Despite a drop in the zircon price earlier this year, the value of Image Resources’ zircon-rich heavy mineral sands concentrate from its Boonanarring operation in WA has not been diminished as offtake partners continue to pay a premium for its product. The company, which has enjoyed a stellar run since production started at the mine last December, is now looking at new ways to add value to its mineral sands ore body.
A recent dip in the zircon price has not penalised Perth-based mid-tier mineral sands producer, Image Resources, at its zircon-rich Boonanarring project in WA.
Whilst the benchmark price for premium grade zircon fell 2.5% to US$1,580-1,590 per tonne in November, Image’s sale price for its zircon rich, heavy mineral sands concentrate mined in WA, continues to fetch a premium to market.
The company recently finalised another regular monthly shipment of heavy minerals concentrate, or “HMC”, of a nominal 20,000 tonnes with offtake partner Natfort, which left WA’s shores at the end of October.
It has also just secured a sales agreement with Hainan Wensheng for a nominal 45,000 tonnes to be delivered over two shipments - one in the latter half of November and one in December.
Whilst the zircon element in Image’s HMC hasn’t taken a hit from the price fall, the company is also encouraged by the fact that the realised price of titanium dioxide in the concentrate continues to sit at August levels, when the price increased by about 6%.
Boonanarring, which sits around 80 kilometres north of Perth in WA’s prospective Perth Basin, is arguably one of the highest heavy mineral grade, zircon-rich, mineral sands projects in Australia.
Construction and project commissioning were completed on-time and on-budget in 2018, whilst HMC production started during December last year.
The company’s first operational achievement was to exceed nameplate capacity in January, helping Image achieve profitability in the first quarter of 2019 and become cashflow positive by the middle of the year.
So far the company has completed three full quarters of successful operations with performance exceeding targets in all major categories, including significantly higher HMC production and lower costs than forecast.
This has allowed Image to complete its first debt repayment of US$8.2M. Further debt repayments are currently scheduled over seven equal quarterly payments of the capitalised principal and interest for the first 15 months of the loan, plus any additional interest on the capitalised amount.
Under this original schedule, the company will make its final repayment in early May 2021, however, it is currently evaluating options to expedite this.
Having established itself as a successful miner, Image is now looking at potential ways to value-add and improve profitability at Boonanarring.
Areas being investigated include options for separation of the HMC into magnetic and non-magnetic components in Australia instead of overseas, a methodology to quantify HMC premium grade zircon content for increased concentrate valuation and opportunities for broader exposure to global mineral sand commodity markets.
Image Managing Director and Chief Executive Officer Patrick Mutz said:"We continue to receive robust demand for our zircon-rich HMC product.”
“The committed sales of 65kt in the December quarter, at stable zircon pricing, keeps the company firmly on track to deliver on our updated 2019 guidance.”
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