Base Resources Ltd (LON:BSE) has issued a definitive feasibility study (DFS) for its Toliara Project in south-west Madagascar that it says further burnishes the credentials of the world-class mineral sands discovery.
A key development milestone, the DFS has set out formally the economic potential of mining ilmenite, together with zircon and rutile, from the deposit and was essentially consistent with an earlier preliminary assessment of the area.
WATCH: Full interview: Base Resources DFS reinforces Toliara’s status as world-class mineral sands development
So, the post-tax pre-debt net present value of a fully constructed mine was estimated to be US$652mln using a 10% discount rate.
The capital investment required for the initial development at Toliara was put at US$442mln to get to a 13mln tonnes a year processing operation. It is expected to cost an additional US$69mln to push on to 19mln tonnes of output.
The ore reserve was confirmed at 586mln tonnes grading 6.5% heavy minerals for a 33-year mine life.
The report prepared by Base expects separation plant recoveries of 94.6% ilmenite, 79.4% zircon and 58.4% rutile with annual production seen in the order of 780,000 tonnes (kt) of ilmenite, 53kt zircon and 7kt rutile.
From this Base is expected to generate annual revenues of US$248.2mln, underlying earnings (EBITDA) of US$164.3mln and free cash flow of US$132.4mln.
“Building on the PFS outcomes, our project development team carried out a rigorous process to further define all aspects of the Toliara Project,” said Colin Bwye, Base Resources' operations and development director.
“This included receiving firm tender submissions and project specific budget quotations for virtually all major capital works, geotechnical and hydrogeological investigation of the region, reviewing timeframes, and extensive consultation with experts and a number of third-party peer reviews. As a result of this, we are confident with the project’s capital and operating metrics,” he added.
The deposit is 40km north of the regional town and port of Toliara.