Heron Resources : Ardea Spin Out-Notice of Meeting and Proxy Form

Suite 702, 191 Clarence St., Sydney, NSW 2000, Australia

heron@heronresources.com.au

+61 2 9119 8111

29 August 2016

ABN: 30 068 263 098

Dear Shareholder

Heron Resources Limited (Heron) announced on 10 August 2016 its intention to restructure its non-Woodlawn asset portfolio in New South Wales and Western Australia, with a focus on gold and nickel, through the proposed listing of its wholly owned subsidiary, Ardea Resources Limited (Ardea) (Spin-Off).

In this mail-out to shareholders you have just received, you will find three documents:

1. Notice for an extraordinary general meeting of the shareholders of Heron (Notice and EGM), with the meeting to be held at the Celtic Club, 48 Ord Street, West Perth, WA 6005 on 29 September 2016 at 2pm (WST).

2. Proxy form for voting at the EGM (Proxy).

3. Prospectus for an offer to transfer Ardea shares to eligible Heron shareholders under a capital reduction by way of In-specie Distribution and to allow the trading of those shares (Prospectus).

The Notice of Meeting includes two resolutions to be voted on at the EGM to approve the Spin-Off:

• Resolution 1 - disposal of a major asset, being the transfer of the non-Woodlawn Assets from Heron to Ardea, with payment to Heron through the issue of Ardea shares to Heron.

• Resolution 2 - If Resolution 1 passes, then a reduction of capital of Heron, being the distribution of those Ardea shares to Heron shareholders at nil cost.

The Prospectus is for information purposes only, as required by the Corporations Act. You are not required to do anything with this Prospectus. It is solely to facilitate the distribution and future trading of your Ardea shares.

If the EGM resolutions are approved and the other conditions to the Spin-Off are satisfied, Heron will be issued new fully paid ordinary shares in Ardea and these shares will then be distributed at nil cost to Heron shareholders on an approximate 1 for 10 entitlements basis at a record date of 3 October 2016 (Record Date). Following the Record Date, Ardea intends to undertake a public offer concurrent with ASX listing, raising up to A$6 million. Heron shareholders at the Record Date will have a priority application right to subscribe for additional Ardea shares. The capital raising prospectus is in preparation, for mail out after the EGM. Azure Capital Limited and Euroz Securities Limited are mandated advisors to Ardea.

Your Directors believe that Ardea as an independent company has great potential for new gold discoveries, notably at Mt Zephyr. Ardea's two main development projects, Lewis Ponds and the KNP, will undergo feasibility programs which are expected to create long term value. This balanced combination of exploration and development projects is expected to position Ardea as a quality standalone mineral resources company with excellent prospects.

Directors therefore encourage and recommend shareholders to vote "for" Resolutions 1 and 2, either by attending and voting at the EGM on 29 September 2016, or by completing and returning the enclosed Proxy at the earliest opportunity.

Stephen Dennis

Chairman

For further information, please visit www.heronresources.com.au or contact: Australia:

Mr Wayne Taylor Jon Snowball

Managing Director and Chief Executive Officer FTI Consulting

Tel: +61 2 9119 8111 or +61 8 6500 9200 +61 2 8298 6100

Email: heron@heronresources.com.au jon.snowball@fticonsulting.com

Canada:

Tel: +1 647-862-1157 (Toronto)

ASX:HER/TSX:HRR Release - Heron Resources Limited 1 of 1

An Extraordinary General Meeting of Heron Resources Limited will be held at the Celtic Club, 48 Ord Street, West Perth, WA 6005 on 29 September 2016 at 2pm (WST).

This notice of extraordinary general meeting should be read in its entirety. If Shareholders are in any doubt as to how they should vote, they should seek advice from their professional advisor prior to voting.

Please contact the Company Secretary on +61 2 9119 8111 or +61 8 6500 9200, or email to heron@heronresources.com.au if you wish to discuss any matter concerning the Meeting.

Notice is hereby given that an extraordinary general meeting of the Shareholders of Heron Resources Limited will be held at the Celtic Club, 48 Ord Street, West Perth, WA 6005 on 29 September 2016 at 2pm (Western Standard Time) (Meeting).

The Explanatory Memorandum to this Notice of Meeting provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and Proxy Form form part of this Notice of Meeting.

Shareholders are urged to vote by attending the Meeting in person or by returning a completed Proxy Form. Instructions on how to complete a Proxy Form are set out in the Explanatory Memorandum.

Proxy Forms must be received by no later than 2pm on 27 September 2016.

Terms and abbreviations used in this Notice and Explanatory Memorandum are defined in Schedule 1 of the Explanatory Memorandum.

RESOLUTION 1 DISPOSAL OF MAJOR ASSET

To consider, and if thought fit, to pass with or without amendment the following as an ordinary resolution:

"That for the purposes of Listing Rule 11.4 and for all other purposes, approval is given for the disposal of Ardea Resources Limited, a subsidiary of the Company, and the tenements as described in Schedule 5 on the terms and conditions set out in the Explanatory Memorandum."

A voting exclusion statement is set out below.

RESOLUTION 2 REDUCTION OF CAPITAL

To consider, and if thought fit, to pass with or without amendment the following as an ordinary resolution:

"That, subject to Resolution 1 being passed and for the purposes of sections 256B and 256C of the Corporations Act and for all other purposes, the issued share capital of the Company be reduced by the Company making a pro rata distribution in-specie of Ardea Shares to all holders of ordinary shares in the Company at the Record Date and on the terms and conditions set out in the Explanatory Memorandum."

VOTING PROHIBITION AND EXCLUSION STATEMENTS

Resolution Persons excluded from voting

Under Listing Rule 14.11, the Company will disregard any votes cast on the following Resolutions by the following persons:

Resolution 1 - Disposal of major asset A party to the transaction However, the Company need not disregard a vote if:

1. it is cast by a person as proxy for a person who is entitled to vote, in accordance with the direction on the Proxy Form; or

2. it is cast by the person chairing the Meeting as proxy for the person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

There are no parties other than Heron as asset vendors so the Heron Board is not aware of any person to whom exclusion applies.

By order of the Heron Board of Directors

Simon Smith Company Secretary

Heron Resources Limited 26 August 2016