Image Resources is on the final stretch towards production at its Boonanarring mineral sands project near Perth after commencing wet commissioning of the processing facility.
Hitting this major milestone leaves the company on track towards achieving first production in the current quarter, receiving its first revenue in January 2019 and crucially, becoming cash flow positive by the end of the first quarter of 2019.
Wet commissioning includes water testing and balancing the various pumping, transfer, storage and control systems of the wet concentration plant and feed preparation plant as well as the tailings transfer and water recovery facilities.
Following successful water testing, first ore will be introduced into the plant and wet commissioning will continue with slurry.
Commissioning is anticipated to continue for up to six weeks and gradually transition to heavy mineral concentrate production and the start of a processing ramp-up period on the way to steady state operations.
Image’s Boonanarring project, which is located just 80km north of Perth, will produce about 220,000 tonnes of heavy mineral concentrate per year from the Boonanarring and Atlas deposits, which have total reserves of 24 million tonnes grading 8.2% heavy minerals from total resources of 32.3Mt at 8.1% HM.
Notably, it contains the valuable heavy minerals zircon, rutile, ilmenite and leucoxene, although the economics are heavily driven by the sought-after zircon that provides 71% of the project revenues from just 29% of the product volume.
There is potential for further growth from the projected mine life of more than eight years too, as Image has another 40Mt of resources across five other project areas.
Boonanarring has an exquisitely low capital cost of just $52m, a pre-tax NPV of $235m, pre-tax IRR of 125% and a measly 13 month payback period.
Image Managing Director Patrick Mutz said: “Commencement of wet commissioning marks a major milestone in the overall Boonanarring Project development schedule and was achieved on-schedule and on-budget in accordance with the approved project development plan and budget.”
Earlier this month, the company executed a second heavy mineral concentrate offtake agreement with China’s Hainan Wensheng High-Tech Materials, or “Wensheng”, to minimise the potential risks associated with a single offtake partner.
The offtake agreement is based on the same general terms and conditions and contains the same market-based pricing model as the previous agreement with China’s Shantou Natfort Zirconium and Titanium, or “Natfort”, that underpinned the company’s bankable feasibility study.
Whilst the original offtake agreement with Natfort covered 100% of heavy mineral sands production from Boonanarring for the life of the mine, Natfort and Image have agreed to allow 50% of production to be sold to Wensheng under the second agreement.
Both Natfort and Wensheng have also agreed to purchase up to the full 100% of Boonanarring production in the event that either company is unable to take delivery of its allotted production.
This neatly provides Image with the certainty that there will always be a buyer for its heavy mineral concentrate products.
