JOHANNESBURG (miningweekly.com) – After announcing earlier this month that it had successfully started ore processing at its wet concentrator at the Kwale project, in Kenya, mineral sands developer Base Resources reported on Wednesday that construction of the mineral separation plant was now in its final stages.

“Commissioning of the ilmenite and rutile circuits and commencement of concentrate processing is expected towards the end of November, and will be followed by the zircon circuit,” MD Tim Carstens said in the company’s quarterly activities report.

All supporting infrastructure for the $300-million project, which is expected to boost Kenya’s fledgling resources sector, had been completed and was operational, including the water supply dam, tailings storage facility, power line and ancillary borefield.

Meanwhile, onshore construction of the nearby Likoni port facility was in the final stages, with the 60 000 t capacity storage shed complete and administration buildings on track.

Following construction and trial assembly in South Africa, the ship loader was successfully erected on the wharf platform in August and its installation was on target for completion prior to the first planned bulk shipment in January 2014.

POSITIVE MARKET

Meanwhile, Carstens said the short-term market outlook for titanium dioxide feedstocks continued to show signs of improvement throughout the September quarter, with major pigment producers reporting a significant reduction in final product stocks and announcing pigment price increases.

Continued strength in the US housing market, together with improvement in the Chinese housing sector, were expected to provide support for market conditions to continue improving through the December quarter and into 2014.

“However, ilmenite and rutile stock levels in the supply chain are likely to result in subdued pricing through until at least the end of the first half of 2014,” he commented, adding that zircon demand, from Chinese customers, in particular, increased significantly throughout the first half of 2013.

In contrast, owing to the extent of restocking by zircon users that occurred during the first half of 2013, demand growth was expected to occur at a slower rate through the second half of 2013, as evidenced in the September quarter.

“The timing of a recovery in zircon pricing will be dependent on the pace of stock rebalancing throughout the supply chain, but the long-term outlook for all mineral sands products remains very positive.

“Enquiry levels for Base's products remains strong and, during the September quarter, we finalised three new three-year, take-or-pay offtake agreements with leading Chinese offtakers, securing a large portion of the previously uncontracted sales volumes for ilmenite and zircon,” he noted.

EXPLORATION

The dual-listed explorer further noted on Wednesday that it had taken the “appropriate legal action” to protect the option-to-purchase rights for three additional Kenya-based exploration projects.

Base received a court order staying the cancellation of rights for the Kilifi, Mambrui and Vipingo projects, pending a hearing. The company would continue to pursue the matter and was confident of a positive outcome. 

Meanwhile, further exploration activity, focused on enhancing the Kwale North Dune resource estimate – which was not currently included in the Kwale project – was completed over the quarter, with composite samples having been sent for assaying.

This would be followed by the preparation of the updated resource model in the December quarter.

At September 30, Base posted cash and cash equivalents of A$44.3-million and debt drawn of $170-million.