It's not every day you see a stock recommended with a return this high, but the Macquarie team have had a good look at Image Resources Ltd (ASX: IMA), and they like what they see.
Firstly, to the company's most recent news, Image Resources in late January published its quarterly report, which showed that heavy mineral concentrate (HMC) production was up 30% quarter on quarter to 73,000 tonnes.
The company said sales totalled just more than 70,000 tonnes and cash receipts were up 98% quarter on quarter to $31.5 million.
For the calendar year, the company said it had produced 174,5000 tonnes of HMC, which was a slight miss to guidance of 175,000 to 195,000 tonnes.
The company also said it had closing cash of $7.7 million.
Record quarter celebrated
The company's Chief Executive, Patrick Mutz, said the result was a record quarter for its Atlas operations.
Ore processing and ore grade increased 15% and 18% respectively quarter on quarter, which resulted in record HMC production and HMC sales which increased 30% and 44% respectively quarter on quarter. The quarter was highlighted with monthly record results in December of 30k tonnes HMC production and 34k tonnes HMC sales. "Importantly, C1 cash costs and AISC were both lower quarter on quarter and on a YTD basis, both were below the lower end of guidance. Revenue also improved substantially quarter on quarter by 25% despite softer commodity prices.
Mr Mutz said the company was on track to repay its outstanding debt in the second quarter of 2026 and was looking to further development activities.
Beyond operations at Atlas, our Development Team continues to assess the Company's options to extend mining and production in the Atlas area through mining at Atlas North or nearby Hyperion, and to advance future development options beyond Atlas at the Company's 100%-owned deposits at Yandanooka, Durack, and other Eneabba projects, as well as at Bidaminna and further into the future, the McCalls project.
Gold project options being considered
Mr Mutz said the company also in early January declared a maiden gold resource estimate of 2.1 million ounces at its Erayinia/King project, and the company was now "undertaking a strategic review to assess options to unlock value for shareholders from this asset given the current very buoyant gold market''.
Options being considered include divestiture or other commercial arrangements for all of Image's gold tenements, as well as options for the development of the Erayinia/King project, including potentially in-house.
Macquarie has had a look at the quarterly result and said that while the price the company was paid for its commodities was 20% weaker than expected, costs were also better to the tune of 20%.
They added:
Image Resources is a nimble pure-play mineral sands producer that presents growth potential with project development at Durack and Yandanooka in the medium term.
The Macquarie team has a price target of 10 cents on the stock, which would be an 81.8% return if achieved.
