African mineral sands producer, Base Resources Limited (ASX & AIM: BSE) (Base Resources or the Company) is pleased to provide a quarterly operational, development and corporate update.
COVID-19 UPDATE
Base Resources continues to closely monitor the COVID-19 pandemic and its impacts on the Company's business, people and wider stakeholders. The Company's Kwale Operations in Kenya continues to operate under a suite of mitigations aimed at protecting the health and safety of our employees and neighbouring communities, including modified workplace practices and a focus on hygiene and social distancing. The Company is also assisting governments and communities in both Kenya and Madagascar with several initiatives, primarily involving the construction of hygiene facilities, distribution of food and provision of medical supplies and equipment.
Mining operations continued according to plan on the South Dune orebody with mined tonnage increasing to 4.6Mt (last quarter: 3.9Mt) due to higher mining faces reducing the downtime associated with relocating mining units. The heavy mineral (HM) grade of ore mined was also higher at 3.68% (last quarter: 3.16%). This was driven by the mine path as well as better grade than predicted by the resource model in some areas mined.
Mining & WCP Performance
Wet concentrator plant (WCP) production of heavy mineral concentrate (HMC) was higher at 142kt (last quarter: 104kt) due to a combination of higher mined tonnes and HM grades. HMC stocks increased to 14kt at quarter end (last quarter: 5kt). Sand tails continued to be deposited into the mined-out Central Dune area and significant progress was made with rehabilitation of the minedout areas of the South Dune, with 49 hectares provisionally rehabilitated in the quarter.
MSP Performance
Total mineral separation plant (MSP) feed tonnage was higher than the prior quarter, due to improved HMC availability, while recoveries were generally steady. Consequently, production of all final products increased compared to the prior quarter. Bulk loading operations at the Company's Likoni Port facility continued to run smoothly, dispatching a combined 64kt of bulk ilmenite and rutile during the quarter (last quarter: 85kt). Containerised shipments of rutile and zircon through the Mombasa Port proceeded according to plan.
Summary of unit costs & Revenue per tonne (US$)
Total operating costs of US$16.8 million were marginally higher (last quarter: US$16.6 million) due to higher volumes mined and processed. Increased production levels resulted in lower unit operating costs of US$161 per tonne produced (rutile, ilmenite, zircon and low-grade zircon) (last quarter: US$189 per tonne). Unit cost of goods sold is influenced by both the underlying operating costs and product sales mix. Operating costs are allocated to each product based on revenue contribution, which sees the higher value rutile and zircon products attracting a higher cost per tonne than the lower value ilmenite. Therefore, the greater the sales volume of rutile and zircon relative to ilmenite in a quarter, the higher both unit revenue per tonne and unit cost of goods sold will be.
Ilmenite, and most of the rutile, is sold in bulk, with typical shipment sizes of 50-54kt for ilmenite and 10-12kt for rutile, which means any given quarter will usually contain either one or two bulk rutile and ilmenite sales. Zircon is sold in smaller parcels and sales generally align with production volume. Product sales mix will therefore vary depending on the number of bulk shipments of ilmenite and rutile in each quarter.
Cost of goods sold of US$207 per tonne sold (operating costs, adjusted for stockpile movements, and royalties) increased due to the higher proportion of rutile and zircon in the sales mix in the quarter (last quarter: US$192 per tonne). Average unit revenue increased to US$464 per tonne (prior quarter: US$413 per tonne) due to sales mix and increased ilmenite prices. From the combination of these factors, the revenue to cost of goods sold ratio for the quarter increased to 2.2 (last quarter: 2.1).
Forward looking statements
Certain statements in or in connection with this announcement contain or comprise forward looking statements. Such statements may include, but are not limited to, statements with regard to capital cost, capacity, future production and grades, sales projections and financial performance and may be (but are not necessarily) identified by the use of phrases such as 'will', 'expect', 'anticipate', 'believe' and 'envisage'. By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside Base Resources' control. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in product prices and exchange rates and business and operational risk management. Subject to any continuing obligations under applicable law or relevant stock exchange listing rules, Base Resources undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after today's date or to reflect the occurrence of unanticipated events.
Contact:
James Fuller
Tel: +61 (8) 9413 7426
Email: jfuller@baseresources.com.au
About Base Resources
Base Resources is an Australian based, African focused, mineral sands producer and developer with a track record of project delivery and operational performance. The Company operates the established Kwale Operations in Kenya and is developing the Toliara Project in Madagascar. Base Resources is an ASX and AIM listed company.
BASE RESOURCES LIMITED 
