FROM THE BROKING DESK
Base Resources*† (LON:BSE) has released its full FY17 results. Jim Taylor has already swooped on this one, and has put out Base Resources — FY17 Financial Report, 29 August 2017. As a quick summary, the results highlighted the benefit that stronger prices have had on the company’s cashflow and net debt position. With the retirement of the Taurus Debt Facility, and with it one of the cash sweeps, the company’s cash flexibility has materially improved.
Revenue increased 28% due to both higher prices and volumes, while net debt dropped US$53m to US$99m by period end. Base continues to offer high-quality exposure to a strong market for mineral sands. We maintained our Buy rating and target price of A$0.49.
Not altogether coincidentally, we have Base MD Tim Carstens here with us in London on Thursday and Friday this week. Spots are pretty limited now, but let us know if you’d like to see or speak to Tim and we’ll try and squeeze you in.
Elsewhere, Peak Resources†† (ASX:PEK) has updated the market on optimisation work completed at its Ngualla Rare Earths Project in Tanzania. This work was done after the company released a bankable feasibility study on the project in April 2017. For those of you who don’t know the Peak story, the rare earths in question are neodymium-praseodymium oxide (NdPr), ie, the metals that are used in electric motors, making Peak an important player in the forthcoming electric car revolution.
Its release highlights that EBITDA can be improved by 20%, or US$29m, to US$174m pa. Furthermore, unit operating costs can be reduced by 5.7% to US$32.24/kg NdPr, with post-tax and royalties NPV10 and IRR increasing from US$445m and 21% to US$579m and 24%. Annual production is set to increase 16% to 2,810tpa.
Managing Director Darren Townsend said: “This is an outstanding outcome by the Peak team that drives Ngualla’s already low unit costs even lower, and delivers a large increase in operating margin, reinforcing Ngualla as the leading development project for NdPr. The more than 100% increase in NdPr prices this year, combined with these significant operating improvements, support our main focus now, which is to progress a mining licence application in order to fast track Ngualla towards production in time for the increased demand for NdPr from electric vehicles.”
It was also good to hear some more from KEFI Minerals† (LON:KEFI). This came in the form of an update on progress at its 1.0Moz Tulu Kapi Gold Project in Ethiopia. Financing plans are continuing to move ahead, with Oryx Management (which was mandated in July) compiling the documentation required for the planned US$135m bond issue that will lease finance the project’s infrastructure. The mining licence is being transferred to the joint-venture company in which KEFI will own 75-80%, and the government the remaining 20-25%. Progress was also reported towards calculating the final compensation amounts to be awarded under the resettlement plan following updated property surveys and associated data. This all bodes well for the planned completion of the financing later this year and for the commencement of construction early in 2018.