Heron Resources Ltd T.HER

Ten Ways To Sunday

[MisterMarket]

topadvisor1's post is just an attempt to get cheap Heron shares.  It is what traydor on Hotcopper the Austr bullboard trys to do.  Rebuttals are given.  I'll give you mine.  From the PEA which uses $1.09 zinc, the annual production target is 51 000 tonnes of zinc which is 112 million lbs of zinc.  The cost to produce the zinc is about $0.30 lb after by product credits.  Analyists predict a much higher zinc price in the next few years.  Lets use a $1.30 zinc price---that gives us a $112 mil profit.  How much is that worth per Heron share?---about $0.25.  Lets give Heron a PE of 4---that equals a $1.00 per share price.  WOW !  Herons a 10 bagger !!

Heron's feasbility study is on track to be completed by the end of June 2016.  Meanwhile project financing discusions (for A$140Mil) are continuing.  Project construction is expected to take 18 mos, with first production by Q1 2018, I believe.  Seems like Heron is on track for higher zinc prices.  Where is Ivanhoe?  IVN has yet to announce the start of a PEA for their Kipushi zinc project and PEAs are followed by feasbility studies, then construction.  My optimistic guess is they are about 5 years away from production, depending on management focus.  Lets see...they have the Kamoa copper project, ranked the world,s largest undeveloped copper deposit by Wood Mackenzie.  Did you know Heron has the world,s largest laterite nickel deposit?  Their Kalgoorlie Nickel Project has 795.6 mil T of 0.7% nickel and 0.048 % cobalt.  Back to Kamoa...they sold half the project and capex is $1.2 B, they will have to find financing for $600 mil of that and forcasts for the copper market aren't that hot right now.  Lets take a look at their Platreef PGE project, capex is again $1.2 B and after tax IRR is 13% which is BAD.  (The IRR for Heron's project is 46% after tax.)  Which brings us back to the Kipushi zinc project.  Maybe management will focus on that.

The drill grades at Kipushi certainly are impressive but none of Kipushi's numbers have $ signs in front of them.  We do not know the costs or profits from the future production.  The Kipushi deposit is at 1300 to 1700M depth.  What will the costs be to mine the ore and bring a significant amount of it to the surface?  What will be the length of construction time?  Heron's Woodlawn is open pit and then underground.  They have not had to drill too deep.  By the time Kipushi is put into production Heron's Woodlawn will have achieved payback and Heron will be working on the Kalgoorlie Nickel Project.  By that time nickel prices should have recovered and Heron will have 2 good projects. 

I found something else interesting about Heron.  The PDAC is being held in Toronto March 6-9, 2016.  Heron's booth has a prime location by one of the doors to the enterance to the trade show.  The first thing anyone will see entering, leaving, or lingering by the trade show door is Heron's booth!  Heron is also making a presentation at the forum for investors Room 803, Tuesday March 8 at 2:20pm.  topadvisor1 you better get your cheap shares now before the crowds start buying.  Heron is the better stock 10 ways to Sunday.