Image receives US$20 million in off-take prepayment loan and expects production in the first quarter of 2025

Image NL (ASX:IMA)("Image" or the "Company") is pleased to announce the execution of a US$20 million binding heavy mineral concentrate ("HMC") offtake million prepayment loan (the "Loan") in connection with China offtake partner Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd.("Guofu") and Image's 100% owned Atlas Ore Project ("Atlas Resources"), located 170 kilometers north of Perth in the North Perth Basin.

Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd. has been the main off-purchase customer of the HMC produced by Image in Boonanaring. Since the beginning of 2019, as the company develops, the loan funds will support the construction and commissioning of the Atlas project with working capital needs. The goal is to complete the first batch of production in the first quarter of 2025 and resume operating income in the second quarter of 2025.

Loan withdrawals must meet standard prerequisites for such financing, as well as Image safety construction and start-up delay insurance to minimize the following risks and significant production delays.

The withdrawal will be made in two phases, each of US$10 million, expected to take place in November 2024 and January 2025. The 12-month unsecured loan, selected as a lower-cost and more favorable alternative to traditional debt or equity issuance, requires payment of fees that should be paid at the end of the term by delivery of an HMC with the same market value.

The US$20 million principal plus accrued interest of the loan will be repaid through delivery to Atlas's HMC, with approximately 25% of each shipment being repaid.

Patrick Mutz, Managing Director and CEO, commented: "On behalf of the Board, I would like to thank Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd for providing Image with the opportunity to participate in this prepayment arrangement. This working capital is crucial to ensure that the construction speed of Atlas development remains at a high level, and HMC production and sales can be achieved as soon as possible, with the goal of achieving profitability by the first half of 2025.

The funds will also help maintain momentum for various other work plans, including other project feasibility studies and overall corporate support.

We are grateful to Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd. for its continued support as Image's main off-take partner, the successful and sustained market-based HMC off-take agreement, and the supporting prepayment mechanism provided in this regard, which has benefited all Image shareholders."

HMC Takeover Background

The HMC sales of Image's Boonanaring project were achieved within a market-based life cycle, the HMC off-take agreement between Image and Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd.(the "Off-take Agreement").

The agreement was signed in 2018 before HMC was first produced in a fair deal from Boonanaring. This original off-take agreement, as well as an updated specific pricing model, will serve as the basis for the commercial terms of all HMC market-based sales, starting with Atlas and with sales made by HMC under the binding agreement governing the loan. The $20 million loan principal plus accrued loan fees will be repaid through delivery to HMC from Atlas. Based on market-based Atlas HMC pricing under the original HMC off-take agreement, a nominal 25% of each shipment of Atlas HMC will be delivered free to repay the loan. Value loans delivered by HMC as repayment are not entitled to market pricing discounts.

The balance of each batch of HMC goods (nominally 75%) does not involve repayment of loans and will be priced according to the market, and will be paid by Shan Tou City Guofu Zirconium Titanium Industrial Co., Ltd. through a letter of credit ("LC"). All shipments of HMC before Boonanaring have been successfully completed.

Through the use of a letter of credit, the full amount of each shipment is effectively prepaid before the ship sails, and the full principal of the loan and accrued loan fees are repaid within a 12-month period.