Shanshan is currently constructing a pilot plant at its facilities in the city of Changsha, China to test the compatibility of Yerilla ore with its processing technology. A 40-tonne bulk sample of Yerilla ore has been shipped to Changsha for this test work.

Subsequent to a positive feasibility study outcome, Shanshan may earn a 70% interest in the Yerilla project by sole funding construction and commissioning of the project to an agreed capacity. The Agreement is subject to Chinese and Australian regulatory approvals.

A study of the Yerilla Project identified an 18 year mine life with annual production of 21,000 tonnes of nickel in mixed sulfide intermediate product and a further 1,400 tonnes of cobalt sourced from 2.5Mt of leach feed grading 1.06% Ni and 0.07% Co.

The study was based on a combined resource of some 135.3Mt at 0.77% Ni and 0.05% Co with a cash operating cost estimate of US$5.70 per pound of payable nickel net of credits.

As part of the transaction Shanshan has subscribed for 12,046,940 Heron shares (4.99% of the issued share capital of Heron) at a 20% premium to the 15 day VWAP, subject to Shanshan Board approval if required and Chinese Commerce Department’s Approval. Its adviser, Huashan Capital, has been issued 4,818,776 options to acquire Heron shares at an exercise price of A$0.30, exercisable upon Shanshan’s decision to commence construction of the plant.

Shanshan also has the option to subscribe for two further tranches of Heron shares; each equivalent to 5% of the Company’s then issued capital, at a price 10% above the 15 day VWAP upon a decision to commence construction and upon completion of construction respectively.