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In the news: Base Resources, KEFI Minerals & Weatherly International

Published: 13:01 19 Jan 2018 GMT

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FROM THE BROKING DESK

Base Resources* has announced the successful close of the retail component of its entitlement offering, with an approximate 70% participation, raising A$7.7m. This follows on from the strong support it received for the institutional entitlement offer and placing component, which was led and underwritten by RFC Ambrian. This was completed earlier in January and secured A$89m at the offer price of A$0.255/share (around £0.165).

The company agreed to acquire an 85% interest in the Toliara Sands Project in Madagascar for US$75m in December 2017. The remaining 15% can be acquired for US$17m, payable on achieving certain milestones. With the completion of the capital raise, Base will now finalise the acquisition, which is expected to close next week.

The Toliara Sands Project is already permitted, and is underpinned by the Ranobe deposit. This deposit has a JORC 2012 Resource of 857Mt at 6.2% heavy mineral (HM), including 612Mt at 6.7% HM in the Measured and Indicated categories. By our calculations that makes it one of the largest and highest-grade heavy mineral sands development projects anywhere in the world. We estimate the NPV10 of Toliara at US$390m, net of milestone payments.

Much good work has already been completed by the previous owner World Titanium Resources. Base’s development plan is to complete a full study phase ahead of a decision to proceed to construction in 2HCY19. This timetable could see the Toliara Sands Project in production in mid-2021.

We think this is the best development asset in the space with the right management team at the right time in the cycle. This acquisition should be transformational for Base, giving it the opportunity to enhance its already demonstrated development expertise at the Kwale Project in Kenya. Unlike much of its peer group, Base will enjoy the benefits of asset and jurisdictional diversification and scale. Mine life, projected for at least 30 years at Toliara, will no longer be an issue for the company; we see no reason for the stock to trade at a discount to the sector any longer.

We have published two pieces on Base in the last month or so. The first one looking at the Toliara acquisition can be seen here, while last week’s piece on its latest quarterly update can be viewed here.

 

On reports, we had some issues with our website yesterday. This meant that our piece on KEFI Minerals’* latest release was not fully available. It can now be accessed here

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