Image Resources NL (ASX:IMA) Signed Memorandum Of Understanding With Diatreme Resources Limited (ASX:DRX) Over Zircon Rich Heavy Mineral Deposits
The parties have each indicated their agreement to cooperate with each other with the aim of entering into a joint venture agreement, or similar arrangement, in respect of the two deposits which abut each other over a common mineral tenement boundary. Diatreme recently announced a MOU with BaoTi (SHA:600456) who are the biggest end user of zircon in China.
The purpose of the transaction is to advance the Assets to feasibility and, if warranted, to production with the aim of adding substantial value for both Diatreme and Image.
Such cooperation may include collective negotiations with third parties who may wish to enter into an agreement or arrangement to invest in or purchase the Assets.
This action, seeking to combine the individual deposits into a single project, is expected to significantly enhance the possibility of future mining operations - the combined value of the resources is likely to be worth much than the sum of the parts. The combined contiguous Cyclone deposit is of global significance containing 2.4 mT of Zircon and 1mT of Rutile and Leucoxene (0.75% HM cut-off). This is because the world's annual production of Zircon is only 1.3 mT. The prices of Zircon are at record highs US$1000/tonne and market conditions are expected to become even more favourable with the current producers being unable to meet expected market demand for Zircon and Rutile.
Also Image has increased its strategic land holding in the WA part of the Eucla Basin to 1620km covering both the Barton and Oldea shorelines with the targeted shorelines covering greater than 70km of strike length.
Diatreme also has significant landholdings in this district and is currently conducting prefeasibility studies over the Cyclone Deposit. Diatreme is engaged in a recalculation of the Cyclone Deposit resource, expected to be released before the end of September 2010. Cyclone represents one of the largest undeveloped deposits of zircon in the world.
Diatreme and Image recently cooperated with each other by way of a technical "data swap" exercise. This assisted Image in the release of its maiden resource estimate over Cyclone Extended. Image is now planning further work over their section of the combined resource in the near future.
Given the remote location of the project, scale will be a significant factor in delivering an economic outcome. Accordingly, Image is highly encouraged by the substantial increase in critical mass delivered by the combination of the existing IMA and DRX resources and the 2010 target area which covers four times the area of the known Cyclone-Cyclone Extended Resources.
For the complete Image Resources announcement including maps, please refer to the following link:
About Image Resources NL
Image Resources NL (ASX:IMA) is an emerging Mineral Sands producer focused on the development of its high-grade Boonanarring Project in the North Perth Basin while continuing to expand its resources and reserves base.
Image Resources NL
Diatreme Resources Limited
Baoji Titanium Industry Company Limited (BaoTi)