Image Resources (ASX: IMA) is set to expand the company’s Boonanarring Heavy Metal deposit, with the acquisition of an exploration licence covering strike extensions to the north of the prospect.
Recent drilling on the Regans Ford tenement returned a best intercept of 7 metres at 26% Heavy Metals containing 33% zircon from 36 metres.
Mineralisation intercepted at Regans Ford is interpreted to be a possible extension of the Boonanarring deposit, which hosts a Measured Resource of 3.1 million tonnes at 7.2% Heavy Metals for 221,000 tonnes of contained Heavy Metals.
Managing director George Sakalidis told Proactive Investors today that the zircon content within the Boonanarring deposit is particularly noteworthy.
“Zircon is a very valuable commodity at the moment, and we seem to be getting a combination of very high grades and very high zircon,” Sakalidis said.
“Zircon grades are often above 30% and the grades are often above 20% which is unusually high.”
Other intercepts from recent drilling include:
- 3 metres at 27.9% Heavy Metals including 42% zircon from 35 metres;
- 5 metres at 25.8% Heavy Metals including 14% zircon from 30 metres; and
- 6 metres at 21.9% Heavy Metals including 46% zircon from 36 metres.
Image has already earned a 70% interest in the extension from Kingsreef through expenditure and cash payments totalling $300,000.
The company has now reached agreement with Kingsreef to purchase the remaining 30% interest for consideration of 1 million Image shares.
Image has identified potential strike extensions of up to 7.7 kilometres north and 2.3 kilometres south of the Boonanarring deposit.
In addition to Regans Ford, the company is seeking access to drill an area in the middle of the deposit.
Sakalidis said the company believes the Boonanarring deposit could extend over 12.5 kilometres of strike.
Image’s ongoing success at Boonanarring could spell good things for the company’s North Perth Basin Mineral Sands Project, where a Feasibility Study is underway.
North Perth Basin progress
The North Perth Basin comprises 11 JORC Resources, for a total Resource of 7.9 million tonnes of Heavy Metals, with just six of these Resources included in the Feasibility Study.
Although Boonanarring is not currently included in the Feasibility Study, Sakalidis told Proactive Investors that it could potentially replace some of the other Resources, improving the project economics.
A recent Scoping Study at North Perth Basin indicates potential for a 3.6 million tonne per annum multi-pit operation over an initial 12 year mine life.
“The numbers are quite robust in terms of early payback and good internal rate of returns and good cash flow,” Sakalidis said.
Capital costs have been estimated at $84 million, with an internal rate of return of between 32.1% and 42.9%.
Sakalidis said the company is looking to pay back the project capital quickly after entering production. “At this stage it’s 2014 to be in production, we think the commodity prices will still be strong, and we will pay back our plant in 13 months, which is quite an early payback.”
Earlier this month Image announced a share placement to raise up to $1.9 million to fund the completion of Feasibility work and undertake Resource drilling at Boonanarring and extension drilling at the Atlas deposit.
Based on the recent Scoping Study, Atlas is the highest value resource within the North Perth Basin project.
Image is offering nearly 5.4 million shares at $0.35 per share to sophisticated and professional investors.