African mineral sands producer and developer Base Resources has reported that its Kwale operation, in Kenya, continued to perform to plan and remains on track to achieve production guidance for the 2024 financial year.

In its financial results for the six-month period ended December 31, 2023 – the first half of the company’s 2024 financial year – Base said mining at Kwale had entered the lower-grade orebodies during the period that will characterise the remaining mine life, which resulted in reduced production and lower sales volumes. 

The period also saw softening sales prices for all products.

“Kwale operations once again performed consistently to plan, but with only lower-grade orebodies remaining, production and sales volumes were lower as expected. Despite this, and softening market conditions for our products, Kwale operations continued to operate profitably and generate positive free-cash flow, with preparations for post-mining after December 2024 occurring in parallel,” Base MD Tim Carstens said on February 26.

Base reported decreases in average achieved product prices of 4% for rutile, 9% for ilmenite and 18% for zircon compared to the comparable period in the previous year, with a revenue of $73.1-million.

The group earnings before interest, taxation, depreciation and amortisation (Ebitda) came to $14.7-million, with a net loss after tax of $1.5-million.

Base reported that its free cash flow amounted to $14.8-million, made up of operating cash flows of $25.2-million less investing cash flows of $10.4-million. The company’s net cash position was at $78.9-million at the end of last year.

In terms of operations, Kwale showed an ore grade of 2.39%, down from 3.9% a year prior, as mining operations moved to lower-grade orebodies as planned.

Base reported that it produced 18 909 t of rutile, 77 663 t of ilmenite, 7 657 t of zircon and a combined 4 140 t of low-grade rutile and zircon products.

Meanwhile, after limited engagement with the Madagascan government in the lead up to the Presidential elections in November last year, discussions on fiscal terms and lifting of the Toliara project’s suspension have restarted. 

With the Madagascan government indicating that progressing the Toliara project is a priority, this year has so far seen sustained engagement with positive progress made, including expressed support for production of a monazite product from the project.

In light of progress achieved and the government’s demonstrated level of focus and engagement, in applying the company’s capital management policy, the board decided not to pay an interim dividend.

The Toliara project monazite prefeasibility study has been completed, delivering positive outcomes and resulting in an enhancement of the overall project economics, with the project’s post net present value doubling to $2-billion.

“Realisation of [the Toliara project’s] potential is now more important than ever. With the President of Madagascar’s government now formed and a new Mining Code in place, a positive shift in dynamics and significant focus and attention from the government on the project’s progression is evident. We are optimistic that mutually attractive fiscal terms can be secured that will support development of the Toliara project,” Cartens said.

In this context, and in light of the approaching conclusion of mining at Kwale, he said he believed it was appropriate that cash now be retained for the expected progression of the Toliara project.