AMN - MADAGASCAR: Base plans mineral sands expansion

Base Resources expects a definitive feasibility study to be completed by December this year on proposals to expand its current Kenyan mineral sands output to a new additional high-end production footprint in Madagascar. The DFS covers the proposed $439 million stage 1 work on the Toliara mineral sands project.

Base describes the Madagascan project as one of the best mineral sands development projects in the world.

During the Paydirt 2019 Africa Downunder conference in Perth, Base’s managing director Tim Carstens said the planned expansion came at a time the company was experiencing high demand from customers and a tightening in supply generally in the market for mineral sands products.

“Following two years of pricing gains, demand stabilised in FY19 due to global trade tensions and economic uncertainty,” he said.

“Current zircon supply is tightly managed by major producers, and this is providing a solid foundation for ongoing market stability – but longer-term supply remains constrained. Even demand for Base Resources’ zircon from current customers exceeds our ability to supply all of it.”

The market dynamics come after a strong year’s performance by Base Resources at its Kwale mine in Kenya in which it recorded favourable prices (28% higher for zircon), higher output and a lift in full-year profits. The company is expanding its future mining resource and capability at its Kenyan operations.

But it is in Madagascar that Base is looking to add a second long-life production stream with the DFS now underway.

The pre-feasibility study showed a NPV₁₀ post of US$671 million, an IRR of 22.4% and average annual production of 806,000 tonnes of ilmenite, 54,000 tonnes of zircon and 8000 tonnes of rutile in a project covering a Stage 1 capex of US$439 million (13Mtpa) and a lower Stage 2 capex of US$67 million (19Mtpa), delivering an anticipated LOM average annual EBITDA of US$165 million.

“We are currently establishing early capability and capacity building programs at Toliara, advancing land acquisition and initiating the debt funding process,” Carstens said. “This is a truly world-class mineral sands development project with a long mine life.”

Toliara, 40km north of the southwest regional town and port of Toliara, is underpinned by the large, high-grade Ranobe deposit, containing a JORC 2012 compliant mineral resource of 1,293 million tonnes at 5.1% heavy mineral (HM), with 794 million tonnes at 5.8% HM in the measured and indicated categories.

The MD said this was sufficient to support a 40+ year mine life at a scale similar to the company’s Kwale operations in Kenya.

“The high HM grade and mineral assemblage of the Ranobe deposit could produce a similar revenue per tonne mined to the Kwale Operations,” he said.

Base is targeting a Toliara final investment decision in 2020 for a planned start-up in 2022. The mine will offer more than 1,000 permanent job opportunities when in production.

www.baseresources.com.au