- Yolanda Torrisi
- +61 412 261 870
- yolanda@yolandatorrisi.com
- Nina van Wyk
- +27 82 926 3882
- nina@africanminingnetwork.com
Base Resources increased ilmenite and zircon output and grades from its Kwale Mineral Sands Project in Kenya during the six months to December 31, 2017. The output of rutile remained steady during the period while ilmenite production was above design capacity.
The period saw an increase to the Hydraulic Mining Unit (HMU) capacity, which was successfully lifted from 400 tonnes per hour to 800 tonnes.
This resulted in increased mining volume of 2.4 million tonnes compared with 1.4 million in the preceding half.
Production of HMC increased to 435,305 tonnes, higher than the prior period’s 391,953 tonnes and the comparative period’s 316,451 tonnes.
Ilmenite and rutile are mainly used as feedstock for the production of titanium dioxide pigment, used in paint, plastics and paper, and demand remained buoyant throughout the period.
In the absence of substantial new supply coming online, the titanium dioxide market is expected to remain in supply deficit, providing an opportunity for continued price strength in both ilmenite and rutile over the coming years.
Zircon, which is used in ceramic tiles and specialty chemicals, due to constraints on global production, has seen a rapidly tightening market and sharp increases in prices since 2016.
The production increases helped the company post a 466% increase in net profit during the half year.
Sales revenue from Kwale was up 28% in the period to A$115.9 million compared to A$90.6 million in the same period in 2016, with the main drivers being the higher ilmenite and zircon prices.
Underlying costs remained steady at an average cost of A$131, or US$102, per tonne of product sold against A$130, or US$98 per tonne in the prior year period.
Group underlying earnings (EBITDA) for the six months to December 31, 2017, were A$69.3 million, a 58% increase on 2016, while the net profit surged 466% to A$21.5 million versus A$3.8 million in 2016.
Base reduced its net debt outstanding by 53% in the period and had cash of A$30.5 million at the end of 2017 versus A$40.4 million at the end of 2016.