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
in February.
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.
Marketing
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.
Analysis
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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