David Robb, Iluka's Managing Director stated: ".....I believe we are on the threshold of a new era for our industry, driven by the forces of growth and urbanisation in emerging economies - most particularly China. Demand for the products Iluka produces is strengthening at a time when we are preparing to bring on high quality, long life new zircon and rutile production sources. When added to our advantageous geographical position, a tremendous opportunity lies ahead."
POSITIVE SCOPING STUDY OUTCOME
Conclusions
The results of the various scenarios considered were:
• Stand alone 400tph dry mining NPV (10% discount, before tax) of $16M-
$39M (IRR 39%-67%) including capital of $37M.
• Stand alone 800tph dredge mining NPV of $47M-$87M (IRR 73%-105%)
including capital of $49M.
• The stand alone scenarios do not take into account that the balance of the
resources could be attractive to third parties with NPVs to them in the
range of $47M-$86M (disregarding any uplift for SR ilmenite).
• Incremental case 800tph dry mining NPV of $56M-$89M (IRR 446%-
543%) including capital of $23M.
• Incremental case 800tph dredge mining NPV of $63M-$102M (IRR 88%-
118%) including capital of $65M.
• Incremental case 2,000tph dredge, 800tph dry mining combination NPV of
$106M-$180M (IRR 241%-294%) including capital of $46M.
• Potential for very substantial increases in the NPV in all cases with SR
ilmenite premiums.
Share price jumps 28% on very low volume, about $50k. Good news, but better would be if it has secured further funding to advance its drilling schedule. Sadly, no one cares about explorers at the moment, even really good ones. Even grace seems absent from this thread. I'm not a holder, just really like what the company has done so far. My capital is locked away in trading systems atm but i will rejoin image when i feel the time is right. Good luck to the holders.
MD David Robb
As most people in the industry are aware, Iluka’s view is that there are grounds for
zircon and high grade titanium dioxide prices to increase “appreciably” in 2009.
2
First, we have experienced continued strong demand for zircon, rutile and
synthetic rutile during the year, with our marketing efforts successfully capturing
new customers and, in China, increased zircon sales penetration. This was
facilitated by investment in building our capability to deliver product in ways other
than the traditional large lot basis, including containerisation, warehousing and
bagging product.
Second, a number of factors (including the typical production decline experienced
by mature producers; the Western Australian gas outage; and the decline of
Indonesian zircon concentrate supply) mean that, in our view, underlying zircon
market supply fell well short of demand in 2008. Strong demand was met, not by
new supply, but by Iluka drawing down the majority of its inventory.
Third, concerns about supply exist also in high grade TiO2 markets as mooted new
projects are delayed or fail to perform.
AT one stage, Swiss bank UBS held about 4 million shares in mineral sands play Image Resources (IMA).
It started selling late last year at around the $2 mark, having accumulated some of that stock for as little as 25c a share.
It was a happy move for UBS in terms of turning a good profit but it was only a partial sell-down. The Swiss kept a presence on the Image register presumably waiting to see how the heavy minerals find worked out.
Since then, of course, things have turned a little sticky at the Zurich office. Not only has UBS pulled out of the commodities business but, thanks to the global financial collapse, there was a sudden and urgent need to lay hands on as many readies as possible.
Well, UBS has now sold the last of its shares in Image. As of Friday's close, there were only 35,000 IMA shares being offered for sale -- about $13,600 worth -- but a good queue of buyers. Most juniors would sell their mothers to get some buyers, so Image is now back in a happy position. The stock closed at 39c on Friday, moving upward from its 23c low last month.
This column has gone a bit quiet this year about Image after having talked up the Cooljarloo mineral sands project in Western Australia. The grinding slide of the share price generated a few doubts in our mind.
But there was reassurance during the week with the release of a scoping study for this North Perth Basin project. It shows that the project is a goer and the company has options -- stand-alone dry mining or dredging or bringing one of the heavy mineral majors already operating the neighbourhood. And this study covers only 20 per cent of Image's landholding in thearea.
It can be made more attractive if further exploration establishes there's enough high-quality ilmenite to sustain synthetic rutile production, but in the meantime there is plenty of zircon there. Zircon is almost alone among metals as having the potential to put on further price gains next year.
It is not so much that demand is soaring, but that supply can't keep up with orders. According to Perth-based titanium sector analyst TZ Minerals International, zircon is likely to average between $US760 a tonne and $US800/tonne in the second half of 2008, but is looking like being between $US900/t and $US940/t next year. Iluka Resources (ILU) produces 37 per cent of the world's zircon and its stockpiles are close to exhausted.
The global shortage has been exacerbated by the gas explosion in the west and a permanent decline in Indonesian production. At the other end of the supply chain, there is still robust buying by Asian ceramics and Chinese zirconia manufacturers.
Mind you, Image, which is still exploring, will need to get a wriggle on. TZ is predicting zircon will come into surplus by 2012. One big contributor to this will be Iluka bringing its big Eucla Basin discovery into operation.
While this deposit seems massive and has a lot of potential it is worth noting that mineral sands are notoriously difficult to get up and running and commissioned properly at full capacity.
Small/fine product makes it difficult to filter/seive etc. Obviously a lot depends on the previous experience that management have, but it can be a long process
....Mind you, Image, which is still exploring, will need to get a wriggle on. TZ is predicting zircon will come into surplus by 2012. One big contributor to this will be Iluka bringing its big Eucla Basin discovery into operation.
MOUs SIGNED WITH LOCAL PRODUCERS
______________________________________________________
Image Resources is pleased to report that following separate Memoranda of
Understanding (MOUs) being reached with two local mineral sands producers, Image has agreed to release composite samples from, and resource models of, its North Perth Basin project to enable the producers to further assess these resources.
Image considers that the MOUs endorse the project, confirm industry interest therein and establish a sound basis on which to engage in discussion with the producers about the possible commercialisation of the project.
The objective of the MOUs is to facilitate the formulation and negotiation of possible transactions. Image’s scoping study (released 1 December 2008) demonstrated that Image’s significant resources can potentially be exploited:
1 on a standalone basis; or
2 by an established producer(s); or
3 a combination of the above.
Existing West Australian producers, with established infrastructure and expertise, have diminishing reserves but an apparent limited ability to replace the same from their local exploration endeavours thus presenting a compelling case for them and Image to examine how to best take advantage of the parties’ respective competitive advantages.
The producers not only have significant infrastructure (which, if not already underutilised, is likely in the near term to become under-utilised) but they also have mining and processing expertise all of which could deliver real cost savings in any mining of Image’s large (and likely expanding) resource base.
The MOUs limit the producers’ freedom to acquire Image shares, however, each producer may at any time acquire up to 5% of Image’s issued capital. Image considers that the MOUs potentially represent a significant step towards the commercialisation of its North Perth Basin resources while keeping open the option of developing the resources on a stand alone basis.
"THE spike early last month in shares of Image Resources (IMA) broke the drought on the sell side, and all the stale bulls came rushing to the party. The stock got another boost last week with news of memorandums of understanding with two local mineral sands producers to get involved in developing Image's large West Australian resource. Everyone seems to have jumped to the conclusion that the two are Iluka Resources (ILU) and the TiWest joint venture.
But we hear that two foreign mineral sands operators in the state, Saudi Arabia's Cristal Australia and Japan's Doral Mineral Sands, should be not be ruled out."
UP TO 45% ZIRCON IN EUCLA HM ASSEMBLAGE
________________________________________________________
HIGHLIGHTS
• A high value mineral assemblage containing up to 45% zircon with
a combined zircon and leucoxene content ranging from 81% to
90% indicated from limited sampling
• Three mineralised zones identified ranging from 300m to 700m in
width and from at least 1.6km to 2.5km in length, with potential to
extend into an unexplored tenement to the south. Better grades
include 10m at 5.3%HM from 12m, 24m at 3.0%HM from 4m and
10m at 5.0%HM from 20m
• A fourth mineralised zone identified 25km to the east with little
exploration completed between these zones
• A very low slime content of 4% for the shallower mineralisation,
indicating amenability to low cost mining with high recoveries
• The zircon market continues to improve with prices around
US$900/t
Im looking to get back in now. Gonna put an order to buy 20k worth over the next few days. Although i don't think it will be filled for < $0.65
Nice to see it rise steadily regardless of market sentiment
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