IMA - Image Resources

[finicky]

Could it be building a position prior to expiry of the 10% dividend (goes ex April 19)?
Just gave it a cursory look and it looks pretty cheap if it has a decent mine life ahead of it and if the price of its main commodity (zircon?) can be expected to hold up.
After 5 years of heavy losses and share inflation it has put in 3 consecutive years of ~20% average return on equity. Book value has grown to 0.11 as at fy20. Looks like it has net cash.
Will have a look at one of their presos.

 

[Erlang]

Yes, it could be the dividend.

IMA paid off their remaining debt earlier this year, I believe. I think they mine about 80 % zircon, 20 percent titanium dioxide.

The current mine site, Boonanarring, will be depleted around the end of 2022, then they move shop a few kms down the road to one of their other sites.

Image snaps up mineral sands mining lease

Image Resources has snagged a mining lease for its Atlas mineral sands project in Western Australia as the life of its Boonanarring project edges closer to ending.

www.australianmining.com.au

 

[finicky]

M.D. Patrick Mutz comes across as a gent. Mentions 10-15 years of mine life ahead and exploration potential. No debt and confident enough to have done a share buy-back and will issue a chunky dividend. Operation only 80kms Nth of Perth.

 

[finicky]

Just bought 30,000 of these @ 0.19 but I figure the price is really 0.17, given IMA goes ex dividend for 2 cents on April 19.

Really haven't read enough about it but there's sufficient there for me to take an interest, I'd guess that it's worth twice the current price if you could count on even half the current rate of earnings to persist over more than 10 years. But that's the rub because I have a vague acquaintance with Iluka Resources (ILU) and how sand minerals can fall into protracted price slumps. The other big risk as I see it is China being one of their big offtake partners/customers. Another thing is that they've apparently been mining their highest grade resource and must move on in a year or two to somewhat lower quality inground assets and spend quite a bit of capital to shift the operation a short distance - albeit capital that they'll have largely saved from the current operation. All comments pretty loose and off the cuff.

I do quite like the monthly chart, keeping in mind they've only been profitable for 3 consecutive years. Looks a reasonable chance of having made the second low in Feb at 0.15 and might have completed an abc retracement of the preceding 2+ year rally from 0.05 to 0.30.

Held

5 Year Monthly

 

[The Cruising Investor]

Appreciate your response, I'm already a shareholder, just thought it was a weird way to invest.....today they've upped the buy to 850 to 900 shares every 5 mins

 

[Erlang]

M.D. Patrick Mutz comes across as a gent. Mentions 10-15 years of mine life ahead and exploration potential. No debt and confident enough to have done a share buy-back and will issue a chunky dividend. Operation only 80kms Nth of Perth.

Yes, Mutz did strike me as a gent -- and a convincing one at that. But then again perhaps that's his job.

IMA claims they will pay for the relocation out of cash reserves.

 

[Erlang]

Just bought 30,000 of these @ 0.19 but I figure the price is really 0.17, given IMA goes ex dividend for 2 cents on April 19.

Really haven't read enough about it but there's sufficient there for me to take an interest, I'd guess that it's worth twice the current price if you could count on even half the current rate of earnings to persist over more than 10 years. But that's the rub because I have a vague acquaintance with Iluka Resources (ILU) and how sand minerals can fall into protracted price slumps. The other big risk as I see it is China being one of their big offtake partners/customers. Another thing is that they've apparently been mining their highest grade resource and must move on in a year or two to somewhat lower quality inground assets and spend quite a bit of capital to shift the operation a short distance - albeit capital that they'll have largely saved from the current operation. All comments pretty loose and off the cuff.

I do quite like the monthly chart, keeping in mind they've only been profitable for 3 consecutive years. Looks a reasonable chance of having made the second low in Feb at 0.15 and might have completed an abc retracement of the preceding 2+ year rally from 0.05 to 0.30.

Held

5 Year Monthly
View attachment 122799

 

[Erlang]

I am already a shareholder. I was wondering if I should do the dividend reinvestment plan at 0.17. I think cash is better for now.

 

[Austwide]

@Erlang That's up to you, just bear in mind if you want to sell your current holding before the new ones are issued it can make you wait for them and miss a price or leave you with a small parcel depending on current holding size.

 

[Erlang]

@Erlang That's up to you, just bear in mind if you want to sell your current holding before the new ones are issued it can make you wait for them and miss a price or leave you with a small parcel depending on current holding size.

Thanks. I don't plan on selling any IMA shares relatively soon.

 

[Erlang]

So the inaugural dividend of Image Resources (ASX: IMA) was completely unfranked. They decided to pay off their debt at the start of this year (2021) in order to issue this dividend (before the end of the current financial year).

If they maintain their profits, would one expect IMA to pay a second dividend in the next half of the year, after the end of the current financial year? And would it be reasonable to assume that the next dividend is (partially) franked?

Of course we can never know what they will decide, but I am just wondering what is reasonable to expect from a company, like IMA, that has just paid off its debt and is making (for now) profits.

 

[finicky]

As I understand it they have accumulated losses prior to fy18 that would have been offsetting subsquent profitable years for tax calculations. Cant attach a franking credit when they're not paying tax. How far they are into using up prior losses I don't have an idea. I'm going to hold my IMA shares, as long as there's no bad news.

 

[finicky]

Um, just checked their fy20 annual and they paid $9,740,000 income tax, also paid tax in fy19, so guess I don't know at all.

 

[Erlang]

Well, thanks for the effort. I don't see any reason why they wouldn't start paying (partially) franked dividends, but I guess we'll see in the next few months.

 

[finicky]

@Erlang

This should answer your queries Erlang. What excellent and painstaking shareholder communication from a company representative. I feel guilty for the effort he put in. I have omitted the courtesy lead in. Looks like they intend to pay future franked dividends where possible.

Email to CFO or Secretary
Subject: dividend franking

To CFO or Secretary

Hello,

I recently took up a small shareholding in IMA. Someone with whom I was discussing the company asked why the inaugural dividend wasn't franked

Answer: The dividend was not fully franked because at the time of determining and paying the dividend Image had not paid any corporate tax.

and whether dividends (partially or fully franked) would be distributed in future half years.

Answer: The dividend policy of the company is to determine and pay dividends based on annual profits. Unless the Board decides to change this policy the next dividend would be expected to be paid in Q2 2022 based on profits for the year ended 31 December 2021

I replied to the first by pointing to accumulated losses in years prior to fy18 and said the profits would not have overtaken past losses yet and therefore the company would likely not have paid tax - therefore would not have franking credits to distribute. Having said that I then checked the profit statement for fy20 and saw that the company had in fact paid full tax in fy20 and fy19. So I had to say I don't understand why franking credits were not available either.

Answer: What I think you are referring to in 2019 and 2020 is the tax charge in the income statement (P&L) and not the actual tax payable. We are getting into detailed accounting here but simplistically once a company is confident that profits will be available such that it will be able to offset previous losses then the future tax benefit is recognised on the balance sheet. Image was able to do this in the 2018 calendar year. This means that as profits are generated tax is deducted in the P&L, but is not payable, so long as there is enough future tax benefit to amortise. Image therefore paid no tax in 2019 and 2020 despite generating profits and showing a tax charge in the P&L. You can see this more clearly in Note 6 to the annual financials. The first line in the note shows the tax payable and the 2nd line the deferred tax impact. We did recognise that, based on initial tax estimates for 2020, there was likely to be a small tax payable against 2020 profits which would become due in mid-2021. However due to the uncertainty as to the amount of tax payable (estimated at $1.28M in the financials), the fact the dividend was being paid before any tax was due, and the relatively small amount compared to the dividend of ~$20M, it was decided not to pre-empt the possible availability of a small amount of franking credits which could in any case be used in future years.

About future dividends, I understand that dividends are at a board's discretion and decided upon at the appropriate time but the company's use of the descriptor "inaugural" suggests to me an intention for dividends to be continued if practical

Answer: It is a reasonable assumption based on our current company policy to expect dividends to be paid in future, based on (and subject to) future profitability / cash flow etc.

Regards

John McEvoy Chief Financial Officer

 

[Erlang]

@finicky

That's an impressive response. Thanks for reaching out and getting the information.

I look forward to future franked dividends.

 

[Erlang]

A new quarter update.

https://cdn-api.markitdigital.com/a...access_token=83ff96335c2d45a094df02a206a39ff4

Any thoughts?

 

[finicky]

Have glanced through it and obviously the market likes it on a down day. I'm a bit distracted by movements in other stocks (e.g Chalice CHN) and thinking about some selling but will be looking closer at the report later and will post something if I have content. Everything seems to be moving in the right direction though doesn't it? Prices rising, production strong, debt repaid, reserves likely to increase by factoring in higher mineral prices alone. I am still not up with their plan after 2022, beyond the currently mined resource.

 

[Erlang]

Yes, everything seems to be moving in the right direction.

Speaking of gold stocks, IMA just released an announcement about their gold prospecting aims:

https://cdn-api.markitdigital.com/a...access_token=83ff96335c2d45a094df02a206a39ff4

 

[finicky]

Following up the tip-off post from @Erlang with a small purchase has paid dividends (literally) but the monthly price chart is shaping up nicely for a potential breakout from a 9 year base. The daily has shot up over the last week and is probably due for a rest or pullback.

Prices of their main mineral, Zircon, has been slipping over a 3 month period but is well up over 180 and 360 days periods - according to my crude research (see thumb screenshot)
I was also alerted by reading the recent preso that they still have intentions for a gold tenement in the Southeast Kalgoorlie area.

Monthly