Base Resources Limited Additional critical mineral product stream doubles Toliara Project's NPV
December 14 2023 - 1:00AM
UK Regulatory
TIDMBSE
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$71million, 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$4.7 billion in direct government revenue and community
development expenditure over the initial 38-year mine life."
"With the recent conclusion of Presidential elections in Madagascar and reform
of the mining regulatory regime well progressed, we believe that 2024 will see
conditions supportive of the Toliara Project's progression. We look forward to
resuming discussions with the newly formed Government early in the new year. We
remain confident that acceptable fiscal terms can be secured that will support
development of the Toliara Project, delivering clear and compelling benefits to
our host communities, the nation of Madagascar and our shareholders."
Investment evaluation
Below are the key financial and production outcomes from the Monazite PFS,
together with the outcomes from Mineral Sands DFS2.
Attached to this release are supporting slides titled "Toliara Monazite Project
Pre-Feasibility Study" containing detailed information about the Monazite PFS
and its outcomes.
Unit Monazite Mineral Sands Combined
PFS DFS2
NPV10 (discount US$ millions 999 1,008 2,006
rate of 10%), post
tax, real
NPV8 post tax, US$ millions 1,281 1,385 2,666
real1
NPV10 spot US$ millions 679 1,008 1,687
monazite price
post tax, real1
IRR % 78.6% 23.8% 32.4%
Initial (Stage 1) US$ millions 71 520 591
Capex
Construction time Months 29 27 27
(Stage 1)
Stage 2 Capex US$ millions N/A 137 137
Capital Payback Years 1.0 4.5 3.6
Period (Stage 1 +
2)
Production - kt pa 21.8 N/A 21.8
Monazite
Production - kt pa N/A 1,033 1,033
ILM/RUT/ZIR
Life of mine (LOM) years 38 38 38
LOM Operating US$/t ore mined 0.98 3.78 4.92
Costs + Royalty
LOM Operating (A) US$/t produced 1,089 88 112
Costs + Royalty
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 (B/A) Ratio : 1 7.9 3.5 4.3
of Sales Ratio
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 UKMAR) which is part ofUKlaw by virtue of theEuropean
Union(Withdrawal) Act 2018. The information is disclosed in accordance with the
Company's obligations under Article 17 of theUKMAR. 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
NOMINATED ADVISER & JOINT BROKER
Canaccord Genuity Limited
James Asensio / Raj Khatri / George Grainger
Phone: +44 20 7523 8000
JOINT BROKER
Berenberg
Matthew Armitt / Detlir Elezi
Phone: +44 20 3207 7800
This information was brought to you by Cision http://news.cision.com
The following files are available for download:
https://mb.cision.com/Public/22548/3893356/89a168c3d231921e.pdf Toliara Monazite Project Pre-Feasibility Study
END
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