Image to spit out $277m EBITDA a year with WA mineral sands

Image Resources has revealed a compelling prefeasibility study (PFS) for its 100 per cent-owned Yandanooka mineral sands project north of Perth, showing an annual EBITDA of $277 million for more than eight years.

The study metrics show the project is modelled to produce 1.04 million tonnes of heavy mineral concentrate (HMC) during its 8.2-year mine life, resulting in a pre-tax internal rate of return of 72 per cent and a pre-tax net present value (NPV) of $151 million.

The company says it expects to process an average of 3.8 million tonnes per year of ore during the life of the mine, spitting out 130,000 tonnes of HMC every year. The throughput rate of 420 tonnes per hour rougher head feed was determined based on the existing Boonanarring wet concentration plant (WCP) capability.

The plant is currently processing ore 80km north of Perth at the company’s project of the same name.

The Yandanooka PFS numbers are based on Image digging away at a 30 million-tonne ore reserve sitting at the surface and grading 3.9 per cent heavy minerals – giving an enviable strip ratio of 0.1:1.

The PFS results reflect a number of positive aspects of the deposit and development plans, including very shallow mineralisation, reasonable grade, high VHM, high-value mineral assemblage and very low capital costs due to the use of existing equipment from Boonanarring. In addition, Yandanooka has the shortest development timeline of any of the other projects in Image’s portfolio due to fewer heritage and environmental sensitivities.

The company says it expects the Yandanooka orebody to contain 90.5 per cent of “valuable heavy minerals” within its total heavy mineral makeup. The valuable heavy minerals include 14 per cent zircon, 3.3 per cent rutile, 27 per cent leucoxene, 46 per cent ilmenite, and 0.19 per cent monazite. The Yandanooka mineral resource estimate sits at 57 million tonnes at 3.1 per cent heavy minerals.

Buoyed by the impressive set of PFS outputs, the company says it will now proceed immediately to a bankable feasibility study (BFS), which is anticipated to be finalised by the second half of this calendar year.

Notably, the PFS results only assume a HMC product, suggesting the future additions of mineral separation and conversion of ilmenite to synthetic rutile (SR) will magnify profitability, provided Image’s proposed novel SR production technology is demonstrated to be viable.

Management says it views Yandanooka as a “credible backup for our Atlas project” and may fill the development slot if that operation is delayed or follow it as a second operating centre.

Earlier this month, Image revealed that its Atlas HMC operations, about 170km north of Perth, had moved one step closer to being realised with no appeals being lodged regarding the Environmental Protection Authority’s recommendation to implement the development of Atlas.

The company says the next steps for Atlas will be to achieve Ministerial approval, the green light for management plans and to secure secondary project approvals to allow construction and mining. Management says it has set an ambitious goal of kicking off construction early in this year’s third quarter, mining and commissioning in quarter four and production in quarter one next year.

Yandanooka sits in the Perth Basin, about 300km north of Perth. The deposit is 6km long and up to 2.5km wide, with mineralisation between 1m and 21m thick for an average thickness of 7m.

All of that mineralisation lies above the water table, meaning mining operations will not require time-consuming and expensive dewatering operations. Image says it will use dry open cut mining methods similar to those commonly used in mineral sands mining operations both in Australia and globally.

With an impressive PFS now on the books for Yandanooka and a BFS just over the horizon, Image is set to take on the free-dig operations and bank some cash as a solid backup to Atlas – a savvy strategy in hedging its bets to get Perth Basin HMC to market.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au