The Speculator

Image Resources’ heavy minerals project at Boonanarring is getting heavy attention.

PORTFOLIO POINT: Latest drilling boosts potential of Image Resources’ heavy minerals project on the North Perth Basin.

My portfolio stock Image Resources (IMA) today reported new assay results, confirming earlier indications of high grade heavy minerals (HM) extending over the full 2.3 kilometres of its new Block B zone.

This extends the strike length of heavy mineralisation to more than 12 kilometres at the Boonanarring project area on the North Perth Basin. The area is located within Image’s 2000 square kilometres of minerals tenements stretching  north for around 200 kilometres from the town of Gingin about 100km north of Perth.

Image’s managing director, mining engineer Peter Davies, reported the grade, thickness and widths of the mineralised zones provide a strong indication of this being a viable mining target.

The richest intersection reported from Block B came in at 11 metres of 19.7% HM, with 20% of the sample being highly-valued zircon.

The report added that the zircon grades, based on visual estimates (pending the results of the full mineral assemblage work currently in progress) were “particularly encouraging”.

This will be further quantified when the maiden JORC resource for Block B becomes available later in September. That will then be added to what the company has already confirmed – a measured  and indicated resource of 3.1 million tonnes of 7.2% HM for 221,000 tonnes of HM.

A new drilling program will be launched in October on Block A, subject to the completion of exploration and mining access agreements with the owner, on the northern end of the Boonanarring project area.

Potential joint venture discussions

Today’s announcement confirmed that Image was continuing to hold discussions with other mineral sands companies in WA to explore possible areas of synergy and co-operation. They include:

  • Discussions with a number of parties who have expressed interest in a Build-Own-Operate arrangement for the initial wet concentrator at Boonanarring, which would further reduce the project start-up costs.
  • Samples from the recent drilling program have been collected in preparation for the start-up of bulk sample test work to provide ilmenite and zircon samples for customer acceptance testing.
  • Work is continuing on product transport and power supply options.
  • A community contact office has been opened in Gingin to enable local residents and visitors to get firsthand information on the project.

Davies confirmed the company’s planned production start-up was on schedule for mid-2014.

In last week’s lacklustre market, Image retreated from a week’s high of 32c to a closing low of 27.5c on a modest turnover of 93,400 shares with a bidder today offering 29c, but no takers.

With 106.5 million shares on issue, Image carries a market capitalisation of $31 million with remaining cash at mid-August of $2.1 million.

As pointed out in this column on August 15, Image has made no secret of the fact that it is willing to trade assets to fund an initial producing HM mine, probably on its Boonanarring discovery.

Image’s executive director of exploration, geophysicist George Sakalidis, will be in Sydney later this week for presentations to potential investors and brokers.

Among Image’s assets is a 10.7% interest in the listed Magnetic Resources NL (worth on market around $10 million) and its extensive portfolio of magnetite ore prospects in WA.

Sakalidis, also managing director of Magnetic, has a third hat as exploration director of Meteoric Resources (MEI), in which Image has a modest interest.

At 3c, Meteoric’s 85.1 million shares carry a market capitalisation of just $2.55 million with remaining cash of less than $1000 and a grab-bag of interests in various mineral exploration tenements. If a buyer could be found in this depressed market, there’s little doubt that deals could be done on any number of largely dormant prospects.

Last week, Meteoric hopefully announced the company had been “encouraged” by the positive preliminary feasibility study results on the Toronto-listed Macarthur Minerals (TSX: MMS) Ularring hematite project south-west of Kalgoorlie. Macarthur announced the study indicated the Ularring project to be potentially “viable and robust”, with further project development justified.

Meteoric pointed out that its adjoining 100%-owned Coorara project covers a 40km extension of the banded iron formation (BIF) hosting the Ularring project and shows “very similar styles” of magnetite BIF and hematite-goethite alteration.

It continued: “A key element  in the positive Macarthur results is the recognition that hematite/goethite mineralisation grading 47% iron is amenable to beneficiation using conventional methods to produce a plus 60% iron product with mass yields in the order of 60%.”

As many readers will be aware, magnetite generally occurs as a low grade ore (25-40% iron content) which, nevertheless, can be simply upgraded through magnetic separation from its silicate host rock to rival the more highly prized hematite ore (6o-65% iron content).

The Coorara project in the South Yilgarn iron province is claimed to be within trucking distance of the TransAustralia Railway.

In better times this may well have tempted investors or potential partners ... and, as I reported on August 15, some as yet unidentified Chinese visitors were in the district with George Sakalidis having a look.

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

The Speculator Portfolio (as at September 4, 2012)
CompanyCodeNo of sharesBoughtPurchase priceCurrent priceCurrent value
Image ResourcesIMA*15,00031/12/2010* 0.362 av$0.290$4,350
Robust ResourcesROL6,00031/12/2010*$1.49 av$0.640$3,840
Scotgold ResourcesSGZ27,50031/12/2010*5.5 av$0.065$1,788
GoConnect LtdGCN250,00031/12/2010*0.034 av$0.018$4,500
Minemakers MAK20,00025/01/2011*0.425 av$0.135$2,700
Broken Hill ProspectingBPL30,00022/02/2011*0.132 av$0.105$3,150
Austpac ResourcesAPG40,0002/03/2011*$0.060$0.033$1,320
Potash West PWN11,05030/03/2011*$0.220$0.180$1,989
Cortona Resources CRC25,00013/04/2011*0.146 av$0.088$2,200
Golden Gate Petroleum GGP408,50020/04/2011*0.0145 av$0.010$4,085
TNT MinesTNT4,44022/07/2011*$0.000$0.250$1,110
Quickstep HoldingsQHL20,00023/11/2011*$0.185$0.170$3,400
Orpheus EnergyOEG19,25017/08/2011*0.164 av$0.070$1,348
Black Mountain ResourcesBMZ10,00017/04/2012$0.300$0.250$2,500
Chesser ResourcesCHZ12,00027/08/2012$0.360$0.440$5,280
Total value of portfolio$53,118
Owe the bank-$10,570
Portfolio change since January 3, 2012 (started with $50,000)-14.90%
All Ordinaries change since January 3 2012 (then 4155.22)4.10%
All Ordinaries close 04 September 20124325.6

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