BSE also boasts a portfolio of early stage exploration projects in Western Australia’s Mid West region, with established targets for iron ore, gold, base metals and uranium.
An updated and enhanced definitive feasibility study (DFS) for Kwale will be completed in the June quarter of 2011 with off-take and financing arrangements slated for the third quarter of 2011.
BSE is looking strong on a forecast supply shortfall for mineral sands – including ilmenite, rutile and zircon – in 2013 – therefore it will be one of the stocks to watch over the medium term.
In the same year Kwale will come into production and Base Resources is poised to meet this supply shortfall.
The company released its Quarterly Activities Report at the end of last week, detailing its progress at its key projects.
Kwale is an advanced and highly competitive project in a sector with a significant forecast supply shortfall widely expected to emerge in the medium term.
The project enjoys a high level of support from the Government of Kenya and is located just 50km from Mombasa, Kenya’s principal port facility.
Importantly, two pilot plant operations at Kwale provide confidence in processing behaviour and indicate a suite of readily marketable products.
The project’s high value mineral assemblage and low stripping ratio result in a projected revenue to cash cost ratio that would place Kwale in the top quartile of world producers.
Minerals sands supply
Kwale is being developed via Base Titanium, a subsidiary of BSE. The object of the project is for BSE to capitalise on a forecast sustained opportunity in the mineral sands market.
A mineral sands market supply shortfall is slated by 2013, creating upward pressure on prices to motivate sufficient supply, as China is the new driver of world demand growth.
Mineral sands include ilmenite, rutile and zircon – essentially the basis of “lifestyle products” via their primary end-uses. All three products are set to face a supply deficit in 2013 – ironically coinciding with the date of Kwale’s first production.
Mineral sands demand growth is slated at around 3% per annum as part of a long-term trend.
Late last week BSE released its quarterly activities report for the three months of 2011.
The quarter’s highlight was the updated JORC-compliant resource estimate of the Kwale project, which we had foreshadowed in our previous coverage of BSE.
The miner made good progress on its Enhanced Definitive Feasibility Study (EDFS), which is on schedule to be completed next month.
BSE has also made progress in attracting financing for the project, with a lead manager appointed to arrange a syndicated loan of $150 million and combined indicative commitment levels already reaching the $150 million threshold.
BSE is working towards taking advantage of Chinese demand for mineral sands via Kwale, which has the full support of the local government and is close to existing infrastructure.
Funding for the project is expected to be in place by the September quarter this year.
Base Resource’s current timeline has the Kwale Project in production in mid-2013. This is the same year that a supply shortfall for mineral sands is forecast, creating upward pressure on prices to motivate sufficient supply.