Base Resources - June Quarterly Activities Report

Base Resources - June Quarterly Activities Report

Mineral sands miner Base Resources (ASX: BSE; AIM: BSE) has signed off on a record-breaking June quarter and reported a $US24 million reduction in net debt to $US98.5 million. Improving zircon markets, stabilising ilmenite prices and a positive outlook for rutile, coupled with a strong performance from Base's Kwale operation in Kenya, delivered a 2.9 ratio of unit revenue to cost of goods sold, up from 2.3 in the March quarter and 2.0 a year ago.


HIGHLIGHTS

  • Record quarterly revenue with continued improvement in ilmenite and zircon prices.
  • Record revenue to cost of sales ratio of 2.9.
  • Net debt reduced by US$24.0 million to US$98.5 million.
  • No lost time injuries.
  • Production for financial year 2017 consistent with guidance for all products.
  • Board approval of Kwale Phase 2 mine optimisation project to deliver enhanced economics.
  • Production guidance for financial year 2018:
    • Rutile – 88,000 to 94,000 tonnes.
    • Ilmenite – 400,000 to 430,000 tonnes.
    • Zircon – 32,000 to 37,000 tonnes.
    • Zircon contained in zircon low grade – 1,500 to 2,500 tonnes.

African mineral sands producer, Base Resources Limited (ASX & AIM: BSE) (“Base Resources” or the “Company”) is pleased to provide a quarterly corporate and operational update for its Kwale Mineral Sands Operations (“Kwale Operations”) in Kenya. The quarter was characterised by continuing improvement in zircon markets, stabilising ilmenite prices and a positive outlook for rutile. The continued strong performance of Kwale Operations has reduced net debt by a further US$24.0 million in the quarter

Mined tonnage increased slightly to 3.0 million tonnes (“Mt”) from 2.7Mt in the previous quarter at an average mining rate of 1,516 tonnes per hour (“ph”). Mined grade increased from 6.7% Heavy Mineral (“HM”) to 8.4% as mining continued in the same high-grade area of the Central Dune mined towards the end of the March quarter.

Hydraulic mining operations progressed according to plan, consistently achieving production rates above the design rate of 400tph. This operation will be upgraded to 800tph during the September quarter thereby further reducing reliance on dozer mining operations with consequent savings in operating costs.

With the benefit of circuit modifications implemented during the March quarter, HM recovery in the wet concentrator plant (“WCP”) remained above target, notwithstanding the increase in mining rates in the June quarter.

Heavy mineral concentrate (“HMC”) production from the WCP increased from 159.4 thousand tonnes (“kt”) to 232.6kt due to higher mined tonnage and grade. HMC stocks at quarter end increased from 43.5kt to 83.6kt. Concentrator availability during the quarter was high at 90%, compared to 88% in the prior quarter. HMC inventory is being built up to enable uninterrupted Mineral Separation Plant (“MSP”) feed during implementation of the Kwale Phase 2 Project.

The tailings storage facility (“TSF”) sand wall stacking, lining and slimes deposition continued according to plan, with the final wall lift now underway. Once this lift is complete, sand stacking will move to the mined-out area of the Central Dune representing the start of rehabilitation in this section. Rehabilitation of the TSF outer wall commenced during the quarter, with promising vegetation growth achieved.

Good rains were received during the quarter, resulting in the Mukurumudzi Dam reaching its full capacity of 8.6GL and spilling in May. Regulatory approval was received to increase borefield abstraction from 5,280 to 9,060 cubic meters per day by increasing production from existing bores and drilling two additional bores, with this additional water supply being required to satisfy the increased demands of the Kwale Phase 2 Project.

The MSP achieved an average feed rate of 92tph for the quarter and availability increased slightly to 96% (with a total of 192.4kt of HMC processed (186.8kt last quarter).

Rutile production was slightly lower at 22.8kt (23.1kt last quarter), despite the increased MSP feed, due to lower rutile content in the mineral assemblage. Rutile recovery remained steady at 98%.

Ilmenite production increased to 119.4kt (112.4kt last quarter) due to higher ilmenite content in the mineral assemblage. Average ilmenite recoveries for the quarter remained at 101%[2].

[1] Zircon low grade tonnes contained in concentrate, equivalent to approximately 70-80% of the value of primary zircon.
[2] The presence of altered ilmenite species that are not defined as either “rutile” or “ilmenite” in the Resource but are recovered in the production of both, results in calculated recoveries above 100% being achievable for both products.


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