Image Resources has locked in a US$20 million offtake pre-payment from Shantou Natfort Zirconium and Titanium Co, its key Chinese heavy minerals concentrate partner. The deal will provide funding to support the construction of the company’s 100%-owned Atlas mineral sands project, 170 kilometres north of Perth. Drawdown should occur in two tranches of US$10 million each in November and January.
Image Resources has locked in a US$20 million offtake pre-payment to give it the necessary funding to accelerate the construction and commissioning of the company’s Atlas mineral sands project, 170 kilometres north of Perth and 100kms north of its now decommissioned Boonanarring mineral sands mine. The company says it is looking to return to profitability by June next year with the commissioning of Atlas.
The agreement with Shantou Natfort Zirconium and Titanium Co (Natfort), a key Chinese heavy minerals concentrate (HMC) partner of Image’s since 2019, has been structured to provide up front funds to Image and notably, will be repaid by Image in heavy mineral concentrate product.
The first tranche of US$10 million (AU$15 million) will be available next month with the balance being distributed in January.
Under the terms of the deal, Image will provide 25 per cent of each Atlas HMC shipment delivered to Natfort to repay the US$20m, using market prices as the guide. Natfort will also take the remaining 75 per cent of each delivery, again at market prices by way of a standard “letter of credit”. The letter of credit effectively secures payment for each shipment for Image prior to sailing.
Image expects to complete repayment of the US$20m prepayment facility within 12 months.
When added to the $30 million in cash already sitting in the company’s coffers, the fresh funding will see Image accelerate the relocation of the Boonanarring wet concentrator to the Atlas site and speed up the balance of construction at Atlas.
Management expects to be able to commission the mine for first production of heavy mineral concentrate and return to profitability within six months.
Altas is a shallow, high-grade mineral sands deposit with a very low 1:1 strip ratio. Hosting 5.5 million tonnes of ore reserves at 9.2 per cent total heavy minerals, 11.9 per cent of the mineralised sands are made up of zircon and 7.9 per cent rutile, while 61 percent is made up of titanium dioxide in ilmenite.
With a planned mine life of two years, the project is expected to process 2.6 million tonnes per annum for a total of 446,000tpa of contained HMC, generating a pre-tax project cashflow of $62 million.
Natfort has been a pivotal partner for Image since 2019, purchasing HMC produced at the Boonanarring project under a long-term market-based agreement. Based in Guangdong Province, the company specialises in processing heavy mineral concentrates into zircon and titanium products and has played a critical role in facilitating the sale of Image’s mineral sands to China.
Image Resources managing director and chief executive officer Patrick Mutz said: “These working capital funds are crucial for ensuring the construction pace for the development of Atlas is maintained at a high level to achieve first HMC production and sales as quickly as practicable. We extend our gratitude to Natfort for its ongoing support as Image’s key offtake partner through the successful and continuing market-based HMC offtake agreement and for providing this prepayment facility, to the benefit of all Image shareholders.”
Mutz went on to say that the funds will also help maintain momentum with the various other work programs targeting growth, including two bankable feasibilities and a concept study on projects which make up part of a broader corporate strategy.
Back in 2022, Image revealed a bold plan, dubbed “chapter two” to transition from a single-mine operator to a multi-mine producer. The move followed two key acquisitions of the Eneabba tenements, including the 60-million-tonne Yandanooka deposit and the huge 3.6-billion-tonne McCalls project, 30 km east of its existing 123-million-tonne Bindaminna prospect.
With the Atlas build now in motion, Yandanooka is next in line. In April, the company dropped a solid prefeasibility study (PFS), projecting an 8.2-year mine life with 130,000tpa of HMC and a total EBITDA of $277 million. The project’s $50 million capex is set to pay itself off in just 15 months.
Although Image has suffered a 12-month cashflow gap between the decommissioning of Boonanarring and the delayed opening of Atlas, it is finally seeing light at the end of the tunnel.
By securing the new funding, the company has firmly set itself up for renewed profitability within the next few months. Just as importantly, it can meet its accelerated timeline without having to sacrifice the momentum currently driving development progress at the three other bigger mineral sands projects of Yandanooka Bindaminna and McCalls, due for development in the next couple of years.
2025 is starting to shape up as a pivotal year for Image as it chases its dream of becoming a multi mine operator and possibly even diversifying into synthetic rutile production.
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