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Base Resources Limited (ASX: BSE) is based out of West Perth, Australia and engaged in the development, production and sale of mineral sands including ilmenite, rutile and zircon in Africa. The company’s flagship property is the wholly-owned Kwale Mineral Sands project situated in Kenya.

On March 21st, 2019, the company announced the results of the Pre-Feasibility Study (PFS) conducted for its Toliara Project, acquired in January 2018, in Madagascar with the support of few independent consultants including Mineral Technologies, Lycopodium, IHC Robbins, Aurecon and PRDW. The PFS results further confirmed the company’s view of the project being a world-class mineral sands asset and estimated a post-tax/pre-debt (real) NPV of USD 671 million and a sector leading average revenue to cost ratio of 3.06 over the 33-year initial mine life.

For the stage I, a capex cost of USD 439 million is estimated to establish a 13Mtpa mining processing operation while for the stage II, a capex cost of USD 67 million will be required to increase the operation to 19Mtpa. The mineral resource has been estimated at 588Mt @ 6.6% heavy mineral derived from existing measured & indicated resources.

Base Resources is currently progressing the Definitive Feasibility Study (DFS) which is expected to be completed by 2019-end, ahead of a planned final investment decision to be finalised in the first quarter of 2020. If the events go as planned, the project will be fully operationalized by the end of 2021. In full production, the Toliara Project is estimated to export over 860kt of product, generating around USD 250 million of revenue (62% ilmenite, 34% zircon and 4% rutile), and an NPAT of USD 110 million every year.

Moreover, the project’s annual averages excluding first and last partial operating years were also calculated and included an estimated operating cost of USD 77 million or USD 82 million inclusive of 2% royalties and an estimated non-operating cost of USD 7 million (including community, external affairs, marketing, etc.). The EBITDA is expected to be USD 165 million, NPAT at USD 110 million and the free cash flow at USD 133 million.

The project is sure to bring significant stimulus to the Malagasy economy with an estimated construction workforce peaking at 1,600.

For the half-year ended December 31st, 2018, Base Resources reported steady production including 49,630 tonnes of rutile, 226,730 tonnes of ilmenite and 17,935 tonnes of zircon with USD 2 million of investments into the community and environmental programs. The revenue for the period increased by 13% to USD 102.2 million and the EBITDA improved by 7% to USD 57.5 million. Moreover, the NPAT stood at USD 17.4 million, up 4% on the prior corresponding period. The company remained debt free as of December 31st, 2018 and recorded revenue to cost ratio of 2.7:1. The prices of rutile and zircon also remained strong through the half-year.

Base Resources has a market cap of AUD 361.65 million with ~ 1.17 billion outstanding shares. The BSE stock price closed at AUD 0.310 with ~ 5.33 million shares traded at the end of the market trading on March 21st, 2019.


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