Image doubles total heavy minerals resource for $24m

Image Resources will pay $24m for Sheffield Resources’ 211 million tonnes of mineral resources grading 3.0 per cent total heavy minerals for 6.3 million tonnes of contained total heavy minerals. Image now has a binding agreement to pick up around eight exploration licences, three mining leases and one retention licence from Sheffield that will see the mineral sands miner effectively double its existing resource.

Image will fund the acquisition from its existing $50 million in cash reserves.

All tenements within the agreement are located in the historic mineral sands mining district of Eneabba in Western Australia and within the operational footprint of Image's existing operation. Eneabba is located only 275 kilometres north of Perth.

According to the company, mineralisation in all of the Eneabba tenements is accessible by dry mining methods and amenable to typical heavy mineral recovery processing technology such as the wet concentration plant currently used at its Boonanarring project north of Perth.

Whilst final approvals for the transactions are subject to various government regulations and considerations, including the Foreign Investment Review Board or “FIRB”, the companies have expressed confidence the process will be completed early in the New Year. FIRB can take up to three months and third party royalty holders will also have to sign off on the agreements. In recognition of the delayed timing of FIRB, both parties have agreed to a $23 million initial payment with a final $1 million payment when conditions for the sale of the three mining licences have been satisfied.

Image Resources Managing Director Patrick Mutz said: “Image is pleased to have the opportunity to acquire a package of tenements that only rarely comes onto the market. Sheffield’s divestment decision coincides positively with Image’s desire to identify and secure potential development projects outside of its current portfolio, as a critical component of its growth strategy. This acquisition provides the Company substantial opportunities for additional mine-life as well as production expansion potential.”

Given the convenient proximity of the purchased tenements to Image's existing projects, it expects the expanded mineral resources to provide the basis for potential new production centres, expanded production rates and extended mine life beyond its current portfolio of projects.

Image is currently mining mineral sands at its Boonanarring project and according to the company, the strategic acquisition opens up many new possibilities for the expansion or progression of mining through its various project areas. This purchase represents a 234 per cent increase in overall tonnes of total Mineral Resources accessible by dry mining, and more than a doubling of the total tonnes of contained total heavy minerals, when compared to the company’s current mineral resources estimate of 90 million tonnes at 6.4 per cent total heavy minerals for 5.8 million tonnes of contained total heavy minerals accessible by dry mining.

According to the company the purchase does not change its current development plan for its 100 per cent owned Atlas deposit slated for production early in 2023 when it expects the Boonanarring project to cease production. Image is also continuing to drive through its feasibility study for its 100 per cent owned Bidaminna project that may run as a stand-alone project in parallel with Atlas.

It says the Eneabba resources could potentially increase its ore-processing rate from 500 tonnes per hour to up to 1,000 tonnes per hour in future dry mining operations. Whilst the Eneabba tenements have a more favourable strip ratio of 0.2:1 compared to 1:1 for Atlas, the latter has an ore grade advantage of six per cent total heavy minerals compared to 2.8 per cent at Eneabba.

Image hit record quarterly production in the June quarter of 2021 at Boonanarring with heavy mineral concentrate output cracking through 100,000 tonnes. Market prices for ilmenite and rutile have been on the rise through 2021 with zircon catching up quickly and demand is expected to increase as the world emerges from COVID-19 restrictions on trade. 

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au