Heron Resources : Ardea Resources Limited - Second Supplementary Prospectus

Ardea Resources Limited ACN 614 289 342

and

Heron Resources Limited ACN 068 263 098

1. Important Information

   This is a supplementary prospectus (Second Supplementary Prospectus) intended to be read with the prospectus dated 9 November 2016 (Prospectus) and supplementary prospectus dated 18 November 2016 (First Supplementary Prospectus) issued by Ardea Resources Limited (Ardea or the Company) and Heron Resources Limited (Heron).

   This second Supplementary Prospectus (Second Supplementary Prospectus) is dated 6 January 2017 and was lodged with the Australian Securities and Investments Commission (ASIC) on that day. ASIC, ASX Limited (ASX) and their respective officers do not take any responsibility as to the contents of this Second Supplementary Prospectus.

   Other than as set out below, all details in relation to the Prospectus remain unchanged. To the extent of any inconsistency between this Second Supplementary Prospectus, the Prospectus and the First Supplementary Prospectus, this Second Supplementary Prospectus will prevail. Unless otherwise indicated, terms defined and used in the Prospectus have the same meaning in this Second Supplementary Prospectus.

   This Second Supplementary Prospectus will be issued with the Prospectus and the First Supplementary Prospectus as an electronic prospectus and may be accessed on the Company's website at www.ardearesources.com.au.

   This is an important document and should be read in its entirety. If you do not understand this document, you should consult your professional advisors without delay.

2. Corporate and Project Updates

   As previously announced to ASX:

3. Extension of Closing Date to 20 January 2017

   The extension allows:

   • Ardea an opportunity to raise further funds in excess of the minimum amount; and

   • the retention of OnMarket Bookbuilds to assist with maximising funds raised under the capital raising, particularly geared to their clients seeking cobalt exposure.

     Details regarding the extension of Closing Date are outlined in Heron's ASX announcement dated 23 December 2016 which forms Schedule 1 to this Second Supplementary Prospectus.

4. KNP Cobalt Zone - Premier Cobalt Resource in Australia, 49.7Mt at 0.11% cobalt and 0.9% nickel

   Ardea has completed an independent Resource Statement for the cobalt-rich portions of the Kalgoorlie Nickel Project (KNP).

   The KNP Cobalt Zone is a key element of Ardea's IPO and listing on ASX:

   • The KNP Cobalt Zone with 49.7Mt at 0.12% cobalt and 0.86% nickel is a significant world resource of "ethical cobalt" (in contrast to a portion of world supply sourced from the Democratic Republic of the Congo);

   • The full KNP with 805Mt at 0.05% cobalt and 0.7% nickel1 (refer Prospectus pages 84-87 and the First Supplementary Prospectus) is by far the largest cobalt resource documented for an ASX- listed Australian mineral explorer; and

   • allows Ardea the opportunity to focus on a Pre-Feasibility Study on the high grade KNP Cobalt Zones and aligning the Company to the high-tech lithium ion battery sector.

     Details regarding the Kalgoorlie Nickel Project - Cobalt Zone are outlined in Heron's ASX announcement dated 6 January 2017 which forms Schedule 2 to this Second Supplementary Prospectus.

5. Project Update - KNP Cobalt Zone and Lewis Ponds Bulk Tonnage Exploration Target

   Based on recent field work and financial modelling subsequent to lodging the Ardea Prospectus, Ardea has completed new resource interpretations and forward programs for its key projects:

   • The full KNP with 805Mt at 0.05% cobalt and 0.7% nickel (refer Prospectus pages 84-87 and the First Supplementary Prospectus) is the largest cobalt resource documented in Australia, and in addition;

     • The KNP Cobalt Zone with 49.7Mt at 0.11% cobalt and 0.9% nickel is a significant world

       resource of "ethical cobalt"; and

     • Occurrences of the semi-precious gemstone chrysoprase within the KNP have for the first time been systematically evaluated as a bulk mining operation.

   • At the Lewis Ponds project a bulk tonnage Exploration Target was defined;

     • Significant base metal-gold open-pit potential, with orogenic gold and base metal mineralisation defined which is very similar to other bulk tonnage deposits in the region (refer Prospectus pages 9-10, 43-48, 83 and the First Supplementary Prospectus); and

     • The Lewis Ponds Main Zone and Tom's Zone main shaft mullock have been sampled by Ardea and returned assays of 9.9-12.1g/t gold and 272-539g/t silver.

   • New tenement applications complementing existing Ardea projects

     • Lewis Ponds, NSW - several EL applications secured and already recommended for grant; and

     • Bedonia West and Perrinvale, WA - high quality Ni-Cu-PGM targets acquired.

       Details regarding the Project Update are outlined in Heron's ASX announcement dated 6 January 2017 which forms Schedule 3 to this Second Supplementary Prospectus.

6. Consents

   Ridley Mineral Resource Consulting Pty Limited (RMRC) consents to the inclusion of the resource statement for the KNP Cobalt zones in the form and context in which it is included. RMRC has not withdrawn this consent before this Second Supplementary Prospectus was lodged with ASIC.

   Resource Category	Quantity (Mt)	Co (%)	Ni (%)
   Measured	9.6	0.081	1.02
   Indicated	244.0	0.052	0.75
   KNP Total Measured and Indicated	253.6	0.052	0.76
   Inferred	551.7	0.046	0.68
   KNP Total Resources	805.3	0.048	0.70

   1 The breakdown for the full KNP resource categories is as follows:

   Mr Ian Buchhorn consents to the inclusion of an exploration target for Lewis Ponds and exploration results for other Ardea projects in the form and context in which it is included. Mr Buchhorn has not withdrawn this consent before this Second Supplementary Prospectus was lodged with ASIC.

7. Directors' Authorisation

8. This Supplementary Prospectus is issued by the Company and Heron and its issue has been authorised by a resolution of the directors of both the Company and Heron (Consenting Directors).

   In accordance with section 720 of the Corporations Act, each Consenting Director has consented to the lodgement of this Second Supplementary Prospectus with ASIC.

   Dated: 6 January 2017

   Matthew Painter Ian Buchhorn

   Managing Director Executive Director

   On behalf of Ardea Resources Limited On behalf of Heron Resources Limited

   Schedule 1 Announcement - Extension of Ardea IPO Closing Date to 20 January 2017

   lodged 23 December 2016