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Image board sees off Chinese backed spill motion in close win

In what is seen as a win for minor shareholders of successful mineral sands producer Image Resources, board members have seen off an attempt by large Chinese backed activist shareholder Murray Zircon Pty Ltd to dispense with directors who delivered almost $20m profit for the company last year. Ninety-six per cent of voting shareholders voted on the six spill motions albeit the vote was close given Murray Zircon’s substantial holding.

There was only a three-point spread between success and failure in five of the six spill motions with final poll results coming in at approximately 410m votes for the spill and 458m votes against.

Murray Zircon went into the meeting with around 23 per cent of the stock but some apparent last minute on-market buying and the 11th hour defection of Image director Huang Cheng Li to the Murray Zircon bid pushed the tally to around 48 per cent, taking the spill motion down to the wire.

The coup attempt raised eyebrows in its execution, being withdrawn, clarified and then disowned by at least one Murray Zircon director.

The Chinese-owned group called the section 249D meeting on January 21. It had to then withdraw as the notice was invalid and it was subsequently relodged.

During the process the Image directors made known their concerns that Murray Zircon associates were looking to secure Image’s offtake sales of its mineral sands products – that are already contracted elsewhere.

Earlier in the week Image posted a net profit after tax of $19.4m for the 2021 financial year, continuing the company’s strong performance since commencing production at its flagship Boonanarring project north of Perth late in 2018.

Shareholders are in line for a 2c per share dividend in April as a result of the company’s strong performance and have the option of reinvesting that windfall back into Image shares at a 15 per cent discount as part of a dividend reinvestment scheme.

The Boonanarring mineral sands cash cow was constructed and commissioned on-time and on-budget in 2018, was quickly ramped up and managed to exceed its nameplate capacity in only its second month of operation in early 2019.

Image then quickly paid off its outstanding debt ahead of schedule in February 2021 and then, remarkably, managed to pay its first dividend after just two years as an active mining company.

The spot price for heavy mineral concentrate increased a whopping 43 per cent over the December 2021 quarter to $904 per tonne. When coupled with a streamlining of operations and a 43 per cent reduction in production costs, Image managed to table a lovely set of numbers for the financial year and its shareholders took the opportunity today to vote for more of the same.

Image also took advantage of its solid financial year to pick up the $12m 5.8Bt McCalls mineral resource going 1.4 per cent total heavy minerals that it sees as a multi-decade production opportunity above and beyond Boonanarring.

Shareholders have now spoken on these matters, and it is time to move on and focus attention on maximising value for all of our shareholders.

As part of this process, we will be seeking to continue discussions with our major shareholder Murray Zircon, and its controlling Chinese shareholders OZC and the LB Group, in an effort to address any residual concerns and avoid any further unnecessary corporate distractions to Image’s ongoing operations.

The Image board took a big stick to Murray Zircon post the vote by sandbagging its highly successful Managing Director Patrick Mutz’ employment contract. The notice period for any termination of Mr Mutz’ employment contract has now been extended from 3 months to 6 months and any future successful attempt to remove Mr Mutz from the board will not automatically result in him losing his role as CEO – a quaint corporate play that reeks of “don’t let the door hit you on the way out….”

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

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