IMA – Image Resources | Aussie Stock Forums


Singin’ in the grain – Bulletins Specular report

05/09/2006

A mineral sands prospect in Western Australia is coming up trumps and investors are sniffing around. David Haselhurst got there first.

My spies in Western Australia tell me that hungry opportunists have been tapping on the door of mineral sands prospector Image Resources. This could result in profitable gains for readers who followed The Speculator into the stock early this year ahead of a drilling program that began in March and has so far turned up encouraging results.
We visited the site on the sand plain scrublands north of Perth (B, Feb 28), where geophysicist George Sakalidis and his field crews were undertaking an extensive ground survey, to identify buried beach strandlines hiding potentially valuable deposits of zircon, the titanium ores rutile and ilmenite, and other heavy mineral fractions such as leucoxene and monazite.

Drilling continues to confirm those expectations. At its Cooljarloo North project, Image earlier this year established an inferred resource of 80 million tonnes of 3% heavy minerals within three strandlines. Then, in early August, the company cheered its backers with positive results from 58 holes sunk on a 20m-by-100m grid to delineate two new shallow high-grade zones over a strike length of 1.7km. Better holes included 8m of 13.4% heavy minerals (HM) from a depth of 2m; 10m of 8% HM from 2m; 10m of 12% HM from 2m. Continued drilling should further extend and enhance this resource.

Cooljarloo North lies along strike from TiWest’s Cooljarloo mine, which is expected to be exhausted within four years. Quite clearly, acquisition of the Image asset could significantly extend TiWest’s mine life at marginal cost in relocating its plant. TiWest’s present alternative is to shift the plant to ground north of Dongara. Image now holds 520sq km of tenements on the north Perth basin, which hosts the world-class Eneabba mine and produces 50% of the world’s chloride ilmenite and close to 25% of its zircon.

Further south at the Bidaminna project, Image also holds 110sq km where mineral-rich strandlines extending 36km in widths up to 800m have been identified from ground magnetic surveys. Drilling is underway to confirm these indications. Importantly, the Bidaminna project appears to be a strike extension of the Gingin mine operated by Iluka Resources. Iluka’s reserves are also being depleted, with expectations that they will last only another two to three years.

So far, two potential suitors have been identified for either Image or its assets. I understand that a third party, Bemax Resources, has made tentative overtures to Image. It has two plants between Augusta and Margaret River in the south-western corner of WA, where production is also declining.

A recent research report from RM Capital of Perth came up with a value of $40m-$60m for Image’s minerals sand assets. That’s 62 ¢-87 ¢ a share after the expected exercise last week of 13.5 million options due at 20 ¢. That will boost total issued capital to 73.9 million shares.

UBS Stockbroking had been soaking up the options with an eye to participating in the forthcoming spin-off of Image’s gold, nickel and base metals interests. Image shareholders will get a free in specie distribution of shares.



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