Base Resources Limited Quarterly Activities Report - June 2017

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Base Resources Limited	LSE:BSE	London	Ordinary Share	AU000000BSE5	ORD NPV (DI)

	Price Change	% Change	Share Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Shares Traded	Last Trade
	0.00	0.00%	12.00	11.50	13.00				0.00	07:30:44

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
Iron Ores	271.43M	-4.84M	-0.0041	-60.98	295M

TIDMBSE

AIM and Media Release

13 July 2017

BASE RESOURCES LIMITED
Quarterly Activities Report - June 2017

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.

"Figures" (graphics) referenced in this release have been omitted. A full PDF
version of this release, including all Figures, is available from the Company's
website: www.baseresources.com.au.

KWALE OPERATIONS

PRODUCTION June 2016 Sept 2016 Dec 2016 Mar 2017 June 2017
& SALES Quarter Quarter Quarter Quarter Quarter

Production (tonnes)

Ilmenite 119,340 121,821 113,806 112,368 119,364

Rutile 21,766 21,886 22,870 23,107 22,762

Zircon 9,471 9,050 8,591 8,212 8,375

Zircon low grade(1) - 2,160 2,550 2,474 3,026

Sales (tonnes)

Ilmenite 150,911 139,441 97,047 122,783 142,405

Rutile 32,454 23,023 19,773 21,416 27,779

Zircon 9,590 8,525 9,432 8,069 8,540

Zircon low grade(1) - - 3,397 3,059 3,045

(1) Zircon low grade tonnes contained in concentrate, equivalent to
approximately 70-80% of the value of primary zircon.

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 ("tph").
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.

MINING & WCP PERFORMANCE June 2016 Sept 2016 Dec 2016 Mar 2017 June 2017
Quarter Quarter Quarter Quarter Quarter

Ore mined (tonnes) 2,363,395 2,325,174 3,049,333 2,664,738 2,975,694

HM % 9.87 7.51 5.83 6.70 8.40

HMC produced (tonnes) 226,453 164,192 152,259 159,379 232,574

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.

MSP PERFORMANCE June 2016 Sept 2016 Dec 2016 Mar 2017 June 2017
Quarter Quarter Quarter Quarter Quarter

MSP Feed (tonnes of HMC) 187,244 193,349 191,576 186,814 192,432

MSP feed rate (tph) 88 92 91 91 92

MSP recovery %

Ilmenite 101 100 99 101 101

Rutile 99 94 98 99 98

Zircon 78 73 73 74 73

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% (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).

Zircon production increased to 8.4kt (8.2kt last quarter) due to the increased
MSP feed. Average zircon recovery of 73% was in line with last quarter, but
lower than the design target of 78%. Circuit optimisation and modifications
continue.

In addition to primary zircon, in July 2016 Kwale Operations commenced
production of a lower grade zircon product ("zircon low grade") from
re-processing of zircon tails into a zircon rich concentrate. Zircon low grade
typically realises 70-80% of the value of each contained tonne of zircon.
Reported zircon low grade represents the volume of zircon contained in the
concentrate. To date, zircon low grade has been produced from the
re-processing of run-of-production and stockpiled zircon circuit tails and this
is anticipated to conclude in the September quarter. During the June quarter,
3.0kt of zircon low grade was produced (2.5kt last quarter) and a single
shipment containing 3.0kt of zircon low grade was made to China (3.1kt last
quarter). When combined with primary zircon recoveries, the production of
zircon low grade effectively lifts total zircon recoveries well above the
design target of 78%.

Bulk loading operations at Base Resources' Likoni Port facility continued to
run smoothly, dispatching more than 178kt of ilmenite, rutile and zircon low
grade during the quarter (152kt last quarter). Containerised shipments of
rutile and zircon through the Mombasa Port proceeded according to plan.

SUMMARY OF UNIT COSTS June 2016 Sept 2016 Dec 2016 Mar 2017 June 2017
& REVENUE PER TONNE (US$) Quarter Quarter Quarter Quarter Quarter

Unit operating costs per tonne $93 $77 $84 $87 $96
produced

Unit cost of goods sold per tonne $99 $90 $106 $111 $103
sold

Unit revenue per tonne of product $201 $200 $250 $258 $297
sold

Revenue:Cost of goods sold ratio 2.0 2.2 2.4 2.3 2.9

Total operating costs were slightly higher than recent quarters due to the
recognition of typical end of financial year costs, however the unit operating
cost of US$96 per tonne produced (rutile, ilmenite, zircon and zircon low
grade) is consistent with the same quarter in the prior year. Cost of goods
sold of US$103 per tonne sold (operating costs, adjusted for stockpile
movements, and royalties) were lower than last quarter (US$111 per tonne sold)
due the impact of product sales mix.

Revenue per tonne of product sold varies significantly each quarter depending
on the number of bulk rutile sales during that quarter. In a normal year,
there are usually seven or eight bulk rutile sales of approximately 10kt each,
which means any given quarter will typically contain either one or two of these
sales. As annual rutile sales account for approximately 40% of revenue but
only 15% of volume, the number of bulk rutile sales in a quarter has a
significant bearing on revenue, but not sales volume. The June quarter saw
three bulk rutile sales taking total rutile sales to 27.8kt, higher than the
prior quarter's 21.4kt total rutile sales. When combined with the higher
ilmenite sales volume, higher ilmenite and zircon prices and zircon low grade

sales, this contributed to the increase in average revenue per tonne to US$297
per tonne (US$258 last quarter).

FY2018 PRODUCTION GUIDANCE FY2016 FY2017 FY2018
Actual Actual Guidance Range

Rutile (tonnes) 85,654 90,625 88,000 to 94,000

Ilmenite (tonnes) 455,870 467,359 400,000 to 430,000
(1)

Zircon (tonnes) 31,389 34,228 32,000 to 37,000

Zircon contained in zircon low grade nil 10,210 1,500 to 2,500
(tonnes)

(1) Ilmenite production is expected to be lower than financial year 2017,
predominantly due to lower ilmenite content in the ore scheduled to be mined.

The above production guidance is based on the following assumptions for FY2018:

* Mining of 10.2Mt at an average HM grade of 7.32%, all from Ore Reserves*.
* MSP feed rate at an average of 89tph, consistent with recent performance.
* MSP product recoveries of 100% for ilmenite and 99% for rutile, and 77% for
zircon, consistent with past performance and anticipated recovery
improvements from ongoing MSP optimisations.

[* The Ore Reserves estimates underpinning the above production targets were
prepared by Competent Persons in accordance with the JORC Code (2012 edition).
The above production targets are the result of detailed studies based on the
actual performance of the Kwale mine and processing plant. These studies
include the assessment of mining, metallurgical, ore processing, environmental
and economic factors.]

MARKETING

The global TiO2 pigment industry continued to firm through the June quarter.
The ongoing strong demand for TiO2 feedstock from pigment plants, now operating
at high utilisation rates, resulted in further feedstock price increases
through the quarter. Several of the leading global pigment producers announced
a further round of significant pigment price increases taking effect through
June and July 2017.

Prices for Base Resources' ilmenite levelled out late in the June quarter after
experiencing further solid gains early in the quarter. Market prices for some
sources of ilmenite in China (mostly Chinese domestic ilmenite) surged to very
high levels by April 2017 and have recently come under some pressure from
pigment producers concerned about the pace of growth in their input costs.
Ongoing political disruptions to ilmenite exports from Tamil Nadu in India are
now being off-set to some extent by an increase in ilmenite supply from various
sources of low quality, high cost concentrates - stimulated by the high market
prices. Chinese domestic ilmenite production has increased slightly following
the disruptions of widespread environmental inspections in late 2016. However,
Chinese ilmenite production, which is mostly produced as a by-product of
vanadium titanomagnetite mining, remains suppressed by the fall in the iron ore
price.

The ongoing strength in pigment demand and pricing is expected to help
stabilise prices for ilmenite at the current healthy levels through the coming
quarters.

Despite strong demand, the overhang of high grade TiO2 feedstock capacity has
resulted in only moderate price improvement for rutile in recent quarters.
However, there are increasing signs of an emerging supply deficit in this
high-grade sector and there is an expectation that mainstream contracted rutile
prices will experience increased upward momentum through the second half of
2017. Spot prices for rutile increased sharply through the quarter - with
prices in China increasing by over 30%. While spot sales for rutile are a
relatively minor part of the total market, they are seen as an indicator of the
overall supply/demand balance and will influence the pricing outcome for bulk
rutile contracts in the second half of 2017.

Zircon demand was strong through the June quarter with enquiries and volumes
requested from customers far exceeding the Company's capacity to supply. Lower
than anticipated global zircon production for 2017 has reduced inventories and
led to an increasingly tight market and solid price improvement since the
December quarter of 2016. Base Resources has secured an increase of US$150/t
on all zircon contracts for the September quarter. Potential remains for
further price improvement in the December quarter.

SAFETY

With no serious injuries occurring during the quarter, Kwale Operations' lost
time injury frequency rate ("LTIFR") remains at zero. Base Resources'
employees and contractors have now worked 9.7 million man-hours LTI free, with
the last LTI recorded in the March quarter of 2014. The total recordable
injury frequency rate ("TRIFR") has ticked up slightly with one minor medically
treated injury late in the quarter.

COMMUNITY AND ENVIRONMENT

Agricultural livelihood programmes, run in conjunction with partners Business
for Development, DEG, FMO, Australia's DFAT and Kenya Red Cross, continue to
develop with encouraging support from both national and county Kenyan
governments. Our aim is to reach commercial scale to provide increased incomes
to local families that can be sustained beyond the life of the Kwale
Operations.

During the quarter, planting in the latest rotation of the cotton, potato,
sorghum and maize programmes was completed in preparation for the "long rains"
season. Unfortunately, the extremely heavy rains subsequently experienced
caused extensive flooding in the region, necessitating the replanting of around
20% of crops.

A consignment of 30 tonnes of Kenyan cotton lint was exported to Bangladesh for
further processing into garments for Cotton On. Five tonnes of this shipment
were produced through the Kwale Cotton project, a positive outcome despite
challenging drought conditions last year. The proceeds of the sale of this
crop have been returned to the farmers' cooperative to prepare them to manage
crop inputs for the current planting season. Training programmes are already
underway to build capacity for the cooperative's administrators.

Rehabilitation of TSF slopes continues on schedule despite the very heavy
rainfall experienced. Erosion control measures worked well and vegetation
growth on stabilised slopes is outstanding. Local women's groups have
continued to provide materials and labour, injecting significant incomes into
villages surrounding the mine site. This also featured in discussions held
with local stakeholders, including Kwale County Government, on ways to increase
local content in the supply of goods and services.

In June, the Kwale Operations received an award from the Kenyan National
Environmental Management Authority in recognition of the considerable effort
and outcomes in environmental management and biodiversity conservation.

BUSINESS DEVELOPMENT

EXTENSIONAL EXPLORATION - KENYA

Having completed the previously reported extensional and infill drilling of the
South Dune orebody in the March quarter, exploration work during this quarter
comprised drill sample analysis, detailed mineralogy and geological
interpretation with a view to completing an updated JORC compliant Mineral
Resource Estimate during the September quarter.

As previously reported on 2 March 2017, drilling results show a substantial
increase in the dimensions of the South Dune Deposit (950m at an average of
700m across strike) and the discovery of the Mafisini Deposit (1,240m and up to
480m in width), separated from the South Dune by a narrow alluvial lowland*.
These discoveries are marked in the SW Sector of Figure 1 [Figure omitted].

[* Refer to Base Resources' market announcement on 2 March 2017. Base
Resources confirms that it is not aware of any new information or data that
materially affects the information included in its announcement on 2 March
2017.]

As previously reported on 10 May 2017, substantial edge definition drilling was
completed in the quarter, along the eastern margins of the South Dune Deposit,
which indicates the potential for a significant extension of this deposit,
marked as Potential Eastern Extension in Figure 1 [Figure omitted]*.

[*Refer to Base Resources' market announcement on 10 May 2017. Base Resources
confirms that it is not aware of any new information or data that materially
affects the information included in its announcement on 10 May 2017.]

The next phase of exploration drilling is anticipated to commence early in 2018
in the North-East Sector, adjacent to the Central Dune.

EXPLORATION - TANZANIA

The Company holds five prospecting licenses in northern Tanzania with a
combined area of 475km2.

The necessary consents and clearances ahead of a planned preliminary drilling
programme across all five licenses are in place. However, field work,
previously scheduled to commence during the September quarter, has been
postponed to later in FY2018.

Total exploration expenditure for the quarter, across all licenses in Kenya and
Tanzania, was US$0.1 million.

KWALE PHASE 2 PROJECT

On 23 May 2017, following completion of the Definitive Feasibility Study ("DFS
"), the Board approved implementation of the Kwale Phase 2 Project ("KP2") at
the Kwale Operations. The DFS confirmed the opportunity for significant
improvement in the financial returns for Kwale Operations through further
optimisation of the remaining mine life.

The key benefits of KP2 are:

* Bringing forward of revenue by maintaining current production levels for
the remainder of the mine life, overcoming the declining ore grades in the
current Ore Reserve through the de?constraining of the mine and
concentrator plant.
* Faster mining and processing of Ore Reserves over a 24-month shorter
period, eliminating approximately US$60 million in fixed costs, with a
commensurate reduction in average operating cost per tonne produced and

    significantly enhancing project economics compared with the current mine 
    plan. 
  * Increases the importance of, and value leverage from, potential mine life 
    extensions emerging from the exploration programme that is underway. 
 
The features, impacts and implementation plan for KP2 are further explained in 
the Company's market announcement on 23 May 2017. 
 
CORPORATE 
 
KENYAN VAT RECEIVABLE 
 
As previously announced, Base Resources has refund claims for VAT paid in 
Kenya, relating to both the construction of the Kwale Project and the period 
since operations commenced, totalling approximately US$19.7 million at 30 June 
2017.  These claims are proceeding through the Kenya Revenue Authority process, 
with operational period claims, totalling approximately US$0.3 million, settled 
during the quarter.  Base Resources is continuing to engage with the Kenyan 
Treasury and the Kenya Revenue Authority, seeking to expedite the remainder of 
the refund. 
 
In summary, at 30 June 2017: 
 
  * Net debt of US$98.5 million, consisting of: 
      + Cash and cash equivalents were US$28.3 million (unrestricted) and an 
        additional US$26.2 million (restricted - debt service reserve account). 
      + Debt of US$153.0 million. 
  * 742,231,956 shares on issue. 
  * 61,425,061 options (exercise price of A$0.40, expiring 31 December 2018). 
  * 67,088,421 performance rights issued pursuant to the terms of the Base 
    Resources Long Term Incentive Plan. 
 
A full PDF version of this release is available from the Company's website: 
www.baseresources.com.au. 
 
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 & BROKERS 
RFC Ambrian Limited 
As Nominated Adviser: 
Andrew Thomson / Stephen Allen 
Phone: +61 (0)8 9480 2500 
As Joint Broker: 
Jonathan Williams 
Phone: +44 20 3440 6800 
 
Numis Securities Limited 
As Joint Broker: 
John Prior / James Black / Paul Gillam 
Phone:  +44 20 7260 1000 
 
SHARE REGISTRY:  ASX 
Computershare Investor Services Pty Limited 
Level 11, 172 St Georges Terrace 
PERTH WA 6000 
Enquiries: 1300 850 505 / +61 (3) 9415 4000 
www.computershare.com.au 
 
SHARE REGISTRY:  AIM 
Computershare Investor Services PLC 
The Pavilions 
Bridgwater Road 
BRISTOL BS99 6ZZ 
Enquiries: +44 (0) 870 702 0003 
www.computershare.co.uk 
 
AUSTRALIAN MEDIA RELATIONS 
Cannings Purple 
Annette Ellis / Andrew Rowell 
Email: aellis@canningspurple.com.au / 
arowell@canningspurple.com.au 
Phone: +61 (0)8 6314 6300 
 
UK MEDIA RELATIONS 
Tavistock Communications 
Jos Simson / Emily Fenton 
Phone: +44 (0) 207 920 3150 
 
KENYA MEDIA RELATIONS 
Africapractice (East Africa) 
Evelyn Njoroge / Joan Kimani 
Phone: +254 (0)20 239 6899 
Email: jkimani@africapractice.com 
 
PRINCIPAL & REGISTERED OFFICE 
Level 1, 50 Kings Park Road 
West Perth, Western Australia, 6005 
Email:  info@baseresources.com.au 
Phone: +61 (0)8 9413 7400 
Fax: +61 (0)8 9322 8912 
 
 
 
END

(END) Dow Jones Newswires

July 13, 2017 02:00 ET (06:00 GMT)

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