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BSE Base Resources Limited

5.625
-0.25 (-4.26%)
28 Mar 2024 - Closed
Delayed by 15 minutes
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
  -0.25 -4.26% 5.625 5.50 5.75 5.875 5.50 5.875 92,413 14:40:39
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Iron Ores 271.43M -4.84M -0.0041 -26.83 129.8M

Base Resources Limited Decision to proceed with the Bumamani Project

20/06/2022 7:00am

UK Regulatory


 
TIDMBSE 
 
AIM and Media Release 
 
20 June 2022 
 
BASE RESOURCES LIMITED 
Decision to proceed with the Bumamani Project 
 
Key outcomes 
 
  * A decision to proceed with development of the Bumamani Project has been 
    made following consideration of the Bumamani DFS outcomes. 
  * This will extend the life of Kwale Operations by 13 months to December 
    2024, once land access arrangements are finalised. 
  * An additional 17.9 million tonnes of Ore Reserves are expected to be mined 
    to produce an estimated 42,000 tonnes of rutile, 171,000 tonnes of ilmenite 
    and 20,000 tonnes of zircon. 
  * Proceeding with the Bumamani Project is a significant further step towards 
    extending mine life at Kwale Operations and maintaining operational 
    continuity, providing additional time to develop other opportunities in 
    Kenya and the region. 
  * Production guidance released for FY23, incorporating mining of the Bumamani 
    Project: 
      + Rutile - 62,000 to 73,000 tonnes 
      + Ilmenite - 260,000 to 310,000 tonnes 
      + Zircon - 22,000 to 27,000 tonnes 
 
African mineral sands producer and developer, Base Resources Limited (ASX & 
AIM: BSE) (Base Resources or the Company) is pleased to announce that a 
decision to proceed with development of the Bumamani Project has been made 
after a definitive feasibility study (the Bumamani DFS) confirmed its economic 
viability. 
 
The decision means that life at Base Resources' 100% owned and operated mineral 
sands operations in Kwale County, Kenya (Kwale Operations) will be extended by 
13 months to December 2024 once land access arrangements are finalised. 
 
The Bumamani Project comprises higher-grade subsets of the Bumamani and Kwale 
North Dune deposits (see Figure 1) and the Bumamani DFS confirmed the viability 
of mining these areas concurrently with the Kwale South Dune deposit. 
 
Mining at the Kwale North Dune is expected to commence in March 2023. 
 
Graphics/figures referenced in this release have been omitted.  A full PDF 
version of this release, including all graphics/figures, is available from the 
Company's website:  www.baseresources.com.au. 
 
FY23 production guidance 
 
The Company's 2023 financial year (FY23) production guidance is shown below, 
together with its FY22 production guidance which is unchanged from that last 
reported.  The FY23 production guidance is lower than that for FY22 as a 
consequence of the planned commencement of mining in the lower HM grade Kwale 
North Dune orebody from March 2023 and normal uncertainties associated with 
mining a new orebody. 
 
PRODUCTION GUIDANCE                    FY22                        FY23 
(tonnes)                          Guidance Range              Guidance Range 
 
Rutile                           73,000 to 83,000            62,000 to 73,000 
 
Ilmenite                        310,000 to 340,000          260,000 to 310,000 
 
Zircon                           24,000 to 28,000            22,000 to 27,000 
 
The FY23 production guidance is supported by the Bumamani DFS and is based on 
the following assumptions: 
 
  * Land access arrangements are finalised in time to enable mining at the 
    Kwale North Dune to commence in March 2023. 
  * Mining of 16.5Mt at an average HM grade of 3.51%. 
  * Heavy mineral concentrate (HMC) produced by the wet concentrator plant of 
    571kt. 
  * HMC fed into the mineral separation plant (MSP) of 556kt. 
  * MSP product recoveries of 101% for rutile, 101.5% for ilmenite and 84.5% 
    for zircon. 
 
Summary of the Bumamani DFS outcomes 
 
The Bumamani DFS was undertaken following an earlier pre-feasibility study ( 
Bumamani PFS) which supported mining higher-grade subsets of the North Dune and 
Bumamani deposits1 (referred to as the P199 and Bumamani pits).  Following the 
pit optimisation stage of the Ore Reserves estimation process undertaken for 
the Bumamani DFS, additional material to that considered for the Bumamani PFS 
was shown to be economically extractable and was added to the scope of the 
Bumamani DFS.  The area added is a subset of the Kwale North Dune referred to 
as the P200 pit (refer to Figure 1). 
 
The Bumamani DFS forecasts net positive, post-tax, cash flows from mining the 
Bumamani Project.  The other key outcomes, together with the assumed product 
prices, for the Bumamani DFS are set out in table 1 below. 
 
Table 1: Bumamani DFS key outcomes. 
 
Outcome / Assumption                                      Units                     Bumamani DFS 
 
Operations life extension                                Months 
                                                                                              13 
 
Ore mined                                        Million tonnes 
                                                                                            17.9 
 
Ore Grade                                                  % HM                              2.1 
 
Upfront capex                                      US$ millions 
                                                                                            28.1 
 
Rutile produced                                 Thousand tonnes 
                                                                                              42 
 
Ilmenite produced                               Thousand tonnes 
                                                                                             171 
 
Zircon produced                                 Thousand tonnes 
                                                                                              20 
 
Operating cost per tonne mined, inclusive of              US$/t                             4.64 
5% royalty 
 
Operating cost per tonne produced, inclusive              US$/t                           266.38 
of 5% royalty 
 
Rutile price - average over LOM                       US$/t FOB                            1,811 
 
Ilmenite price - average over LOM                     US$/t FOB                              285 
 
Zircon price - average over LOM                       US$/t FOB                            2,021 
 
Study margin of error band                                    %                         -5 / +15 
 
[Note (1): For further information about the Bumamani PFS, refer to Base 
Resources' market announcements on 3 September 2021 "Bumamani PFS supports 
extension of Kwale mine life to mid-2024" and "Further supporting information 
for Bumamani PFS", available at https://baseresources.com.au/investors/ 
announcements/.] 
 
Mining 
 
The Bumamani DFS considered mining the Kwale North Dune Ore Reserves, which are 
estimated at 13.9 million tonnes (Mt) (8.3Mt Proved and 5.6Mt Probable) at an 
average heavy mineral (HM) grade of 2.1% for 0.29Mt of contained HM, and the 
Bumamani Ore Reserves, which are estimated at 3.9Mt (2.6Mt Proved and 1.3Mt 
Probable) at an average HM grade of 2.3% for 0.09Mt of contained HM2. 
Together, these Ore Reserves estimates total 17.9Mt at an average HM grade of 
2.1% for 0.38Mt of contained HM (with 10.9Mt or approximately 61% Proved and 
6.9Mt or approximately 39% Probable). 
 
The mining method planned for the Bumamani DFS is hydraulic mining, utilising 
Kwale Operations' existing hydraulic mining units (HMUs).  This mining method 
has been successfully used at Kwale Operations since 2016.  It is 
non-selective, with HMUs using high pressure water jets to sluice the entire 
ore face, creating an ore slurry which can then be pumped to the wet 
concentrator plant. 
 
To maximise mining rates and better manage tailings, the Bumamani DFS 
established that the Bumamani Project will be mined concurrently with the Kwale 
South Dune deposit, commencing from March 2023.  Four existing HMUs will be 
utilised, instead of three (as is current mining practice at Kwale South Dune), 
with two continuing to mine at Kwale South Dune and two at the Bumamani Project 
pits.  After the transition to four HMUs, in both areas, one HMU will operate 
at full capacity of up to 800 tph and one at half capacity of up to 400 tph to 
give a total feed rate of up to 2,400 tph, consistent with the present feed 
rate at Kwale South Dune.  HMUs are capable of mining at either up to 400 or 
800 tph by operating one or two high pressure monitors, each capable of up to 
400 tph. 
 
A shutdown of mining operations and the wet concentrator plant is scheduled for 
February 2023 to relocate the HMUs and associated pumping infrastructure, after 
which mining at P199 will commence.  Following depletion of P199 (anticipated 
in February 2024), mining equipment will relocate to P200 while mining 
continues at Kwale South Dune.  When mining completes at Kwale South Dune in 
May 2024, mining equipment will be relocated to the Bumamani pit. 
 
Figure 2 summarises the planned mining schedule incorporating the Bumamani 
Project, compared to the mine plan if mining at the Bumamani Project does not 
occur. 
 
Figure 3 shows the planned mining schedule at the Bumamani Project across seven 
stages.  Mining is scheduled at P199 and P200 concurrently with mining at Kwale 
South Dune for stages 1-5, following which (and for the last two stages) mining 
occurs solely at the Bumamani pits. 
 
[Note (2): For further information, refer to Base Resources' market 
announcement on 20 June 2022 "Maiden Kwale North Dune and Bumamani Ore Reserves 
estimates" available at https://baseresources.com.au/investors/announcements/.] 
 
Tailings 
 
The majority of fine tailings will be accommodated within Kwale Operations' 
current tailings storage facility while coarse tailings will be used for land 
rehabilitation across Kwale Operations.  It is anticipated that approximately 
25% of the fine tailings from all mining will be co-disposed with the coarse 
tailings to create a water retention layer as part of land rehabilitation, 
which is the current practice at Kwale Operations.  Coarse tailings disposal 
will commence in the P199 mined out void as soon as space is available and will 
subsequently move to P200 when space is available.  From commencement of P199 
mining, approximately 30% of coarse tails production will be placed in these 
pit voids.  Figure 4 depicts the planned tailings schedules for the Bumamani 
DFS. 
 
Processing 
 
Material mined will be processed through Kwale Operations' existing wet 
concentrator plant and mineral separation plant.  Recovery factors assumed were 
the same as those currently experienced at Kwale Operations and are set out in 
Table 2 below.  They are also supported by the metallurgical testwork carried 
out on the Kwale North Dune. 
 
The metallurgical testwork comprised wet concentrator and mineral separation 
plant tests on bulk samples collected from two 61cm diameter holes drilled in 
the Kwale North Mineral Resource, as part of the earlier Kwale North 
pre-feasibility study.  One hole is adjacent to P199 while the other hole is in 
P200.  Discrete ore zones were sampled (Ore1, Ore4 and Ore5) from each hole. 
The samples were dried and shipped to Brisbane, Australia for processing 
through IHC Robbins' laboratory.  Samples of the fine tailings generated by IHC 
Robbins were sent to Outotec Metso for thickener testwork.  The results of the 
testwork were not materially different to the run of mine results being 
achieved from mining the Kwale South Dune deposit.  No metallurgical testwork 
was completed on the Bumamani deposit, however, it exhibits similar 
characteristics (including particle size) to ore currently mined at Kwale South 
Dune and is expected to achieve similar processing results, including mineral 
recoveries, as those achieved from mining the Kwale South Dune ore. 
 
Table 2: Bumamani DFS recovery assumptions. 
 
Description                                           Units           Bumamani DFS 
                                                                  (consistent with 
                                                                          current) 
 
Concentrate grade                                         %                   85.0 
 
HM recovery - wet concentrator plant                      %                   79.5 
 
Rutile recovery - wet concentrator plant                  %                   88.9 
 
Ilmenite recovery - wet concentrator                      %                   90.0 
plant 
 
Zircon recovery - wet concentrator plant                  %                   94.7 
 
Rutile recovery - mineral separation                      %                  101.0 
plant 
 
Ilmenite recovery - mineral separation                    %                  101.5 
plant 
 
Zircon recovery - mineral separation                      %                   84.5 
plant 
 
Marketing 
 
The chemical specifications of products from the Bumamani Project are the same 
as existing Kwale Operations production and the Bumamani DFS assumes the same 
price forecast applicable to Kwale Operations products. 
 
The assumed product prices were derived from Base Resources' internal price 
forecasts for the proposed period of extraction, based on supply/demand 
analysis and taking into account relevant data from independent industry 
consultants, TZMI, and are not materially different from TZMI's average 
forecast prices over the same period. 
 
Infrastructure and capital and operating costs 
 
As Kwale Operations is an operating mine, all the major infrastructure already 
exists - 132 kV power line and transformer yard, 8Gl water dam, water bores, 
export facility, processing plants, offices, maintenance workshops, laboratory 
and camp.  The cost of additional roads, powerlines, pumps and pipelines 
required to service the proposed pits have been allowed for in the capital 
expenditure estimate.  Figure 5 shows the locations of new mine infrastructure, 
including a new community road to replace those intersected by the pits, with 
all infrastructure implemented in a staged approach as required by the mine 
plan. 
 
Capital cost is estimated at US$28.1 million, including the acquisition of land 
and the additional mine services and infrastructure that will be required. The 
Bumamani DFS capital cost estimate is higher than that of the Bumamani PFS, 
primarily due to inclusion of the P200 area and related field services and land 
acquisition costs. Capital costs will be funded from internally generated cash 
flows. 
 
Operating cost per tonne mined is expected to be consistent with current Kwale 
Operations performance but operating costs per tonne produced are expected to 
be higher due to the lower production volumes, a consequence of the lower heavy 
mineral grade of the Bumamani Project relative to the Kwale South Dune. 
 
Implementation schedule 
 
Implementation is planned in three stages: 
 
  * Stage 1 - (7 months) land acquisition, resettlement and completion of all 
    construction work, including mining earthworks and installation of new 
    field services to the P199 mining area. 
  * Stage 2 - (1 month) relocation of two HMUs, plus associated plant, and 
    field services from Kwale South Dune to P199, including a 2-week shutdown 
    for tie-ins followed by commissioning and start-up. 
  * Stage 3 - following the start-up of P199, field services will be extended 
    to P200 and the Bumamani pit, as required by the mine plan, and consists of 
    mining earthworks, relocation and installation of pipelines, booster 
    stations and power supply lines. 
 
Legal, community and environment 
 
The Company has secured the right to mine the Bumamani Project, following the 
recent extension of the boundary of Special Mining Lease 23 (SML 23) to 
incorporate that project.  The extension was effected by a formal deed of 
variation between the Company's wholly-owned Kenyan subsidiary, Base Titanium 
Limited, and the Government of Kenya acting through the Ministry of Petroleum 
and Mining.  In accordance with the terms of SML 23, a royalty of 5% is payable 
to the Government of Kenya. 
 
The Resettlement Action Plan for landowners in the Bumamani Project areas has 
been approved by the National Environmental Management Authority (NEMA) and is 
currently being implemented.  The socio-economic baseline study has confirmed 
landowner eligibility and, following an extensive consultation and negotiation 
process, compensation rates have been agreed.  Asset valuation is underway 
following which, individual compensation agreements will be signed and 
relocation implemented.  Broader community consultation programs have been 
running for the duration of the current mining operation, assisting with 
two-way information sharing and management of stakeholder expectations. 
 
The key regulatory approval in addition to the SML 23 extension, being that in 
respect of the Environmental and Social Impact Assessment (ESIA), was issued on 
23 August 2021 by NEMA following extensive public consultation and 
environmental impact assessments.An environmental management plan was also 
approved as part of the ESIA. The only other authorisation required to mine the 
Bumamani Project is that for silt trap construction as a control measure for 
sedimentation with no issues expected in obtaining this authorisation. 
 
Key risks and sensitivities 
 
Completing the necessary land acquisitions at reasonable prices within a 
timeframe that does not impact the implementation schedule and commencement of 
mining at the Bumamani Project in March 2023, has been identified as a key 
risk.  The Company is confident that this risk will not give rise to material 
impacts on implementation of the Bumamani Project given progress made to date 
and further planned mitigations.  However, given the requirement for engagement 
with and action by landowners, residual risk remains.  Inaction on the part of 
landowners and any emerging project opposition could stem from, among other 
things, the upcoming Kenyan general election in August 2022.  The inability to 
commence mining at the Bumamani Project by March 2023 as planned would impact 
project economics. 
 
The key sensitivity to the Bumamani Project achieving forecast net positive, 
post-tax cash flows is product prices, which are subject to many variables 
outside the control of Base Resources and the assumed average product prices 
may not reflect realised prices.  If all other financial and operating outcomes 
were as forecast, realised prices for the full product suite would need to be 
29% lower than forecast for the Bumamani Project to not be net cash flow 
positive. 
 
Other factors which could negatively affect cash flows include an increase in 
operating costs or an increase in land acquisition costs, though these are 
moderated by the Company's experience managing Kwale Operations and the 
progress made in the land acquisition process. 
 
Ore Reserves estimates and production and forecast financial information 
 
The information included in this announcement about the estimated Ore Reserves 
for the Kwale North Dune and Bumamani deposits has been extracted from Base 
Resources' ASX announcement titled "Maiden Kwale North Dune and Bumamani Ore 
Reserves estimates" dated 20 June 2022, 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 that announcement and all material assumptions and 
technical parameters underpinning the estimates continue to apply and have not 
materially changed. 
 
The estimated Ore Reserves for the Kwale North Dune and Bumamani deposits 
underpin the Bumamani DFS and the anticipated production and financial outcomes 
from that study.  These Ore Reserves estimates were prepared by Competent 
Persons in accordance with the requirements of the JORC Code.  The proportions 
of Probable and Proved Ore Reserves underpinning the Bumamani DFS and the 
anticipated production outcomes are disclosed in the main body of this 
announcement.  The material assumptions on which Bumamani DFS production and 
financial outcomes disclosed in this announcement are based are also disclosed 
in the main body of this announcement. 
 
Forward Looking Statements 
 
The Bumamani DFS 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  UK Media Relations 
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 
 
This release has been authorised by the Board of Base Resources. 
 
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 
 
PRINCIPAL & REGISTERED OFFICE 
Level 3, 46 Colin Street 
West Perth, Western Australia, 6005 
Email:  info@baseresources.com.au 
Phone: +61 8 9413 7400 
Fax: +61 8 9322 8912 
 
NOMINATED ADVISOR 
RFC Ambrian Limited 
Stephen Allen 
Phone: +61 8 9480 2500 
 
JOINT BROKER 
Berenberg 
Matthew Armitt / Detlir Elezi 
Phone: +44 20 3207 7800 
 
JOINT BROKER 
Canaccord Genuity 
Raj Khatri / James Asensio / Patrick Dolaghan 
Phone: +44 20 7523 8000 
 
 
END 
 
 

(END) Dow Jones Newswires

June 20, 2022 02:00 ET (06:00 GMT)

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