited (ASX:HRR) is developing a copper-zinc project just north of Canberra, Australia. What can you tell me about this project?
Wayne Taylor: Yes Rachael, we are. We're at a very exciting time in the project development. We started construction in September last year, so around 12 months in. And we've got a couple more months to go before we start commissioning, so we see ourselves on track for delivering our first product to market in the first quarter of 2019.
Rachael Jones: Thanks Wayne. Now before we talk about the project, can you tell me about zinc prices and the long term demand?
Wayne Taylor: Certainly. Zinc is in a very strong position. The fundamentals are very good at the moment. Supply doesn't meet demand, and we've seen a draw on global stocks for a number of years now. And we continue to see it today, so we think the basis is there to see a longer term strong zinc price going forward. A bit of weakness at the moment, but every commodity's facing that. But we believe the fundamentals will shine through at the end of the day.
Rachael Jones: Now let's talk in more detail about the Woodlawn Zinc-Copper Project. What is the size of that resource?
Wayne Taylor: We've got a great resource at the Woodlawn Zinc-Copper Project. It's divided between two different components that make up the project. We've got the underground, which runs at about 7.2 million tonnes, and the re-treatment component which runs just shy of 11 million tonnes. Both of these resources will feed into the mine plane, which has been outlined in our feasibility study we released in 2016. So with that study, we outlined a reserve base, which gives us 9.2 years of life of mine. And we see plenty of upside on the exploration side to take it further than that.
Rachael Jones: And what can you tell me about the processing plant and the off take partners?
Wayne Taylor: Certainly. The processing plant is rated between 1 and 1.5 million tonnes per annum, depending on whether or not we're feeding hard rock underground or the re-treatment tilings to the plant. From that, we will end up with a production rate of around 40,000 tonnes of zinc a year, 10,000 tonnes of copper, and 12,000 tonnes of lead, producing three concentrates. That is for the first three years will be purchased by a company called IXM. It's the old Louis Dreyfus Company Metals trading house. They'll provide us with very competitive commercial terms on the off take.
Rachael Jones: And now to the financials and the share price. Can you provide a snapshot of the company?
Wayne Taylor: Certainly. On the corporate side, we've got a market capitalisation of around AUD$130 million at the moment. Cash at the end of June 2018 was AUD$65 million, and we have a debt facility with Orion Mine Finance, USD$60 million, which we've drawn USD$20 million of so far. So that's broadly the financials of the company.
Rachael Jones: Can you provide a comment on the share price and the expectation over the next 12 months?
Wayne Taylor: Certainly. We're going through a period of construction, which is always a little bit difficult to maintain the interest of investors. And our share prices has reflected that. But the transition to produce, we do reasonably expect to see increased interest on the back of the cash flows that will generate from production.
Rachael Jones: And last question, now Wayne. Why should investors consider adding Heron Resources Limited (ASX:HRR) to their portfolios?
Wayne Taylor: Look, we believe the company provides the opportunity to get exposure to commodity sweep that is driven by very strong fundamentals. We've got a very high quality project, and a great jurisdiction, great infrastructure, low sovereign risk. All the things that you would look for in a resources company. And that transition to produce a status really changes the game for us.
Rachael Jones: Wayne Taylor, thanks for the update. And congratulations on your progress.
Wayne Taylor: Thank you, Rachael.