Image Resources NL provided an updated Ore Reserve estimate at its 100%-owned, Atlas mineral sands project (Atlas Project) located in the infrastructure-rich North Perth Basin in Western Australia. The northern section of the Mineral Resource is now excluded in this updated Ore Reserve estimate due to uncertainties of timing for environmental approval over the northern section of the deposit. This Ore Reserve estimate is based on a Mineral Resource estimate completed by Snowden Optiro as of December 2022.

This Ore Reserve update was prepared and reported by Entech Mining Consultants in accordance with the guidelines of the JORC Code (2012). The following material changes have been made to the mine plan inputs since the previous Ore Reserve estimate: Mineral Resource estimate and corresponding block model updated for additional assay and mineral assemblage data obtained since the 2017 BFS due to the inclusion of additional drilling undertaken in the intervening period. The updated Mineral Resource has also now used the results of sachet logging and visual estimates of Iron Oxides (FeOx) to interpret and exclude laterite material within the interpreted strandlines; Change to Mine Development Envelope to exclude the northern section of the Mineral Resource.

The northern section was excluded due to the uncertainties of achieving environmental approvals in a timely fashion over the Mount Jetty and Bibby creek lines, Aboriginal areas of cultural concern and areas of potentially sensitive flora and fauna as well as native vegetation. The Southern section of the Mineral Resource area is more economically robust due to higher HM grades and lower strip ratio, and consequently generates most of the net cash flow; Changes in pit design based on revised pit optimisation results using current study inputs and assumptions, including a reduced feed rate to the WCP from earlier studies; and A change to the assumptions and application of mining dilution to reflect a less selective mining method due to the thin strand mineralisation anticipated at the Atlas Project. Mining adjustments from the previous Ore Reserve include adopting a different approach to applying mining dilution to encompass both internal laterite material and boundary material dilution at the top and bottom ore surfaces.

The previous Ore Reserve excluded some material for the previously proposed high voltage powerline crossing, which has now been removed from the current mine plan. Together these adjustments have a minor effect on contained HM, though the dilution adjustments do increase the feed tonnage with a commensurate reduction in HM%. Very minor changes can be attributed to Mineral Resource modelling impacts between estimates.

The previous Ore Reserve estimate downgraded all Measured Mineral Resources to Probable Ore Reserve, based on some uncertainty surrounding density estimates. The current Mineral Resource estimates density using an algorithm that considers lithology, HM and slime grades interpolated into the model, such that a variable density attribute is estimated based on the material characteristics as modelled. The same method has been used for the Boonanarring deposit since 2019 and the algorithm has been refined since, using operational data from the Boonanarring site.

Hence this estimate includes no downgrading of Measured Mineral Resources, which convert directly to Proved Ore Reserves, subject to the application of appropriate modifying factors. A detailed comparison has been performed between the 2017 Ore Reserve and this updated estimate. The main variance, both in terms of ore tonnage and contained HM, is due to the removal of the Northern area of the Mineral Resource since the disclosure of the previous Ore Reserve.

Changes to the pit design are the next greatest area of variance between the updated and previous Ore Reserve. In general, the updated pit design focuses more tightly on the main economic core of the Resource where the majority of the cashflow is generated, with the removal of some more marginally economic regions to the north. These changes contribute to the uplift in total HM% and valuable mineral assemblage composition of the HM in the updated estimate.

This Ore Reserve estimate is based on modifying factors and processing inputs determined from technical studies to Feasibility Study level for the Atlas Project, informed where relevant by analysis of actual operating performance at Image's Boonanarring mine site. The Feasibility Study is based on mining of the Atlas Project, once mining and processing at the Boonanarring operation has finished, using conventional dry open pit mining techniques and wet concentration of the ore to produce Heavy Minerals Concentrates (HMC) for sale or toll treatment. Mining of the Atlas Project is currently scheduled to commence 2H 2023, with commissioning and first production near the end of Fourth Quarter 2023.

Life-of-mine (excluding rehab) for this Ore Reserve estimate is approximately 30 months. HMC production during the first 6 months is high as the mine plan concentrates on the central high-value area of the pit. Final economic evaluation was conducted by Image using a standalone financial model and life-of-mine schedule, utilising the Ore Reserve pit designs.

Where sales receipts or costs are in US Dollars, an exchange rate of 1.00:0.70 AUD:USD has been used. 100% of HMC produced at Atlas is contracted under life of mine offtake agreements and the Feasibility Study shows that operating cashflows are expected to remain positive for the production duration at the Atlas Project, with particularly strong operating margins expected in the first year of production. Operating margins are expected to decline after year one, as lower HM feed grades and HMC production is scheduled once mining advances away from the high-value central region of the pit.

Sensitivity analysis was conducted on key variables (+/- 20%) based on undiscounted cashflows. The Atlas Project is reasonably insensitive to changes in capital and operating costs and is most sensitive to those variables that directly impact on the revenue stream, such as pricing and recovery/grade.