The Speculator

PORTFOLIO POINT: Image Resources raises funds will accelerate development of its heavy minerals project in WA.

In a vote of confidence from shareholders, Image Resources held its share price when it relisted this week after a 25-day self-sought trading halt while it topped up its share capital.

Image sought a trading halt on July 5 when its shares closed at 30c pending the announcement of a new capital raising to fund further drilling on promising extensions to its burgeoning resource base on the North Perth basin.

This week the company relisted, having successfully placed 6.3 million shares at 30c with sophisticated and professional investors to raise $1,891,012.

That boosts total issued capital to106.5 million shares which, at 30c, gives the company a market capitalisation of $31.95 million. Remaining cash following the placement stands at $2.75 million.

Image’s June quarterly report, released this week, confirmed that its North Perth Basin project represents one of the largest undeveloped high-grade heavy minerals (HM) resources in Australia, with excellent existing infrastructure and upside exploration potential.

The report confirmed that confidence increased in a high-value mineral inventory to support a 3.3 million tonnes/year multi-pit operation over more than 12 years while still retaining significant exploration potential.

While the company’s earlier focus was on its Atlas Project on the northern end of its more than 2,000 square kilometres of 100%-owned tenements stretching along the Brand Highway from Gingin in the south towards Geraldton in the north, the company has renewed its focus on its Boonanarring target closer to Gingin in the south.

Its Boonanarring deposit has so far been delineated as hosting a measured and indicated resource of 3.1 million tonnes of 7.2% HM for 221,000 tonnes of HM.

Image exploration director and geophysicist, George Sakalidis, said Boonanarring had the potential to be about 12.5 km long and had already been drilled along more than 4km with promising results. During the latest quarter, the company has negotiated an option to buy freehold land covering a 3km gap between the so far measured resource on M70/1194 and the northern section, all being part of the target area.

During the latest quarter, infill drilling continued on the northern section at sufficient density for a JORC indicated resource to be estimated, with 35 holes drilled for 1481 metres. Drilling was completed in July, with a maiden resource estimate expected in September once all assays have been received.

Drilling of the 3km mid-section of the potential 12.5km strike length is planned for completion in the current quarter, and Image expects it will “significantly increase the size” of the Boonanarring resource.

Atlas deposit also world class

The current measured and indicated resource at the Atlas deposit near the northern end of the project area is 10.8 million tonnes of 7.8% HM for 841,000 tonnes of HM.

Company sources assert that resource has the second-highest grade of any mineral sands project in the world, and the highest of any in Australia due to start production over the next two years.

Image’s latest quarterly points out that recent technical studies have shown that, solely on an operating cost margin basis, Atlas is still a more attractive target than Boonanarring based on average grade.

But the decision to focus on Boonanarring as the initial mining target has been driven by a number of factors:

• Less uncertainty related to delays that could be incurred in negotiating native title agreements over Atlas,
• Less extensive environmental planning permits required,
• Better infrastructure and better location for attracting key staff, and
• Expected higher grades, and therefore higher HM concentrate production, for any given wet plant feed rate.

Image’s recently appointed managing director and highly-experienced HM processing plant manager, Peter Davies, added: “Boonanarring offers a quicker and lower-risk route to production – and provides shorter payback even on average grades.

“If the expected higher grades in the sections currently being drilled are confirmed, then this approach will be reinforced.”

The company’s aim will then be to bring Atlas on as a parallel mine and wet plant as soon as possible, in order to improve the overall project economics. Atlas South drilling during the latest quarter has extended the main Atlas deposit length by 700 metres.

The Speculator portfolio, as at August 1, 2012

Company	Code	No of shares	Bought	Purchase price	Current price	Current value
Image Resources	IMA*	15,000	31/12/2010*	0.362 av	$0.295	$4,425
Viralytics	VLA	19,995	20/12/2011	$0.308	$0.245	$4,899
Robust Resources	ROL	6,000	31/12/2010*	$1.49 av	$0.780	$4,680
Scotgold Resources	SGZ	27,500	31/12/2010*	5.5 av	$0.068	$1,870
GoConnect Ltd	GCN	250,000	31/12/2010*	0.034 av	$0.016	$4,000
Minemakers	MAK	20,000	25/01/2011*	0.425 av	$0.140	$2,800
Platsearch	PTS	20,000	8/02/2011*	$0.130	$0.070	$1,400
Broken Hill Prospecting	BPL	30,000	22/02/2011*	$0.132	$0.105	$3,150
Austpac Resources	APG	40,000	2/03/2011*	$0.060	$0.029	$1,160
Potash West	PWN	11,050	30/03/2011*	$0.200	$0.205	$2,265
Cortona Resources	CRC	25,000	13/04/2011*	0.146 av	$0.087	$2,175
Golden Gate Petroleum	GGP	408,500	20/04/2011*	0.0145 av	$0.011	$4,494
TNT Mines	TNT	4,440	22/07/2011*	$0.000	$0.250	$1,110
Quickstep Holdings	QHL	20,000	23/11/2011*	$0.185	$0.170	$3,400
Orpheus Energy	OEG	19,250	17/08/2011*	0.164 av	$0.110	$2,118
Black Mountain Resources	BMZ	10,000	17/04/2012	$0.300	$0.280	$2,800
Gullewa	GUL	40,000	22/05/2012	$0.063	0.084	$3,360
Total value of portfolio						$50,105
Cash at bank						-$7,530
Total						$42,575
Portfolio change since January 3, 2012 (started with $50,000)						-14.85%
All Ordinaries change since January 3, 2012 (then 4155.22)						3.23%
*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.