AIM and Media Release
3 September 2021
BASE RESOURCES
LIMITED
Bumamani PFS supports extension of Kwale mine life to mid-2024
Key outcomes
- The Bumamani PFS concludes that it is economically feasible to
mine higher-grade subsets of the Bumamani and Kwale North Dune
deposits concurrently with the Kwale South Dune deposit, which
would extend the mine life of Kwale Operations by 7.5 months to
July 2024.
- Estimated 11.4 million tonnes of material to be mined to
produce an estimated 34,000 tonnes of rutile, 113,000 tonnes of
ilmenite and 13,000 tonnes of zircon.
- The Bumamani PFS is a significant further forward step in
achieving Base Resources’ goal of extending the mine life at Kwale,
providing additional time to develop further opportunities within
Kenya whilst maintaining
operational continuity.
- A definitive feasibility study is now underway to improve the
accuracy of project estimates.
African mineral sands producer and developer, Base Resources
Limited (ASX & AIM: BSE) (Base Resources) has
completed a pre-feasibility study on the potential for mining
higher grade subsets of the Bumamani and Kwale North Dune deposits
(Bumamani PFS) to extend mine life at its 100% owned and
operated mineral sands operations in Kwale County, Kenya (Kwale Operations).
The Bumamani PFS has concluded that it is economically feasible
to mine smaller, higher-grade subsets of the Bumamani deposit and
the Kwale North Dune deposit (referred to as P199)
concurrently with the Kwale South Dune deposit, which would extend
the mine life of Kwale Operations by 7.5 months to July 2024. This extension would provide
additional time for Base Resources to develop further opportunities
within Kenya, and the region,
while maintaining operational continuity. A definitive
feasibility study is now underway to improve the accuracy of
project estimates.
The Bumamani PFS was undertaken after an earlier pre-feasibility
study on mining significantly larger subsets of the North Dune and
Bumamani deposits concluded this was not viable due to the low
combined heavy mineral grade, high upfront capital costs, elevated
slimes content and associated tailings disposal
costs1.
The North Dune Mineral Resources are estimated at 194 million
tonnes (Mt) (119 Mt Measured,
73 Mt Indicated and 2 Mt Inferred) at an average heavy mineral
(HM) grade of 1.5% for 2.9 Mt of contained HM, and the
Bumamani Mineral Resources are estimated at 5.9 Mt (3.0 Mt
Measured, 2.6 Mt Indicated and 0.3 Mt Inferred) at an average HM
grade of 1.9% for 0.115 Mt of
contained HM. The subsets of these Mineral Resource estimates
considered for the Bumamani PFS totalled 11.4 Mt of material at an
average HM grade of 2.3% for 0.26Mt of contained HM. Of this
11.4 Mt of material, 60% is categorised as Measured and 40% as
Indicated.
The Bumamani and North Dune deposits are situated within Kwale
Prospecting Licence PL/2018/0119 (PL119), but outside
Special Mining Lease 23 (SML 23), which lies within PL119 –
see Figure 1, which is included in the full PDF version of this
announcement, available from Base Resources’ website:
https://baseresources.com.au/investors/ announcements/. The
Bumamani PFS assumes that mining tenure will be obtained by way of
a further extension of SML 23 to incorporate the Bumamani deposit
and the P199 section and that a royalty of 5% would be payable to
the Government of Kenya.
Capital cost is estimated at US$13.6
million for the acquisition of land and the additional mine
services and infrastructure that will be required. Mining
operations would use existing hydraulic mining units relocated from
the South Dune and the mined material would be processed through
Kwale Operations’ existing concentrator and mineral separation
plants.
To maximise mining rates and better manage tailings, it is
envisaged that the Bumamani deposit and the P199 section would be
mined concurrently with the South Dune deposit, commencing from
early 2023, with all deposits then being depleted at approximately
the same time in July 2024.
The majority of fine tailings would be accommodated within Kwale
Operations’ current tailings storage facility while coarse tailings
would be used for land rehabilitation across Kwale Operations.
It is anticipated that approximately 25% of the fine tailings
from all mining would be co-disposed with coarse tailings to create
a water retention layer as part of land rehabilitation.
Set out below are the key outcomes and other key assumptions for
the Bumamani PFS.
Upfront
capital |
US$
millions |
13.6 |
Total
rutile produced |
tonnes |
34,000 |
Total
ilmenite produced |
tonnes |
113,000 |
Total
zircon produced |
tonnes |
13,000 |
Mining -
Operating costs inclusive of 5% royalty |
US/t
mined |
4.83* |
Production - Operating costs inclusive of 5% royalty |
US$/t
produced |
261* |
Rutile
price – average over 2023/2024 |
US$/t
FOB |
$1,400 |
Ilmenite
price – average over 2023/2024 |
US$/t
FOB |
$183 |
Zircon
price – average over 2023/2024 |
US$/t
FOB |
$1,775 |
*Average operating costs for Kwale Operations from early 2023
to July 2024 following commencement
of mining at the Bumamani deposit and assuming concurrent
mining with the Kwale South deposit.
Operating cost per tonne mined is consistent with current Kwale
Operations performance but operating costs per tonne produced will
be higher as a consequence of the lower heavy mineral grade
resulting in lower production. On the basis of the above
outcomes, and subject to the above assumptions, the Bumamani PFS
has forecast net post-tax cash flows totalling US$16.5 million.
Assumed average product prices were derived from Base Resources’
internal price forecasts, determined based on supply/demand
analysis and taking into account relevant data from independent
industry consultants, TZMI, and are not materially different to
TZMI’s average forecast prices over the same period.
Following the completion of an Environmental and Social Impact
Assessment, Base Resources’ wholly owned Kenyan subsidiary, Base
Titanium Limited, has now received an Environmental Impact
Assessment Licence from the National Environment Management
Authority to extend mining activity into the Bumamani and P199
deposits once it has secured mining tenure over these areas.
A key risk identified for this Kwale mine life extension
opportunity is the ability to secure mining tenure for the Bumamani
and P199 deposits on reasonable terms by mid-2022, either by way of
a variation to extend SML 23 or the grant of a new mining licence
under the Kenyan Mining Act 2016 subject to an equivalent fiscal
regime to the regime applicable to SML 23. Another key risk
is the ability to complete the necessary land acquisitions at
reasonable prices and in line with the proposed mine schedule.
Failure to achieve either of these outcomes could impact the
viability of this extension opportunity. While plans have
been developed to actively manage and mitigate these issues to the
extent possible, as they require engagement with and action by
third parties, residual risk remains.
[Note (1): For further
information, refer to Base Resources’ market announcement on
1 April 2021 “Kwale North Dune PFS
outcomes” available at
https://baseresources.com.au/investors/announcements/.]
Mineral Resources estimates and
production and forecast financial information
The information included in this announcement about the
estimated Mineral Resources for the Kwale North Dune and Bumamani
deposits has been extracted from Base Resources’ ASX announcement
titled “Updated Kwale North Dune and maiden Bumamani Mineral
Resource estimates” dated 19 February
2021, which is available at
https://baseresources.com.au/investors/announcements/. Base
Resources confirms that it is not aware of any new information or
data that materially affects the information included in this
announcement and all material assumptions and technical parameters
underpinning the estimate continue to apply and have not materially
changed.
The information included in this announcement about the subsets
of the estimated Mineral Resources for the Kwale North Dune and
Bumamani deposits is based on, and fairly represents, information
and supporting documentation prepared by Mr. Scott Carruthers. Mr. Carruthers is a
Member of The Australasian Institute of Mining and Metallurgy. Mr.
Carruthers is employed by Base Resources, he holds equity
securities in Base Resources, and is entitled to participate in
Base Resources’ long-term incentive plan and receive equity
securities under that plan. Details about that plan are
included in Base Resources’ 2021 Annual Report. Mr.
Carruthers has sufficient experience that is relevant to the style
of mineralisation and type of deposits under consideration and to
the activity which he is undertaking to qualify as Competent
Persons as defined in the JORC Code and is considered a Qualified
Person for the purposes of the AIM Rules for Companies. Mr.
Carruthers has reviewed this announcement and consent to the
inclusion in this announcement of the information about the subsets
of the estimated Mineral Resources for the Kwale North Dune and
Bumamani deposits in the form and context in which the relevant
information appears.
The estimated Mineral Resources underpinning the production and
forecast financial information included in this announcement have
been prepared by Competent Persons in accordance with the JORC
Code.
Forward Looking Statements
The Bumamani PFS is based on technical, economic and other
conditions and information as at the date of this announcement,
which may be subject to change. Accordingly, the information
and conclusions presented in this announcement should be viewed in
this light. Information in this announcement should also be
read in conjunction with other announcements made by Base Resources
to ASX.
Certain statements in or in connection with this announcement
contain or comprise forward looking statements. Such
statements may include, but are not limited to, statements with
regard to capital cost, operating cost, future production and
available grades, product prices, and financial performance and may
be (but are not necessarily) identified by the use of phrases such
as “will”, “expect”, “anticipate”, “believe” and “envisage”.
By their nature, forward looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that will occur in the future and may be outside Base
Resources’ control. Accordingly, results could differ
materially from those set out in the forward-looking statements as
a result of, among other factors, changes in economic and market
conditions, success of business and operating initiatives, changes
in the regulatory environment and other government actions,
fluctuations in product prices and exchange rates and business and
operational risk management. Some risks that could impact
Base Resources' ability to achieve the outcomes or results
expressed or implied by such statements are disclosed in this
announcement. Subject to any continuing obligations under
applicable law or relevant stock exchange listing rules, Base
Resources undertakes no obligation to update publicly or release
any revisions to these forward-looking statements to reflect events
or circumstances after today's date or to reflect the occurrence of
unanticipated events.
ENDS.
For further information contact:
James Fuller, Manager Communications
and Investor Relations |
UK Media Relations |
Base Resources |
Tavistock Communications |
Tel: +61 (8) 9413 7426 |
Jos Simson and Gareth Tredway |
Mobile: +61 (0) 488 093 763 |
Tel: +44 (0) 207 920 3150 |
Email:
jfuller@baseresources.com.au |
|
About Base Resources
Base Resources is an Australian based, African focused, mineral
sands producer and developer with a track record of project
delivery and operational performance. The company operates
the established Kwale Operations in Kenya and is developing the Toliara Project in
Madagascar. Base Resources is an ASX and AIM listed
company. Further details about Base Resources are available
at www.baseresources.com.au
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