The paper discusses the problem of flux estimation for the induction motor (IM) drive and presents a sensorless observer. The objective is to estimate the fluxes of the IM in the stationary reference frame and to obtain the magnitude and the angle of the rotor flux. In a typical sensorless IM scheme, both these estimates are needed. The paper first presents an alternative state-space model of the IM. Using this, a Sliding Mode (SM) observer is designed. The paper first assumes that the speed of the motor is measured and develops a sensored observer; this is later transformed into a sensorless observer by feeding it with a speed estimate. This approach eliminates the need to measure the speed; instead, the speed estimate is an input of the SM observer. The paper studies the behavior of the observer under these conditions, finds a favorable tuning and shows that the resulting estimates are quite insensitive to the speed mismatch. The proposed design allows accurate estimation of the magnitude and angle of the flux. Previous observers developed under the same conditions based on the traditional IM model were capable of estimating only the angle of the flux (but not the magnitude). The advantage of this method is that it also yields an accurate flux magnitude. The equilibrium point of the observer with improper speed input is studied and conclusions are drawn. The theoretical developments and observations are supported by the simulations.