The Speculator

Heavy minerals miner Image Resources remains in a trading halt, with a foreshadowed placement potentially the precursor to expansion plans.

PORTFOLIO POINT: Trading halt for Image Resources is seen as a curtain raiser on expansion plans for the emerging heavy minerals miner.

Our long-held heavy minerals developer Image Resources (IMA) surprised the market with a request on Monday for a trading halt, pending an announcement expected this morning (July 11).

This morning, however, the company sought an extension of the halt as a voluntary suspension since it needed additional time to “complete negotiations” in relation to a foreshadowed placement. The suspension may or may not be lifted before the weekend.

Many Image shareholders may have become alarmed, since Australia’s biggest heavy minerals miner, Iluka Resources (ILU), shocked the market on Monday with a dramatic cut to its full-year sales forecasts due to weaker demand in key economic markets.

Iluka shares plunged 24% to a day’s low of $8.88 – well below its 12-month high of $19.46. It was the second downgrade of sales forecasts in two months, with Iluka now predicting further weakness in demand and pricing for rutile (titanium dioxide) and zircon.

Image, however, has yet to go into production, although a move in that direction was foreshadowed earlier this year following an extremely positive scoping study that evaluated six of the company’s 11 defined resources on the North Perth Basin.

As this column pointed out on February 29, Image appointed one Peter J. Davies, of ISOC Pty Ltd, as project manager to complete a feasibility study following the promising scoping study.

On May 25, Peter Davies was elevated to managing-director of Image, succeeding the founding managing-director and geophysicist George Sakalidis, who remains executive director exploration.

Davies has extensive operational experience in the mineral sands industry, having been general manager for TiWest’s mineral sands processing and synthetic rutile production. He was also previously director of European operations for Kerr-McGee Chemicals/Tronex for titanium dioxide pigment manufacturing.

Ahead of the trading halt, Image shares closed last week at 30c – less than half their high of a year ago of 63.5c. At that lower price, the company carries a market capitalisation of around $30 million.

In its last update on the North Perth Basin feasibility study on June 19, Image reported an “increased degree of confidence” in a high-value minerals inventory to support a 3.3 million tonnes/year multi-pit operation over more than 12 years mine life, with further significant exploration potential. The “increased confidence” results from further high grades of ore being identified in the more recently acquired Boonanarring property north of Gingin, which is destined to be the site of a dry mill to produce heavy minerals concentrate.

In this column on April 27, when Image shares were trading around 32c, we drew attention to a bullish report from two investment analysts from Perth-based Proactive Investors Pty Ltd. The analysts – Richard Badauskas and Andrew McCrea – predicted a price range for Image within 12 months of between 66c and 87c.

No doubt they – along with other shareholders – will be eagerly awaiting the news to be released following the lifting of Image’s voluntary suspension.

Win for our anti-cancer developer Viralytics

Our long-held cancer-cure hopeful Viralytics (VLA) scored a notable milepost this week with the announcement of its first success in advanced trials in America under the auspices of the US Food and Drug Administration.

On Monday, Viralytics managing-director Bryan Dulhunty announced the company’s first evaluable patient from the company’s Phase II CALM (CAVATAK in Late Stage Melanoma) trials had become eligible and had chosen to continue treatment by entering a further Phase II extension trial.

As pointed out previously (in this column on May 30, Viralytics is undertaking Phase II trials in the USA, on destroying melanomas through multiple injections of the company’s trademarked Cavatak coxsackievirus, which combines with tumour cells, destroys them and replicates itself to invade more tumour cells.

After encouraging results from Stage I trials in Australia, Viralytics won approval from the US FDA late last year to conduct Stage II trials on up to 63 patients in America. This involved multiple injections into multiple tumours over an 18-week period to monitor immune-related progression-free survival at six months.

The first Stage II patient began successful treatment last December. To be eligible to join the extension study, the patient must have displayed complete or partial tumour reduction or disease stabilisation at six months from initiation of the CAVATAK treatment.

The Phase II extension study is being made available to patients for two reasons:

  • To continue CAVATAK treatment for patients who display clinical benefit from it, and
  • To enable Viralytics to continue studying the effectiveness of CAVATAK treatment over a further six-month period. Under the extension study patients are offered the opportunity to receive nine additional injections over a 24-week period.

A positive trial outcome for the Phase II CALM study will be achieved when immune-related, progression-free survival at six months is observed in 10-12 of the 54 evaluable patients.

Such a result may make it possible to accelerate development without being required to complete Stage II trials on all evaluable patients.

A progression to more advanced Stage III trials, including targeting a wider range of cancers, such as colorectal, prostate, head and neck cancers, would raise Viralytics’ investment profile significantly.

Viralytics, now with a market capitalisation of around $25 million, has no debt and remaining cash of almost $6.4 million (equivalent to 8.5c a share) – sufficient to carry through its programs until at least the end of the year.

The company plans to conduct a series of shareholder and investor briefings in each of Australia’s major capital cities in coming months, the first of which was staged in Perth on July 2. Readers, investors and others wishing to attend the briefings should contact Viralytics (02 9988 4000) or

-The Speculator portfolio, as at July 11
No of shares
Purchase price
Current price
Current value
Image Resources
0.362 av
Robust Resources
$1.49 av
Scotgold Resources
5.5 av
GoConnect Ltd
0.034 av
0.425 av
Broken Hill Prospecting
Austpac Resources
Potash West
Cortona Resources
0.146 av
Golden Gate Petroleum
0.0145 av
TNT Mines
Quickstep Holdings
Orpheus Energy
0.164 av
Black Mountain Resources
Total value of portfolio
Cash at bank
Portfolio change since January 3, 2012 (started with $50,000)
All Ordinaries change since January 3, 2012 (then 4155.22)
*Shares held from previous year, carried at their December 30, 2011 closing price.

David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.

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