Why the Image Resources (ASX:IMA) share price is rocketing higher today

Mineral sand's mining company, Image Resources' share price took off today, at one point trading 9% higher. Here's why…

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Following a stellar performance in 2019, which saw the Image Resources NL (ASX: IMA) share price gain 108% in only 12 months, Image Resources' share price has been far choppier in 2020.

Like most every company on the ASX, Image Resources share price was savaged by the COVID-19 panic selling earlier this year, falling 45% from 24 February through to 23 March. From there it gained 75% through to 18 September before again sliding lower.

Year-to-date the share price is down 30% despite today's strong performance, which saw shares trading 9% higher in mid-afternoon before giving up some of those gains to be 6% higher at time of writing.

What does Image Resources do?

Image Resources is a mining company primarily focused on mineral sands. The company operates an open-cut mine and ore processing facility at its 100%-owned Boonanarring Project, one of the highest-grade zircon-rich mineral sands projects in Australia. Just 80 kilometres north of Perth, the mine is well serviced by existing infrastructure.

Image Resources achieved profitability in the first quarter of 2019 and was cash flow positive in the second quarter of 2019. It is now at steady state production.

Image Resources has a market cap of $162 million.

Why is the Image Resources share price soaring higher today?

After closing on Friday at 16 cents per share, Image Resource's shares are trading at 18 cents this afternoon.

Aside from a potential lift from the broader rise of the All Ordinaries Index (ASX: XAO), up 2.1% in intraday trading, Image Resources' share price looks to have gained a boost from the company's share buy back announcement to the ASX this morning.

The shares in question, just over 495,000 of them, had been issued to employees as part of the company's Employee Share Plan (ESP). Image Resources noted that:

Some of those employees have ceased employment with the company and the loans made to the employees to fund the issue of the shares became repayable on the cessation of employment. In accordance with the terms of the ESP, the board has determined that the company will buy back and cancel the relevant shares, with the proceeds applied to offset the loans.

The company is offering 26.7 cents per share, considerably higher than the current share price of 18 cents.

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