Image Resources drilling at Atlas South could lead to capital payback within 13 months

Image Resources (ASX: IMA) has received the necessary permits to begin drill testing the highly prospective southern extensions of the Atlas and Boonanarring heavy mineral deposits, which have potential to add to a fast capital payback.
Drilling will begin next week.
Based on Image’s recent Scoping Study results, Atlas is the highest value resource within the North Perth Basin project with a projected payback of project capital within 13 to 16 months from the start of operations.
Adding significant value add to the North Perth Basin mineral sands project.

Preparations are underway to begin drilling of the 3 kilometre southern extension of the Atlas deposit identified by magnetic mapping.

Importantly, the aircore drilling program has the potential to add tonnage to the Atlas Measured and Indicated Resource and is targeting grade extensions of the Atlas deposit, the southern end of which contains elevated grades and zircon contents up to 20% of the heavy mineral suite.

The program is expected to take around two weeks to complete after which the drill rig will move to Boonanarring.

The Boonanarring South target is a 2.3 kilometre extension to the Boonanarring Measured Resource situated on farmland that was previously inaccessible due to the presence of a pine plantation.

The Boonanarring Resource, which has not yet been included in the North Perth Basin Scoping Study, forms part of a 12.5 kilometre long target zone, of which 5.5 kilometres still remains to be drilled to the north of the resource.
First pass drilling was completed in December last year on part of the northern magnetic extension to the Boonanarring deposit.

Highlights include 15 metres at 9.9% heavy minerals from 24 metres at 2.5% cut-off, including 5 metres at 19.7% heavy minerals (5% cut-off), with encouraging zircon enrichments in two holes.

Significant mineralisation was intersected over widths ranging from 300-400 metres of a similar tenor to the Boonanarring deposit.

The mineralisation is considered to be a possible extension of the high zircon areas found within the Boonanarring deposit where zircon values average 15% of the heavy minerals with concentrations up to 70% in some areas.

Boonanarring could potentially be a significant additional high grade component of Image's North Perth Basin Feasibility Study.
Drilling will take about five weeks to complete.


Improved Economics

The economics of Image Resources’ North Perth Basin project has been further enhanced in recent times with increases in the prices of titanium dioxide and zircon mineral sand products.

Tellingly, the increases would boost the Internal Rate of Return of the project to 47% at the current A$/US$, up from 43%.  The net cash flows for the life of the mine would increase to $381 million, up from $259 million.

The capital for the project would be repaid from cash flows after just 13 months of operation, previously 18 months. Capital costs are estimated at $84 million.

The project would produce some 1.4 million tonnes of ilmenite, 85,000 tonnes of rutile, 193,000 tonnes of zircon and 93,000 tonnes of leucoxene over a 12 year mine life.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24019/image-resources-drilling-at-atlas-south-could-lead-to-capital-payback-within-13-months-24019.html