Great safety of margin

Petra have lowered price assumptions for Zircon and analysed impact on IMA.the conclusion is that IMA even at lower zircon prices remains a great cash generative business and significantly undervalued. Given the strong balance sheet this analysis shows the safety of margin IMA presents at current prices . Now Petra lower prices assumption may not eventuate and thus this may be seen as a bear case scenario

IMA is targeting an additional two years of mine life this year through exploration success, which we believe will attract and broaden investor interest. Despite cutting 2020 prices by 15%, we forecast IMA to have net cash of A$45m, 7 years of reserves and generating A$50-60m FCF p.a. by Dec 2020. IMA is one of our top picks in small cap mining with a strong balance sheet, solid cash generation and mine life extensions likely to re-rate the stock. We maintain our BUY, with our price target (1x P/NPV10) reduced 16% to A$0.26/sh (prev $0.31/sh).