The net present value of Toliara was estimated at US$671mln in the study, which was better than expected said Peel Hunt.
“Capex looks in line with our estimates but margins look stronger – largely due to better quality ilmenite product suite than we had baked into our present estimates,” said the broker.
Based on the existing resource, the PFS estimated a mine life of 33 years producing 806,000 tonnes of ilmenite, 54,000t zircon and 8,000t of rutile each year.
Annual revenues would be US$254mln and net profits of US$110m, though Base added the study assumed only 46% of the existing Ranobe deposit being utilised, which leaves significant development potential.
Key mineral sands
Tim Carstens, managing director, said the PFS confirmed that Toliara is one of the best mineral sands development opportunities in the world.
Costs of stage one construction for a 13Mtpa procession operations are estimated at US$439mln US$67mln to boost processing production to 19Mtpa.
Peel Hunt added that management had mentioned a US$100mln equity raise to help fund the capital cost.
Colin Bwye, operations and development director, said work had already started on the Definitive Feasibility Study, which it aims to complete by the end of 2019.
A final investment decision will be made in the first quarter of next year with Toliara potentially in operation by the end of 2021.
Shares rose 2% to 14.5p.