POSITIVE SCOPING STUDY OUTCOME

Transcription

1 ASX Release 1 December 2008 ASX code: IMA POSITIVE SCOPING STUDY OUTCOME HIGHLIGHTS Image has several opions for he commercialisaion of is exising Norh Perh Basin indicaed and inferred resources: sand alone dry mining; sand alone dredging; and larger scale dredging/dry mining by a hird pary ( incremenal case ). The incremenal case dredging (2,000ph) and dry mining (800ph) combinaion gives a bes case (US60c exchange rae) Ne Presen Value (10% discoun, before ax) of $180M (Inernal Rae of Reurn 294%) wih poenial o increase his NPV o $298M if a Synheic Ruile ilmenie premium is applied. Sand alone dredging (800ph and viable on par only of he resources) gives a bes case NPV of $87M (IRR 105%), of which Image s share is $68M plus any paricipaion by Image in he NPV (up o $160M wih SR ilmenie premium) o a hird pary mining he balance of he resources. The presence of SR ilmenie has he poenial o add significanly o he NPV of boh sand alone and incremenal cases, illusraing he need o deermine he disribuion of SR ilmenie hroughou he projec. Only he resources idenified from he drilling of 20% of Image s arges are addressed. The value of resources idenified in he remaining 80% has he poenial o be subsanially greaer by leveraging sunken capial and/or economies of scale. 2 nd Floor, 35 Ouram S Wes Perh WA 6005 PO Box 644 Wes Perh WA 6872 Telephone Facsimile info@imageres.com.au ABN

2 Conclusions The resuls of he various scenarios considered were: Sand alone 400ph dry mining NPV (10% discoun, before ax) of $16M- $39M (IRR 39%-67%) including capial of $37M. Sand alone 800ph dredge mining NPV of $47M-$87M (IRR 73%-105%) including capial of $49M. The sand alone scenarios do no ake ino accoun ha he balance of he resources could be aracive o hird paries wih NPVs o hem in he range of $47M-$86M (disregarding any uplif for SR ilmenie). Incremenal case 800ph dry mining NPV of $56M-$89M (IRR 446%- 543%) including capial of $23M. Incremenal case 800ph dredge mining NPV of $63M-$102M (IRR 88%- 118%) including capial of $65M. Incremenal case 2,000ph dredge, 800ph dry mining combinaion NPV of $106M-$180M (IRR 241%-294%) including capial of $46M. Poenial for very subsanial increases in he NPV in all cases wih SR ilmenie premiums. Scoping Sudy The Scoping Sudy on Image Resources iniial idenified indicaed and inferred resources oalling 6.4 million onnes of heavy minerals in he Norh Perh Basin has been compleed. The resource base for he sudy is summarised in he Appendix ogeher wih a locaion map. The brief for he sudy was o assess he economics of he developmen and commercialisaion of hese iniial resources and in paricular o examine he poenial: mining scenarios for a sand alone operaion producing concenrae which could hen be oll processed by exising underuilised dry separaion plans in he mid wes or souh wes of Wesern Ausralia; value of he resources o exising producers wih esablished bu underuilised infrasrucure and depleed reserves in his maure mineral sand province. The sudy does no ake ino accoun ha Images exploraion has idenified numerous drilling arges (oalling more han 300km in lengh) or ha here is a srong likelihood ha many of hese arges could ulimaely conver ino addiional resources. Even hough he sudy ascribes no value o hese poenially valuable arges, he plan and equipmen paid for by he operaions considered by he sudy can be expeced o maerially enhance he economics of furher discoveries. The mehodology and deail of he iniial resource esimaes have been previously described (ASX release 8 May 2008). The main parameers used for he scoping sudy are summarised below and include esimaes of commodiy prices and capial coss. All references o currency are o A$ unless oherwise saed. The Scoping Sudy is an iniial concepual sudy o evaluae projec conceps and o provide an order-of-magniude esimae of cos, reurn and viabiliy. The sudy was based on he exising indicaed and inferred resources, assumed processing onnages and grades, wih preliminary mineral processing daa, and as such should be regarded wih appropriae cauion. The Scoping Sudy is early sage and here is no cerainy ha he esimaes of he Scoping Sudy will be realised in he fuure. 2

3 Scoping Sudy Parameers Sand Alone Capial Cos Assumpions 400ph Dry Mining Operaion 38 $M 800ph Dry Mining Operaion 52 $M 800ph Dredge Mining Operaion 49 $M Revenue Assumpions Ilmenie 130 US$/ Zircon 850 US$/ Ruile 650 US$/ Garne 150 US$/ Exchange Rae US$/A$ Major Operaing Cos Assumpions Mining of Ore - Dry 3.75 $/bcm Mining of Wase - Dry 2.75 $/bcm Mining of Ore - Dredge $/bcm Concenrae Haulage 0.1 $//km Mineral Separaion Plan 20 $/ con. Toll Treamen of Concenrae 35 $/ con. Ne Presen Value (NPV) 10% discoun rae, before ax and financing coss Mining opimisaions of he geological block models were carried ou by mining indusry consulans and used o assess various dry mining and dredging opions for he resources. Esimaes of Ne Presen Value (NPV, 10% discoun rae, before ax) proved o be highly sensiive o exchange raes bu less so o commodiy prices and even less o capial and operaing cos changes. Commodiy prices for ilmenie, ruile and zircon are expeced o remain firm or o srenghen bu no view is expressed as o he likely direcion or exen of movemens in exchange rae. Sand Alone Cases The Scoping Sudy examined sand alone scenarios for 400 onnes per hour (ph) dry mining, 800ph dry mining and 800ph dredging of he Alas, Hyperion and Helene resources (oal 1.6M of HM). The sudy assumed he use of new (no second hand) equipmen. Esimaes of NPV and Inernal Rae of Reurn (IRR) a US70 and US60 exchange raes are shown in he able below. Sand Alone Case Alas, Hyperion and Helene Resources Case NPV $M IRR % US70 US60 US70 US60 400ph dry mining ph dredge The NPV of Images share of hese resources range from $12M - $30M (US70 and US60 exchange raes respecively) for he 400ph dry mining case and from $37M - $68M for he 800ph dredge case. Payback imes for he sand alone cases are 1.5 years or less. I should be noed ha no premium for synheic ruile (SR) grade ilmenie has been applied o hese esimaes and ha such a premium, if i could be achieved, would have a very significan posiive impac on he NPV and IRR. The sudy indicaed ha he sand alone opions for he Tian, Calypso, Teleso and Bidaminna resources, as hey presenly sand, are no aracive a curren commodiy prices and exchange raes however he sudy shows hese resources could be an aracive opporuniy for a hird pary wih appropriae plan and equipmen wih assessed NPVs (wih SR ilmenie premium) in he range of up o $107M - $160M. 3

4 Incremenal Cases No surprisingly, he sudy showed ha mining (dry, dredge or a combinaion of he wo) by a hird pary wih exising plan and infrasrucure in he region, including access o a synheic ruile plan (he incremenal case ) subsanially increases he NPV. Esimaes of NPV and IRR a US70 and US60 exchange raes for various mining scenarios are shown in he able below. Incremenal Case Alas, Hyperion and Helene Resources NPV $M IRR % 4 wih SR Premium NPV $M IRR % Case US70 US60 US70 US60 US70 US60 US70 US60 800ph dry mining ph dredge ,000ph dredge/800ph dry mining incl. Tian, Calypso, Teleso and Bidaminna resources A 2,000ph dredging scenario for he Tian, Calypso, Teleso and Bidaminna resources and concurren 800ph dry mining of he Alas, Hyperion and Helene resources gives he bes case of an NPV range of $106M o $180M and very aracive IRR s of 241% o 294% a US70 and US60 exchange raes respecively, including capial of $46M and assuming he relocaion of a large dredge. Significanly, if a premium for SR ilmenie of $40 per onne is facored in, he NPV and IRR ranges increase significanly o $195M o $298M and 359% o 411% respecively. Payback imes for he incremenal cases are all less han one year. The incremenal case for 800ph dry mining includes capial of $23M which assumes relocaion of exising plan and equipmen. The 800ph dredging case includes capial of up o $65M and assumes acquisiion of a new dredge. Furher Work The Scoping Sudy highlighed areas for furher work o enhance he value of he projec including: Infill drilling o upgrade he Alas resource from Inferred o Indicaed saus. Mineralogical and chemical es work o deermine he proporion of SR ilmenie in each of he resources. Geoechnical invesigaions, including ground and surface waer invesigaions, on he resources o assess suiabiliy for dredging. Compleion of access agreemens over he Tian and Calypso resources. Invesigaion of oher low cos mining opions, paricularly for he Tian and Calypso resources. The sudy has encouraged Image o affirm is commimen o commercialise is exising resources while coninuing wih exploraion aimed a ripling hese resources wihin he projec areas. For more informaion on he company visi Please direc enquiries o: George Sakalidis Roger Thomson Managing Direcor Execuive Direcor Phone (08) Phone (08) Mob Mob The informaion in his repor is based on informaion compiled or reviewed by Sco Carruhers BSc, MSc, MAusIMM and George Sakalidis BSc (Hons), MAusIMM. Sco Carruhers is a full ime employee of Image Resources NL and George Sakalidis is a direcor of Image Resources NL. Messrs Carruhers and Sakalidis have sufficien experience which is relevan o he syle of mineralisaion and ype of deposi under consideraion and o he aciviy which hey are underaking o qualify as Compeen Persons as defined in he 2004 ediion of he Ausralasian Code of Reporing of Exploraion Resuls, Mineral Resources and Ore Reserves. Messrs Carruhers and Sakalidis consen o he inclusion of his informaion in he form and conex in which i appears in his repor.

5 APPENDIX Norh Perh Basin Resource Summary Shallow Indicaed Resources - 2.5% HM Cu off Resource Tonnes % HM HM Tonnes Overburden Raio Alas 1,900, , Teleso 1,900, , Helene 11,500, , Hyperion 3,700, , Sub - Toal 19,000, ,010,000 Shallow Inferred Resources - 2.5% HM Cu off Alas 9,700, , Toal Dry 28,700, ,570,000 Dredge Indicaed Resources - 1% HM Cu off Tian 21,200, , Dredge Inferred Resources - 1% HM Cu off Bidaminna 44,600, ,350, Tian 115,400, ,210, Calypso 51,500, , Sub - Toal 211,500, ,410,000 Toal Dredge 232,700, ,790,000 Grand Toal 261,400, ,360,000 Norh Perh Basin Mineral Assemblage Resource Ilmenie Shallow Indicaed Resources - 2.5% HM Cu off Leucoxene/ Zircon Monazie Ruile Garne + Saurolie Oher Alas 63,000 10,000 8, ,000 11,000 Teleso 71, ,000 10,000 2,500 15,100 Helene 391,000 19,000 55,000 1,500 7,800 53,000 Hyperion 155,200 18,000 21, ,000 28,600 Sub - Toal 681,000 47,800 90,000 12,600 82, ,700 Shallow Inferred Resources - 2.5% HM Cu off Alas 346,000 61,000 46,000 1,900 33,000 70,000 Toal Shallow 1,027, , ,000 14, , ,700 Dredge Indicaed Resources - 1% HM Cu off Tian 273,000 12,000 36,000 7,400 28,000 17,200 Dredge Inferred Resources - 1% HM Cu off Bidaminna 1,113, ,000 73,000 1,400 19,000 17,200 Tian 1,626,000 67, ,000 44, , ,000 Calypso 598,000 44,000 90,000 16,000 70,000 31,000 Sub - Toal 3,337, , ,000 61, , ,200 Toal Dredge 3,610, , ,000 68, , ,400 Grand Toal 4,637, , ,000 83, , ,100 5

6 Norh Perh Basin Projec The informaion in his repor ha relaes o mineral resources is based on informaion compiled by Lynn Widenbar BSc, MSc, DIC MAusIMM employed by Widenbar & Associaes who are consulans o Image Resources NL. Lynn Widenbar has sufficien experience which is relevan o he syle of mineralisaion and ype of deposi under consideraion and o he aciviy which he is underaking o qualify as a Compeen Person as defined in he 2004 ediion of he Ausralasian Code of Reporing of Exploraion Resuls, Mineral Resources and Ore Reserves. Lynn Widenbar consens o he inclusion of his informaion in he form and conex in which i appears in his repor. 6