Transcript: Image Resources (IMA) - Profitable Miner Aiming for Significant Growth

Morgan Leighton
October 13, 2021

Image Resources is Australia’s newest mineral sands mining company, operating at its 100%-owned, high-grade, zircon-rich Boonanarring Project, located 80km north of Perth in the infrastructure-rich North Perth Basin.

Image Resources is a successful and profitable mining company and mines and produces a heavy mineral concentrate. Mineral sands are mined from ancient beaches which are buried 10-20m below the surface. These beaches in Australia contain two main minerals used in the concentrate made by Image Resources which are Zircon and Titanium Dioxide. Zircon is primarily used to make floor tiles and ceramics and Titanium Dioxide has a number of uses primarily in paint.

Image Resources was originally keen to start as a small company to keep overheads low and to build the business from there. In 2019 the company made AUS$$21M net profit and in 2020 AUD$25M net profit. Image Resources got into production quickly at a low cost and now the company is talking about the growth strategy going forward.

The company has 12 projects of which they are currently developing the first at the moment and looking to develop the second project from now. These are small projects with low capex and the idea is that the company moves from project to project.

The strategy for Image Resources is to grow into a AUD$500-600M market cap company. Exploration costs for Image Resources are very low and the company is exploring to extend the current footprint using ground magnetics.

The company is also actively looking for acquisition opportunities to add to their portfolio.Image Resources also has 2 gold projects which the company plans to add to the portfolio and aims to get to a mineral resource estimate to decide whether they are feasible in the long term. The company recognises that there are many other aspects to focus on in addition to profitability. Image Resources started the ESG process early on with a very strong commitment for a positive relationship with the community and landowners. The company has built a solar plant to off-set electricity requirements and is also working with landowners to look at carbon sequestration testing on the properties. The company also believes in the importance of mine rehabilitation after use.

We Discuss:

0:00 – Company Overview

0:42 – Mineral Sand, Composition & Market Environment

3:25 – Starting Production, Dividend, Sustaining Profitability, Operating Parallel Projects

7:15 – Strategy: Equipment Relocation, Gold Prospect, Planning & Efficiency

12:34 – Sovereign Risk, Timing, Scale, Exploration Cost, Acquisition Component

18:42 – Shares: Price, Market Cap, Holding Percentages, Asian Investor Base Connection

21:54 – Background History of Key-Staff

25:09 – King Gold Prospect: Plans, Debt-Free, Cashflows

29:34 – Drilling, Capital & Time Spent

30:33 – Gold Project:  Expenses, Interested Investors, Estimates & Tangible Results

32:14 – Focusing on ESG: Solar Plant, Carbon Sequestration Testing, Mind Rehabilitation

35:26 – Approach & Views on Carbon Sequestration Testing

37:07 – Outro

Patrick Mutz: Hello Matthew, my name is Patrick Mutz and I am the fortunate person to be the Managing Director of a little company in Western Australia called Image Resources.  Image Resources in a nutshell is a successful, profitable, mining company.  We mine and produce mineral sands products, we produce a heavy mineral concentrate and we've been going at it about 3 years now very successfully and now we're on to a growth strategy to take the company to the next level. 

Matthew Gordon: Fantastic, Patrick thanks for jumping aboard, looking forward to hearing about this one, you've been quite quiet so we want to know more about you because, you're making a lot of money.  Market cap is seeing steady state and share also steady state so I want to sort of try and understand a little bit more about it.  Why don't you kick off and help people new to what mineral sands is, by just sort of defining that and also the market environment in which that lives.

Patrick Mutz: Happy to do that but I'll make one comment, I think that one of the reasons that we've been a little bit quiet as you say, I think my directors and my shareholders would agree with that is we had a strategy of starting small, staying small, as far as people and we've been so busy actually working at being successful and doing the things that we have been we haven't paid enough attention to marketing and that's one of the reasons I'm here today and hopefully that's a bit of it to your listeners because I think they'll hear the story and recognise that, mm these guys may just be undervalued.  Now as far as mineral sands itself, yes that's an interesting one, it is known and it not so well known.  Because it's not gold or iron ore some people really do wonder what is mineral sands all about.  The simplest way to think about it is we mine ancient beaches and this is the, this is where they're buried down about 10m or 20m below the current topography and the sands on these beaches have the eroded from the mountain chains in Australia, in our particular case, that contain 2 main minerals, zircon and titanium dioxide.  And those 2 are the products that are involved in our concentrate.   Zircon is primarily used to make floor tiles or ceramics such as the white toilet seats, sorry the white toilet bowls and the white sinks so it's a very common use thing and titanium dioxide, well it has a number of uses.  It's primary use is to make paint that you paint on the walls, so our products are basically very general use products and that is one of the reasons that their values are tied to the GDP of the world.  That's probably the simplest way to sum it up.

Matthew Gordon: Okay, let's talk about you as a company, you said you wanted to start off small, you're keeping the overheads low and you're focused on building the business.  Been at it 3 years, 2019 you made 21M net profit, 2020 you made near as dammit 25M net profit.  You can clearly make money but as a CEO your job, sorry you're an MD, you're in Australia aren't you?  You guys…

Patrick Mutz:  Actually both, CEO and Managing Director.

Matthew Gordon: Both, fantastic, you guys can't rest on your laurels you've got to keep moving you've got to keep growing, that's what investors want to hear.  What new investors want to hear and I was quite intrigued, because when I was reading through your stuff, your PowerPoint talks about growth strategies.  Now that's something I haven't seen in a long time, we used to talk about it in banking and I haven't seen companies talk about it, so we can we just talk about, you know where the future lies for your company?

Patrick Mutz: Look, I want to, even before I cover that specific point let me just back up and say that we at Image Resources under my direction and the current Board launched into a decision to move to production from what Image was.  Which was an advanced exploration company, we brought with us a philosophy that says, let's get into production as quickly as possible, as low a cost as possible to satisfy what Image had been promising its shareholders for many years, and that is to get into production.  Let's now do it and after that start talking about growth strategy and here's what I mean by that.  We could have started the projects of launching by saying we've got to do more drilling and we've got to build more reserves before really ready to get into production.  Instead we took the tactic to say no we've got enough ore reserves to get started.  Let's get started and by the way this was at the bottom of a market, this was a contrarian decision from the very start and right after we started into production the price started climbing.  We'll talk about that, it's still climbing today but the point was, don't spend any more shareholder money looking for more reserves so you have mine life, start with what you have and once you get positive cash flow then spend the money on drilling and grow the company. 

Well 3 years later, actually it only took a couple of years of getting into production and we started expanding our horizons but we always had in our portfolio 12 projects and we are only developing the first one right now.  As of about a year ago we started looking at the development of the second one which is part and parcel to this growth strategy.  So I'll jump into that.  Look operating profitably and making money is a very, very good thing.  Very important and if you look at our propaganda you will notice that earlier this year, and after only  2 years of operation we became debt free and we paid an inaugural dividend of $0.02 when the share price was running about $0.18.  So a very healthy return on the investment so far to our current investors and that was an inaugural dividend, meaning that we're looking to of course repeat that.  There's not a lot of companies that have launched into a production scenario and paid a dividend that fast and reduced their debt to zero, but we have.  But the harder part now is sustaining that profitability and growing.  So we're working our second project that we already own 100%, looking to develop that one.  It will be a lead-on to the current project which, when it's reserves are done we'll move to this one. 

We're actually also working on project number 3 and project number 3 is actually a little bit longer lived, up to 10 years in and of itself and the concept of the growth strategy for this third project is operating in parallel to what we're doing today.  So if you can imagine that we're making 20M net profit from the current one operation, the second operation can do the same, that means that once we have the aspect of 2 operations simultaneously the market cap of the company can double, just on profitability.  You don't want to talk about multiples on earnings, we're just talking about on profitability, it can't be denied.

Matthew Gordon: But talk to me about this Patrick, because obviously the first answer is kind of, it's, I think we, well it indicates a 3 year life of mine but you're looking to expand that right?    

Patrick Mutz: That's correct.

Matthew Gordon: So these are small deposits with presumably what, small CapEx requirements as well.  So they're small, you can expand a certain, well to a certain amount, I don't know what that's going to be, maybe you're going to indicate and tell me.  The second project, is that similar?  Do all 12 projects have similar sizes then?  It's just a case of the efficiencies that you can garner by moving equipment from one to the next, is that how it works?

Patrick Mutz: That's exactly right, look one of the other things about mineral sands is that we don’t have to dig very deep and the capital equipment to relocate to a new mining area is very low.  I'll give you the example, starting in 2016 when we launched into production at the current project called Boonanarring, I know that's a mouthful but Boonanarring, we spent $53M in total capital on the ground to get put into production, that's amazing right?  To pick up from Boonanarring and move to the next location is probably about half that capital.  So the cost of moving around is not a lot of money, well covered by the kind of profitability that you can get out of running in a mining area for 2 or 3 or 4 or 5 years and that's our plan and to keep moving on.  But the third project that we're talking about in and of itself has a 10 year mine life.  But I want to go further and keep talking about the growth strategy, because while we're really hard set on, we'll have Feasibility Study numbers later this year, late this year I should say that I'm confident will show that we've got our next project ready to start financing and having then 2 operations.  At the same time we're doing 2 other aspects of our growth strategy.  In our portfolio we also had a couple of little gold projects that we promised shareholders we wouldn't talk about because we were focused on demonstrating we could be a credible and now sustainable, profit making company. 

Now though we’ve started looking at this gold project, I mean look the price of gold is doing okay and we actually think that there's a little sleeper project in these 2 tenements that we have and we very well may, as the third prong of the growth strategy be looking at in 2022 a possibility of a small gold operation.

Matthew Gordon: No sorry that… 

Patrick Mutz: And gold…

Matthew Gordon: …that's the King Gold Prospect, but let's keep that as an outlier for now, let's keep that parked up for now, we'll come back to it I promise.  Just, I'm just intrigued about the planning by you guys about how you efficiently manage these 12 projects and what sense of scale, when are you going to be able to give us sort of sense of scale to us about, not just your cash flow, the fact your dividend paying, which is all fantastic stuff.  But you know, how you as a player are positioning yourselves in the context of the global market, you know.  What do you represent?  What could you represent?  Because that will also drive your market cap, your share price, people's perception of you as potentially being significantly larger than you are now so how do you manage those, you know some concurrent and some are, you know I guess a way out.  So if you can just paint that picture for us, it'll be really useful.

Patrick Mutz: I'll try to put some perspective to that, you know that's a very interesting that you're, we're talking about sort of smaller projects and maybe only 3 or 4 years of  life and then the next one and then another one and on and on.  And we have a number of them in our portfolio so that's absolutely a good point to talk to.  How do we manage that? 

But I'll start by saying that you know the bigger mining companies in mineral sands such as Iluka, Tronox would never do what we're trying to do.  There is a size that we are working to fill and there's; there are projects out there that fit our size.  So the strategy is about us being this small-medium size company accessing these smaller projects, at least for now.  Because there's a niche for that and we've proven it can be very profitable.  Having said that, the fourth prong of the growth strategy after the gold, and again that's just an aside, you're absolutely right but it has the ability to grow real legs.  And whether we do it or we want to stay as mineral sands and we get rid of it and use it to fund the other projects that's an option for us, optionality's fantastic.

But the fourth prong is about growing in a bigger way, it's about looking outside of our portfolio now that we are profitable and have cash in the bank, no debt.  We’re looking at finding a development ready project that has a longer mine life.  So mineral resources and ore reserves that can put us into a 15-20 year mine life projection and that is the next, in fact the third, level of growth that the company is looking to and we are actively in that space looking at what's available.  Luckily to start with, all of our existing projects were as good as anything else out there, so we didn't have to look very far.  But to grow with that larger sector that is what we're doing now and even one foot but not a lot, not very heavy pressure on that one foot, in exploration space, seeing if we can find some of our own new projects that haven't even been discovered yet. 

Matthew Gordon: Right, so 2 things there.  One exploration, let's come to that in a second, but if you are looking for larger development projects, are you sticking with Australia, are you looking further afield?  We’ve spoken to a few mineral sands companies over the past few months and we've got some sense of you know, what they're trying to do but for you, can you tell us again how best to understand the timing of that?  You know, how ambitious are you, when you say scale, what do you mean?

Patrick Mutz: So firstly the strategy is to be very cognisant of understanding the risk outside of Australia, so initially the Board's been very clear about start with everything and anything that's in Australia first because, hey it's the place to mine, we know that.  The risk on those fronts, not the least of which is Southern is just important.  But, but look there's a lot known about what's in Australia and unless we can find something new the prospects are beginning to become less and less.  The good stuff has been found, I think there's still some room for some of these smaller ones and that'll continue.  But if the right project came to us outside of Australia and we did the right assessment of course we would be in a position to be able to consider capitalising on that as well and we've got only about a half an eye looking outside for right now.  Overall I want to say this though, I see that the plan and the strategy for the company is to grow, to be in the $500, $600M market cap range and that means operating at a service that we're doing right now.  By the way we're producing about 6% of the world's zircon in the last 2 years, 3 years and I think we can do that and a little bit more for the next 10 years. 

Matthew Gordon: Okay, interesting so half an eye what there is potentially elsewhere, outside of Australia for, to create scale, focus on Australia, exploration I get, no debt, producing good net profit numbers, presumably that says to me for now not a lot of dilution expected for shareholders.  So how much, how are you allocating that cash, are you putting it all back in the ground?  I know there's a dividend, which is a reasonable dividend but how much are you putting back in the ground from this exploration component?

Patrick Mutz: It's an interesting dimension to mineral sands you see because it's relatively shallow and in sand most of the places, it's not about hard rock drilling.  It's all very simple drilling.  The cost of exploration is very low, so we won’t need to put a lot of it back in the ground and by the way, of course, when you're a production company you don’t want to spend a lot of money on exploration, that's the hard work, that's the uncertain work.  But we have in our repertoire of tools some very interesting tools for exploration.  For example the founding director of the company's a fellow named George Sakalidis, he's a geophysicist, and the reason he amassed this portfolio that today we're bringing into the market and commercialising profitably is that he used these tools to find things that others couldn't find.  Well George is still on my staff, we are happily still looking now at redeploying his tools and looking outside and I can't say too much but we are believing that we will be successful to extend some of our current footprints in areas that other people hadn't been thinking to look yet.  Because of the tool and the tool is simply ground magnetics and it's not about the tool as much as it is about the ability of a person to interpret the data.  So, we're going to be very smart and very controlled about our expenditure and exploration and hoping to use as many dollars as we make either returning to shareholders but even shareholders know the better place is if we invest them, sort of the Warren Buffett effect.  We can do better with these dollars on behalf of shareholders if we're very smart as we have been and disciplined about finding additional growth opportunities and that's what we're doing. 

Matthew Gordon: That's interesting so you'll accumulate the cash, because you're not going to burn through it, well it doesn't sound like you're going to burn through it at a rate of knots, so you're going to accumulate cash with a view to potentially expanding your current 12 projects, I get it.  But I guess the more exciting thing, in terms of if you truly want to make an impact on the market and drive awareness and interest it's going to have to be an acquisition so I come back to it, when you say you've got half an eye on that, should you be paying more attention to the acquisition component?

Patrick Mutz: I think I maybe said it incorrectly, half an eye was on exploration, one prong of the growth strategy is definitely looking at acquisitions outside of our portfolio, that's a big one.    

Matthew Gordon: Got it, sorry I misunderstood, right.

Patrick Mutz: Right, I'd say it's 25% of my time right now is just looking at what else is out there from an acquisition stand point, we're actively talking to other owners who need somebody, such as Image, who is proven to be a development animal.  Knowing how to do it at low cost but efficiently and quickly.  I want to take you back just a second when we launched into production.  We did it all in 6 months, not only at $52M, 6 months, no-one thought that could be done, but I'm going to tell you another aspect that was even better.  In the second month of operation we were at full production, that's unheard of, the normal operating curve to get up to speed is 12-18 months and we did it in the second month.  I'm not saying that to brag, I'm saying that, that we've demonstrated to the market that we have a few tools that we use and know how to, we think, we believe and I'm going to do it again I want to demonstrate that a second time.  Many people say, oh you got lucky,  We did get lucky, we did get lucky but excellent planning really helps the luck let me tell you and this is what we want to employ.  So I believe that we can take that and be a very, very, worthy partner for somebody that may have a development project that they need some help with. 

Matthew Gordon: This share registry, I mean how much institutional, how much retail, how much does the Board hold, how much do you hold?

Patrick Mutz: Yeah look there's about 980M shares on issue and the share price currently is about $0.16, so we have $169M market cap.  The share register is interesting, the biggest shareholder is probably about 18% and it is a zircon manufacturer out of China.  This is an investor I brought in to Image in 2016 and it helped us to set the company up on a path to production because they were able to give us off-take agreements for the zircon for the life of the project and zircon represents about 80% of our revenue, so it was a very valuable connection with this particular shareholder.  In fact though when we got started getting him involved he was at 42% of the share register and he was happy to stay there but my goal was to say if we can bring others in will you dilute and he did and today he's at 18%.  Below that we have a couple of individuals, one is a wealthy fellow out of Hong Kong who's an investor and just likes zircon.  Another is a family group out of Malaysia and then we have a number of larger institutions here in Australia as well.  Ownership by management and the Board, of course the Board is represented by those 3 bigger shareholders in the first instance, so if you count that, of course it's you know, it's nearly 35% of the register but if you just count individuals then myself for example, I'm a fairly reasonable shareholder at about 4½, 5M shares.  Not big in context to percentages but certainly I'm, I've got a little skin in the game.

Matthew Gordon: So what's the history to the sort of Asian connection in terms of the investor base?

Patrick Mutz: So I want to tell you that the very first group was the Malaysian group that has actually been following Image when it was just an exploration company.  They, I believe, love investing in exploration in Australia and they've had some successes and I'd say, given where they started with Image that they have been successful with that one.  They've been there the longest.  The fellow from China with the zircon processing came when I joined the company in mid-2016 and in 2017 the second biggest shareholder today joined when we were raising funds for the capital for launching into production.  He came in very boldly and said, look I like what you guys are doing I want 20% of the company.  He didn't get it and we couldn't give that to him, we had a few people offering to take that big of a stake but he ended up taking 10% or getting 10% and he's been a very active buyer in the market since then.  He likes the story, he believes in our growth opportunities and he's actually one of these that's working with companies in the world looking for different applications for zircon.  So he's actually trying to help build active markets for zircon and I just think as a non-executive director that's a great director to have on staff.

Matthew Gordon: Tell me a little bit about your background and maybe some of the other key staff.  You've obviously mentioned one and what's…?  Have you guys come from mineral sands backgrounds?

Patrick Mutz: No, I actually… well first of all I'll tell you I've been in mining now for something like 45 years, starting out in the US for many years but I've now been doing mining in Australia for nearly 20.  I had a very, very long history in the uranium industry and in fact in 2011 took my first break from the industry as a Managing Director to take a break, to work on a PhD and work on some renovations at the house and during that break Fukushima happened and so there was a disconnect from my longstanding career in uranium and I suddenly realised, you know it's time to try a different horse.  And at that time I knew Mineral Sands Mining Company had come to South Australia where I was domicile and I picked up a role as a COO with them because I'm a process guy.  I'm a metallurgist by background and so it was very easy to get involved to help them get started and we did and we've been working with them.  This is actually that big shareholder from China who's a zircon processor, but we've together for a while because he knows that I know how to do projects.  I roll up my sleeves if necessary, but of course today my real focus should be on marketing and growing the company and that's what I'm doing.

Matthew Gordon: Okay and so who are the other key players in terms of operationally?

Patrick Mutz: I have hand-picked 2 key players when I first launched into the programme with Image.  A couple of fellas that I recognised here in Western Australia, one is currently my COO, at the time he was doing some consulting work for Image for I recognised him as one of those kind of guys, like-minded with me that understands that there are better ways to launch projects than the normal expensive route.  And a CFO, similarly who was doing consulting work for Image and I tapped them both on the shoulder and said, look guys if I get these 2 companies together and we launch to production would you join me?  And they absolutely said yes because they liked the idea of a vision and we had a vision from the beginning to grow the company.  Obviously they are still with me and now we have been populating the company with other non-executives but managers and supervisors and we've built a brilliant team.  They do some fantastic work and now they are salivating waiting for the opportunity to go ahead with other projects.

Matthew Gordon: Yes, I like the fact that you guys decided to get into cash flow sooner, like get out of the gate.  I think that's a very Australian thing, there's a sort of North American mentality that's let's make this resource as big as we can possibly make it and then we'll start thinking about getting into cash flow in position or putting ourselves in a position to get the cash flow in position.  So that's interesting to me, I guess I'd love to maybe hear from you in how you move forwards on the first 3 projects with regards to giving us that scale, or indeed M&A.  That'd be interesting we'd love to hear from you on that one. 

Shall we…?  Let's go back to King Gold Prospect which is, your farming obviously, hunting gold.  I saw a press release, quite nice grades.  Tell us about what your plans are for that?

Patrick Mutz: Okay, I just want to say one thing though about the debt piece that, for what it's worth.  We are debt free and that is an important move that we made, we made it purposely, but that is not a bad thing at all.  We did it because we were in a high-yield debt situation because we started as a no-name company basically, no credibility so we had to go with high-yield coupons for our debt so we had to get rid of those.  But importantly debt is a very strong tool for us to be able to use going forward, whether it's with M&A or not, but importantly also as a profitable growing concern we can now attract very, very low interest debt.  If we fail to take advantage of the current situation for being able to get debt and get debt at such low rates we will really have missed the boat.  So I'm excited about making these things come together at the right time for all of us. 

Matthew Gordon: But the, yeah…

Patrick Mutz: But the key project to get,…

Matthew Gordon: But the, yeah…

Patrick Mutz: … the key…

Matthew Gordon: … just, I think that's a point that's very important for people to understand because if you're throwing, if you're creating enough cash flow for, to provide the equity component to any projects you may have to finance further down the line.  The debt is cheap at the moment and that means you can move quickly, I guess that's going to be quite attractive to a lot of people too.  Okay, noted.

Patrick Mutz: Exactly, Matthew that's the, this is the point of, the nexus I guess about what I'm trying to say.  It's very easy to go to shareholders and have to ask for more money and the dilution effect is real.  We all know that, what I'm trying to do is as much as possible, where I can rely on either our cash and/or debt. But for today, that to me is still, let's not go any further on the dilution, stand on our own 2 feet, make our projects pay for our growth and use the banking system, especially with the low interest rates and grow out and grow and that's what we're on a target to do.

Matthew Gordon: Right, King Gold, what are we doing?

Patrick Mutz: King Gold.  So King Gold was very interesting in that it was one little tenement, hosted amongst the 2 that we had and it had the mineralisation that ours only had sniffs of.  It was important for us to do a deal on the owners, private owners of this small tenement within our bigger tenement package to understand the model, the geology model.  So we went to them and made it very clear, hey we can try to do something to help you and we'll make sure you profit by it.  When we do deals, they're win-win deals, that's the only way to do them in my opinion.  So we worked out an earn-in, farm-in arrangement and we are well into that now.  In fact I think there'll be completion of the first stage of earn-in, it's already actually completed we just have to actually do the administrative work around that.  But here's the point, it's a low-risk, low-cost entry into gold and it's all about doing it again smartly by capturing that small piece which allows us to really understand the overall geological model for the gold deposition.  We are well up the curve now on understanding that.  Our founding director that I mentioned, George Sakalidis is a gold hound he's got another gold project on his own, that he's doing very, very well with because he knows what he's looking for and he's still on our team to help us look for what that looks like and we're making progress.  So the idea, just to cover off on what we might do with it, is to create another leg of optionality for Image.  The optionality being that we might be able to turn this into a small, profitable, lower-grade but profitable gold mining operation.  Which I would be fine adding that into our portfolio, or we might be able to use that to piggybank on a sale or joint venture with others so that we can create some more capital to invest in more mineral sands projects.  And again I don’t know which way that will go yet, I'm fine with whichever, I think it will create some value for shareholders.

Matthew Gordon: Okay, so when you say you've got a better picture of what's going on there.  How many metres have been drilled?  I notice a lot of RC drilling going on so what can you tell us about the drilling, how much has been spent, how much more time, money and effort, you're going to put into it before making a decision?

Patrick Mutz: Look on a historic and current basis, because currently we're just doing confirmatory drilling to the historic drilling so we can bring it up to the JORC 2012 standard, but in total it's probably been more than 12,000m drill.  It's a relatively shallow deposit, we don't have to look deep just yet and that's very important for launching into a low cost capital mining operation and then, even then do we set up our processing operation or do we look at toll processing, very low cost entry?  I think there will be something here and the gold price of course is helping.   So there has to be something to strike while everything is still in very good stead if not it'll run out of steam.  Does that answer your question?

Matthew Gordon: Well it's a case of, you know when you said to me, okay mineral sands exploration is actually quite low cost right?  Great, it's not rock, it's a much simpler process.  Gold, not so much, I know you're doing a lot of RC but if you get into diamond drilling it's going to get a little more expensive, so you've got in your minds obviously a view of, look we'll take it so far.  Then we'll pop our heads up and have a look around at who might be interested in it, or indeed if we move it forward what we're prepared to spend on this.  Because it is, potentially, a distraction from what is, looks like quite a nice business, a very profitable business overall with the mineral sands.  So that's, I guess the debate you're having internally?

Patrick Mutz: It is and in fact it's one that we have, as I mentioned earlier, purposely stayed away from to make sure that we made it clear to shareholders we will not be distracted by this.  It will only be done in our spare team by a different set of team, usually just consultants and contractors.  And perspective wise, before we get through spending our first million I expect this will have an initial mineral resource estimate that will tell us quickly whether it has legs.  And so again I don’t see this as a long commitment or a big commitment.  It's cast and planned to be a low cost entry to get to tangible results which is a mineral resource estimate that can then be talked about from a standpoint of a Scoping Study and Feasibility Study, low costs again.  I would say maybe another $1M before this could actually be a development project.

Matthew Gordon: Fantastic, well look I'm, that gives me a very good overview of the project, the way you think more importantly for me, I'm always fascinated by that in terms of decision making.  I say let's stay in touch, let us know how you get on, on all fronts, especially the kind of expansion component, the exploration component, that could be where it starts to get exciting for you.

Patrick Mutz: Thank you very much Matthew.  Look I'm confident that there will be additional news flow that will complement all of the things that I've talked about today.  That news flow could start in the next few months and will continue for the next 12-18 months.  I would like, if you can give me one more minute, to just mention one more point about the company and that being that in addition to all of these nice things that we've talked about, which are the crux of the business.  We are also, as we are growing recognising though that there are many other aspects to the business besides just a profitability side.  You know, we all are hearing more and more about ESG and we are no exception.  But in fact we have actually started that process early on.  Remember I mentioned earlier about we have a philosophy about win-win?  That doesn't go to just deals that we might do with partners on the ground but that's important about the community, the land owners and everything else we do in our business.  Because we affect a lot of people and we started out early on with a very strong commitment to be positive with our relations on the ground in the community and with our land owners and we continue that and we also are doing that environmentally.  And I'll just give you 2 quick examples from the environmental side of how we're already thinking big from a company standpoint, even though we're small.

The first one is that we are, we put in a solar plant on our property, from the get-go we started talking about it.  It is now up and running and offsetting about 25% of our electricity requirements as solar renewable energy, right here on our property.  We didn't have to, we have grid power but it's the right thing to do and we committed to do that and now we are turning around and working with land owners and looking at carbon sequestration testing on these properties where we are working to find out if there's ways to enrich the surface area of their properties to actually absorb carbon.  The Government's looking at ways to incentivise land owners to do this and we're trying to work with land owners to help that.  So I'm just trying to make a couple of quick examples. 

The last example is about mine rehabilitation.  It's very, very important in mining to get our hands on rehabilitation and we've purposefully, within the first, within the end of the second year we demonstrated that we had about 13ha already completely backfilled and rehabilitated and revegetated, just to show and demonstrate how quickly coincidental mining and rehabilitation can work and we've already now put the first runs on the board and that will continue as we go forward.

Matthew Gordon: Yes I saw the pictures in the PowerPoint, amazing the way you were kind of backfilling and revegetating the landscape, that's impressive.  You do mention something in there about carbon sequestration research and I'm just wondering what your views on that are, because we do get companies who come on here and say, well we'll buy carbon credits.  Which is a, you know, it seems a cheat quite frankly.  You know, what is your approach to that discussion?

Patrick Mutz: You know the harder path to the whole idea of carbon awareness and working with systems to make it real, the harder path is what I'm talking about doing.  Projects that really do offset and in some cases hopefully mark it up; having said that there's nothing wrong with buying carbon credits because if they're done correctly those credits are working towards projects in a bigger way.  I don't know if we can all do little things here and there but, you know, and as you get bigger maybe that's the better way.  Get the credits where they're applied in other parts of the world to still accomplish the same thing.  I'm open to it, I just think we should always have our eyes open for trying to do something on the ground ourselves and helping, especially in this case.  If we're successful with what we're trying to do it actually improves the yields of crops on the ground for the land owners in the future, not for us but for them and I think that's a way we are trying to set ourselves up to put a little back.  Give a little back that lasts beyond us being there because we'll be gone in a few years from that area and hopefully there's a legacy that continues beyond us.

Matthew Gordon: I love that point and what a wonderful point to leave this discussion on, thank you Patrick, appreciate your time.

Patrick Mutz: Very good, thank you Matthew.

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