Mineral sands miner Image Resources (ASX: IMA) has sold a further 100,000t of surplus heavy mineral concentrate at current market prices after its two existing offtake partners agreed to take delivery of the material over a three-to-five month period.
Image will send the 100,000t of heavy mineral concentrate to Guangdong Orient Zirconic Inc Sci & Tech and Shantou Natfort Zirconium and Titanium in multiple shipments that will average about 20,000t to 30,000t each time.
Ore will be transported from Image’s zircon-rich and high-grade Boonanarring mineral sands operation 80km north of Perth.
Shipments will begin this month with the ore locked in at current market prices – protecting Image against any unanticipated price softening during the delivery period.
“Once again our offtake partners have demonstrated their commitment to acquiring Image’s heavy mineral concentrate by stepping up to purchase Image’s surplus inventory even under the current uncertain economic conditions,” Image managing director and chief executive officer Patrick Mutz said.
“This is a great example of the benefits of a positive working relationship.”
“We welcome the support, however, we are also look forward to expanding our sales network beyond our current offtake agreements, including, if achievable, broadening our customer base geographically,” Mr Mutz added.
Excess inventory due to COVID-19
Image noted that the uncertain economic environment caused by COVID-19 had resulted in softening demand for its heavy mineral concentrate products in the first half of this year.
Despite the dip in demand, Image’s Boonanarring operation has been largely unimpacted by restrictions resulting in ongoing production and an increase of heavy mineral concentrate inventory to more than 100,000t by the end of May.
To address the inventory increase, Shantou Natfort and Guangdong Orient agreed to purchase the 100,000t, which Image claims will address the delay in sales and assist it with meeting its 2020 sales guidance.
Despite the sales lag in the first half of 2020, Image’s shipments in June rose with the company selling 30,000t of heavy mineral concentrate to Shantou Natfort – equating to almost half of Image’s sales for the entire June quarter which were 64,000t.