The Speculator

Image Resources raises development cash and another two portfolio stocks see a bright future in acid.

PORTFOLIO POINT: Image Resources raises development cash and another two portfolio stocks see a bright future in acid.

A month ago, shares in the emerging heavy minerals miner Image Resources (IMA) were trading around 30c ahead of announcing a trebling of its JORC-compliant heavy minerals (HM) resource on its Block B Boonanarring target zone on the North Perth Basin.

Ever the optimist, I added another 5,000 Image shares to the portfolio on October 10 after the shares slipped to 26.5c, despite all the good news – particularly a significant boost in the valuable zircon content of the HM from an earlier conservative estimate of 11% to 17.4%.

Perhaps some shareholders have become a little unnerved since I pointed out at that time that the company would soon need to top up its funds to further the development of its increasingly promising project.

Sure enough, Image sought a trading halt on October 26 while it worked on a new capital raising. Yesterday (November 6) Image was reinstated to trade after the company confirmed it had mandated Perth stockbroker CPS Securities to raise up to $7 million through an issue of fully paid ordinary shares at 20c each. They slipped a little more to close at 24c, although the broker had already confirmed commitments that would raise more than $6.5 million through a placement.

Shareholders will be asked to approve the placement at a meeting to be called for early December. It will result in another 35 million shares being issued to take Image’s issued capital to 141.5 million shares.

The funds to be raised will exceed current estimated costs for the completion of a bankable feasibility study (BFS) on development of the Boonanarring and Atlas HM deposits on the North Perth Basin by July 2013.

Managing director and mining engineer Peter Davies said: “With this raising, Image will continue to move toward the important milestone of delivering production in 2014 and we can now focus on the main feasibility study and associated environmental and approvals work.”

New investors who pick up shares at 20c through the planned capital raising can look forward to a recovery in the company’s fortunes since the shares traded as high as 47c earlier this year before the upgrade in the extent and richness of its deposits was confirmed with the likelihood of more to come.

Austpac sees profits to come in waste recovery

Stockbroker Alpha Securities yesterday released a bullish recommendation on its listed client Austpac Resources NL (APG).

My portfolio stock APG is developing new technology for recycling waste from steel industry.

Alpha believes the stock offers “speculative buying appeal in the range of 4-8c a share, with excellent medium term upside as additional opportunities in the steel and titanium industries are realised.”

Auspact closed last week at 3.7c.

At its plant on Newcastle’s Kooragang Island, Auspac has developed the capacity to recycle 17,000 tonnes/year of mill scale and 34,000 tonnes a year of spent liquor from steel mills to produce 18,000 tonnes/year of iron chips or briquettes and 18,000 tonnes/year of hydrochloric acid.

We carried Austpac into the portfolio at 6c a share in early 2011 and no doubt the stock has accumulated many stale bulls after successive share issues to fund development. The most recent was a placement in August this year of 33 million shares at 6c to raise $1.98 million from Orient Zirconic Resources (Australia) Pty Ltd to develop acid regeneration and iron recoveries within the Chinese steel industry.

Austpac has also developed what it describes as ERMS SR technology (Enhanced Roasting and Magnetic Separation Synthetic Rutile) to recover high-grade synrutile from illmenite. A plant  to produce 60,000 tonnes a year of synrutile is under consideration to serve the titanium metal industry. This would meet around one quarter of the present requirement of Japan’s two major titanium producers, Toho Titanium  Co Ltd and Osaka Titanium Corporation.

Widely-held share register

Austpac today has 1,192 million shares on issue which a 3.7c a share give it a market capitalisation of $44.1 million. Of the 4376 ordinary shareholders, the current top 20 shareholders have 37% of the capital with the largest and only substantial holder being  Kronos International Inc, a subsidiary of Kronos Worldwide Inc, a major producer of titanium dioxide pigments in Europe and North America with 6.4%, followed by BHP Billiton Innovation Pty Ltd (4.6%).

Shareholders might hope to learn more of the company’s outlook at its annual meeting at Sydney’s Menzies Hotel on November 15 when managing-director Mike Turbott will no doubt update his investors of what’s in store.

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 November 6, 2012

CompanyCodeNo of sharesBoughtPurchase priceCurrent priceCurrent value
Image ResourcesIMA*20,00031/12/2010* $0.338 av$0.270$5,400
Robust ResourcesROL6,00031/12/2010*$1.49 av$0.620$3,720
Scotgold ResourcesSGZ27,50031/12/2010*5.5 av$0.060$1,650
GoConnect LtdGCN250,00031/12/2010*0.034 av$0.010$2,500
Broken Hill ProspectingBPL30,00022/02/2011*0.132 av$0.092$2,760
Austpac ResourcesAPG40,0002/03/2011*$0.060$0.037$1,480
Potash West PWN11,05030/03/2011*$0.220$0.265$2,928
Cortona Resources CRC25,00013/04/2011*0.146 av$0.095$2,375
Golden Gate Petroleum GGP408,50020/04/2011*0.0145 av$0.008$3,268
TNT MinesTNT4,44022/07/2011*$0.000$0.250$1,110
Quickstep HoldingsQHL20,00023/11/2011*$0.185$0.180$3,600
Orpheus EnergyOEG19,25017/08/2011*0.164 av$0.068$1,309
Black Mountain ResourcesBMZ10,00017/04/2012$0.300$0.225$2,250
Chesser ResourcesCHZ12,00027/08/2012$0.360$0.400$4,800
Total value of portfolio$52,208
Owe the bank-$8,835
Portfolio change since January 3, 2012 (started with $50,000)-13.25%
All Ordinaries change since January 3 2012 (then 4155.22)8.39%
All Ordinaries close 6 November 20124503.7

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