Mineral sands producer Base Resources describes the 2023 financial year as one of operational and financial success in which the company delivered robust results at its Kwale Operations, in Kenya, where operations are due to cease in December 2024.

Chairperson Michael Stirzaker says tight control of costs and a supportive pricing environment contributed to an operating result that was only marginally behind the previous year’s record.

The robust pricing environment more than offset lower production following the introduction of the North Dune orebody, with the group generating underlying earnings before interest, taxes, depreciation and amortisation of $158.6-million. 

Despite this, a net loss of $4.8-million was recorded, as profitability was impacted on by a non-cash impairment of $88.9-million. The impairment followed a reassessment of the carrying value of Kwale Operations and reflects the increased operating costs of mining the North Dune, the softening outlook for mineral sands product prices over the remaining Kwale mine life and an improved understanding of the ultimate costs of closure.

Strong underlying cash flow enabled the company to end the year with net cash of $92.9-million, with the board declaring a final dividend of A$0.04, which, together with the interim dividend, brings the total distribution for the year to A$0.06 apiece, or $45-million.

The Kwale Operations has been the foundation on which the company is built; however, after extensively exploring all avenues, Stirzaker says the company has been unsuccessful in identifying additional deposits of sufficient grade or scale to support further extension. 

Consequently, mining is expected to end in December 2024 and the company’s focus at Kwale now necessarily turns to detailed closure planning and transition to post-mining land use. 

“Just as we have done over the past ten years of mining at Kwale, we intend to close with the clear objective of cementing our reputation for excellence in the full lifecycle of mining,” Stirzaker states.

With the Kwale Operations now coming to an end, the next phase of shareholder value creation will come from progression of the world-class Toliara project, in Madagascar, to development and realising both its mineral sands and rare earths potential. 

This project continues to represent a transformational growth opportunity for the company.

Building on the updated definitive feasibility study released last year, which significantly increased both the scale and economic value of the mineral sands project, a concept study assessing the commercial potential of the project’s monazite content has been completed. 

This study confirmed substantial economic potential and further reinforced Base’s confidence that the Toliara project is the best undeveloped mineral sands asset in the world. 

“We look forward to sharing more about this opportunity in coming weeks once we have completed a prefeasibility study for the addition of a monazite concentrator,” Stirzaker says.

MADAGASCAR CONTEXT

After making sound progress in its discussions with the government of Madagascar in relation to the fiscal terms applicable to the Toliara project and, with that, the expected lifting of an on-ground suspension, engagement slowed owing to the government's focus on an overhaul of the Malagasy Mining Code and preparations for the Presidential elections. 

The first round of the elections was held on November 16 and the new Mining Code has come into effect; however, engagement is expected to continue to be limited until the new government has been formed and the full suite of Mining Code reform is completed.

With the delay in advancing the Toliara project, substantial effort is being applied to the identification of attractive business development opportunities to provide broader funding options for project development and to secure optionality in pursuit of Base’s longer-term Vision 2031 objective of multiple concurrent operations. 

“We are also accelerating our wider Kenyan exploration efforts with the recent lifting of the licensing moratorium,” Shirzaker confirms.

Meanwhile, nonexecutive director Malcolm Macpherson has retired following the company’s yearly general meeting on November 24.