Base Resources Limited Chairman's Address to Annual General Meeting

 
TIDMBSE 
 
AIM and Media Release 
 
23 November 2016 
 
BASE RESOURCES LIMITED 
Chairman's Address to Annual General Meeting 
 
Wednesday, 23 November 2016, 10.00am (Perth Time) 
 
Base Resources Limited (ASX & AIM: BSE) ("Base Resources") advises that the 
following address was delivered by Base Resources' Chairman at the company's 
Annual General Meeting held today at 10.00am (Perth time) at West Perth, 
Western Australia. 
 
A PDF copy of the Chairman's address, and the presentation given by the 
Managing Director at the Annual General Meeting, are available from the 
company's website:  www.baseresources.com.au. 
 
Chairman's AGM Address 
 
Ladies and Gentlemen 
 
The 2016 financial year has seen your company weather the storm of a 
challenging, low commodity price environment and emerge into an improving 
market in sound shape, well positioned to capitalise on opportunities. 
 
The past year, our second full year of operations, has seen production volumes 
at our Kwale Operations in Kenya exceed original project design across all 
three products.  We have consistently achieved or exceeded plant design 
availabilities, concentrate production, mineral separation throughput and 
ilmenite, rutile and zircon recovery.  This is testament to the quality of the 
resource, our plant and equipment and, most importantly, to the experience, 
quality and dedication of our operations team. 
 
With the operation now at steady state, our focus has turned to further 
enhancing throughputs in the mineral sands separation plant, which has driven a 
further material lift in our production guidance for the 2017 financial year. 
 
Strong cost discipline is firmly entrenched in the company, as illustrated by 
our annual cash operating costs per tonne for the 2016 financial year of US$89/ 
tonne, down from US$104/tonne in the prior year.  While further improvements 
are challenging, we are continuing to seek innovative approaches to refine our 
operations, with the introduction of a hydro mining unit in recent months a 
good example. 
 
Most importantly, these results continue to be achieved with an uncompromising 
focus on the safety of our people and the operation.  There were no lost time 
injuries during the past year and Total Recordable Injury Frequency was a low 
1.42 cases per million hours worked.  The Kwale Operation has not had a lost 
time injury since February 2014 and did not record a medically treated injury 
for the first three quarters of 2016. 
 
In a challenging market, Base Resources exported just short of 600,000 tonnes 
of products from the Kwale Operation over the 2016 financial year, with 
shipments made to customers with existing offtake agreements, regular customers 
buying on a spot basis and some new spot customers buying Base Resources' 
products for the first time.  While all of our rutile and most zircon 
production is contracted, our ilmenite marketing strategy into China has been 
highly successful with minimal inventory on hand at year end and with Base 
Resources being the single largest importer of ilmenite into China. 
 
These significant achievements for the year are reflective of a highly capable, 
settled and engaged team throughout the organisation.  We have been highly 
successful in establishing a Kenyan workforce at the Kwale Operation, with 96% 
of the team being Kenyan and 63% coming from our local community.  Our 
structured training and skills development programme is also seeing progression 
in quality of jobs, with a further two Kenyan appointments to the management 
team in the 2016 financial year. 
 
Base Resources' local subsidiary, Base Titanium, has continued to enhance its 
strong track record of positive community engagement.  Base Titanium, 
increasingly in partnership with various local and international development 
organisations, supports a wide range of programmes to address community-led 
priorities.  In the past year, our programmes have been particularly focused on 
agricultural development, with a view to sustaining local communities' economic 
potential and quality of life beyond the life of the Kwale Operations.  The 
past year has seen additional financial support secured from new organisations, 
reflecting the quality, scope and potential of these agricultural programmes to 
drive regional socioeconomic development. 
 
We continue to work closely, and enjoy positive relationships, with our host 
governments in Kenya, both at Kwale County and national level, supported by a 
common objective of establishing a healthy, vibrant mining sector.  With the 
appointment of a new Cabinet Secretary for Mining in December 2015, Kenya has 
articulated bold aspirations for what has been a nascent mining industry, 
building on the success of Base Resources' Kwale Operation.  Kenya is 
implementing a competitive and stable administrative and fiscal regime and is 
now actively seeking to directly engage with foreign mining companies and 
attract investment. 
 
While the 2016 financial year was a challenging one from a commodity price 
perspective, our success in driving production and managing costs has meant 
that Base Resources was still able to generate an EBITDA in excess of 
A$60 million, and with a revenue to cash cost ratio of 2:1, placing the company 
in the top few of the top quartile of mineral sands producers.  This also 
enabled us to reduce net debt by US$36 million to US$151 million as at the end 
of the 2016 financial year. 
 
After three years of consistently declining prices for our products, we are now 
seeing strong signs of the ilmenite and rutile markets returning to balance 
with excess inventories having been substantially worked down.  We have now 
seen prices for our ilmenite improve from the lows in the June 2016 quarter by 
around 90% for deliveries in December 2016.  With supply also tightening in the 
rutile market, we are encouraged by the outlook for 2017. 
 
Base Resources closed the 2016 financial year in sound financial shape.  We are 
generating significant cashflow with an improving market outlook.  We are 
rapidly paying down debt with a repayment schedule well suited to the current 
environment following the successful rescheduling in December 2015.  We are on 
a robust financial footing from which to grow the business. 
 
Our plan for growth involves, firstly, adding value to the current asset 
suite.  In this respect, we have recently secured a significantly expanded 
exploration tenure around the Kwale Operations to take in some previously 
identified targets.  Drilling of these targets in pursuit of mine life 
extensions is expected to be completed over the coming year.  In addition, the 
company recently secured exploration tenure over a significant land area in 
northern Tanzania.  The "Kwale Phase 2" project, which seeks to optimise the 
Kwale Central and South dunes mining tonnage and methodology, and to increase 
concentrate production rates, is progressing through a Definitive Feasibility 
Study to be delivered in the June quarter of 2017. 
 
Looking beyond Kwale, we see opportunities to capitalise on our capabilities 
and positioning to create shareholder value through acquisition and discovery. 
With much work already done, we will continue to assess and progress these 
opportunities in a disciplined manner in the coming year.  We are well 
positioned for growth. 
 
I wish to thank the Board, management and teams of Base Resources and Base 
Titanium, our suppliers, local communities and host governments for your 
support and commitment during the year.  Finally, thank you to you our 
shareholders for your confidence and ongoing support.  I am confident of a 
bright future for Base Resources. 
 
ENDS 
 
CORPORATE PROFILE 
 
Directors 
Keith Spence (Non-Executive Chairman) 
Tim Carstens (Managing Director) 
Colin Bwye (Executive Director) 
Sam Willis (Non-Executive Director) 
Michael Anderson (Non-Executive Director) 
Michael Stirzaker (Non-Executive Director) 
Malcolm Macpherson (Non-Executive Director) 
 
Company Secretary 
Chadwick Poletti 
 
NOMINATED ADVISOR & BROKER 
RFC Ambrian Limited 
As Nominated Adviser: 
Andrew Thomson / Stephen Allen 
Phone: [phone] 
As Broker: 
Jonathan Williams 
Phone: [phone] 
 
SHARE REGISTRY:  ASX 
Computershare Investor Services Pty Limited 
Level 11, 172 St Georges Terrace 
PERTH WA 6000 
Enquiries: 1300 850 505 / [phone] 
www.computershare.com.au 
 
SHARE REGISTRY:  AIM 
Computershare Investor Services PLC 
The Pavilions 
Bridgwater Road 
BRISTOL BS99 6ZZ 
Enquiries: [phone] 
www.computershare.co.uk 
 
AUSTRALIAN MEDIA RELATIONS 
Cannings Purple 
Annette Ellis / Andrew Rowell 
Email: [e-mail] / 
[e-mail] 
Phone: [phone] 
 
UK MEDIA RELATIONS 
Tavistock Communications 
Jos Simson / Emily Fenton 
Phone: [phone] 
 
KENYA MEDIA RELATIONS 
Africapractice (East Africa) 
Evelyn Njoroge / James Njuguna/Joan Kimani 
Phone: [phone] 
Email: [e-mail] 
 
PRINCIPAL & REGISTERED OFFICE 
Level 1, 50 Kings Park Road 
West Perth, Western Australia, 6005 
Email:  [e-mail] 
Phone: [phone] 
Fax: [phone] 
 
 
 
END 
 

(END) Dow Jones Newswires

November 23, 2016 02:00 ET (07:00 GMT)