Base Resources Limited - Quarterly Activities Report - June 2024
AIM and Media Release
Quarterly Activities Report –
African mineral sands producer,
Corporate
--Base Resources reached agreement with, a US-based uranium and critical minerals producer, for a proposed combination to create a global critical minerals business. -- Implementation is well underway, with a Scheme Booklet for the proposed combination expected to be despatched to shareholders in early August and completion targeted for early October. Energy Fuels
Kwale Operations
-- Mining operations were split 50/50 between North Dune and Bumamani with rehabilitation activities on South Dune nearing completion. -- FY24 production guidance was achieved with 159kt ilmenite, 41kt rutile and 17kt zircon produced. -- Mine closure planning continued with employee, government and community engagement progressing positively.
-- In-principle agreement on the key fiscal terms that will apply to the wholeToliara Project (i.e. both mineral sands and monazite) considered to have been reached with theGovernment of Madagascar , although these remain subject to entry of binding documentation. -- Engagement with the Government is now focused on finalising the binding MoU that will give effect to the in-principle agreement and other key matters to facilitate timely project progression.
PROPOSED COMBINATION WITH ENERGY FUELS
Following announcement of the transaction on
With the Proposed Combination to be effected by scheme of arrangement ( Scheme ), a Scheme Booklet is being prepared and is well advanced, targeted for dispatch in early August following the First Court Hearing. The Scheme Booklet will contain key information about the Proposed Combination and the Scheme, an Independent Expert’s Report and will formally convene the meeting of shareholders to consider the Scheme. The current indicative timetable for the Proposed Combination is below .
Base Resources Directors continue to unanimously recommend that shareholders vote in favour of the Proposed Combination in the absence of a superior proposal and subject to the Independent Expert concluding, and continuing to conclude, that the Scheme is in the best interests of
____________________________________________________________________________ |Event |Indicative timing| |__________________________________________________________|_________________| |First Court Hearing and despatch of Scheme Booklet to Base|Early August | |Resources Shareholders | | |__________________________________________________________|_________________| |Scheme Meeting |Early September | |__________________________________________________________|_________________| |Effective Date |Mid-September | |__________________________________________________________|_________________| |Record dates for Scheme and Special Dividend |Mid-September | |__________________________________________________________|_________________| |Special Dividend Payment Date and Implementation Date |Early October | |__________________________________________________________|_________________|
KWALE OPERATIONS
Operational performance
SUMMARY BY FY23 FY24 FY23 FY24 QUARTER JUN SEP DEC MAR JUN MAR JUN SEP DEC MAR Mining(million tonnes) US$ per tonne Ore mined 4.1 4.1 3.9 3.7 3.5 Sales revenue$695 $1,029 $589 $685 $655 HM % 3.0 2.5 2.2 2.4 2.4 Operating costs$240 $343 $317 $373 $257 VHM % 2.3 1.9 1.7 1.9 1.9 Cost of goods$263 $442 $315 $403 $335 sold Revenue: Cost 2.6 2.3 1.9 1.7 2.0 ratio Production(thousand tonnes) Sales (thousand tonnes) Ilmenite 55.5 38.8 38.9 33.5 48.2 Ilmenite 74.6 11.1 63.7 20.1 44.2 Rutile 13.8 9.6 9.3 9.0 13.4 Rutile 19.6 5.5 15.0 3.9 10.3 Zircon 5.5 3.8 3.8 3.7 6.0 Zircon 6.6 3.9 3.3 4.5 5.5 Low grade 3.4 2.0 2.2 2.3 3.6 Low grade 3.2 2.0 2.6 1.0 3.5 products1 products1
[ Note (1) : Low grade products are a combination of low-grade zircon and low-grade rutile which are sold separately at a discount to standard grade products.]
Mining at both Bumamani and North Dune pit P199 continued during the quarter. Due to the nationwide civil unrest and protests against the Government of Kenya’s 2024 Finance Bill, measures were put in place to ensure employee safety when travelling to and from work, which resulted in some interruptions to operations late in the quarter. These interruptions, together with mining remnant areas of P199, resulted in lower tonnage mined for the quarter. During July, one of the two mining units operating on North Dune pit P199 will transition to pit P200, which is the final mining block before the closure of Kwale Operations.
The heavy mineral ( HM ) grade of ore mined in the quarter was in line with last quarter at 2.4%. Concentrator recoveries improved due to coarser mineral from Bumamani, resulting in an increase in heavy mineral concentrate ( HMC ) production to 77.2kt (last quarter: 73.3kt). The mineral separation plant ( MSP ) continued to be operated on a campaign basis to ensure optimum product recoveries were maintained, with extended shuts between campaigns to allow HMC stocks to rebuild. HMC fed to the MSP was higher in the quarter at 94.2kt (last quarter: 63.0kt).
Deposition of sand tails into the mined-out Central Dune and P199 pit on North Dune continued in the quarter. To aid water retention and subsequent rehabilitation, the sand tails are capped with a 4m to 6m co-disposed slimes/sand layer. Rehabilitation activities on the Central Dune, South Dune and North Dune proceeded to plan, with rehabilitation activities for the entire South Dune mining area largely completed by quarter end.
Bulk shipping operations at the Company’s Likoni export facility continued to run smoothly with 50kt of bulk ilmenite and rutile dispatched (last quarter: 20kt). Included within the 50kt of bulk shipping for the quarter, was 33kt of a 54kt ilmenite shipment where loading took place over quarter end, with the remaining 21kt loaded in July. Containerised shipments of rutile and zircon were exported through the Mombasa Port. Despite lower production levels for the remainder of Kwale Operations’ mine life, the Company plans to continue bulk shipments of ilmenite (up to 54kt lots) and rutile (between 5-10kt lots), which will result in significant sales volatility between quarters, as illustrated by the sales volumes over recent quarters.
Total cash operating costs of
Cost of goods sold decreased to
Production guidance
Total Kwale Operations production for the 2024 financial year ( FY24 ) was at the upper end of the Company’s previously disclosed guidance range for rutile and ilmenite and slightly above the guidance range for zircon. Total production for FY24, together with the Company’s production guidance for FY24 and the 2025 financial year ( FY25 ), is set out in the table below. The production guidance for FY25 is unchanged from that previously announced 2 .
FY24 Guidance Range FY25 PRODUCTION GUIDANCE(tonnes) Updated Q3 2024 Achieved To end of mine life Rutile 38,000 to 42,000 41,317 17,000 to 19,000 Ilmenite 145,000 to 160,000 159,395 55,000 to 63,000 Zircon 15,000 to 17,000 17,354 5,500 to 7,000
[
Note (2)
: Refer to Base Resources’ announcement on
Transition to closure
Mining at Kwale Operations is planned to end in
During the quarter, the Government inaugurated and convened a
MARKETING
Following a solid March quarter, demand for all products remained firm through the June quarter but sentiment became more cautious as the quarter progressed due to economic conditions remaining more subdued than anticipated. Base Resources’ sales volumes for the quarter were in line with its sales plan while pricing outcomes tracked slightly better than expected.
Demand for ilmenite in the June quarter continued to be strong as Chinese pigment plants operated at high levels of production, absorbing increasing domestic ilmenite supply and maintaining ilmenite price stability.
Chinese pigment exports were elevated throughout the June quarter as customers stocked up ahead of new
Western pigment producers have reported improved demand for the March and June quarters.
However, much of the demand recovery is thought to be from re-stocking by pigment consumers who had been operating with minimal inventory in the lead up to the end of the 2023 calendar year.
It is uncertain how much of the demand recovery has been attributed to underlying pigment consumption but the ongoing subdued economic conditions – particularly sluggish housing markets – suggest that underlying pigment demand may currently remain constrained.
While rising western pigment production rates have increased consumption of high-grade feedstock (including rutile) through the March and June quarters, the overhang of high-grade feedstock inventory from the back end of 2023 has not been fully absorbed and the rutile market has remained under pressure.
A renewed cautious buying approach by pigment producers, combined with the recent recommencement of rutile mining in
Re-stocking of zircon by major users through the March quarter supported firm demand for zircon for June quarter contracts.
This resulted in a slight up-lift in prices for the quarter, however, the ongoing subdued economic conditions, particularly in
SUSTAINABILITY
Health and safety
There were no lost time injuries during the quarter.
With no lost time injuries in the past 12 months,
Community and environment – Kwale Operations
Engagement with communities on the impact of mine closure continued throughout the quarter with increasing focus on post-mining land use options.
The Company also continued to invest in community programs albeit on a reduced scale.
Construction of the Government funded ginnery progressed at the farmers cooperative established by the Company (the
An emergency response drill and associated information sessions relating to the
Consistent rainfall for the quarter allowed rehabilitation and restoration work across the mine site to continue at pace.
Over 40,000 trees were planted during the quarter, bringing the FY24 total to 110,000.
Seasonal ecological monitoring was completed in partnership with the
Community and environment –
All community training programs and social infrastructure projects remain on hold while the Toliara Project’s on-ground activities are suspended.
BUSINESS DEVELOPMENT
As was anticipated, following the passing of the legislative assembly elections on
Engagement with the Government is now focused on agreeing the terms of a binding memorandum of understanding (
MoU
) that records the terms agreed in-principle, a draft of which is well advanced.
Lifting of the Toliara Project’s on-ground suspension is expected to occur upon entry into the MoU, which
Once fiscal terms have been recorded in binding arrangements and the suspension has been lifted,
-- completion of the necessary land acquisitions; -- finalisation of funding arrangements; -- ratification of the investment agreement and LGIM eligibility certification; and -- entry into offtake agreements and major construction contracts.
Total expenditure on the
Extensional exploration –
Following the Government of Kenya’s lifting of the moratorium on issuance of mineral rights in
Expenditure on exploration activities during the quarter in
CORPORATE
As at
The Company currently has the following securities on issue:
-- 1,178,011,850 fully paid ordinary shares. -- 70,275,931 performance rights issued pursuant to the terms of the Base Resources Long Term Incentive Plan, comprising:
o 6,599,881 vested performance rights, which remain subject to exercise3; and o 63,676,050 unvested performance rights subject to performance testing in accordance with their terms of issue.
[ Note (3) : Vested performance rights have a nil cash exercise price. Unless exercised beforehand, these rights expire five years after vesting.]
Forward looking statements
Certain statements in or in connection with this announcement contain or comprise forward looking statements.
Such statements may include, but are not limited to, statements with regard to future production and grades, capital cost, capacity, sales projections and financial performance and may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”.
By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside Base Resources’ control.
Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in product prices and exchange rates and business and operational risk management.
Subject to any continuing obligations under applicable law or relevant stock exchange listing rules,
ENDS.
For further information contact:
______________________________________________________________ |Australian Media Relations |UK Media Relations | |________________________________|_____________________________| |Sodali & Co |Tavistock Communications | |________________________________|_____________________________| |Cameron Gilenko and Michael Weir|Jos Simson andGareth Tredway | |________________________________|_____________________________| |Tel: +61 8 6160 4900 |Tel: +44 207 920 3150 | |________________________________|_____________________________|
This release has been authorised by
the Board of
About
PRINCIPAL & REGISTERED OFFICE
Level 3,
Email:
info@baseresources.com.au
Phone: +61 8 9413 7400
Fax: +61 8 9322 8912
NOMINATED ADVISER & JOINT BROKER
Phone: +44 20 7523 8000
JOINT BROKER
Berenberg
Phone: +44 20 3207 7800
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