Published on March 4, 2014
AJM MINERAL SANDS CONFERENCE ASX:IMA 2014 1
COMPETENT PERSON STATEMENT 2 COMPETENT PERSON’S STATEMENT – EXPLORATION RESULTS The information in this presentation that relates to exploration results is based on information compiled by Paul Leandri BAppSc who is a member of the Australasian Institute of Mining and Metallurgy. Paul Leandri is an employee of Image Resources NL. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Paul Leandri consents to the inclusion of this information in the form and context in which it appears in this presentation. COMPETENT PERSON’S STATEMENT – RESOURCE ESTIMATES The information in this presentation that relates to mineral resources is based on information compiled by Lynn Widenbar BSc, MSc, DIC MAIG, MAusIMM employed by Widenbar & Associates who is a consultant to the Company. Lynn Widenbar has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the ‘Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Lynn Widenbar consents to the inclusion of this information in the form and context in which it appears in this presentation. COMPETENT PERSON’S STATEMENT – PROJECT EVALUATION The information in this presentation that relates to project evaluation and financial analysis is based on information compiled by Mr Ray Cary, BSc., who is a Fellow of the Australasian Institute of Mining and Metallurgy and a Fellow of the Australian Institute of Geoscientists. Ray Cary is the Director and Principal of Northwind Resources Pty Ltd, a Perth, Western Australia based minerals industry consultancy. Ray Cary has sufficient experience in the technical and economic evaluation of minerals development projects and mining operations which is relevant to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ray Cary consents to the inclusion of this information in the form and context in which it appears in this presentation.
FORWARD LOOKING STATEMENT FORWARD LOOKING STATEMENT Certain statements made during or in connection with this communication, including, without limitation, those concerning the economic outlook for the mining industry, expectations regarding prices, exploration or development costs and other operating results, growth prospects and the outlook of Image’s operations contain or comprise certain forward looking statements regarding Image’s operations, economic performance and financial condition. Although Image believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes that could result from future acquisitions of new exploration properties, the risks and hazards inherent in the mining business (including industrial accidents, environmental hazards or geologically related conditions), changes in the regulatory environment and other government actions, risks inherent in the ownership, exploration and operation of or investment in mining properties, fluctuations in prices and exchange rates and business and operations risks management, as well as generally those additional factors set forth in our periodic filings with ASX. Image undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today’s date or to reflect the occurrence of unanticipated events. 3
CONTENT 1. Investment Case 2. Company Overview 3. Location 4. Sustainability 5. Resources 6. Plant Concepts 7. Funding Requirement 8. Project Economics 9. Next Steps 10. Development Team 11. Exploration Potential 12. Conclusion Appendices: Resources, Maps, CVs. 4
THE MINERAL SANDS BUSINESS 5 FOUR CONSTANTS CHANGE Markets, economic drivers, investment climate QUALITY MARKETING Quality of resources is a key driver Bulk commodity marketing = bulk commodity pricing INVESTMENT Counter-cyclic investment is essential
1a. INVESTMENT CASE 6 North Perth Basin Mineral Sands Project An >80% IRR project PROJECT Low funding (target <A$65M) for 3Mtpa plant producing 180ktpa of finished product in the early years ECONOMICS 16 month pay back, Pre tax IRR between 80% and 100% TIMETABLE Quick into development. Less than six month build FINANCE PARTNERS Detailed discussions continuing
1a INVESTMENT CASE 1b. INVESTMENT CASE 7 High grade resources and ideal location RESERVES Highest in ground value per tonne currently being evaluated globally (8% HM, 6.5% VHM and over 19% Zircon) LOCATION 90km from Perth, near existing major road, power lines, gas pipelines and adequate water supply on site PRODUCT In first two years higher priced Zircon/Rutile generate 75% of the revenue UPSIDE Large JORC Resource base and exploration potential beyond initial 10 year mine life
2. COMPANY OVERVIEW Focus of Operations: Mineral Sands in Western Australia Liquid Assets: A$2.6M (at 31 December 2013) Market Cap: A$20M (at A$0.145 per share) Shares: 140.2M Options: 8.8M (held by directors, all well above current share price) Top 20 Shareholders: Holding 46% Board and Management: Peter Thomas Chairman Peter Davies MD/ Project Manager George Sakalidis Director Exploration Graeme Scott CFO 8
3. LOCATION Home - Centre of WA’s Mineral Sands “province” for over 35 years Industry - Company making deposits nearby for Iluka and Tronox (Tiwest) In Place - Excellent road, rail, power, gas and ports Team - Locally available experienced technical staff and plant operators Mineralogy - Known characteristics Government - Low sovereign risk 9
4. SUSTAINABILITY All proposed operations at Boonanarring will be carried out on cleared farmland At the end of mining and processing operations the land will be returned to pre-mining topography and land use Environmental studies to date have not indicated any significant environmental impediments The public review period for the Boonanarring PER ended on 12th February. Work has commenced on secondary approvals processes. The aim is to have all required licences and approvals in place in time to start work on site in October 2014. 10
5a. BOONANARRING RESOURCES “Boonanarring is a world class combination of HM, VHM and Zircon.” Strike Length - 12km Resource - 21.5Mt @ 8.3% HM containing 1.4Mt VHM (79% of HM) Contains 370kt Zircon Sweet Spot - East Strand 8.4Mt @11.7% HM with 25% of HM as Zircon (includes higher grade sections) Extension - Potential to North 11
5b. ATLAS RESOURCES Shallow and high grade Location - 90 km from Boonanarring - mined in years 6 to 10 Resource - 10.7Mt @ 7.8%HM containing 0.64Mt VHM (all Measured and Indicated) Assemblage - 53.4% Ilmenite, 5.3% Leucoxene, 7.8% Rutile, 10.6% Zircon Strip ratio - 1:1 Extensions - Atlas South drilled Mining Lease - Application in progress NPB DEVELOPMENT PROJECT STAGE 2 12
6a. PLANT CONCEPTS Mine to finished products on one site 13
6b. PLANT CONCEPTS “State of the art plants. Easy to build and relocate.” NPB DEVELOPMENT PROJECT SITE LAYOUT 14
7. FUNDING REQUIREMENT 15 Item A$M Conservative Capex Wet Plant Cost 13.6 Dry Mill Cost 15.0 Zircon Plant Cost 5.0 Infrastructure 2.1 Indirects, EPCM Contingency 7.9 Sub-total (incl. Contingency) 43.6 Other Pre-Production Costs 12.9 Modular plant costs ~ $34M Mining Contractor and Pre-strip 12.3 TOTAL (excluding working capital) 68.8 Working Capital 2.2 Maximum Negative Cashflow 71.0 TARGET FUNDING REQUIREMENT ~$65M Mining contracted out ~80% IRR based on the A$71m
8a. PROJECT ECONOMICS 16 CASE FUNDING A$M Pre-Tax NVP@8% Pre -Tax IRR Pre-Tax PAYBACK BCFS = TOLL TREATMENT 64.1 $145 M 57.4% 22 months STAND-ALONE 71.0 $239 M 82% 16 months STAND-ALONE TARGET 62.2 $247 M 97% 14 months Capital: Includes pre-production costs and working capital Assumptions: • Exchange rate: 2015 A$1 = US$0.85 2016 on A$1 = US$0.80 • Chloride/SR Ilmenite price = US$ 275/t • Premium Zircon price = US$ 1500/t STAND-ALONE CAPEX IS ORDER OF MAGNITUDE – FURTHER STUDIES PLANNED
8b. SENSITIVITIES 17
8c. ZIRCON PRICE 18 US$/t 2500 JP Morgans Weighted Average Zircon Inducement Price $1807 March 2013 2080 1880 2000 1450 1500 1000 1500 1500 1275 750 900 At Long Term $1500/t the NPV would be A$240M and IRR >80% 880 500 IMA Zircon Inducement Price $600 0 2008 2009 2010 2011 2012 2013 2014 2015 Long Term
9a. NEXT STEPS 19 Final submissions lodged mid Nov 2013 Studies in progress Off-take and debt progressing 6 month build From mining to product in 2-3 months
9b. NEXT STEPS Delivery drives value ü Base Case Feasibility Study ü Updated Economic Case ü Environment Submissions Lodged • Boonanarring JORC Resource Upgrade • Sales Off-take Agreements progressing • Detailed Design (Q2 2014) • Conclude Debt and Finance Negotiations (Q3 2014) • Construct (Q4 2014) 20
10. DEVELOPMENT TEAM Key members of the project development team have all worked for many years in other local mineral sands operations The combined list of recent mineral sands experience amongst the team includes Tiwest/Tronox, Iluka, Gunson, Tormin, Base and Bemax MD with 40 years industry experience in project evaluation and operations, including mineral sands and pigment plant senior management roles No initial requirement for Fly in-Fly out or camp accommodation 21
11. EXPLORATION POTENTIAL Extensive new finds and extensions within the known NPB mineral sands province achieved over the last 13 years Large resource base of both high grade and large scale resources, in addition to Boonanarring and Atlas Potential northern resource extension between Boonanarring and Red Gully Potential for further major finds at Bidaminna and between Atlas and Bidaminna currently being tested Positive additions to medium term news stream at low cost – historical costs are $0.15/t JORC Resources Longer term potential in the Eucla basin IMAGE’S EXPLORATION EXPERTISE IS A KEY COMPETITIVE ADVANTAGE 22
12. CONCLUSION Low funding required - A$60M to A$70M Product Mix - high proportion of high value Zircon/Rutile Good Margins - A$345 per tonne product Fast Pay back - 16 months from first production Timetable - Quick into development. Six month build Economics - NPV over A$240M, IRR of 80% to 100% Upside - Exploration for large scale deposits Risk - Low infrastructure, technical and sovereign risks 23
PERMITTING IN WA 24 EP ACT PART IV Public Environmental Review DMP Radiation Management Plan Project Management Plan Mining Proposal DER Works Approval - Construction - Operations q Dewatering >50ktpa q Mineral Sands Mining DOW H3 Hydrological Studies Operating Strategies Water licenses for Abstraction DEPT OF ENVIRONMENT (Federal) EPBC Act Referral (Black Cockatoos)
COMMUNITY RELATIONS NIMBY vs employment opportunities Remote communities vs neighbouring landowners Land access: • Exploration • Environmental studies • Technical studies • Mining access agreements Local Presence Mineral sands mining impacts Community liason 25
TECHNICAL CHALLENGES Grade optimisation Achievable production rates Mine scheduling Slimes management Minimising plant capital cost Dust, noise and light emission minimisation Zircon cleaning Agglomeration 26
PROJECT FINANCE 27
EXPLORATION INSIGHTS 28
APPENDICES 29 RESOURCES & RESERVES MINING APPROACH PRODUCTION / PROVEN EXPLORATION THE TEAM
APPENDICES HEAVY MINERALS RESOURCES Note #1 30 HM GRADE CONTAINED HM CUT-OFF GRADE Mt %HM kt %HM Boonanarring Note #2 21.5 8.3% 1,770 2.5 Total North Perth Basin (Dry Mining) 64.0 7.1% 4,530 2.5 Cyclone Extended 86.3 1.9% 1,640 1.0 Bidaminna (Dredge) 44.6 3.0% 1,300 1.0 Cooljarloo (Dredge) 191.6 1.9% 3,600 1.0 TOTAL IMA 386.5 2.9% 11,070 JORC RESOURCES Area Note #1 Refer to Annual Reports and ASX Releases for details Note #2 Also included in the North Perth Basin JORC Resources. Includes Block E as of 30/5/13
APPENDICES HEAVY MINERALS RESERVES 31 RESERVE HM GRADE ZIRCON IN HM CONTAINED HM Mt %HM % Zircon kt Boonanarring 14.4 8.3% 24.5% 1,200 Atlas 9.7 8.1% 11.0% 800 TOTAL JORC RESERVES 24.1 8.2% 19.1% 2,000 2.8 5.8% 17.3% 160 PROBABLE RESERVES Area Excluded Resources Boonanarring Inferred* * Infill drilling to JORC Indicated category has been completed
APPENDICES NPB DETAILED RESOURCE STATEMENT 32 High Grade Resources @ 2.5% HM Cut-off Resource Resource Category BCM TONNES % HM Atlas Indicated 520,000 1,080,000 3.2 19.2 Atlas Measured 4,810,000 9,700,000 8.5 5,330,000 10,780,000 2,100,000 Boonanarring Indicated Boonanarring Measured Boonanarring Inferred TOTAL Ilmenite (%) Leucoxene (%) Rutile (%) Zircon (%) 34,000 74 53 8 7 6 15.3 820,000 76 52 5 8 11 7.9 15.7 854,000 76 52 5 8 10 4,200,000 6.5 17.4 270,000 83 51 8 7 18 7,000,000 14,300,000 9.0 17.2 1,270,000 80 49 6 3 22 1,680,000 3,000,000 7.8 10.1 230,000 70 49 1 3 17 10,780,000 21,500,000 TOTAL VHM (%) 8.3 16.2 1,770,000 79 49 6 4 21 % SLIMES HM TONNES Gingin Nth Indicated 680,000 1,320,000 5.7 15.7 80,000 75 57 9 3 5 Gingin Nth Inferred 580,000 1,090,000 5.2 14 60,000 78 57 11 4 6 1,260,000 2,410,000 5.5 15.0 140,000 77 57 10 3 6 TOTAL Gingin Sth Inferred 400,000 730,000 6.5 8.4 48,000 92 67 8 6 11 Gingin Sth Indicated 3,240,000 5,820,000 6.5 7.1 380,000 91 68 10 5 8 Gingin Sth Measured 870,000 1,530,000 4.4 7.2 67,000 79 51 15 6 8 4,510,000 8,080,000 6.1 7.3 495,000 89 65 10 5 8 TOTAL
APPENDICES NPB DETAILED RESOURCE STATEMENT 33 NPB DETAILED (CONTINUED) High Grade Resources Helene Indicated 5,600,000 11,500,000 4.6 18.6 520,000 84 70 1 3 11 Hyperion Indicated 1,800,000 3,700,000 7.8 19.3 290,000 71 56 0 6 9 Red Gully Indicated 1,930,000 3,410,000 7.8 11.5 270,000 90 66 8 3 12 Red Gully Inferred 1,455,000 2,570,000 7.5 10.7 190,000 90 66 8 3 12 3,385,000 5,980,000 7.7 11.2 460,000 90 66 8 3 12 32,665,000 63,950,000 7.1 13.9 4,529,000 80 57 6 5 13 TOTAL Grand Total EUCLA BASIN – CYCLONE EXTENDED Cyclone Extended Resources HM Cut-off Resource Category BCM TONNES % HM % SLIMES HM TONNaES VHM Ilmenite Hi Ti Oxide* Leucoxene Rutile Zircon (%) (%) (%) (%) (%) (%) 1.00 Indicated 44,500,000 77,300,000 2.0 5.6 1,500,000 75 23 21 1 9 21 1.00 Indicated 5,400,000 9,000,000 1.2 3.3 100,000 86 31 29 1 4 21 1.9 5.3 1,600,000 76 24 22 1 8 21 1.00 Total 49,900,000 86,300,000
APPENDICES MINING APPROACH 34
APPENDICES HIGH QUALITY PRODUCTS COMMANDING PREMIUM PRICING Boonanarring Ilmenite is a sought after premium product: • 54.5% and 60% TiO2 (range of world deposits is between 40% and 63% TiO2) • Coarse Grained (D50 150 – 200 micron) • Low U+Th (80 – 130 ppm) • Suitable as feed to SR plants, pigment plants and slag production “ILMENITES AIN’T ILMENITES” 35
APPENDICES PRODUCTION - VALUABLE HEAVY MINERALS AREA 36 ZIRCON ILMENITE LEUCOXENE RUTILE kt kt kt kt Boonanarring 268 525 49 44 Atlas 75 368 5 46 TOTAL 343 893 54 89 Average Annual Production 34* 89** 5 9 * Up to 55 ktpa ZIRCON ** up to130 ktpa ILMENITE
APPENDICES PROVEN EXPLORATION Historical exploration costs of 15 cents per tonne of Resources Dry Mining Resources • Boonanarring (existing ML - most) • Atlas and Atlas South (part MLA) • Red Gully (existing ML) • Gingin North (existing ML) • Gingin South (existing ML - part) • Hyperion • Helene Larger Tonnage Dredge Mining Projects • Bidaminna • Cooljarloo 37
APPENDICES THE TEAM 38 PETER DAVIES – DIRECTOR/PROJECT MANAGER Peter Davies, appointed as Managing Director in May 2012, is a mining engineer with 39 years of global experience in project evaluation and management of mining, chemicals and mineral sands operations. From 1995 to 2000 he was Manager/General Manager of the Tiwest Chandala mineral sands and Synthetic Rutile processing facilities north of Perth. In 2000 he was transferred by Kerr-McGee Chemicals (later Tronox) to manage the TiO2 pigment plant at Antwerp and from 2001 to 2006 was Director of European Operations, in charge of the pigment plants at Uerdingen (Germany), and Botlek (The Netherlands). Peter joined Image in February 2012. GEORGE SAKALIDIS – TECHNICAL DIRECTOR (MD UNTIL MAY 2012) George Sakalidis is an exploration geophysicist with over 25 years’ industry experience, during which time his career has included extensive gold, diamond, base metals and mineral sands exploration. Mr Sakalidis has been involved in a number of significant mineral discoveries,. He was also instrumental in the design of the magnetic surveys and exploration drilling program that led to the discovery of the large mineral sands resources at Magnetic Minerals Limited's Dongara Project. Magnetic Minerals were taken over by Ticor in early 2003. The geophysical techniques used by Image and George Sakalidis’ proven ability to interpret the results in order to find economic mineralisation which has been missed by other companies, gives Image a significant competitive advantage in this field. LYNN WIDENBAR – WIDENBAR AND ASSOCIATES Consultant resource geologist with over 40 years experience in the exploration, evaluation and mining of mineral resources in Australia, Asia, Africa, North, Central and South America and Europe; this includes more than 10 years involvement in resource estimation mineral sands, mainly in Western Australia, for companies such as Image Resources, Magnetic Minerals and Diatreme Resources. PER SCRIMSHAW – CREATIVE MINED Consultant mining engineer with 14 years experience in technical support for mining operations within Australia and abroad. Over 10 Years of this has been servicing Mineral Sands clients in the key areas of optimisation, design, scheduling and economic evaluation. Supported operations have included North Capel Extended, Stratham West, Gingin, Cataby, Eneabba South Mine, Dardanup / Burekup, Kwale. TODD COLTON – BROAD REACH PTY LTD Mining professional with over 23 years experience in the mining industry, predominately in mineral sands operations with WSL/Iluka, providing operational, technical and management support for project development and mining operations in Australia and overseas. Todd has held operational and senior management roles through feasibility studies, operations planning and design, construction and commercial production.
APPENDICES THE TEAM 39 EUGENE DARDENGO – PROCESSING MANAGER Eugene is an accomplished Metallurgist and Operations Manager with over 27 years’ experience in the Australian mining and mineral industry. Eugene has held a number of other diverse roles and was held accountable for Logistics Services, Technical Support Services and Safety, Health and Environment Advice for Tiwest Northern Operations. Has worked as a Metallurgist, with Hamersley Iron (Rio), and Allied Mineral Laboratories and the Readings Group of Companies, and has had exposure to the planning, prioritising and implementation of various metallurgical test work programs for iron ore projects and a wide range of industrial minerals. STEVE BENSON – ALLMINERAL Over 33 years experience in Mineral Sands at Allied Eneabba (RGC) and Tiwest Chandala and Cooljarloo operations. Steve has worked at all levels in Wet Plant and Dry Mill operations up to Plant Manager and has provided technical support both as an in house specialist and as a specialist with equipment suppliers. He has strong knowledge of and experience in physical separation techniques and some unique skills in the assessment of heavy minerals mineralogy. PETER MCSWEENEY – MSP ENGINEERING Peter has over 25 years experience in delivering industrial minerals projects throughout Australia and overseas. He has been the Managing Director of MSP Engineering for the past 16 years and during this period the company has delivered over $AUD 500M in capital projects including: – ISK Mineral Sands – Wet and dry mineral sands processing facility at Waroona and Picton WA – MBT (now Bemax) – MBT wet and dry mineral sands processing facility in the Murray Basin – Bemax – Relocation of the Jangardup wet plant floating concentrator to Murray Basin – Rocla – Design and construction of their 1.6mtpa high purity silica sands plant in South Australia – Sons of Gwalia / GAM – Numerous expansions of the Wodgina and Greenbushes tantalum gravity/grind concentrators valued in excess of $200M. JACKIE BOYER – JASS (AUST) PTY LTD Jackie has over 27 years’ experience in statutory approvals management, environmental impact assessment, environmental planning, environmental management and environmental policy matters. Her experience has been gained working with a wide range of interests from State and local government, construction, industry and academic institutions to landowners, community groups and the general public.
APPENDICES CONTACT US PRINCIPAL OFFICE Suite 4A 5 Mumford Place BALCATTA WA 6021 POSTAL ADDRESS P.O. Box 1075 West Perth, W.A. 6914 40 TELEPHONE (08) 9485 2410 FACSIMILE (08) 9240 7845 EMAIL firstname.lastname@example.org www.imageres.com.au
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