viewBase Resources Limited

Base Resources makes smooth transition at Kwale


Grades improved throughout the quarter as operations moved further into the orebody.

Base Resources Limited - Base Resources makes smooth transition at Kwale

Quick facts: Base Resources Limited

Price: 11.25 GBX

Market: AIM
Market Cap: £131.81 m
  • Minerals sands miner in Kenya

  • Working on a new project in Madagascar on similar size to Kenya deposit

  • Ilmenite used as a whitener in paint and toothpaste

What it owns


In Kenya, during Kwale’s 13-year mine life, Base expects to mine and process 140mt of ore and produce 4.6mt of the final product for sale.


In Madagascar, Toliara’s Ranobe deposit contains a JORC 2012 compliant Mineral Resource of 1,293Mt at 5.1% heavy mineral (HM), with 794Mt at 5.8% HM in the Measured and Indicated categories, sufficient to support a 40+ year mine life at a scale similar to Kwale.

How it’s doing

In June, Base Resources Limited (LON:BSE) reported production at Kwale came in in line with guidance at 92,393 tonnes of rutile, 402,698 tonnes of ilmenite and 31,941 tonnes of zircon, and the mining rate increased by 57% to 17.8mln tonnes per year.

There was a 22% increase in the average rutile price and a 28% increase in the zircon price.

This helped boost revenue by 5% to US$209.5mln.

Underlying profits [EBITDA] increased 4% to US$113.5mln and net profits after tax by 15% to US$39.2mln.

Net cash at the end of June stood at US$19.2mln.

In October, Base highlighted a successful ramp-up of mining and processing operations as it released an activities update for the three months ended 30 September.

The company noted Kwale advanced at the South Dune orebody following a transition from a depleted orebody, Central Dune, at the end of June.

As scheduled, mining began on the northern fringes of South Dune and, although they started in lower grades this improved throughout the quarter as operations moved further into the orebody.

Mining rates in the quarter were equivalent to 19.6mln tonnes per year, above the targeted 18mln tonne rate.

It also highlighted supportive market forces with ongoing supply constraints elsewhere factoring into stronger rutile and ilmenite prices.

Toliara meanwhile has seen “sound progress” on all workstreams and a definitive feasibility study remains on-schedule to complete in December.

However, November saw the government in Madagascar suspend all on-the-ground activity at Toliara while fiscal terms are agreed.

What the broker says

In October, broker Numis said production and cash flow were lower due to grade this quarter but guidance was reiterated and we don’t see grade as a cause for particular concern based on the mine plan.

An operational positive from the quarter was the 19.8Mtpa run rate achieved, which suggests that Base could push production as it moves into higher-grade areas.

Base remains significantly undervalued relative to its free cash flow added the broker, which has a buy rating and 30p target.

Inflexion points

  • Kwale Mine Life extension
  • De-risking of the Toliara project, with the feasibility study expected by the end of calendar 2019
  • Lifting of suspension at Toliara 
  • Strong demand currently for titanium feedstocks

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