Image Resources has completed a positive feasibility study on its Boonanarring/Atlas mineral sands project north of Perth, WA. The location is close to infrastructure and the extensive detail in the study leaves minimal risk in terms of the Company not meeting its production and financial targets.
Image Resources (“IMA”) was ASX listed on 4 July 2002 and in recent years has attained an enviable track record of successful mineral sands exploration in the Perth Basin, immediately north of Perth. The Company is now transforming to producer status with first mineral sands production scheduled for March 2018.
The final hurdle is financing the relatively modest capex of A$56.7m and which will be a combination of debt and equity – we have assumed 50:50. The Board has approved Managing Director Patrick Mutz to secure this financing and he has engaged PCF Capital Group to assist with the debt portion. A recent placement raising $3.0m at 9 cents per share has enabled the Company to order long lead items.
In terms of raising the equity portion, this will be conducted in September and we believe there will be keen interest in participation by the local funds. We would also expect the Company may offer its shareholders participation in a rights issue. Therefore from an investor perspective, with the financial robustness of the project, the financing could be completed relatively quickly and investors waiting for the financing may miss out. Hence, we recommend investing now as the price is supported by the valuation metrics and it may also allow participation in a future rights issue if the Company decides to proceed down this fund raising path.
The development of the Boonanarring project is a major step forward as the Company transitions to a producer and generates earnings and cash flows. This allows the Company to then pursue a strong growth path given it has a portfolio of projects that can be accelerated. Hence, Breakaway Research has a BUY recommendation on Image Resources.
Official website: http://www.imageres.com.au/
ASX on Hotcooper: http://hotcopper.com.au/asx/IMA
Markets: Mineral Sand