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Base to acquire Toliara Sands project in Madagascar, raises US$100 mln

Published: 08:29 19 Dec 2017 GMT

Mineral sands
Demand for Mineral sands are increasing as markets continue to recover

Base Resources Limited (LON:BSE) is to acquire the Toliara Sands project in Madagascar in a deal that will be funded by a US$100 mln placing and entitlement offer.

Toliara has a large, high grade resource of 857mln tonnes at 6.2% heavy minerals, with 612mln tonnes in the measured and indicated categories at 6.7% heavy minerals.

READ: Base Resources “in a robust position" and "well-placed to take advantage of an improving commodity market"

Base will pay US$75 mln for an 85% interest, acquiring the final 15% on the completion of certain milestones.

Crucially, key permits are in place, including mining lease and environmental approval. An established legislated land acquisition process is underway and scheduled for completion in mid-2018.

Mining trials and processing test-work completed to date support a simple dry mining operation and technically straight forward process flowsheet.

This means that operational simplicity, high grade and scale can be expected to produce a robust project with a first quartile revenue-to-cash cost ratio.

The plan is to put Toliara Sands into production in mid-2021.

READ: Base Resources sees continued improvement in zircon markets; lifts output guidance for 2018

Broker RFC Ambrian called the deal “fantastic”.

“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,” said the broker.

“We see no reason for the stock to trade at a discount to the sector any longer.”

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