ASX-listed mineral sands miner, Image Resources, has managed to relieve itself of a previously unloved heavy mineral concentrate, or “HMC” inventory that was mounting in the wake of uncertain economic conditions brought on by coronavirus restrictions. The company’s key Chinese offtake customers, Shantou Natfort Zirconium and Titanium Co and Guangdong Orient Zirconic Ind Sci & Tech Co have now purchased 100,000 tonnes of HMC from the Boonanarring mineral sands operation 80km north of Perth.
The Chinese firms will start taking delivery of the stockpile over a three to five-month period starting this month.
Shantou Natfort has been the primary buyer of Boonanarring HMC since Image’s initial sale of product from the new mine in January last year.
However, the WA minerals sands producer hit a snag, as did millions of businesses globally, when demand for HMC, zircon and ilmenite took a tumble as a result of the economic fallout and market uncertainties that flowed from the shutdowns imposed across the world in a bid to contain the spread of covid-19.
Production at Boonanarring, on the other hand, was almost unaffected by the coronavirus restrictions and continued pretty much unabated, leading to Image building a pile of HMC that was growing at record levels, eventually reaching 100,000 tonnes by May this year.
The 100,000 tonne sales agreement with Shantou Natfort and Guangdong Orient Zirconic will help ease the inventory overload burden for Image and offset the pandemic-induced slide in sales in the first half of 2020.
Image is still looking to meet its calendar year sales guidance of 300-330Kt this year.
Image Resources Managing Director, Patrick Mutz said: “Once again our offtake partners have demonstrated their commitment to acquiring Image’s HMC by stepping up to purchase Image’s surplus inventory even under the current uncertain economic conditions.”
“We welcome the support, however, we also look forward to expanding our sales network beyond our current offtake agreements including, if achievable, broadening our customer base geographically.”
Pricing for the HMC shipments to China is based on current market prices and will be locked in for the full 100,000 tonnes to protect against any further unanticipated softening of the market during the delivery period.
Interestingly, Image said it will seek to avoid finding itself in a similar predicament in the future by diversifying its customer base through the sale of HMC to interested buyers outside of its existing offtake agreements.
According to Image, discussions are ongoing with several other potential offtake partners and it is confident the combination of sales to Shantou Natfort and Guangdong Orient Zirconic and potential sales to others will monetise the surplus HMC inventory in the next 3-4 months and maintain more timely sales of ongoing production.
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By Matt Birney
