$0.51 price target

https://www.*.co.uk/companies/news/...ecord-amount-of-rutile-and-zircon-207353.html

Base Resources produces record amount of rutile and zircon
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10:11 18 Oct 2018
Net debt came down despite the Kenya Revenue Authority failing to provide any VAT refunds in the third quarter
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More than 150 tertiary scholarships were awarded to students from Kwale County in the quarter
Base Resources Limited (LON:BSE, ASX:BSE) said mined ore tonnes increased by 35% in the third quarter.

The sharp increase in output followed the successful implementation of the Kwale Phase 2 mine optimisation project.

READ: Base Resources clears outstanding project debt for Kwale
The company produced a record amount of rutile – 25,125 tonnes – and a record 9,683 tonnes of zircon in the quarter.

Production guidance for the full year at the Kwale mineral sands project in Kenya was left unchanged.

Total operating costs at Kwale were marginally higher than last quarter with higher tonnes mined, but due to a similar increase in overall production volumes the unit operating cost of US$103 per tonne produced (rutile, ilmenite and zircon) remained in line with the prior quarter (US$102 per tonne).

Unit operating costs were higher than the same period last year (September 2017: US$90 per tonne) due to higher operating costs associated with a 60% increase in the mining volume following implementation of the Kwale Phase 2 mine optimisation project.

The cost of goods sold of US$124 per tonne sold (operating costs, adjusted for stockpile movements, and royalties) was lower than the preceding quarter due to an increase in finished product stocks.

Net debt narrowed by US$9.4mln to US$23.8mln.

“Operationally this was (yet) another good performance from the company. This follows the completion of the KP2 expansion of the Wet Concentrator Plant in March 2018, and the move to hydraulic mining, which was completed during the quarter. The move of mining operations to the South Dune remains on track for completion in July 2019,” said RFC Ambrian, the nominated advisor (nomad) of Base Resources.

“A drilling programme at the North Dune at Kwale was completed during the period and a resource update is planned to be completed in 1Q19. Drilling at Kwale East remained suspended pending the resolution of the community access issues there.

“Work at Toliara in Madagascar also remains on track to deliver a pre-feasibility study [PFS] in 1Q19 and a DFS [definitive feasibility study] ahead of a Final Investment Decision in 4Q19. We expect that the upcoming PFS will confirm our view that Toliara has the potential to be a long-life, high-margin operation once in production, which is targeted for 2021,” RFC Ambrian said.

“With continued strong production and an ongoing supportive mineral sands environment, we expect that the results of the exploration programmes at Kwale and the definition of parameters at the Toliara Project have the potential to add further value. In the meantime, we maintain our Buy rating and our target price of A$0.51,” the broker concluded.

Base Resources shares currently trade at 13.75p (about A$0.25), unchanged on the day.   

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