Copy a greyscale image over another solid color one so the greyscale information is transparency

I have 2 images. Image 1 is a block of solid red colour. Image 2 is a black (raster) image of a pen. Image 2 is greyscale; the pen is black and the bakcground is white. But at the edges there are shades of grey. (4)

I am attaching two samples. One shows my source greyscale image (a extract) and the other shows the resuult I am aiming for - but with the problem. 

I want to paste image 2 (the pen) over image 1 (the red block) so that the shades of grey at the edge of the pen which give a nice soft edge are turned into transparency. My current method is convert image 2 to transparency using Select Colour but this fails because it just selects white. This gives the jagged edges which are visible on the attached file.

I understand that this is to do with channels or layers but I can't see what to do exactly.

Thank you