ASX- and Aim-listed mineral sands producer and developer Base Resources has reported revenue of $135.1-million for the financial year ended June 30, which is a 50% reduction on revenue reported for the prior financial year, owing to lower production and sales volumes.

Earnings before interest, taxes, depreciation and amortisation stood at $26.4-million, with an underlying net loss after tax of $1.6-million. Free cash flow was $25.7-million, with operating cash flows of $45.4-million, less $19.7-million invested to transition mining at the Kwale operation, in Kenya, to the remaining orebodies and to progress the Toliara project, in Madagascar.

The company’s net cash position was $88.1-million at financial year-end.

Upon the release of the company’s financial, operational and development results for the year, MD Tim Carstens confirmed that mining at its Kwale operation would end in December when ore reserves were fully depleted as planned. Planning for closure and the transition to post-mining land use was well advanced, he said.

Carstens added that the Kwale operations continued to perform to plan during the year, achieving production at the top end of guidance. However, the transition to lower-grade orebodies, which would characterise the remaining mine life, led to reduced production and lower sales volumes.

Additionally, the period saw a softening in sales prices for all products.

"The Kwale operations team overcame the dual challenges of new orebodies and lower grades to deliver production volumes at the top end of guidance, while continuing to keep tight control of costs, contributing to the group’s strong closing cash position of $88.1-million,” Carstens said.

In October last year, it was announced that an evaluation of the remaining near-mine extensional opportunities concluded they were not economically viable.

Consequently, mining at Kwale is expected to end this year following the planned depletion of remaining ore reserves, with processing activities concluding shortly thereafter.

Carstens also noted that discussions with the government of Madagascar on the key fiscal terms that would apply to the Toliara project restarted earlier in the year, shortly after President Andry Rajoelina formed his new government and appointed his Cabinet following his re-election late last year.

Carstens noted that the company believed that an in-principle agreement had been reached on the key fiscal terms that would apply to the entire Toliara project, which included both mineral sands and monazite, although these remained subject to entry of binding documentation and therefore the terms remained subject to change and timing was uncertain.

"Our belief that the Toliara project is the best undeveloped mineral sands project in the world was reinforced following completion of the Monazite prefeasibility study in December," he commented.

Engagement with the government was focused on agreeing on the terms of the binding agreements to give effect to the in-principle agreement and other key matters for facilitating timely project progression, he said.

In April, the company announced a proposed combination with NYSE- and TSX-listed Energy Fuels to establish a new key player in the critical minerals sector. Carstens said the board had determined to pay a special dividend of A$0.065 a share in connection with the transaction.

He said the payment of the special dividend was conditional on the scheme of arrangement to implement the proposed combination becoming effective.

In addition to the special dividend, Base Resources shareholders would be entitled to receive 0.026 Energy Fuels common shares for each Base Resources share held should the scheme proceed.

"By providing the opportunity to go further downstream and capture more of the rare earths supply chain value and risk diversification, the proposed combination with Energy Fuels will . . . enhance Toliara’s potential and also provide increased capacity and optionality for funding the project,” Carstens said.

He also highlighted the transition of Kwale South Dune mining operations to the Bumamani deposit, following the depletion of the Kwale South Dune ore reserves.

This transition impacted on mined volumes, which were 6% lower year-on-year, at 15.3-million tonnes.

He pointed out that the 2024 financial year production guidance was achieved, with production of 41 317 t of rutile, 159 395 t of ilmenite, 17 354 t of zircon and a combined 10 034 t of low-grade rutile and zircon products.

However, this production was lower than the prior year owing to lower ore grades and mined tonnages. Softening product markets resulted in reductions in average achieved prices of 4% for rutile, 9% for ilmenite and 14% for zircon compared with the prior year.