Base Resources Madagascar

Base Resources says it expects a DFS to be completed by December 2019 on proposals to expand its current Kenya output to a new additional high end production footprint in Madagascar.

The DFS covers the proposed $439 million Stage 1 work on the Toliara mineral sands project in Madagascar and at a deposit Base Resources describes as one of the best mineral sands development projects in the world.

Base Resource’s MD, Tim Carstens, says the planned expansion came at a time the company was experiencing high demand from its customers and a tightening in supply generally in the market for mineral sands products.

“Following two years of pricing gains, demand stabilised in FY19 due to global trade tensions and economic uncertainty,” Carstsens says.

“Current zircon supply is tightly managed by major producers, and this is providing a solid foundation for ongoing market stability – but longer term supply remains constrained.

“Even demand for Base Resources’ zircon from current customers exceeds our ability to supply all of it.”

The market dynamics come after a strong year’s performance by Base Resources at its Kwale mine in Kenya in which it recorded favourable prices (28% higher for zircon), higher output and a lift in full year profits.

The company is currently expanding its future mining resource and capability at its Kenyan operations.

But it is in Madagascar that Base Resources is looking to add a second long life production stream with the DFS now underway.

The pre-feasibility study showed a NPV10 post of US$671 million, an IRR of 22.4% and average annual production of 806 Kt ilmenite, 54 Kt zircon and 8 Kt rutile in a project covering a Stage 1 capex of US$439 million (13 Mtpa) and a lower Stage 2 capex of US$67 million (19 Mtpa), delivering an anticipated LOM average annual EBITDA of US$165 million.

“We are currently establishing early capability and capacity building programs at Toliara, advancing land acquisition and initiating the debt funding process,” says Carstens.

“This is a truly world-class mineral sands development project with a long mine life.”

Toliara, 40 km north of the southwest regional town and port of Toliara, is underpinned by the large, high grade Ranobe deposit, containing a JORC 2012 compliant Mineral Resource of 1,293Mt at 5.1% heavy mineral, with 794 Mt at 5.8% heavy minerals in the measured and indicated categories.

Carstens says this is sufficient to support a 40+ year mine life at a scale similar to the company’s Kwale operations in Kenya.

“The high heavy mineral grade and mineral assemblage of the Ranobe deposit could produce a similar revenue per tonne mined to the Kwale operations,” he said.

Base Resources is targeting a Toliara final investment decision in 2020 for a planned start-up in 2022. The mine will offer more than 1,000 permanent job opportunities when in production.