"Fantastic" deal - RFC Ambrian

Base to acquire Toliara Sands project in Madagascar, raises US$100 mln

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08:29 19 Dec 2017
The acquisition of Toliara Sands adds strength in depth to Base's offering, with the company already well established in Kenya
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Mineral sands are in increasing demand as markets continue to recover
Base Resources Limited (LON:BSE) is to acquire the Toliara Sands project in Madagascar in a deal that will be funded by a US$100 mln placing and entitlement offer.
Toliara has a large, high grade resource of 857 million tonnes at 6.2% heavy minerals, with 612 million tonnes in the measured and indicated categories at 6.7% heavy minerals.
Base will pay US$75 mln for an 85% interest, acquiring the final 15% on the completion of certain milestones.
Crucially, key permits are in place, including mining lease and environmental approval. An established legislated land acquisition process is underway and scheduled for completion in mid-2018.
Mining trials and processing test-work completed to date support a simple dry mining operation and technically straight forward process flowsheet.
This means that operational simplicity, high grade and scale can be expected to produce a robust project with a first quartile revenue-to-cash cost ratio.
The plan is to put Toliara Sands into production in mid-2021.
Broker RFC Ambrian called the deal “fantastic”.
“Unlike much of its peer group, Base will enjoy the benefits of asset and jurisdictional diversification and scale. Mine life, projected for at least 30 years at Toliara, will no longer be an issue for the company,” said the broker.
“We see no reason for the stock to trade at a discount to the sector any longer.”