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IMAGE RESOURCES NL

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ANNUAL REPORT 

FINANCIAL YEAR ENDED 31 DECEMBER 2017

ASX Announcement 28 March 2018 

REVIEW OF OPERATIONS

The principal focus of Image Resources NL (“Image” or “the Company”) during the 2017 calendar year was the finalisation of the updated feasibility study for its 100%-owned, high-grade Boonanarring Mineral Sands Project (the “Project”) in the North Perth Basin located 80 Kilometres north-northwest of Perth. The feasibility study results were announced on 30 May 2017; and subsequently the Company has been focussed on delivering a financing solution for the development of the Project. 


Boonanarring/Atlas Feasibility Study Update 

The highlights from the study results were as follows:

  • Pre-Tax NPV of A$135M at an 8% discount rate, 
  • IRR of 64% and pre-tax EBITDA of A$266M, 
  • Rapid pay-back of capital post production start-up of less than 2 years, and 
  • Initial development capital, including contingency and resalable land of only A$52M. 

In November, the Company updated its bankable feasibility study (BFS) financial model to include significantly higher forecasted mineral sand commodity prices from TZMI, than were used in the original BFS results announced 30 May 2017. 

Revised BFS financial metrics included: 

  • Project Pre-Tax NPV increased from A$135M to A$197M (8% discount rate);
  • Project Pre-Tax IRR increased from 64% to 104%; 
  • Pre-tax EBITDA increased from A$266M to A$339M, and 
  • Payback period decreased from 22 months to 16 months. 


Boonanarring Project Capital Financing 

In March 2017, the Company secured the services of PCF Capital of Perth to act as financial advisor to identify potential debt providers. The initial focus was on attracting interest from big banks to seek to secure a loan package with more conventional terms and conditions, and generally lower interest rates. 

The Company released the BFS results in May 2017 and focused on identifying, analysing and actively pursuing project finance options to support the development of the Project. 

In October 2017, the Company secured the services of Jett Capital of New York to identify non-banking financial institutions as potential debt providers for Boonanarring. Following comparative analysis of a number of indicative debt facility proposals, the Company selected a preferred provider and executed a non-binding term sheet which triggered the start of due diligence in late December. 

In October 2017, Euroz Securities Limited was selected to be lead broker to assist Image with raising equity capital for the Project. Subsequent to the end of the year:

  • On 8 March 2018, the Company announced the execution of a Loan Note Subscription Agreement with Switzerland-based Pala Investments Limited (“Pala”) as the ‘arranger’, and Pala and USA-based Castlelake, L.P. as the Loan Note Holders, to provide AU$50M from the issue of senior secured loan notes to be used for the construction and commissioning of the Boonanarring Project, drawdown of funds is subject to satisfaction of certain conditions precedent; 
  • On 14 March 2018, the Company announced the issue of 250 million shares at 10 cents per share to raise A$25 million (before costs) as the balance of capital required for the construction and commissioning of the Boonanarring Project. The share issue settled on 28 March 2018.

Click here to view full announcement 

Projects

Image Resources has a major landholding and an expanding resource base in both the North Perth Basin in Western Australia.  Titanium minerals and zircon prices are closely related to global economic activity and there is a strong market outlook for these commodities in the medium term.
The locations of Images’ main projects are shown in Figure 1.

Click here to view all projects 

IMAGE RESOURCES PROFILE

Image Resources has been listed on the ASX since 2002. The company was principally focused on exploration and delineation of heavy mineral sands resources on its tenements in the North Perth Basin; extending from 60km to 180km north of Perth in Western Australia. This region is a proven mineral sands province, with excellent existing infrastructure and a local workforce with extensive mineral sands operating experience.

Image is currently focused on the development of its 100%-owned, flagship Boonanarring and Atlas projects with high-grade, high-value mineral resources. An initial feasibility study was completed in 2013 and plans are underway to update this study to a bankable standard by upgrading the mineral resources to JORC 2012 standards, completing geotechnical studies for a more cost-effective mine design and mine plan and incorporating current favourable costings for labour, mining services, fuel, foreign exchange and interest.

In June 2016 the company acquired a wet concentrate plant and the majority of associated plant and equipment required to process ore at Boonanarring into a heavy mineral concentrate (HMC) intermediate product. In addition to the plant and equipment, as part of a deal with Murray Zircon Pty Ltd, Image also acquired access to funding, off-take arrangements for zircon, a purchase option for a mineral separation plant, as well as 3 new directors and an experienced senior project development and management team.

The company is committed to continuing its steady advancement towards production and believes its recently acquired assets will allow for a relatively rapid and low capital cost path to production..

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