AIM
and Media Release
14 December 2023
Base
Resources Limited
Additional
critical mineral product stream doubles Toliara Project’s
NPV
Key Points
-
Pre-feasibility
study on the production of monazite has significantly enhanced the
forecast financial returns from the Toliara Project.
-
With an
incremental NPV10
of
US$1.0 billion (post-tax, real), the
Monazite PFS has doubled the Toliara Project’s overall
NPV10
to
US$2.0 billion (post-tax,
real).
-
Monazite
is a rich source of rare earth elements critical to the world’s
green energy transition and represents 2.0% of the heavy mineral in
the Toliara Project’s Mineral Resources estimate.
-
The
Monazite PFS demonstrates that tails from the mineral sands
processing planned under the Mineral Sands DFS2 can be easily
upgraded to a monazite product, for modest additional capital
expenditure. Capitalising on what is essentially a ‘waste’ stream
will make the Toliara Project one of the largest and most
cost-competitive sources of rare earth oxides globally.
-
Other key
incremental outcomes from the Monazite PFS include:
-
IRR of
79%.
-
Capex of
US$71 million and a capital payback
period of 1 year.
-
Average
annual monazite production of 21.8kt, containing 2.8kt of
NdPr.
-
LOM free
cash flow of US$4.7 billion,
averaging US$130 million per
annum.
-
Average
annual EBITDA of US$164
million.
-
Key
overall outcomes from incorporating the Monazite Project in the
Toliara Project include:
-
Average
revenue to cash cost of sales ratio of 4.3 over the 38-year
modelled mine life.
-
Increase
of LOM free cash flow by 80% to US$10.6
billion, averaging US$306
million per annum.
-
Average
annual EBITDA of US$371
million.
African
mineral sands producer and developer, Base Resources Limited (ASX
& AIM: BSE) (Base
Resources) is
pleased to release the outcomes of its pre-feasibility study on
exploitation of the contained monazite at its Toliara Project in
Madagascar through
concentration
of the existing waste stream from the project’s mineral sands
processing facilities to produce a valuable monazite product
(Monazite
PFS).
On an
incremental basis, the Monazite PFS has delivered exceptional
outcomes and is a significant enhancement of the Toliara Project as
outlined in the enhanced definitive feasibility study on the
project’s mineral sands (Mineral
Sands DFS2).
For modest
additional estimated capital expenditure of US$71 million,
the Monazite PFS outcomes include an incremental post-tax/pre-debt
(real) NPV10
of
US$1.0 billion, IRR of 79% and an
average revenue to cost of sales ratio of 7.9, over an initial
38-year mine life.
When
combined with the Mineral Sands DFS2, the Toliara Project has an
overall post-tax/pre-debt (real) NPV10
of
US$2.0 billion.
Managing
Director of Base Resources, Tim
Carstens, said:
“Put
simply, the outcomes from our Monazite PFS reinforce our belief
that Toliara is the best undeveloped mineral sands project in the
world.
Unsurprisingly,
adding another critical mineral stream through concentrating what
would otherwise have been ‘waste’ from the mineral sands processing
has materially improved the forecast financial performance of the
project, with a 100% increase in NPV and free cash flow of almost
US$10.6 billion over the initial
modelled life of the project.
Utilising
the waste stream as an essentially free source of monazite feed
will make the Toliara Project one of the largest and most
cost-competitive sources of rare earth oxides globally.”
“We have
always believed in the Toliara Project’s potential to be a catalyst
for growth in Madagascar, creating
transformational opportunities for our communities, economic
stimulus for the Toliara region and being a flagship investment for
the Government.
The
addition of the monazite product stream enhances these
opportunities for all stakeholders, with the project now forecast
to generate over US$4.7 billion in
direct government revenue and community development expenditure
over the initial 38-year mine life.”
“With the
recent conclusion of Presidential elections in Madagascar and reform of the mining regulatory
regime well progressed, we believe that 2024 will see conditions
supportive of the Toliara Project’s progression.
We look
forward to resuming discussions with the newly formed Government
early in the new year.
We remain
confident that acceptable fiscal terms can be secured that will
support development of the Toliara Project, delivering clear and
compelling benefits to our host communities, the nation of
Madagascar and our
shareholders.”
Investment
evaluation
Below are
the key financial and production outcomes from the Monazite PFS,
together with the outcomes from Mineral Sands
DFS2.
Attached
to this release are supporting slides titled “Toliara Monazite
Project Pre-Feasibility Study” containing detailed information
about the Monazite PFS and its outcomes.
|
|
Unit
|
Monazite
PFS
|
Mineral Sands
DFS2
|
Combined
|
NPV10
(discount
rate of 10%), post tax, real
|
US$
millions
|
999
|
1,008
|
2,006
|
NPV8
post tax, real1
|
US$
millions
|
1,281
|
1,385
|
2,666
|
NPV10
spot monazite price post tax,
real1
|
US$
millions
|
679
|
1,008
|
1,687
|
IRR
|
|
%
|
78.6%
|
23.8%
|
32.4%
|
Initial
(Stage 1) Capex
|
|
US$
millions
|
71
|
520
|
591
|
Construction
time (Stage 1)
|
|
Months
|
29
|
27
|
27
|
Stage
2 Capex
|
|
US$
millions
|
N/A
|
137
|
137
|
Capital
Payback Period (Stage 1 + 2)
|
|
Years
|
1.0
|
4.5
|
3.6
|
Production
– Monazite
|
|
kt
pa
|
21.8
|
N/A
|
21.8
|
Production
– ILM/RUT/ZIR
|
|
kt
pa
|
N/A
|
1,033
|
1,033
|
Life
of mine (LOM)
|
|
years
|
38
|
38
|
38
|
LOM
Operating Costs + Royalty
|
|
US$/t ore
mined
|
0.98
|
3.78
|
4.92
|
LOM
Operating Costs + Royalty
|
(A)
|
US$/t
produced
|
1,089
|
88
|
112
|
LOM
Revenue
|
(B)
|
US$/t
produced
|
8,648
|
306
|
477
|
LOM
Cash Margin
|
(B-A)
|
US$/t
produced
|
7,559
|
218
|
365
|
LOM
Revenue: Cost of Sales Ratio
|
(B/A)
|
Ratio :
1
|
7.9
|
3.5
|
4.3
|
LOM
Free Cash Flow
|
|
US$
millions
|
4,733
|
5,922
|
10,655
|
[Note
(1): Alternative
NPV calculations are provided for illustrative and comparative
purposes.
Spot
monazite price assumed to be US$5,900/t.
Base
Resources considers a 10% discount
rate to be the most appropriate for evaluation
purposes.]
Investor
briefings
Base
Resources will host two investor briefings to discuss the outcomes
from the Monazite PFS on 19 December
2023 at 8.30am (AWST) and
5.00pm AWST / 9.00am BST.
The
briefings will be hosted by Tim
Carstens (Managing Director), Kevin
Balloch (Chief Financial Officer), Stephen Hay (General Manager – Marketing) and
Andre Greyling (General Manager –
Growth).
The
briefings will be by webcast and teleconference.
Details
for accessing each are below.
Participants
will only be able to ask questions via the teleconference
line.
Participants
that propose using the teleconference line will need to
pre-register their details using the teleconference registration
URL provided below.
Upon
registering, participants will receive an email with their unique
PIN and dial-in details so that they can join the call on the day
without needing to speak to an operator.
Australia webcast and teleconference
Date:
Tuesday, 19 December 2023
Time:
8.30am AWST / 11.30am AEST
Webcast
URL:
https://webcast.openbriefing.com/bse-mu-2023-au/
Teleconference
pre-registration URL:
https://registrations.events/direct/OCP60911
UK webcast
and teleconference
Date:
Tuesday, 19 December 2023
Time:
5.00pm AWST / 9.00am BST
Webcast
URL:
https://webcast.openbriefing.com/bse-mu-2023-uk/
Teleconference
pre-registration URL:
https://registrations.events/direct/OCP61023
Further
information about the Monazite PFS and the PFS
Materials
The
supporting slides attached to this release titled “Toliara Monazite
Project Pre-Feasibility Study” form part of this release (together,
this release and the supporting slides are the PFS
Materials).
This
release should be read together with these
slides.
The
information contained in the slides includes information in
relation to the modifying factors in JORC Code Table 1, and the
material assumptions (including in respect of the modifying
factors) and underlying methodologies and inputs used for the
Monazite PFS and from which the financial and production outcomes
and other forward-looking statements set out in the PFS Materials
were derived.
Base
Resources has concluded that it has a reasonable basis for
providing the forward-looking statements set out in the PFS
Materials.
This
includes a reasonable basis to expect that Base Resources will,
when required, be able to fund development of the Toliara Project,
including the additional capital expenditure required to produce a
monazite product, and obtain a legal right to exploit
monazite2.
The
Disclaimer & Important Notices on pages 2 and 3 of the
supporting slides apply to all the PFS Materials, including this
announcement.
The PFS
Materials also contain the outcomes from Mineral Sands DFS2 and
select information from that study.
This
information has been provided to contextualise the outcomes of the
Monazite PFS and because the Monazite PFS was based on
concentration of the monazite waste stream from the Mineral Sands
DFS2.
For this
reason, and to the extent material to the production and financial
outcomes from the Monazite PFS, the assumptions and underlying
methodologies and inputs used for the Mineral Sands DFS2 have also
been included in the PFS Materials.
For
further information in relation to the Mineral Sands DFS2, refer to
Base Resources’ announcement on 27 September
2021 “DFS2 enhances scale and economics of the Toliara
Project” available at
https://baseresources.com.au/investors/announcements/.
Base
Resources confirms that all the material assumptions underpinning
the production information and forecast financial information
disclosed in that announcement continue to apply and have not
materially changed.
[Note
(2): The
Toliara Project’s existing mining tenure, Permis d’Exploitation
37242, does not currently provide the right to exploit
monazite.]
ENDS.
The
information contained within this release is considered inside
information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the
UK MAR)
which is part of UK law
by virtue of the European
Union (Withdrawal)
Act 2018.
The
information is disclosed in accordance with the Company's
obligations under Article 17 of the UK MAR.
Upon
the publication of this release, this inside information is now
considered to be in the public domain.
For
further information contact:
Australian
Media Relations
|
UK Media
Relations
|
Citadel
Magnus
|
Tavistock
Communications
|
Cameron
Gilenko and Michael Weir
|
Jos Simson
and Gareth Tredway
|
Tel: +61 8
6160 4900
|
Tel: +44
207 920 3150
|
This
release has been authorised by the Board of Base
Resources.
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.
Further
details about Base Resources are available at
www.baseresources.com.au.
PRINCIPAL
& REGISTERED OFFICE
Level 3,
46 Colin Street
West Perth, Western
Australia, 6005
Email:
info@baseresources.com.au
Phone: +61
8 9413 7400
Fax: +61 8
9322 8912
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ADVISER & JOINT BROKER
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Phone: +44
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BROKER
Berenberg
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