Increased production boosts profits for Base Resources

Australian based, African focused, mineral sands producer and developer Base Resources, which is listed on the London Stock Exchange, have offset lower grades at its Kwale mineral sands operation in Kenya with a 66% boost to output during the six months to December 2018. This means that production was broadly flat when compared to the corresponding period a year ago.

According to its half year results, released yesterday, the company produced 49,630 tonnes of rutile, 226,730 tonnes of ilmenite and 17,935 tonnes of zircon and sold into a strengthening market for rutile and zircon.

This resulted in an increase in revenue of 13 per cent to US$102.2 million, with net profits after tax increasing 4 per cent to US$17.4 million.

Base have also managed to eliminated net debt during the period, an overall reduction of US$34.2 million, leaving the Group US$1 million cash positive at the end of the period.

Managing Director of Base Resources, Tim Carstens, said:

“Kwale Operations have continued to perform strongly as we head towards completion of mining on the Central Dune. The mine optimisation strategy we implemented in the first half of 2018 to address the decline in ore grades delivered as expected. We are now focused on transitioning mining operations to the South Dune deposit in June this year and continuing to pursue additional mine life through extensional exploration at Kwale, including the newly issued Vanga licence.”

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Base Resources wholly-owned subsidiary, Base Titanium Limited, operates the 100% owned Kwale Mineral Sands Operations in Kenya, which commenced production in late 2013.

Kwale is located 10 kilometres inland from the Kenyan coast and 50 kilometres south of Mombasa, the principal port facility for East Africa. The project was acquired by Base in 2010. Following the completion of feasibility study enhancements and financing, development of Kwale commenced in October 2011.

The Project is based on a mine life of 13 years, and features a high grade ore body with a high value mineral assemblage. Over the first six years, production is expected to ramp up to produce an annual average of 80,000 tonnes of rutile, 360,000 tonnes of ilmenite and 30,000 tonnes of zircon, making Base a globally significant producer of mineral sands products.

Kwale’s mining operations are based on a conventional dozer trap mining unit (DMU), using Caterpillar D11T dozers to feed the DMU. The DMU is a cost effective method of mining, which is particularly well suited to the type of ore at Kwale. During Kwale’s 13 year mine life, Base expects to mine and process 140mt of ore, and produce 4.6mt of final product for sale.

The operation is designed to process ore to recover three separate products – ilmenite, rutile and zircon. Ore is received at the wet concentrator plant (WCP) from the DMU via a slurry pipeline. The WCP removes slimes at a particle size less than 45μm, concentrates the valuable heavy minerals (ilmenite, rutile and zircon) and rejects most of the non-valuable, lighter gangue minerals. The WCP incorporates a number of gravity separation steps using spiral concentrators. The heavy mineral concentrate (HMC), containing 90 per cent heavy minerals, is then processed in the mineral separation plant (MSP).

The MSP cleans and separates the ilmenite, rutile and zircon minerals and removes any remaining gangue. This is accomplished by a combination of attritioning, electrostatic separation, magnetic separation, classification and gravity separation. The ilmenite and most of the rutile produced is then transported in bulk to Base’s own Likoni Port facility. The balance of the rutile and all of the zircon produced is containerised prior to transporting to the main Mombasa container port.

A key feature of the Kwale Operation is its proximity to well-developed existing physical infrastructure. To support the mining operation, Base has constructed several additional dedicated infrastructure elements.

In late 2013, construction of a purpose built marine facility was completed at Likoni, south of Mombasa. The fully owned and operated port facility includes a storage shed capable of holding in excess of 80,000 tonnes and a 1,000 tonnes per hour ship loader. The loading facility provides access to the existing shipping channel associated with the main Mombasa port, which is the primary terminal for East Africa. Containerised rutile and zircon are exported through the main Mombasa container port.

Base also completed construction of an eight kilometre paved access road, which connects the mine site to the main coastal highway running between Mombasa and northern Tanzania. The bulk product is hauled 50 kilometres by truck from Kwale along this route to the port facility at Likoni.

Water is a key input for mineral sands projects. Supply for the Kwale Operation comes from the dedicated Mukurumudzi Dam constructed by Base and completed in the second half of 2013, providing 8.6 gigalitres of water storage. The south coast of Kenya enjoys two wet seasons annually. In addition, a borefield accessing a local aquifer has been constructed to provide a supplementary supply in the event of prolonged drought conditions.

Power for Kwale is supplied from the Kenyan grid via a Base-constructed, 132kVA power line from the Galu substation just 16 kilometres from the Kwale Operations site. The power line was commissioned in 2013 and the reliability of the supply has proved to be excellent with negligible downtime from outages or voltage dips.

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