Base Resources readies to ship Kwale heavy mineral concentrates
Base Resources (ASX: BSE)
continues to stockpile ilmenite and rutile produced from its Kwale
mineral sands project in Kenya for bulk shipments that are due to begin
The company produced a total of 42,472 dry metric tonnes of heavy mineral concentrate in the December 2013 quarter.
All work packages for the mineral separation plant are now complete and operational with the exception of the zircon circuit, which is currently undergoing feed commissioning.
Base had $33.3 million in cash as of 31 December 2013.
Kwale mineral sands project
Production of HMC began in October 2013 following commissioning of the dry mining unit and wet concentrator in early October.
Optimisation of these circuits continued throughout the quarter resulting in a steady increase in throughput, recoveries, availability and runtime towards design targets.
The DMU proved extremely effective with the Caterpillar D11T dozers performing to expectation.
Slimes separation and disposal and sand tails stacking has proceeded and performed according to plan. Wet concentrator production and performance has been ramping up consistently and is in line with ramp up expectations.
Commissioning of the MSP commenced in December with the main focus on balancing and debottlenecking in order to progress the ramp‐up to achieve nameplate throughput.
Ilmenite production is on track in terms of both tonnage and quality to achieve the first bulk shipment in February 2014, slightly later than planned.
Ramp up of rutile production has been slower due to an initial focus on the front end ilmenite circuit as well as the rectification of a number of plant bottlenecks. The first bulk rutile shipment is scheduled for March.
Trucking of bulk ilmenite and rutile to stockpile at the Likoni port facility commenced during the quarter and has proceeded without incident.
Construction work at the Kwale processing plant is winding down. Over 80% of the contractor workforce has demobilised and outstanding activity comprises mainly remedial work and commissioning of the wet and dry zircon circuits.
Zircon production is expected to commence slightly behind schedule in early February.
Construction works at the Likoni port facility are complete with the 60,000 tonne capacity storage shed receiving both ilmenite and rutile product.
Budget and Financing
The estimated cost at completion for the Project is currently US$310 million, of which US$300 million had been incurred to 31 December 2013.
In addition, the total Kwale Project debt facilities drawn stands at US$215 million.
The short term market for titanium dioxide feedstocks continued to show signs of improvement through the December quarter with reports from major pigment producers suggesting that pigment demand has improved, and stock levels and plant utilisation rates have started to normalise, through H2, 2013.
Improvement of ilmenite and rutile pricing in 2014 is dependent on the pace of stock re‐balancing between producers and consumers.
Demand for zircon was firm in the major markets of China and USA throughout 2013, with consumption exceeding that in 2012 with the trend expected to continue through 2014.
Although zircon pricing remained relatively stable for much of 2013, the rate of supply into the market through the December quarter exceeded that of demand and forced a drop in pricing by year end.
Base has agreed sales schedules with all customers for 2014 and is currently finalising shipping and logistics arrangements for the initial shipments in the first quarter of 2014.
Base Resources ongoing work at the Kwale mineral sands project has brought it to the brink of starting bulk shipments of heavy mineral concentrates, which are expected to begin in February starting with ilmenite.
Rutile exports will begin shortly after, with zircon following.
Late last year Base received a buy recommendation and a $1 share price target price from UK broker RFC Ambrian. Highlighting the potential upside, Base last traded at $0.42.
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