HomeEast AfricaBase Resources' Kwale on track to achieve FY,2021 production

Base Resources’ Kwale on track to achieve FY,2021 production

Base Resources has presented its results for the six-month period ended 31 December 2020 (H1,FY21), including announcement of a half-year dividend of AUD 3 cents per share, unfranked.

Kwale Operations maintained operational continuity in the period, adapting successfully for the ongoing COVID-19 challenge, and is on track to achieve FY21 production guidance.

CEO one-on-one with Tim Carstens from Base Resources

Firm demand from pigment producers supported ongoing price improvement for ilmenite during H1 FY21. While zircon and rutile prices moderated in the reporting period, there are positive signs of a price recovery in early 2021.

Read more articles about Madagascar

The Toliara Project progressed with practical completion of lender technical due diligence and submission by the Company’s wholly owned subsidiary, Base Toliara SARL, of a Large Mining Investment Law application, which, if approved, will provide fiscal and legal stability.

Discussions with the Government of Madagascar on fiscal terms re-commenced in the period and are ongoing.

MD of Base Resources, Tim Carstens, says:

“Kwale Operations performance has been consistently strong throughout the half year and is on schedule to meet our FY21 production guidance.

“Outcomes for the remainder of FY21 are expected to be stronger again with firm market demand supporting price increases for all our products.

“Progress towards Kwale mine life extension remains a priority with the North Dune pre-feasibility study nearing completion and the recent resumption of our near-mine exploration program.”

“On-the-ground activity at the Toliara Project remains suspended as we engage with the Government of Madagascar in relation to the fiscal terms applicable to the project.

“This, together with international travel restrictions and broader COVID-19 measures and impacts both in Madagascar and globally, has led to the final investment decision (FID) to proceed with development of the Toliara Project being delayed.

“Once fiscal terms are agreed and the suspension is lifted, there will be approximately 11 months’ work to complete prior to FID.”

“At a Group level, we are delighted to be once again delivering meaningful returns to shareholders via dividends whilst remaining committed to the sensible progression of the Toliara Project, and the value generation opportunity this represents for shareholders, as uncertainty resolves.”

Financial highlights for H1,FY21

  • Revenue of US$72.8 million, lower than the six months to 31 December 2019 (H1,FY20) due to reduced production and timing of bulk product shipments
  • EBITDA of US$33.9 million
  • Net loss after tax of US$6.3 million, impacted by Kenyan dividend withholding tax of US$4.5 million incurred on repatriation of surplus cash from operations to the Company
  • Debt reduced by US$50.0 million as COVID-19 uncertainties subside, with the remaining US$25.0 million scheduled for repayment in March 2021
  • Payment of the Company’s maiden dividend in October of AUD 3.5 cents per share totalling US$29.8 million
  • Free cashflow of US$18.3 million
  • Net cash position of US$74.6 million as at 31 December 2020