A start-up mining company that achieves nameplate capacity in just the second month of operation is something the industry doesn’t hear of too often.
Nestled in the Perth Basin in WA, amongst key players such as Iluka Resources and Tronox, is a newcomer to the mineral sands mining operations, Image Resources.
In December 2018, Image Resources moved from advanced explorer to active mining company, becoming profitable within three months of operations and, subsequently, cashflow positive in the second quarter of 2019.
Two years on, Image Resources is now an established, profitable mining company producing heavy mineral concentrate (HMC), with 270,000t achieved in 2019.
It completed the sale of 12 bulk shipments of HMC during the year, for a total of $146m.
On October 30, 2020, the market capitalisation of Image Resources was $186m.
Image Resources managing director Patrick Mutz says the company’s success in its first year of production was a testament to the quality of the deposit it mines from as well as the team of people that make up the company.
“In 2019, our inaugural production year, we exceeded our expectations,” he said. “We started out by achieving nameplate capacity in the second month of operation, which is very unusual.”
Image Resources raised market guidance twice during the year and the company met the guidance.
“With COVID-19 striking in March and April in 2020, most companies in our sector lowered or dropped their guidance completely,” Mr Mutz said. “We maintained that guidance and we are on track now to meet that guidance at the end of December.”
Mr Mutz is expecting even higher production and sales in 2020 and 2021, with Image Resources’ production guidance for both years at 300,000-330,000tpa HMC.
No stranger to transitioning companies from exploration to production, Mr Mutz – who has 30 years of international mining experience – led Murray Zircon from developmental to operational status during the company’s pivotal transition period in 2012 to become South Australia’s newest mineral sands company at the time.
The Boonanarring mine is 80km north of Perth and 16km north of Gingin in the Perth Basin, an onshore and offshore sedimentary basin extending about 1300km along the southwest of Australia.
With high-grade ore, zircon-rich sediments and high recovery rates on its side, Mr Mutz calls the Boonanarring deposit a “strong asset” and a “very valuable mineral matrix”.
“We used a very simple business model involving open cut mining and making a concentrate, which is less complicated and less costly,” he said.
Image Resources implemented a simple business model consisting of a classic dry, open-cut mining utilising standard truck and shovel fleet; a 3.7mtpa conventional wet concentrate plant (WCP) to produce high-quality HMC that is trucked to the Port of Bunbury; and bulk shipments to China under a life-of-mine off-take contracts based on market prices.
Construction was completed on time, within six months, and on budget, at a capital cost of $52m.
“We had very low capital costs because when Image Resources and Murray Zircon came together in 2016, Image brought with it the vast majority of the capital equipment required to start up the project,” Mr Mutz said.
Boonanarring has a six-year mine life from December 2019, after which the Atlas project is expected to commence.
Atlas is a shallow, high-grade open pit mine about 90km north of Boonanarring, with a mine life of three years.
Key infrastructure including the existing WCP will be relocated from Boonanarring to Atlas to continue producing high quality HMC to be exported through Bunbury.
Image Resources has formalised its efforts to convert more ore reserves by creating Project ‘MORE’, which aims to increase ore reserves within economic pumping or hauling distance to their relocatable processing plant.
“Project ‘MORE’ is a name that means more ore reserves,” Mr Mutz said.
“We formalised our focus and made it clear to our shareholders that we are aware our mine life is somewhat limited.
“We look for ore within the economic pumping distance, and in the case of Boonanarring, because the grades are relatively high, the distance could be 10km or more for pumping, and possibly up to 20km if we could truck it economically, depending on the grade.”
Boonanarring has a 2.3MW solar farm adjacent to the processing plant, built and operated by Sunrise Energy Group, providing some of the electricity requirements for its mining and processing operations.
“I believe that the Boonanarring project is the only mineral sands project now that is powered at least 25% of its electricity requirements from renewable energy, solar farm,” Mr Mutz said.
The title of being the most environmentally-friendly mineral sands miner in Australia came at zero capital cost to Image Resources.
“A deal was struck for the solar power company to build the project at their cost and for Image to guarantee taking that electricity as the supply into our mining operations,” Mr Mutz said.
“We were already connected to the grid and had all the power we required but this was about exemplifying to the market in a broader sense that solar power can today compete with grid power and that there are in fact people willing to capitalise this in order to lower a company’s carbon footprint.”
Mr Mutz says the primary focus in the short term is the drilling programs and additional exploration to add ore reserves.
Priority exploration areas under Project ‘MORE’ include the Boonanarring Northern Extension Area, Boonanarring North-western Extension Area, Boonanarring West (including Trandos Blue Lake) and Gingin North.
“In the short term, over the next six to 12 months, our key focus is adding more ore reserves and bolstering the remaining mine life,” Mr Mutz said.
“We’ve got five to six years of ore reserves now and we’d like to bolster that to eight to 10 years.
“In the medium term, our goal in the next three to four years is developing a second mining operation, parallel to the one we’re running now at Boonanarring.
“This could come from our own portfolio of projects but we also have an eye out for other opportunities outside of our portfolio.”
Zircon accounts for about 80% of the Image Resources’ revenue, while titanium dioxide makes up the other 20%.
Some applications of zircon include ceramics (tiles and sanitary ware), foundry sands (metal castings) and refractories (furnace linings).
Titanium dioxide is made from rutile and ilmenite and processed into titanium-based products, primarily ultra-white pigment used in paint, paper and plastics, as well as welding rods (flux coating) and applications in aircraft, spacecraft, motor vehicles and medical implants.
Mr Mutz is bullish on the market despite COVID-19 and believes it will likely improve further, with no new producers coming online soon.
“Titanium dioxide and zircon are considered strategic minerals and metals in a number of countries including Australia, Europe and the US,” he said.
“They are in high demand and they will continue to experience high demand.
“These products can consist of rare earth elements as well, which are typically on the list of critical minerals for most countries.
“We’re still Australia’s newest producer and have been running now for two years.
“Even today, titanium prices are continuing to rise due to a bit of shortage, so I’m very optimistic that the prices will stay strong in the next year to year-and-a-half and beyond that.”