Strange market moves Font Size:DecreaseIncreasePrint Page:Print Robin Bromby | October 27, 2009
Article from: The Australian
SOMETIMES you just have to scratch your head and wonder what the market is thinking about.
This morning was one of those times. Investors were selling off Image Resources after the market opened, and selling it off sharply.
Did they not read the announcement the company put out this morning? Do they not recall that when Iluka Resources found the Jacinth-Ambrosia mineral sands complex a few years ago that it soon came to be regarded as one of the major finds of the new century?
Well, it might just be that Image, and its neighbour Diatreme Resources, have between them a deposit of heavy minerals (and one that is rich in high value zircon) on the western end of the Eucla Basin in Western Australia that rivals Jacinth-Ambrosia, in South Australia on the eastern side of the Eucla Basin.
That’s not The Dirt talking. Image’s statement says so this morning - and we can tell you that this would not have been lightly stated, as Image rarely allows itself flights of fancy in its announcements and errs on the conservative side. In fact, some of its announcements are so technical it is hard for a non-geologist to figure out their importance.
Image reported this morning that the strike length of its eastern zone of the Cyclone Extended deposit has been upgraded from 2.5km to 4.5km, and still remains open to the south. The western zone has a strike length of 2.7km. The width of both zones - and this is a critical factor - is 800m. That’s large.
The bottom line: 1 million tonnes of zircon, and Diatreme has a similar deposit on its side of the fence.
On top of that, Image has 2.5km of mineralisation at the nearby Monsoon deposit.
IMA closed yesterday at 88.5c, but this morning some investors decided to get out and pulled the price down to 81c, although it started to lift off that low as the morning progressed. Our bet: those who sold low this morning will rue their actions.
It is London to a brick that Image and Diatreme will work closely together on this project. After all, they are drilling the same ore body - it’s just that the tenement boundary cuts it in two as far as ownership is concerned.
We know that old adage “buy on the rumour, sell on the news” but this time we’re left flabbergasted.
The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.
DRX Price at posting:
12.5¢ Sentiment: Buy Disclosure: Held
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