AIM and Media Release
27 September 2021
BASE RESOURCES LIMITED
DFS2 enhances scale and economics of
the Toliara Project
Key Points
· Increase in post-tax / pre-debt
(real) NPV @ 10% discount rate to US$1.0
billion, measured at FID
· Average revenue to cost of sales
ratio of 3.5
· Increase of LOM free cash flow
by 60% to US$5.9 billion, with first
10 years averaging US$210 million
pa
· Stage 2 scaled up to increase
mining rates by 33% to ~25Mtpa and increasing MSP production
capacity by 47%
· The increased scale of the
Toliara Project is underpinned by significant increases to the
Ranobe Mineral Resources and Ore Reserves estimates and the
long-term supply-demand outlook for mineral sands:
o Ranobe Mineral Resources estimate has almost doubled to
2,580Mt at an average heavy mineral grade of 4.3%
o Ranobe Ore Reserves estimate increased to 904Mt at an average heavy mineral grade of 6.1%,
a 45% increase in contained heavy mineral, supporting an initial
mine life of 38 years
· Stage 1 capex cost, to establish
a 13Mtpa mining processing operation, has increased by 18% to
US$520 million, primarily due to cost
escalation
· Stage 2 capex cost increase to
US$137 million due to scale up of the
operation to 25Mtpa mining rate
· Annual averages (excluding first
and last partial operating years):
o Production of 960kt ilmenite (sulphate, slag and
chloride), 66kt zircon and 8kt rutile
o Revenue of US$317 million
– 65% ilmenite, 32% zircon and 3% rutile
o Operating costs of US$77
million or US$90 million incl.
a 4% government royalty
o Non-operating costs of US$8
million (community, external affairs, marketing etc.)
o EBITDA of US$219 million,
NPAT US$152 million
o Free cash flow of US$174
million
African mineral sands producer and developer, Base Resources
Limited (ASX & AIM: BSE) (Base Resources) is pleased
to release the outcomes of its enhanced Definitive Feasibility
Study (DFS2) for its Toliara Project in Madagascar. The increased scale of DFS2
(from the 2019 DFS1) has delivered a substantial
improvement in the forecast financial returns for the Toliara
Project, including a post-tax/pre-debt (real) NPV10 of
US$1.0 billion and an average revenue
to cost of sales ratio of 3.5, over an initial 38-year mine
life.
[Note (1): For further information refer
to Base Resources’ market announcement on 12
December 2019 “DFS reinforces Toliara Project’s status as a
world class mineral sands development” available at
https://baseresources.com.au/investors/announcements/.]
Executive Director Operations and
Development of Base Resources, Colin Bwye, said:
“The true size and value of the Ranobe mineral sands deposit is
only just beginning to reveal itself, as evidenced by the
significant increase in the Ranobe Mineral Resources and Ore
Reserves estimates, with more expected to come once we can complete
the mineralogy work required to incorporate the lower sandy unit
which holds great potential. Encouraged by this, and the
expected future supply deficit in mineral sands markets, we have
taken the opportunity to scale up the Toliara Project in DFS2.”
“The scaled-up project now supports average annual production of
960kt of ilmenite, 66kt of zircon and 8kt of rutile, with the first
10 years of stage 2 operations materially higher at 1.2Mt of
ilmenite and 82kt of zircon.”
“In addition, since the release of the 2019 DFS, significant
effort has gone into optimising the mine plans and increasing the
level of project engineering, as well as engaging with preferred
suppliers to improve scope definition, giving greater confidence in
the capital cost estimates and allowing a reduction in associated
contingencies. While the initial stage 1 capital cost
estimate has increased by US$78
million to US$520 million,
primarily driven by sector-wide cost escalation for capital
development, the economics of the project have been substantially
enhanced.”
Managing Director of Base Resources,
Tim Carstens, said:
“We are pleased to share the outcomes of our enhanced DFS2 which
reaffirms our view that the Toliara Project is a world class
mineral sands development opportunity.”
“While capital costs have increased, the subsequent expansion in
production has materially improved the financial performance of the
project, with a 55% lift in forecast NPV and free cash flow
generated of almost US$6 billion over
the life of the project. Importantly, and despite the
increased development costs, the capital payback period is still
only 4.5 years.”
“We have always firmly 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 a flagship foreign investment for the
government. The increased scale of DFS2 enhances these
opportunities for all stakeholders with the project now forecast to
generate almost US$2.0 billion in
direct government revenue and community development expenditure
over the 38-year mine life.”
“We will be maintaining a high degree of engagement with the
Government of Madagascar in
seeking to secure fiscal terms and the lifting of the current
suspension of on-ground activities as soon as possible. We
remain confident that acceptable terms can be secured that will
support the development of the Toliara Project, delivering clear
and compelling benefits to our host communities, the nation of
Madagascar and our
shareholders.”
Investment evaluation
Set out below are the key financial and production outcomes from
DFS2, compared against those from the 2019 DFS.
|
|
Unit |
DFS2 |
DFS |
Change |
NPV10 (discount rate of 10%), post tax, real |
US$
millions |
1,008 |
652 |
55%
higher |
NPV8 post tax, real* |
US$
millions |
1,385 |
910 |
52%
higher |
NPV12 post tax,
real* |
US$
millions |
733 |
461 |
59%
higher |
NPV10 – TZMI Q2-2021 price forecast,
post tax, real |
US$
millions |
996 |
722# |
38%
higher |
IRR |
|
% |
23.8 |
21.4 |
11%
higher |
Initial (Stage 1)
Capex |
|
US$
millions |
520 |
442 |
up
18% |
Construction time
(Stage 1) |
|
Months |
27 |
26 |
+1
month |
Stage 2
Capex |
|
US$
millions |
137 |
69 |
up
99% |
Capital Payback Period
(Stage 1 + 2) |
|
Years |
4.5 |
4.3 |
+2
months |
Production
(ILM/RUT/ZIR) |
|
kt
pa |
1,033 |
839 |
25%
higher |
Life of mine
(LOM) |
|
years |
38 |
33 |
+5
years |
LOM Operating Costs +
Royalty |
|
US$/t
ore mined |
3.78 |
4.31 |
12%
lower |
LOM Operating Costs +
Royalty |
(A) |
US$/t
produced |
88 |
94 |
6%
lower |
LOM Revenue |
(B) |
US$/t
produced |
306 |
295 |
4%
higher |
LOM Cash Margin |
(B-A) |
US$/t
produced |
218 |
201 |
8%
higher |
LOM Revenue: Cost of
Sales Ratio |
(B/A) |
Ratio :
1 |
3.5 |
3.2 |
10%
higher |
LOM Free Cash
Flow |
|
US$
millions |
5,922 |
3,692 |
60%
higher |
* Alternative NPV calculations are
provided for illustrative and comparative purposes only. Base
Resources considers a 10% discount rate to be the most appropriate
for evaluation purposes. # Based on TZMI Q3 2019
price forecast.
Updated mining and production
profile
Production
Profile |
Life of Mine (LOM) |
Stage 1#
Years 2 - 4.5 |
Peak
Stage 2#
Years 6 - 15 |
Stage 2†
Years 16+ |
|
Total |
annual
avg* |
annual
avg# |
annual
avg |
annual
avg† |
Ore mined (Mt) |
904 |
23.9 |
12.6 |
25.1 |
25.1 |
HM% |
6.1% |
6.1% |
9.4% |
7.1% |
5.4% |
HMC produced (Mt) |
55.6 |
1.5 |
1.2 |
1.2 |
1.4 |
Period (years) |
38.4 |
37.0 |
3.5 |
10.0 |
23.0 |
Produced
(kt): |
|
|
|
|
|
Sulphate ilmenite |
16,941 |
450 |
388 |
566 |
407 |
Slag ilmenite |
9,804 |
261 |
225 |
327 |
236 |
Chloride ilmenite |
9,371 |
249 |
215 |
313 |
225 |
Total ilmenite |
36,115 |
960 |
828 |
1,206 |
868 |
Rutile |
283 |
8 |
6 |
9 |
7 |
Zircon |
2,468 |
66 |
56 |
82 |
60 |
# excludes ramp up. * Does not
include the first and last years of operation as these are both
partial operating years. † Does not include the last year of
operation as this is a partial operating year.
Further information about DFS2
Included below is a section titled “Toliara Project Definitive
Feasibility Study 2 – Summary Outcomes” which contains detailed
information about DFS2 and its outcomes. This information
includes, as applicable, the material assumptions, underlying
methodologies and detailed reasoning supporting and used to derive
the financial and production outcomes and other forward-looking
statements set out in this release (including above), such as the
material price and operating cost assumptions. Accordingly,
this release should be read together with this
information.
Base Resources has concluded that it has a reasonable basis for
providing the forward-looking statements set out in this
release. This includes a reasonable basis to expect that Base
Resources will be able to fund development of the Toliara Project
when required. The Disclaimer & Important Notices
sub-section below also applies to this release.
Graphics and charts referenced in this release have been
omitted. A full PDF version of this release, including all
graphics, is available from the Company’s website:
www.baseresources.com.au.
Toliara Project Definitive Feasibility
Study 2 – Summary Outcomes
Disclaimer & Important Notices
Definitive Feasibility Study 2
This document has been prepared by Base Resources. The
information included in this document relates to the outcomes of
the Definitive Feasibility Study 2 for the Toliara Project
(DFS2). DFS2 is based on technical, economic and
other conditions and information as at the date of this document,
which may be subject to change. Accordingly, the outcomes,
conclusions and other information presented in this document should
be viewed in this light. Information in this document should
also be read in conjunction with other releases made by Base
Resources to AIM.
Mineral Resources and Ore Reserves estimates, production targets
and forecast financial information
This document contains estimated Mineral Resources,
estimated Ore Reserves, production targets and forecast financial
information for the Toliara Project.
Save in the case of the estimates on a mineralised unit basis,
the details included about the estimated Ranobe Mineral Resources
and Ore Reserves have been extracted from Base Resources' market
announcement titled “Updated Ranobe Mineral Resources and Ore
Reserves estimates” dated 27 September
2021, available at
https://baseresources.com.au/investors/. Base Resources
confirms that it is not aware of any new information or data that
materially affects the information included in this announcement,
and that all material assumptions and technical parameters
underpinning those estimates continue to apply and have not
materially changed.
The details included about the estimated Ranobe Mineral
Resources on a mineralised unit basis are based on, and fairly
represent, information and supporting documentation prepared by Mr
Ian Reudavey. Mr Reudavey is a
member of the Australian Institute of Geoscientists. Mr
Reudavey is employed by Base Toliara, a wholly-owned subsidiary of
Base Resources, does not hold securities in Base Resources and is
not presently eligible to participate in Base Resources’ long-term
incentive plan and receive equity securities under that plan.
Mr Reudavey has sufficient experience that is relevant to the style
of mineralisation and type of deposits under consideration and to
the activity which he is undertaking to qualify as a Competent
Person as defined in the JORC Code and is considered a Qualified
Person for the purposes of the AIM Rules for Companies. Mr.
Reudavey has reviewed this document and consents to the inclusion
in this document of the Mineral Resources estimate on a mineralised
unit basis and the supporting information in the form and context
in which that information appears.
The Ranobe Mineral Resources included in this document are
reported inclusive of the Ranobe Ore Reserves.
The estimated Ranobe Ore Reserves underpin the production
targets and forecast financial information for the Toliara Project
included in this document. This Ore Reserves estimate has
been prepared by Competent Persons in accordance with the
requirements of the JORC Code. The proportions of
Probable and Proved Ore Reserves underpinning the production
targets are set out in the sub-section titled “Geology – Ore
Reserves”. The material assumptions on which the production
targets and the forecast financial information derived from those
targets included in this document are based are included in this
document.
Forward-looking statements
Certain statements in or in connection with this document
contain or comprise forward looking statements. Such
statements may include, but are not limited to, statements with
regard to capital cost, operating cost, capacity, future
production and available grades, forecast global supply, product
prices, sales projections and financial performance and may be (but
are not necessarily) identified by the use of phrases such as
“will”, “expect”, “anticipate”, “believe” and “envisage”. By
their nature, forward looking statements involve risk and
uncertainty because they relate to events and depend
on circumstances that will occur in the future and may be
outside Base Resources’ control. Accordingly, results could
differ materially from those set out in the forward-looking
statements as a result of, among other factors, changes in
economic and market conditions, success of business and operating
initiatives, changes in the regulatory environment and other
government actions, fluctuations in product prices and
exchange rates and business and operational risk management.
Some risks that could impact Base Resources' ability to achieve the
outcomes or results expressed or implied by such statements include
those set out in the sub-section titled "Pre-FID and Post-FID
Risks". Subject to any continuing obligations under
applicable law or relevant stock exchange listing rules, Base
Resources undertakes no obligation to update publicly or
release any revisions to these forward-looking statements to
reflect events or circumstances after today's date or to reflect
the occurrence of unanticipated events.
Not advice, not an offer and other
Nothing in this document constitutes investment, legal or other
advice. You must not act on the basis of any matter contained
in this document, but must make your own independent investigation
and assessment of Base Resources and obtain any professional advice
you require before making any investment decision based on your
investment objectives and financial circumstances.
This document does not constitute an offer, invitation,
solicitation, advice or recommendation with respect to the issue,
purchase or sale of any security in any jurisdiction. In
particular, this document does not constitute an offer to sell, or
a solicitation of an offer to buy, securities in the United States or to any ”US Person” (as
defined in the US Securities Act of 1933). This document may
not be distributed or released in the
United States or to, or for the account of, any US
Person.
No representation or warranty, express or implied, is made as to
the fairness, accuracy or completeness of the information contained
in this document (or any associated presentation, information
or matters). To the maximum extent permitted by law,
Base Resources and its related bodies corporate and affiliates, and
their respective directors, officers, employees, agents and
advisers, disclaim any liability (including, without
limitation, any liability arising from fault, negligence or
negligent misstatement) for any direct or indirect loss or damage
arising from any use or reliance on this document or
its contents, including any error or omission from, or
otherwise in connection with, it.
Glossary
A glossary of key terms used in this document is set out below.
All references to currency ($ or US$) are to United States
Dollars unless otherwise stated.
Changes since DFS
Rationale and overview of DFS2
Since the release of the DFS in 2019, the Ranobe Mineral
Resources and Ore Reserves estimates have substantially increased,
which, when combined with the attractive long-term
supply-demand outlook, have provided the opportunity to enhance the
project value by increasing its scale.
The project NPV10 (post-tax real) improves from
US$652m in the DFS to US$1,008m in DFS2. The main factors contributing
to this overall increase in value are:
· Ranobe Ore Reserves estimate increased to
904Mt at an average heavy mineral
grade of 6.1%, a 45% increase in contained heavy mineral –
extending initial mine life to 38 years.
· Increased scale and scope of Stage 2,
lifting mining rates to ~25Mt per annum (33% higher than DFS) and
adding a further ~47% to the MSP production capacity (to 220tph) to
deliver average LOM annual production of 960kt ilmenite (sulphate,
slag and chloride), 66kt zircon and 8kt rutile.
· Stage 1 capex increased to US$520m (up US$78m), primarily due to cost escalation, while
the larger scale of Stage 2 is reflected in higher capex of
US$137m (up US$68m).
· Updated Base Resources internal price
forecasts and TZMI long term pricing assumptions.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a chart
showing the key drivers of project NPV from DFS to DFS2.
Side by side comparison - DFS2 to
DFS
DFS2 significantly improves the
financial outcomes, despite increases in royalties and capital
costs.
· 55% increase in post-tax / pre-debt (real)
NPV @ 10% discount rate to US$1,008m.
· Average revenue to cost of sales ratio
improves to 3.5.
· LOM free cash flow increased by 60% to
US$5.9 billion, with first 10 years
averaging US$210m per annum.
· Stage 1 capex cost, to establish a 13Mtpa
mining and processing operation, increased to US$520m, primarily due to cost escalation.
· Stage 2 scaled up to increase mining rates
by 33% to ~25Mtpa and increasing MSP production capacity by 47% at
a higher capex cost of US$137m.
· Increase in Malagasy government royalty to
4% in line with the proposed revised Mining Code.
· The increased scale of the Toliara Project
is underpinned by significant increases to the Ranobe Mineral
Resources and Ore Reserves estimates and the attractive long-term
supply-demand outlook for mineral sands.
· Annual averages (excluding first and last
partial operating years):
o Production of 1,033kt (ilmenite 960kt) increased from
839kt (ilmenite 780kt).
o Revenue US$317m - a 28%
increase.
o Operating costs of US$90m
(inclusive of 4% royalties) higher than DFS US$77m (inclusive of 2% royalties) due to
increased scale of operation and royalties.
o EBITDA US$219m – 34%
higher.
o Free cash flow US$174m –
32% higher.
|
Unit |
DFS2 |
DFS |
NPV10 (discount rate of 10%), post tax, real |
US$
millions |
1,008 |
652 |
IRR |
|
% |
23.8 |
21.4 |
Initial (Stage 1)
capex |
|
US$
millions |
520 |
442 |
Construction period
(Stage 1) |
|
Months |
27 |
26 |
Stage 2
capex |
|
US$
millions |
137 |
69 |
Construction period
(Stage 2) |
|
Months |
21 |
12 |
Capital payback
period (Stage 1 + 2) |
|
Years |
4.5 |
4.3 |
Life of
mine |
|
Years |
38 |
33 |
LOM operating costs
+ royalty |
|
US$/t
ore mined |
3.78 |
4.31 |
LOM operating costs
+ royalty |
(A) |
US$/t
produced |
88 |
94 |
LOM
revenue |
(B) |
US$/t
produced |
306 |
295 |
LOM cash
margin |
(B-A) |
US$/t
produced |
218 |
201 |
LOM revenue : cost
of sales ratio |
(B/A) |
Ratio :
1 |
3.5 |
3.2 |
LOM free cash
flow |
|
US$
millions |
5,922 |
3,692 |
Source of change from DFS - Stage 1
capex
Input cost escalation, scope changes
and additional contingency bring the DFS2 capex for Stage 1 to
US$520m.
Escalation - US$59m
· US$44m
observed escalation from DFS capex estimate to Q2-2021.
· US$15m forward
looking escalation to the assumed FID in Q4-2022.
Key scope changes since DFS completion - US$15m
· MSP storage shed concrete quantity update
and increased marine costs.
· Schedule optimisation changes:
o Early works (site access road and camp earthworks) moved
from Pre-FID to Post-FID.
o Haul road south design and establishment of quarry
contract moved from Post-FID to Pre-FID.
· Provision for a new DMU for Stage 1 in lieu
of the previously assumed refurbished Kwale Operations DMU.
· Changes to the MSP to avoid later re-work
when throughput increases, including larger up-current classifier
and HMC surge bin.
· Site access road upgraded to double lane to
improve traffic control.
· Process plant optimisation savings including
consolidation of wet circuits.
· FOREX exchange movements.
Contingency – US$4m
· Contingency increase of US$4m, inclusive of escalation. However,
overall proportion of contingency decreased from 10.5% (DFS) to
9.7% (DFS2) due to increased scope certainty from post-DFS
work.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a chart
showing the increased Stage 1 capital cost estimate from DFS to
DFS2.
Progress since the DFS
After the delivery of the DFS in
November 2019, a significant amount
of the front-end engineering design has been completed, preferred
suppliers appointed for a number of key contract packages and
lender due diligence well progressed.
Progress made following the DFS
· Power (largest contract package) – finalised
tender evaluation, selected the preferred contractor and commenced
contract negotiations.
· Processing plants – finalised the Basis of
Design documentation, updated all equipment specifications,
datasheets and scopes of work for equipment packages ready to issue
to vendors. This facilitates early access to vendor data to
allow detailed design and long lead fabrication to commence quickly
following FID.
· Bridge and export facility piling (critical
path contracts) – concluded tender process and selected preferred
contractors and awarded design portion of bridge scope (hydrology,
geotechnical and detailed design) for early progressing.
· Transport and logistics – confirmed shipping
to port logistics, including a detailed review of container
quantities and timing, and routes to project site.
· Accommodation - reviewed our manning
requirements and strategy, resulting in shifting some pre-FID works
associated with this to post FID.
· Ground water – updated the ground water
model for DFS2 scale and finalise location of production and
monitoring bores.
· Schedule - review, stress tested and
optimised the overall delivery schedule.
· Mine planning – detailed review of mine
path, DMU block sizes and shape resulted in less mine moves, more
uptime, optimised production and HMC stock management.
Lender due diligence
· Lenders’ Independent Engineer (IE) and
Independent Environmental and Social Consultant (IESC) engaged to
undertake project due diligence.
· IE technical due diligence completed on the
DFS, subject to a confirmatory site visit. Due diligence
involved an extensive technical audit and review of:
o Geology, Mining and Tailing;
o Mineral processing;
o Infrastructure – water, power, roads;
o Construction;
o Operational Management;
o Operating and capital costs; and
o Technical economic model.
· IESC have reviewed the project’s
environmental and social management systems against international
best practice standards and prepared a preliminary gap analysis
which will form the basis for the project’s Environmental and
Social Action Plan. However, due to COVID-19 constraints, the
field work required to complete their report has not yet been
started.
Enhanced Toliara Project – DFS2
Introduction
The world class Ranobe mineral sands
deposit is located in south west Madagascar, 45km north of the regional port
town of Toliara, 18km inland, approximately 640km southwest of
Antananarivo, the capital of
Madagascar.
The Toliara Project
· The Toliara Project is based on the Ranobe
deposit, located 45km north Toliara on a 125.4 km2
mining lease.
· The deposit comprises a single continuous
body of mineralization approximately 20km long, 1.5 to 4.5km wide
and 3m to 60m in thickness and situated immediately west of
a prominent north-south escarpment. The HM mineralisation
(including ilmenite, rutile and zircon) extends from the
surface.
History
· Madagascar Resources NL (MRNL) started
exploring for minerals in Madagascar in 1995 and discovered several
zones of HM mineralisation.
· In 2003, Ticor Ltd (now Exxaro Resources)
negotiated an option over the project. Drilling occurred at
Ranobe and Basibasy and a pre-feasibility study commenced on the
Ranobe deposit. Between 2005 and July
2009, a bankable feasibility study commenced, but was not
completed (strategic focus shifted).
· MRNL, which became World Titanium Resources
Limited (WTR) in 2011, engaged TZMI to undertake a comprehensive
review of the project, resulting in a definitive engineering study
being completed in September 2012.
· A concept to produce only an ilmenite and
non-magnetic concentrate as the saleable product (at a time of weak
overall market conditions) was developed.
· In early 2016, African Minerals and
Exploration Development Fund II purchased a majority stake in WTR
and increased the proposed project scale from a mining rate of
8Mtpa to 12.8Mtpa. A definitive feasibility study was
completed by external consultants, Hatch.
· Base Resources acquired the project in
January 2018 and completed a concept
study, the PFS, the DFS and DFS2.
Introduction (cont.)
Following acquisition in January 2018, the Toliara Project has been
progressing through Base Resources’ structured project development
system – commencing with identifying conceptual value adding
options and then progressively evaluating and selecting the best of
those options to progress through to DFS stage. DFS2 redefines the
project scope to further enhance value by increasing the scale of
Stage 2 and optimising the life of mine plan and associated
production rates.
· Base Resources acquired the Kwale Mineral
Sands Project in Kenya in mid-2010
and over the ensuing three years successfully funded, engineered,
constructed, and commissioned the project.
· In late 2013, mining started at Kwale
Operations and the final completion test was satisfied, and normal
operations established by mid-2015.
· To fully capitalise on Base Resources’
organisational capability, business model and financial platform
built at Kwale, Base Resources had been seeking the right growth
opportunity from which to drive shareholder value and, after
extensive evaluation of many opportunities, acquired the Toliara
Project in Madagascar in early
2018.
· The Toliara Project was identified by Base
Resources as one of the premier mineral sands development
opportunities in the world due to the size of the deposit, the
consequent long mine life, its expansion potential, scope for
operational scale up, technical simplicity and expected competitive
positioning in the sector.
· Project development of the Toliara Project
immediately started following a clearly defined Base Project
Development System.
· The PFS, completed in March 2019, evaluated development options and
selected the preferred development option to progress to the
DFS. A clear business case for the Toliara Project was
confirmed.
· In December
2019, the DFS was completed. It defined the project
scope, how it will be implemented, and confirmed a requisite
business case for future investment. The Stage 1 mining rate
was 12.6Mtpa, increasing to 18.6Mtpa in Stage 2.
· In September
2021, DFS2 was completed which increased the Stage 2 mining
rate to 25Mtpa and the MSP feed rate from 150tph to 220tph as well
as updating capital costs, operating costs and product pricing
assumptions.
Project description
The Toliara Project will be
implemented in two stages, with Stage 2 production commencing ~4
years after Stage 1 completion. Once the Government-imposed
suspension is lifted and fiscal terms are agreed, an 11-month early
works program is required to reach FID.
On average, the Toliara Project is expected to deliver a
combined ~1,033ktpa chloride ilmenite, sulphate ilmenite, slag
ilmenite, zircon and rutile over a predicted 38-year mine life
based upon exploiting the estimated Ranobe Ore Reserves.
Stage 1 consists of engineering, procurement, construction and
commissioning of:
· Heavy mobile equipment (HME).
· A dry mining unit (DMU).
· 1,750tph wet concentrator plant (WCP).
· 150tph mineral separation plant (MSP).
· Field services (pipes, pumps, powerlines,
roads).
· Power generation facility.
· Borefield.
· Camp.
· Offices, laboratories and workshops.
· Haul/access road and bridge.
· Export facility storage shed, workshop and
offices.
· Jetty, multi buoy mooring (MBM) facility and
ship loader (located at Batterie Beach).
Stage 2 production commences ~4 years after Stage 1 mining
commences. It will consist of the engineering, procurement,
construction and commissioning of:
· A second DMU.
· A second 1,750tph WCP.
· Upgrading the MSP capacity from 150tph to
220tph.
· Additional HME.
· Upgrading the power plant capacity to
accommodate increased process plants power demand.
· Additional boreholes to accommodate
increased water demand.
The haul road, bridge and export facility are not impacted by
Stage 2.
Geology
Located 45km north of the town of
Toliara, the Ranobe deposit comprises five mineralised units.
Deposit geology
· Upper sand unit (USU) - a well sorted,
fine-grained, unconsolidated aeolian sand containing approximately
4% slime or clay (SL) and approximately 5% HM. The HM is
primarily ilmenite, with secondary zircon and rutile. The USU can
also contain a surface silt unit (SSU) within broad topographical
drainage features, and another silty sand unit (USSU) at the base
of the USU profile.
· Intermediate clay sand unit (ICSU) - a thin
unit of high slime content with a dark red to orange brown sandy
clay and clayey sand material averaging approximately 3% HM and 25%
SL deposited in a low energy lagoonal environment.
· Lower sand unit (LSU) - orange brown to yellow brown medium grained
quartz sand with variable mineralisation and moderately low slimes
content. The LSU is interpreted as a shallow marine or
fluvial sediment that onlaps the limestone (LST) basement
with HM primarily ilmenite and garnet, with
secondary zircon.
· The deposit thickness generally increases to
the west.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
stylised cross section of the mineralised units.
Geology - tenure and drilling
A Mining Lease exists over the
entirety of the current Ranobe Mineral Resources estimate.
Tenure
· The instrument providing tenure is Permis
d’Exploitation 37242 (PDE 37242), which is a mining lease under
Malagasy law, issued to Base Toliara on 23
October 2017.
· PDE 37242 expires on 20 March 2052 (40 years from 21 March 2012, being the date of grant of the
original mining lease). The lease may be renewed by
increments of 20 years thereafter.
· PDE 37242 provides the right to extract and
produce ilmenite, zircon, leucoxene, rutile, guano, basalt, and
limestone.
Drilling
· The Ranobe deposit has had five reverse
circulation drilling exploration programs. The first four
were carried out by the previous owners of the project and the most
recent was completed by Base Resources.
· All programs used Wallis Drilling to perform the drilling.
· Some drilling completed during 2019 are yet
to be assayed and have the potential to enable the upgrade of
Inferred Resources to Indicated Resources and expansion of the
Mineral Resources estimate to the south.
· Further drilling is planned which is aimed
at providing more definition to the encouraging results from
the LSU in the northwest of the tenure
area.
Historical drilling
Program |
Company |
#
Holes |
#
Metres |
2001 |
Madagascar Resources
NL |
121 |
3,074 |
2003 |
Ticor/Kumba Resources
(Exxaro) joint venture |
400 |
9,424 |
2005 |
Ticor/Kumba Resources
(Exxaro) joint venture |
288 |
6,135 |
2012 |
WTR |
363 |
8,087 |
2018-19 |
Base Resources |
770 |
29,753 |
Total |
|
1,942 |
56,473 |
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the historic drill hole summary.
Geology - Mineral Resources
Following a significant drill program
completed in 2018 and 2019, the JORC-compliant Ranobe Mineral
Resource has been updated to an estimated 2,580Mt at 4.3% HM,
including 1,390Mt at 5.1% HM in the Measured and Indicated
categories.
Mineral Resources and Ore Reserves estimates update
completed
Assays of 12,759 samples from a 29,753m drilling program completed during 2018 -
2019 were utilized to update the Mineral Resources estimate.
A further 5,443 samples from the drill program remain in Toliara
awaiting export and analysis following the lifting of
suspension.
Ranobe
Deposit Mineral Resources estimate as at 27 September 2021 |
HM Assemblage as % of HM |
Category |
Tonnes |
HM |
HM |
SL |
OS |
ILM |
RUT |
LEUC |
ZIR |
MON |
GARN |
|
(Mt) |
(Mt) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
Measured |
597 |
36 |
6.1 |
4.3 |
0.2 |
74 |
1.0 |
1.0 |
5.9 |
1.9 |
2.2 |
Indicated |
793 |
35 |
4.4 |
7.1 |
0.5 |
71 |
1.0 |
1.0 |
5.9 |
1.9 |
3.6 |
Inferred |
1,190 |
39 |
3.3 |
9.7 |
0.6 |
69 |
1.0 |
1.0 |
5.8 |
2.0 |
4.3 |
Total |
2,580 |
111 |
4.3 |
7.7 |
0.4 |
71 |
1.0 |
1.0 |
5.9 |
2.0 |
3.4 |
Table subject to rounding
differences. Mineral Resources estimated at 1.5% HM cut off
grade. Mineral Resources are reported inclusive of Ore
Reserves.
Ranobe
Deposit Measured and Indicated Mineral Resources estimate as at 27
September 2021^ |
HM Assemblage as % of HM |
Mineralised
Unit |
M&I Tonnes |
HM |
HM |
SL |
OS |
ILM |
RUT |
LEUC |
ZIR |
MON |
GARN |
|
(Mt) |
(Mt) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
Upper sand
unit* |
1,229 |
66 |
5.4 |
3.6 |
0.1 |
73 |
1.0 |
1.0 |
5.9 |
1.9 |
2.9 |
Surface silt
unit* |
12 |
0.5 |
4.2 |
18 |
0.6 |
71 |
1.0 |
0.9 |
5.8 |
2.0 |
4.1 |
Upper silty sand
unit |
13 |
0.8 |
6.3 |
23 |
2.3 |
72 |
0.9 |
0.8 |
6.5 |
1.5 |
4.4 |
Intermediate clay sand
unit |
136 |
4 |
3.0 |
24 |
2.0 |
68 |
1.2 |
1.1 |
6.1 |
2.2 |
3.4 |
Total |
1,390 |
71 |
5.1 |
5.9 |
0.3 |
72 |
1.0 |
1.0 |
5.9 |
1.9 |
2.9 |
Table subject to rounding
differences. Mineral Resources estimated at 1.5% HM cut off
grade. ^Refer to the Appendix for estimates of the individual
categories for the mineralised units. *Mineral Resources are
reported inclusive of Ore Reserves.
Geology – Ore Reserves
DFS2 is underpinned by the
JORC-compliant Ranobe Ore Reserves estimate of 904Mt at 6.1% HM, comprising the USU and SSU
material only.
· Resource model was optimised to generate pit
shells via industry standard Lerch
Grossman algorithm using Base Resources internally forecast
product pricing, DFS test-work derived mineral recoveries and DFS
derived operating costs.
· Building on the DFS work, ten pit shells
(71% to 80% of revenue) were scheduled at high level and input into
the DFS financial model to select the optimum pit.
· The 74% of revenue shell was selected based
on a better match of HMC production with MSP design throughput of
150 tph (Stage 1) and 220 tph (Stage 2), financial metrics
(weighted towards NPV and revenue to cost of sales ratio) and mine
life expansion from DFS. This shell was subject to
preliminary mine planning and scheduled in detail for financial
modelling.
· Additional optimisation and mine planning
work will occur during FEED and the implementation phase.
Ranobe
Ore Reserves estimate as at 27 September 2021 |
HM Assemblage as a % of HM^ |
Category |
Tonnes |
HM |
HM |
SL |
OS |
ILM |
RUT |
LEUC* |
ZIR |
(Mt) |
(Mt) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
Proved |
433 |
30 |
6.9 |
3.8 |
0.1 |
75 |
1.0 |
1.0 |
6.0 |
Probable |
472 |
25 |
5.3 |
3.9 |
0.2 |
72 |
1.0 |
1.0 |
5.8 |
Total |
904 |
55 |
6.1 |
3.8 |
0.1 |
73 |
1.0 |
1.0 |
5.9 |
Table subject to rounding differences. ^ Monazite and
Garnet excluded from the Ore Reserves estimate because PE 37242
does not currently provide the right to exploit these
products. *Recovered Leucoxene will be split between
Rutile and Chloride Ilmenite products depending on product
specification requirements.
Geology – exploration opportunity
Additional high grade mineralisation
discovered in the NW sector of the LSU
in 2019 has not been included in the current Ranobe Mineral
Resource estimate, due to insufficient mineralogy work having been
completed. This mineralisation has the potential to add significant
additional value to the Project.
· During the 2019 drill program significant
heavy mineral intercepts were identified in the Lower Sandy Unit
(LSU) in the NW sector.
· These intercepts are within the Toliara
Projects mining lease.
· Further drilling, and subsequent resource
definition, targeting high-grade LSU
zones in the NW sector will be completed as access to site becomes
available.
· Higher garnet levels are evident in the
LSU mineral assemblage and initial
indications suggest that it is suitable to produce an 80 mesh
product for the waterjet and blast markets.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the location of the significant results from the
2019 drill program.
For further information in relation
to the drill results set out above, refer to Base Resources’
announcement on 21 January 2020
“Toliara Project drill assays reveal significant high-grade
mineralisation” available at
https://baseresources.com.au/investors/announcements. Base
Resources confirms that it is not aware of any new information that
materially affects the information included in that
announcement.
Mining
The selected mining method is
conventional dozer-fed DMU with in-pit tailings deposition,
enabling a short 3 to 4-year cycle from initial land clearing to
final rehabilitation.
Planned mining activity cycle
· Scrub clearing – removal of trees and scrub
by bulldozers, excavators and dump trucks. Stockpiled for
community use or mulching.
· Topsoil stripping – using bulldozers,
excavators, and dump trucks, topsoil is stockpiled for later
rehabilitation or directly replaced onto rehabilitation
areas. The aim is to preserve seed viability by minimizing
time in stockpile.
· Mining – utilizing D11 bulldozers, in
200m x 100m blocks, into the DMU with some excavator
assistance. Run of mine feed (ROM) enters the DMU
through a grizzly (400mm screen), passes up the DMU conveyor which
discharges through a slurry chute onto a 4mm screen. The
screen undersize is pumped to the WCP. Oversize is disposed
of in the pit void.
· Coarse tailing – Quartz sand separated by
the WCP is pumped, initially to an out of pit storage facility and
later to the mining pit void where a moveable tails stacker
de-waters the slurry. Water is recovered and pumped back to
the WCP. Sand is stacked to a height approximating the
planned finished surface level and then formed into fine tails
evaporation ponds by bulldozer.
· Fine tailing – Flocculated clay tailings
from the thickener at the WCP is pumped to the evaporation ponds
built on coarse tails. Initially, until enough coarse tails
area is available, some ponds will be constructed on ore and the
dried tails removed to allow subsequent mining. The tails
ponds will be filled to a depth of ~1.5m and, when dry, the clay
will be ~0.4m thick. An alternative co-disposal
methodology (directly mixing fine and coarse tailings prior to
deposition) using technology developed at Kwale will be evaluated
during the FEED stage.
· Landform reconstruction and topsoil return –
The desiccated fine tails are worked by bulldozer into the coarse
tails to make a nominal 2m thick
water retention layer at the surface, graded into final landform
and topsoil replaced on top using front-end loader (FEL), dump
truck and dozer or grader. The area will then be ready for
rehabilitation.
· The process from scrub clearing to final
rehabilitation is expected to take 3 to 4 years.
Mining life cycle
The selected mining method is
conventional dozer-fed dry mining with in-pit tailings deposition,
enabling a short 3 to 4-year cycle from initial land clearing to
final rehabilitation.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the mining life cycle.
Optimisation of mine path
A detailed review of the Stage 1 mine
path has been completed to incorporate the latest Ore Reserves and
identified mining optimisation opportunities enabling an improved
and more stable production profile.
The review included all mining areas and associated schedules
that encompass Stage 1. The schedule is similar to the DFS
Stage 1 mine path but has been further optimised to maintain heavy
mineral concentrate (HMC) production to meet MSP design capacity
whilst remaining within the optimal 2km pumping radius of the
WCP.
Operational maximum throughputs for Stage 1 are consistent with
the DFS:
· Dry Mining Unit – 1,750tph.
· WCP – 1,750tph.
· MSP – 150tph.
Three main areas were optimised and modelled to improve Stage
1:
· Pit design & optimisation – a change
from the spherical pit shape contemplated in the DFS to a more
traditional rectangular pit shape.
· Pre-mining earth works – reduced starter pit
requirements, scope and cost as well as optimised associated
schedules.
· Revised mine path – optimised to balance ore
grade, WCP/MSP commissioning schedule, HMC stocks and final product
production.
The optimisation process decreased the planned off-path mining
tonnes (truck and shovel) by 60% and reduced the number of DMU
moves by 40% over the life of Stage 1. This optimisation has
also enabled mining of additional high-grade tonnes at the northern
limit of the WCP pumping radius of WCP1.
Further mine planning optimisation opportunities around the time
usage model, WCP and starter pit locations have been identified and
will be reviewed during FEED.
Mining schedule
Mining will utilise D11 bulldozers
feeding into a DMU to deliver 12.8Mtpa to the WCP in the first 4.25
years before increasing to 25Mtpa with the addition of a second DMU
and WCP for the remainder of the mine life.
Mining schedule
· Stage 1: 0 - 4.25 years – Single DMU
and WCP, a fleet of two operating D11 bulldozers mining at a
combined rate of 1,750tph. Mining of high-grade ore
averaging 9.1% HM.
· Stage 2: 4.25 - 38 years – Additional DMU,
D11 bulldozers and WCP operating at 1,750tph. Combined mining
rate of 3,500tph, total D11 fleet of four operating units.
Average ore grade of 6.1% HM.
· To maintain acceptable overland pumping
distances, WCP1 moves in years 12 and 23 and WCP2 in year
23.
Water abstraction
· Stage 1: 526m3 per hour.
· Stage 2: 976m3 per hour.
· Approved bore-field abstraction:
886m3 per hour.
The approval to increase abstraction rates will be applied for
prior to the commencement of Stage 2.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the Stage 1 and 2 mining blocks.
Tailings schedule
The tailings management plan allows
creation of viable final landforms for rehabilitation approximately
18-24 months after mining.
The tailings management plan is:
· Initially tailings will be stored out-of-pit
tailing until sufficient pit void is available after 15 months of
mining.
· A second out-of-pit tailing storage is
required to service the first nine months of operation at the
second location of WCP1 (Year 12).
· Subsequent WCP1 and WCP2 locations will use
remnant pit voids for their initial tailings.
· Generally, coarse tailings will fill pit
voids created 6-12 months earlier.
· Coarse tailings will be used to form
evaporation ponds for fine tailings deposition.
· Initial fine tailing areas will be created
on ore, and the dry tailings removed prior to mining.
· Fine tailings will normally fill evaporation
ponds created on coarse tailings.
· Landform restoration will take place when
fine tailings have dried and been reincorporated into upper layer
of coarse tailings.
· Topsoil will be placed on reinstated
landform, approximately 18-24 months after mining.
· Co-disposal of coarse and fine tails
together to create a mix of clay and sand that reflects in-situ
levels and promotes regrowth of native vegetation will be further
developed and tested at Kwale before being refined during the
initial 15 months of the Toliara operation when ex-pit tails
storage is undertaken.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the coarse tails placement sequence.
Metallurgical testwork and flowsheet
design
The DFS metallurgical testwork
program, using full scale spirals, was the basis of the WCP
flowsheet design and resultant design mineral recoveries.
WCP
· In early 2018, Base Resources generated
three bulk samples (low grade - 4.8% HM, medium grade – 8.2% HM,
high grade – 10.5% HM) to represent a range of ore grades on which
to base the WCP design.
· Base Resources’ mineralogy methodology,
MinModel, was adapted for the Ranobe deposit and used to calculate
WCP performance during the testwork.
· A three-stage spiral wet gravity circuit was
tested on the low, medium and high-grade bulk samples using a
combination of MG12 and VHG spirals. The testwork was
performed by Mineral Technologies in Brisbane.
· The testwork results were modelled using
industry proven programs to optimise the flowsheet design, mass
balance and resultant performance metrics.
· Bulk HMC samples were generated from each HM
grade test as feed for MSP testwork and market sample
generation.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for graphics
showing the location of the bulk testwork samples and WCP
flowsheet.
Metallurgical testwork and flowsheet
design (cont.)
DFS metallurgical testwork program,
using full plant scale separation equipment, was the basis of the
MSP flowsheet design and confirmed the mineral recoveries and final
product qualities.
MSP
· Three feed samples representing HMC from
low, medium and high-grade ore generated from WCP testwork were
used as feed for MSP flowsheet development testing. The
testwork conducted by IHC Robbins provided final product samples
for marketing and established mineral recoveries and final product
grades.
· The ability to produce varying ratios of
three ilmenite products, sulphate, slag and chloride grades from
the full range of HMC feedstock to match market conditions was
confirmed and built into the process design.
· A comprehensive and iterative series of
tests were completed to establish flowsheets for each processing
stage consistent with the design intent:
o Feed preparation – removal of coarse and fine quartz
using wet gravity separation.
o Ilmenite circuit – produce three ilmenite products under
varying ore types and generate a non-magnetic stream, using
magnetic and electrostatic separation.
o Wet non-magnetics circuit – remove residual quartz to
enable efficient rutile separation using wet gravity
separation.
o Rutile circuit – produce a rutile product and a
non-conductor zircon stream using electrostatic and magnetic
separation.
o Dry zircon circuit – remove Fe and Ti contaminants to
produce a standard zircon product using electrostatic and magnetic
separation.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the MSP flowsheet.
Product recoveries
An extensive suite of testwork was undertaken that
provides a sound basis for product recovery estimation.
WCP
· Testwork on each of the low, medium and
high-grade bulk samples was used to generate a model (Mineral
Technologies) from which the WCP recoveries (ilmenite, rutile and
zircon) were estimated.
· High-grade scenario recoveries were assumed
and then further reduced (for ilmenite, rutile and zircon) by 1.5%
to allow for the reality of plant operations often running at
sub-optimal conditions.
· Insufficient data and accuracy was available
for leucoxene recovery estimation using the Minmod mineralogy
method and the Mineral Technologies WCP simulation. This was
calculated based on the non-mag TiO? recovery.
WCP Recoveries
|
Low
Grade Ore |
Medium Grade
Ore |
High
Grade Ore |
Avg |
DFS
Design |
Rutile |
97.1 |
95.8 |
93.8 |
95.6 |
92.3 |
Zircon |
98.5 |
98.6 |
98.7 |
98.6 |
97.2 |
Ilmenite |
97.1 |
96.6 |
96.4 |
96.7 |
94.9 |
Leucoxene |
85.0 |
80.0 |
70.0 |
78.3 |
75.0 |
% HM in HMC |
91.0 |
91.0 |
91.0 |
91.0 |
91.0 |
MSP
· Ilmenite recovery – derived from the MSP
testwork and calculated on a circuit-by-circuit basis, an average
total recovery (from three bulk samples processed) of 94.4% was
established.
· The proportion of each ilmenite product
produced (sulphate, slag and chloride) used testwork results
adjusted for product quality targets using a mathematical model
with interpolation algorithms. The quality targets and splits
were optimised for NPV. The design accommodated a range of
potential ilmenite splits.
· Zircon recovery - derived from the MSP
testwork, a recovery was calculated on a circuit-by-circuit basis
to give an overall zircon recovery of 79.4%.
· Rutile recovery – derived from the MSP
testwork and calculated on a circuit-by-circuit basis, giving an
average total recovery (from three bulk samples processed) of
54.1%.
· Leucoxene is recovered to a HiTi stream
which is redirected to both rutile and ilmenite products.
· Leucoxene recovery - derived from the MSP
testwork, a leucoxene recovery of 23.2% was calculated that is
distributed to ilmenite and rutile, 79% and 21% respectively.
This increases the ilmenite and rutile total recoveries to 94.6%
and 58.4% respectively.
MSP Recoveries
|
Base |
Leucoxene
re-distributed |
Ilmenite |
94.4 |
94.6 |
Zircon |
79.4 |
79.4 |
Rutile |
54.1 |
58.4 |
Leucoxene |
23.2 |
0 |
Ilmenite Splits
Ilmenite |
Proportion % |
Target %TiO2 |
Sulphate Ilmenite |
47.0 |
48.5 |
Slag Ilmenite |
27.2 |
50.5 |
Chloride Ilmenite |
25.8 |
57.0 |
Process engineering – dry mining
unit
The processing plants design for
Stage 1 includes a DMU, 1,750tph WCP, 150tph MSP, water circuit,
tails disposal and electrical reticulation. Stage 2 includes
a second DMU, 1,750tph WCP and upgrade of the MSP to 220tph.
Dry mining unit
· Piacentini & Son will be commissioned to
supply a new DMU for Stage 1, similar to the existing unit at Kwale
Operations. The existing Kwale Operations unit will be refurbished
and shipped to Madagascar for the
Stage 2 upgrade in year 4.
· A 4mm screen will be installed on the DMU
hopper to remove all +4mm material in the mining area.
· The DMU pump will be supported by ROM
booster pumps to pump ore to the WCP from the DMU when the distance
between the two plants is greater than ~800m.
· Each DMU is designed to be relocatable
(using Caterpillar D11 bulldozers), which is anticipated to be
every 2-4 weeks.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the mining process flowsheet.
Process engineering – wet concentrator
plant
Both 1750tph WCP’s are simple but
robust 3-stage spiral plant designs based on bulk sample testwork
programs conducted at Mineral Technologies metallurgical facilities
and caters for the range of heavy mineral grades within the Ranobe
deposit.
Wet concentrator plant
· The flowsheet developed uses proven spiral
technology to produce a HMC grade above 90% HM.
· De-sliming cyclone and thickening circuit
designed for wide range of ore clay content.
· A constant density surge tank provides a
one-hour buffer between the DMU and WCP.
· MG12 spirals, operating at 2.5tph per start,
used in rougher and scavenger stages minimises footprint and
simplifies the design, reducing pumping costs and power
requirements.
· The cleaner spirals are twin start VHG
operating at 1.5tph per start.
· Cross launders have been incorporated in the
design to simplify material flow and reduce the number of gravity
launders by 75%.
· HMC will be pumped to the MSP from each
WCP.
· Tailings are pumped back to the mine void as
back fill with water recovered to minimise make up water required
from the borefield.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the WCP flowsheet.
Process engineering - mineral
separation plant
Extensive design optimisation was
undertaken to balance plant availability (by reducing number of
drives), operating costs and capital costs.
Mineral separation plant
· Stage 1 feed rate of 150tph, decoupled from
the mining operation by a HMC stockpile which buffers changing ore
grades and differing plant run times.
· The MSP will be upgraded to 220tph in year 4
as part of Stage 2. A larger dryer, belt filter, HMC surge
bin, screen and UCC will be included as part of Stage 1 to minimise
overall combined Stage 1 & 2 project capex and downtime during
the Stage 2 upgrade.
· The MSP location is fixed for the life of
mine. It is a ~50m tall building with multiple machine floors
to reduce operating cost (by utilising gravity to reduce materials
handling equipment and drives).
· Final products will be stored in 1,000t bins
(350t for rutile). Additional site storage is provided for the
three ilmenite products (two week’s production).
· Tails from the MSP are pumped back to the
WCP to be disposed with the main tails lines.
· The ilmenite circuit design incorporates the
facility to isolate a single machine for cleaning and
maintenance.
· Fresh raw water will be used where necessary
to ensure product quality.
Sampling
· All incoming and outgoing streams throughout
the plant are automatically sampled, including dry stream analysers
on the zircon and rutile circuits.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for graphics
showing the MSP flowsheet and a 3D render of the stage 1 and stage
2 MSP.
Design progression
The plant design progressed
substantially during the DFS. Further engineering development
occurred during DFS2 in preparation for detailed design following
FID.
Electrical
· Majority of the power requirements are in
overland pumping. Pipe loop testwork has been undertaken to
determine the optimum pumping velocities.
· Site high voltage reticulation is at
11kV.
· Switchrooms, electrical equipment rooms and
field skid switchrooms are modular pre-fabricated buildings with
main equipment pre-installed to minimise construction time.
· Site wide power distribution system is well
developed, with a significant effort put into power consumption on
a year by year basis, matching the mine plan and pumping
requirements.
· High degree of integration across multiple
sites (power plant, DMU, WCP and MSP) to enable efficient
operation.
· Modelling and sizing of plant cabling
requirements well developed (cable schedule).
· Completed lighting study with lux level
modelling and selection of optimal luminary locations.
Control systems
· Fully automated and supported by instruments
measuring density, flow, level, temperature, tonnage etc.
· Completed datasheet sets for all
instrumentation packages.
· Operating and control philosophy developed
for control system design.
· The operator interface system is typical of
supervisory control and data acquisition (SCADA) systems. The
SCADA monitors and controls instruments in the plant through a
programmable logic controller.
DFS / DFS2 design deliverables produced
· Scope of work documents and firm pricing
received from vendors for all mechanical equipment in the
processing plant.
· Mechanical equipment list [3].
· Electrical load list.
· Piping & instrumentation diagrams
[110].
· Processing plant 3D models, including
piping, instrumentation, pipe racks, cable trays and valves.
· Process design criteria, flowsheets and mass
balances [18].
· Site layouts, general arrangements and
sections [71].
· Standard drawings for electrical,
structural, instrumentation, civil, mechanical & piping
[68].
· General specifications.
· Tender reviews on mechanical equipment.
· Preliminary platework drawings for vendor
pricing [186].
· Single line electrical diagrams [28].
· Valve schedule and piping material take
off.
· Instrument list and datasheets [25].
· Detailed structural calculations and
material take-offs.
· Detailed pump calculations for all slurry
and water lines.
· Fire protection and fire detection system
equipment schedules.
Marketing – product quality
The quality of Toliara Project
products ensure they are suitable for a wide range of
applications.
The following three ilmenite products to be produced with
qualities that specifically target different ilmenite markets.
· Sulphate Ilmenite
Of similar quality to Kwale Operations’ ilmenite which is widely
consumed in the global sulphate pigment industry.
· Slag Ilmenite
A higher TiO2 (>50%) makes this ilmenite
attractive to chloride slag producers where elevated
Fe2O3 has no detriment. An option
exists to re-blend it with sulphate ilmenite and have more volume
targeting either the sulphate pigment market (albeit with a higher
Fe2O3 specification than the sulphate
ilmenite stream) or the slag market (albeit with lower
TiO2 than the slag ilmenite stream).
· Chloride Ilmenite
A typical 57.0% TiO2 ilmenite. Optimises revenue while
producing a product that suits direct feed chloride pigment
production as well as chloride slag and synthetic rutile
production.
Processing plant design flexibility and testwork confirms that
the split between the ilmenite products and qualities can be
adjusted within specification constraints to respond to ore
variations and market requirements.
Final Product Typical
Specifications
% |
Kwale
Ilmenite |
Sulphate
Ilmenite |
Slag
Ilmenite |
Chloride
Ilmenite |
|
Typical |
Typical |
Typical |
Typical |
TiO2 |
48.3 |
48.5 |
50.5 |
57.0 |
Cr2O3 |
0.09 |
0.08 |
0.08 |
0.10 |
ZrO2 |
0.12 |
0.02 |
0.04 |
0.03 |
CaO |
0.02 |
0.01 |
0.03 |
0.02 |
MgO |
0.7 |
0.6 |
0.4 |
0.3 |
MnO |
0.6 |
0.8 |
1.0 |
1.5 |
Fe2O3 |
20.4 |
21.0 |
27.5 |
30.5 |
FeO |
27.6 |
26.8 |
16.0 |
6.0 |
P2O5 |
0.02 |
0.02 |
0.07 |
0.06 |
Nb2O5 |
0.06 |
0.12 |
0.15 |
0.20 |
V2O5 |
0.23 |
0.24 |
0.23 |
0.22 |
SiO2 |
0.7 |
0.6 |
1.2 |
1.0 |
Al2O3 |
0.6 |
0.5 |
1.0 |
0.9 |
U+Th (ppm) |
55 |
40 |
85 |
148 |
Marketing – product quality
A very good standard grade zircon
product and a rutile product suitable for all end use sectors.
Zircon
· A very good standard grade zircon product
will be produced.
· The quality is acceptable to all key end use
sectors, particularly in China.
% |
Kwale Standard
Zircon |
Toliara
Zircon |
|
Typical |
Typical |
ZrO2+HfO2 |
65.8 |
65.6 |
TiO2 |
0.14 |
0.09 |
Fe2O3 |
0.12 |
0.12 |
SiO2 |
32.4 |
32.9 |
Al2O3 |
1.15 |
0.89 |
U+Th (ppm) |
400 |
550 |
Rutile
· Rutile very similar to Kwale Operations’
rutile, suitable for chloride pigment, titanium metal and welding
consumables, will be produced.
· A TiO2 of 95.0% can be
produced (with a potential option drop to a minimum of 93% if
significant recovery benefits can be achieved).
% |
Kwale Rutile |
Toliara Rutile |
|
Typical |
Typical |
TiO2 |
95.5 |
95.0 |
Cr2O3 |
0.22 |
0.15 |
ZrO2 |
0.64 |
0.84 |
CaO |
0.02 |
<
0.01 |
MgO |
0.05 |
0.01 |
MnO |
0.03 |
0.01 |
Fe2O3 |
1.08 |
0.8 |
P2O5 |
0.02 |
0.03 |
Nb2O5 |
0.28 |
0.47 |
V2O5 |
0.61 |
0.59 |
SiO2 |
0.8 |
1.1 |
Al2O3 |
0.4 |
0.6 |
U+Th (ppm) |
53 |
240 |
Infrastructure
Existing infrastructure required for
the development of the Toliara Project is limited. The
project scope addresses this through building a dedicated product
haulage and access road, bridge, export facility, hybrid power
plant, bore field for water supply and a permanent camp.
Existing infrastructure
· Toliara has an existing container port able
to accommodate coastal vessels, an airport with scheduled domestic
and international flights and good mobile and data
communications.
· The RN9 national route, although upgraded
and sealed during the last few years, is not suitable for oversize
and heavy construction loads or road train product haulage.
The existing bridge over the Fiherenana river also has limited
capacity.
· There is no electrical power grid in the
vicinity of the mine. Power supply at Toliara is limited and
unreliable and currently not adequate for the new export facility
site, although plans are in place to upgrade the local generation
facility by addition of solar power.
· There is limited existing accommodation in
Toliara for the anticipated non-local construction and operations
personnel requirements.
· There are no suitable sewage treatment
facilities in the area but there is a solid waste recycling plant
some 10kms north of Toliara.
· Toliara has a diesel bulk storage facility
at the port with limited HFO storage capacity that is shared
amongst four distributors.
Roads
· A new 45km long, sealed, dedicated, haul and
permanent access road will be constructed, including a new
630m long concrete bridge over the
Fiherenana river. Provision is made for several community
crossing points as well as an underpass at the RN9 crossing.
The bridge will be designed to withstand 1:100-year
floods.
· A staged development approach includes:
o Upgrading of existing Ranobe road for early process
plant contractors’ access through the RN9 immediately after
FID.
o Construction of the northern section of the haul road in
conjunction with upgrading the PK24 road to facilitate movement of
heavier WCP / MSP mechanical equipment. This route avoids
populated villages along the RN9 north of PK24.
o Construction completion of the southern haul road
section to the export facility in time for first product
export.
o Contractor access to the export facility will be
constructed pre-FID to provide the piling contractor access
immediately on FID.
Infrastructure (cont.)
Comprehensive groundwater modelling
has confirmed suitable quantities of water can be abstracted from
an aquifer without adverse community or environmental
impacts. Detailed, binding offers have been received for bulk
power supply.
Water
· Ground water modelling (Knight Piesold) has
confirmed the ability to sustainably source the required make-up
water for the Stage 2 (25Mtpa) mining rate from four borefields
within the mining permit area, consisting of nine operating (5 for
Stage 1 and 4 for Stage 2) and two standby 30l/s boreholes.
· Permits are in place for abstraction of 889
m³/hr of raw water but will require renewal after lifting of
suspension as they expire in Q4 2022. The estimated raw water
requirement for Stage 1 is 526 m³/hr and Stage 2 is 972 m3/hr. Further regulatory
approval is required for the increased Stage 2 abstraction and will
be progressed prior to Stage 2 development.
· Drilling of 3 production boreholes to enable
step testing and refinement of the groundwater model is
planned during the pre-FID phase and monitoring bores for baseline
and operational purposes will be installed.
Power
· Power for the mine site will be
“self-supplied” by Base Toliara, with the generation facility to be
constructed by an IPP who will in turn operate and maintain that
facility on Base Toliara’s behalf.
· Power generation will be based on a hybrid
HFO, solar photovoltaics (PV) and battery storage system located
near the MSP. The design aims to maximise solar contribution
to reduce CO2 emissions.
· Stage 1 installed power is 23.5MW with a
maximum demand of 15.1MW with an average usage of 10.5MW.
Stage 2 will increase installed power to 35MW with a maximum
demand of 24MW and an average usage of 15.2MW.
· Export facility power will be self-generated
using high speed diesel generators with a small contribution from
solar PV.
Accommodation camp
· An accommodation camp of 272 rooms
(converted to 511 beds with shared rooms) will be constructed to
accommodate the peak construction workforce. 219 rooms are required
for operational workforce leaving 53 surplus rooms.
· The 53 surplus rooms are sufficient to
accommodate Stage 2 construction and operations workforce.
· National labour and off-site
contractors will be housed in the local communities. Local
workforce will be bused in daily.
Infrastructure (cont.)
Full bridge simulations have confirmed the operability of the
multi-buoy mooring berth for vessels in a wide range of operating
and environmental conditions up to Panamax class (partially loaded
to 68kt). Typically, Ultramax vessels (loaded to 63kt) will
be used during operations. Stage 1 ship loading will
occur 14-17 times per year while ship loading at Stage 2 peak
production will occur up to 26 times per year.
Mine complex
· Provision has been made for fencing,
security, offices, workshops, laboratories, stores, change houses,
ablution blocks, control rooms, weighbridge, clinics and first aid
facilities, water storage dams and tanks, fuel storage facilities,
firefighting systems, storm water management and landscaping.
No additional infrastructure will be required for Stage
2.
Waste treatment
· A sewage treatment plant (STP) will be
constructed at the mine complex and serve the process plant, mine
complex buildings and accommodation camp. Conservancy tanks
will be utilised at remote sites such as the export facility and
sewage transported to the STP for treatment. No additional
infrastructure required for Stage 2.
Product haulage
· Up to a maximum of 1,303kt of product will
be hauled annually from the mine to the export facility by a
transport contractor utilising 90t triple trailer road trains
operating 13 hours per day on a seven days a week basis.
Export facility
· An export facility at Batterie Beach will
include a storage shed for 135kt of ilmenite, 10kt rutile, with a
separate shed to store 17kt of zircon. At the MSP, an
additional 38kt of product storage will be provided during Stage
1. For Stage 2, the MSP storage capacity will be increased to
75kt.
· Ground improvement (rigid inclusion piles)
required for the shed foundations.
· A 550m long
jetty with pipe conveyor and fixed ship loader will load Panamax
vessels (loaded up to 68kt) or Ultramax vessels (loaded up to 63kt)
moored on a multi-buoy mooring berth. No additional
infrastructure is required for Stage 2.
· A charter contract will be placed for a
fully crewed tug with minimum bollard pull of 40 ton and a mooring
line handling vessel for the operations phase.
Marketing – pricing
Product pricing forecasts through to
2030 are derived from Base Resources’ internal supply/demand
analysis before transitioning to TZMI’s long term inducement prices
from 2035.
Over the short term, Base Resources’ supply forecast is
generally aligned with TZMI’s five year outlook for existing
producers, but Base Resources forms its own view on the anticipated
timing of new brownfield and greenfield projects coming into
production.
Base Resources’ medium to long term supply forecast is based on
its internal view of future production from existing operations as
well as new brownfield and greenfield projects. For each new
project forecast to commence production in the future, Base
Resources considers the stage of development, estimated economics,
mine life, applicable risks and the forecast market supply gap to
determine a likely start-up date.
DFS2 forecast product prices
· Base Resources’ internal price forecast for
each product is used until 2030.
· From 2035 prices are assumed to be the
long-term inducement prices, as forecast by TZMI, re-based to 2021
real. The exception to this is chloride ilmenite, which is
derived from Base Resources’ internal long-term outlook specific to
the chloride ilmenite sector and a pricing structure that is more
consistent with traditional practice within that sector.
· Prices transition between 2030 and 2035 in a
straight line.
· All forecast prices are FOB, real 2021,
after adjusting for expected product quality.
Base Resources’ internal supply/demand analysis and price
forecast methodology
Base Resources’ internal price forecast is derived from
continuous supply and demand analysis. In broad terms, when a
supply deficit is forecast, prices are predicted to trend upwards
and when a supply surplus is forecast, prices are predicated to
trend downwards. However, the direction and extent of
forecast price movements also take into consideration:
· Industry inventory levels relative to levels
considered to be normal.
· Estimated “floor” and “ceiling” prices
derived from historical precedents, for example, where low price
levels would threaten the economic viability of many producers or
excessively high prices encourage product substitution to take
significant effect.
· The anticipated behaviour of key suppliers
actively managing production to support prices.
Base Resources’ internal supply and demand analysis utilises
historical production and consumption data. Base Resources’
forecast product demand utilises TZMI’s five year demand outlook
before transitioning to a steady annual growth rate, generally
consistent with global GDP growth forecasts, adjusted for product
specific considerations where applicable.
Product Prices
USD/t (FOB) |
Average
2025 – 2030 |
Average
2031-2034 |
From
2035 |
LOM
Average |
Sulphate ilmenite |
$187 |
$197 |
$189 |
$189 |
Slag ilmenite |
$196 |
$207 |
$199 |
$199 |
Chloride ilmenite |
$254 |
$281 |
$285 |
$278 |
Rutile |
$1,369 |
$1,259 |
$1,117 |
$1,185 |
Zircon |
$1,628 |
$1,573 |
$1,496 |
$1,532 |
Marketing outlook – sulphate
TiO2 feedstock
A future sulphate feedstock supply
deficit is forecast, providing robust support for the development
of the Toliara Project.
Sulphate and slag ilmenite
· Longer term there is an anticipated emerging
supply gap assumed to be partially filled by the Toliara Project
and other new greenfield projects.
· Medium term outlook subject to high cost
“swing” supply (concentrates and Vietnam). Prices in the range of
US$190 to US$230 are generally required to stimulate and/or
sustain swing supply.
· Upside demand for sulphate ilmenite is
likely given the extent of the deficit in the chloride feedstock
market which will lead to increased sulphate pigment production (to
fill the shortage from feedstock-constrained chloride pigment)
and/or new chloride slag capacity to fill the chloride feedstock
deficit (which will use sulphate ilmenite as feed).
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the sulphate feedstock outlook.
Marketing outlook – chloride TiO2
feedstock
A future chloride feedstock supply
deficit is forecast, providing robust support for the development
of the Toliara Project.
Chloride ilmenite and rutile
· Substantial anticipated deficits for
chloride pigment feedstocks support a positive outlook for rutile
and chloride ilmenite from the Toliara Project.
· Chloride ilmenite is a unique feedstock
within the overall chloride feedstock sector which has its own
dynamics – see below.
· Rutile is a preferred high-grade feedstock
for chloride pigment production and the relatively small quantities
produced from the Toliara Project will be easily absorbed.
· The longer-term supply deficit should
either:
o stimulate further chloride slag production which will
result in higher demand for sulphate ilmenite suitable as a
feedstock for chloride slag; or
o constrain chloride pigment production (lack of feedstock
availability) which would result in more sulphate pigment being
produced and more demand for sulphate ilmenite.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the chloride feedstock outlook.
Marketing outlook – chloride
ilmenite
The forecast chloride ilmenite supply
deficit is more significant than overall chloride feedstocks,
providing a source of high value for the development of the Toliara
Project.
Chloride ilmenite
· Stage 1 production of chloride ilmenite will
add ~ 20% to global supply in a market that is forecast to be in
substantial deficit, ensuring production is easily absorbed.
· Demand for chloride ilmenite is driven by
pigment, synthetic rutile and chloride slag production.
Pigment expansions in recent years and an increased focus on
external sourcing of chloride ilmenite for chloride slag and
synthetic rutile production suggests that actual demand for
chloride ilmenite now exceeds historic peak consumption levels and
will continue to increase into the future.
· Availability of chloride ilmenite supply has
historically constrained consumption, with end users able to
consume significantly higher volumes. Chloride ilmenite
consumers from each end use sector have expressed concern over the
significant deficit of this specific titanium mineral in coming
years.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the low grade chloride feedstock outlook.
Marketing outlook – zircon
A future zircon supply deficit is
forecast, providing robust support for the development of the
Toliara Project.
Market outlook – zircon
· Significant new supply is needed from new
supply to meet projected zircon demand.
· There is limited opportunity of “swing”
supply from concentrates to manage this in the medium term.
· Over the long term there are forecast to be
growing shortages.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the zircon outlook.
Implementation strategy
The Toliara Project is a
“greenfields” mineral sands project that will be constructed on a
remote site in a developing country with limited construction
resources. The delivery approach addresses this, incorporating Base
Resources’ experience in delivering and operating Kwale
Operations.
Toliara Project implementation objectives
That the wider industry will see the delivery of the Toliara
Project as the best reference project to emulate:
· It has been delivered safely, on time, on
budget and environmentally responsibly.
· It is making a real and sustainable positive
difference to the surrounding people and communities.
· A new standard has been reached in terms of
incorporating an optimum balance between innovation, low capital
cost and risk.
· Design and delivery have ensured the
facilities are effectively operated, maintained and quickly ramped
up to the requisite production efficiencies and outputs.
· People and companies who are part of the
delivery feel they have been part of an outstanding success and
experience.
A number of factors drive the implementation strategy
· Complex scope (mineral sands) and long life
requires continual owners input to ensure an enduring, fit for
purpose and world class design is delivered.
· Remoteness of the project and the country
risk limits the appeal of “lump sum” contracts (to a limited
contractor market for complex processing plants) making this
approach high cost with minimal increase in delivery certainty.
· Government and community engagement and
approval processes are more effectively conducted by Base Resources
due to the complexity, risk, and existing/future relationships.
· Utilising Base Resources’ knowledge gained
through the Kwale project delivery and operation.
· Outsourcing or fixed price contracts where
Base Resources doesn’t have the requisite knowledge (power) or
competitive value is tied to a contractor's unique methods or
capability (marine and power).
The broad delivery approach is as follows
· Mining – Owner Implementation.
· Processing plants and field services –
EPCM.
· Infrastructure – EPCM.
· Fiherenana bridge – EPC.
· Jetty, shiploader and marine infrastructure
– EPC.
· Power – “self-supplied” by Base Toliara,
with the generation facility to be constructed by an Independent
Power Provider (IPP) that will operate and maintain that facility
on Base Toliara’s behalf.
Implementation strategy (cont.)
The delivery of the Toliara Project
will follow Base Resources’ proven project development system and
standards.
Project development phases
Base Resources has followed its proven project development
system and standards for the concept, pre-feasibility and
definitive feasibility study phases. This was achieved by
retaining engineering companies and key staff from PFS through DFS,
and now DFS2. Subject to performance and cost, this is
intended to carry through into implementation.
Pre-FID works program
· Following lifting of the on-the-ground
suspension (LOS), 11 months will be required to complete the
necessary work before FID can be achieved. This work includes
community engagement, permitting and environmental approvals, land
acquisition, funding and geotechnical investigations, engineering
and contractor procurement for key packages.
· The pre-FID work aims to de-risk the overall
implementation schedule by progressing engineering designs and
selecting preferred contractors to start construction of the camp,
export facility shed piling, haul road, bridge, jetty and power
plant as soon as practical after FID. The project
implementation plan will be updated during this period.
Final investment decision
· The Board will consider the DFS2, forecast
market conditions and funding availability in order to make the
FID.
Implementation phase
· Planned in two stages:
o Stage 1 includes DMU1, WCP1, MSP, haul road, bridge,
export facility and all associated infrastructure and is scheduled
over 27 months from FID.
o Stage 2 comprises the construction DMU2, WCP2 and MSP
upgrade over a 21 month period, delivered 4.25 years after Stage 1
implementation ends.
Transport and logistics
· An experienced logistics contractor will be
engaged to manage freight forwarding, customs clearance and
organise road transport to site.
Stage |
Commence |
Finish |
Duration
(months) |
Cost
(US$m) |
Assumed LOS |
Jan-22 |
- |
- |
- |
Pre-FID |
Dec-17 |
Dec-22 |
60 |
194* |
Stage 1 FID |
Dec-22 |
- |
- |
- |
Stage 1
Implementation |
Jan-23 |
Mar-25 |
27 |
520 |
Stage 2 Studies /
FEED |
Nov-25 |
Mar-27 |
17 |
2 |
Stage 2 FID |
Mar-27 |
- |
- |
- |
Stage 2
Implementation |
Apr-27 |
Dec-28 |
21 |
137 |
*$149m spend up to LOS and
US$45m required from LOS to FID
Construction workforce
The construction effort will be
spread over a wide geographic area covering the MSP, WCP, mine
infrastructure, road, bridge and export facility. These works
will be performed by multiple civil, structural mechanical &
piping (SMP), electrical & instrumentation (EI) and marine
contractors, with a workforce peaking at ~2,150.
· Peak workforce of ~2,150 personnel excluding
Base Resources operational, community, environmental and
administration personnel.
· Up to 800 skilled contractor personnel
and 1,350 unskilled local workers will be on site during
the 27-month construction period.
· The accommodation camp facilities will be
completed early and are sized to cater for the non-local workforce
and supervisory staff working on the process plant site
facilities.
· Local Toliara people and contractors working
on facilities other than the process plant site construction
activities, will be accommodated in Toliara and local towns.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a chart
showing the Stage 1 construction manning levels.
Operational workforce
A detailed manning ramp-up plan has
been developed to estimate the requirements for the operational
phase. For Stage 1, a total of 690 employees is forecast for
mining and WCP start-up at September
2024, increasing to 731 by February
2026, prior to commencement of Stage 2 construction.
· It is anticipated that the total operations
workforce at the commencement of mining in September 2024 will be 690 employees, rising to
731 employees by February 2026 and
will remain stable until the commencement of Stage 2 operations.
Of these, it is expected that 60 employees will be expatriate
at start up, reducing to 49 employees by the start of Stage 2
operations. The remainder of the employees and contractors
will be Malagasy, primarily from the Toliara region.
· Accommodation objectives
balance several factors including community impact, benefits
to the community, availability of accommodation, fit-for-work
standards and the attraction and retention of capability.
On-site camp accommodation is planned for expatriate fly-in
fly-out, shift workers on night shift, emergency response
teams, apprentices, clinicians, on-call tradespeople and
consultants.
· Malagasy employees from outside the Toliara
region are expected to relocate to the surrounding communities and
transported to work daily.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a chart
showing the operations manning ramp-up levels.
Operational management and
readiness
Early capability and capacity
building programs were initiated to develop Toliara regional skills
in semi-skilled, skilled and professional categories prior to the
operational phase.
Operating and construction readiness
The complete range of skills required to commission, start up
and operate the Toliara Project are not readily available in the
Toliara region. While there are many skills available and
people with diverse academic qualifications, these need to be
augmented with:
· Specific mining and processing training and
work experience in order to reach acceptable capacity and
capability for the needs of the project.
· Use of expatriate employees in key technical
and managerial positions during early operational phases.
In accordance with the Labour, Recruitment and Influx Management
Plan (LRIMP), a comprehensive early capacity building program
commenced in early 2019:
· Registration of over 7,000 local people for
traineeships.
· Over 2,000 people progressed through a
selection process to finalise the selection of over 500 people to
train in a variety of skill sets.
· Construction and operational traineeships in
trades, equipment operation, maritime operations and computing,
combined with English literacy, numeracy and leadership
training have been completed. The first group of 24
apprentices have successfully completed internationally recognised
trade qualifications whilst on secondment at the Kwale
Operations. Further to this, the early selection of 17
Malagasy nationals for the graduate program is complete.
Training programs will resume prior to and throughout the
construction period.
· Monitoring of employee performance during
construction will provide a basis for operational phase training
and employment.
Management systems
· Health and safety systems address the
relative inexperience of locals working in the mining industry.
· Administrative systems are computer based
and integrate with existing Base Resources applications.
· Maintenance systems reflect the need for the
operations to be self-sufficient due to remoteness.
Workforce skills and training
The required construction and
operational skills are not readily available in the Toliara
region. Base Toliara has implemented strategies to maximise
the availability of skills for the implementation and operational
phases of the Toliara Project.
To ensure the required skills are available, Base Toliara has
planned and is implementing:
· A system of preferential recruitment, agreed
with community stakeholders, where skills are sourced locally where
available, and then from progressively further afield in
Madagascar and internationally,
where they are not available in Toliara. This arrangement is
embodied in the LRIMP.
· Training for trades apprentices and
professional graduates from Madagascar, at Base Resources’ Kwale
Operations in Kenya, through the
national and in-house training programmes.
· Community capacity-building and training to
develop local construction and other work skills.
Following a registration and screening process, over 7,000
applicants from the project area have registered for employment and
training opportunities. Over 500 of these have completed Base
Resources’ construction readiness training courses in mobile
equipment operation, construction “wet trades”, and other work
skills.
Contractors from outside the local area will utilise their
existing management, supervisory and specialist personnel to the
extent allowable. Procedures are in place to support
contractor access to the Base Resources registration database for
skilled, semi-skilled, and unskilled local labour, and to assist
contractor recruitment of additional skilled personnel from outside
Toliara if required.
Inductions and training will be used to prepare construction
workers for shift work during construction which will serve as an
introduction to the long-term shift work required for
operations.
For maximum effectiveness, leadership positions relating to
local functions such as community and government relations will be
held by a Malagasy national. To date, three senior positions
in this area (General Manager External Affairs, Manager Community
Relations and Manager Government Relations) have been
successfully sourced.
Operational management and readiness
(cont.)
Operating philosophy
The majority of the operation functions will be owned and
operated by Base Resources.
Functions outside Base Resources’ experience or where financial
benefits accrue will be outsourced allowing focus on core
activities:
· Mining – owner operator.
· Processing – owner operator.
· Administration – owner operator.
· Product transportation – contractor.
· Export facility operation (land) – owner
operator.
· Export facility operation (marine) –
contractor.
· Power – “self-supplied” by Base Toliara,
with the generation facility to be constructed by an IPP that will
operate and maintain that facility on Base Toliara’s behalf.
· Laboratory services – owner operator.
· Camp services – contractor.
Management
Internal candidates have been identified for key operational
positions:
· General Manager Operations.
· Manager Human Resources.
· Manager Finance & Administration.
· Manager Environment.
Stakeholder engagement
Stakeholder mapping
Analysis of the various stakeholders’ ability to influence
Toliara Project development provides an understanding of the
potential for persons, organisations and institutions to play a
supportive or disruptive role in development of the Toliara
Project.
Base Resources has been able to form an understanding of the “on
ground” situation in the Toliara area through its own stakeholder
mapping in conjunction with initial stakeholder mapping performed
during the Environmental and Social Impact Assessment (ESIA) study
by the previous owners (WTR).
Consultation process
Community consultation programs have commenced but are
currently on hold due to the Government-imposed suspension of
activities. These programs are intended to improve
information sharing and bring communities and other stakeholders
closer to the Toliara Project. An overview of the Community
Stakeholder Engagement Plan process and participants is as
follows:
· The Regional Coordination Committee (SCRC in
French) was established by the Government to manage stakeholder
engagement during WTR project ownership. It comprises 45
members and is intended to sit monthly to discuss progress,
grievances and give feedback. The Governor (the senior most
administrative position in the region) is the Chairman. Its
current function remains focused on high-level communication and
information sharing amongst regional players.
· The Resettlement Working Groups (RWG), one
for the mine site and another representing communities along the
haul road and at the export facility site, are committees that
bring together communities that will be subject to the resettlement
requirements of the Toliara Project, enabling them to participate
in the decision-making process and provide input into how to
achieve positive outcomes for the process. These committees
comprise community representatives that will be directly affected
by resettlement and relevant government agencies and local
administrators that have a participatory role in delivering
positive resettlement outcomes aligned to IFC Performance Standard
5 – Involuntary Resettlement.
· Community Liaison Committees (PLL in French)
are the main stakeholder and communication link between communities
outside the Toliara Project’s footprint. The PLL will be
formed once the RWG process is well established. The PLL
committees are intended to be very mobile, reaching out to remote
areas to establish trust with local communities and avoid issues of
information distribution shortcomings which can be a result of
closed-door static committees. Each village will have a
representative in a PLL to enhance the community’s ability to share
information amongst themselves.
Land acquisition
Foreign controlled companies are not
permitted to own land in Madagascar but can obtain surface rights
through a lease arrangement with the Government.
A high-level overview of the process of obtaining surface rights
being employed by Base Resources is as follows:
· Establish title/ownership of land – only a
small number of land parcels required have an existing formal title
(106 of 1,041), the rest are held through customary interests.
This stage has been completed.
· Agree/determine the land value. There
are two options to do this:
o Compulsory acquisition of land through the DUP
process. Currently on hold pending the lifting of suspension
following which the Evaluation and Compensation Committee (CAE)
will finalise field work required and negotiate compensation.
o Private treaty negotiations direct with landowners is
permitted under the Mining Code. Currently on hold pending the
lifting of suspension and completion of CAE’s negotiations.
· As Base Toliara cannot own land, it will
fund the Government (on the basis of values determined above once
the process is completed) to:
o acquire land titles where available; or
o acquire the customary interests where no land title
exists.
· Where the Government acquires customary or
privately owned interests through compulsory acquisition, a title
must be created for that land in the name of the State.
· Base Toliara will then negotiate a lease
with the Government for the surface rights to the land held by the
Government as required for the project.
A total of 20 households associated with Base Toliara employees
working at the exploration camp, and residing nearby on the mine
site, were forcibly removed by a group of people opposed to the
Toliara Project. Base Toliara supported them to return to
Benetse, their village of origin, and constructed temporary
accommodation and provided materials to replace lost belongings.
They remain listed as subject to physical relocation and will
receive full compensation and relocation benefits in compliance
with IFC Standards after preparation of the Resettlement Action
Plan (RAP) once the consultation process can begin again in
collaboration with the RWGs.
The DUP process does not extend to dealing with livelihood
replacement, the relocation of tombs and other requirements under
IFC Standards which Base Resources seeks to comply with through the
RAP. These additional steps will involve the RWGs and run in
parallel to ensure legal and IFC compliance. The Livelihood
Replacement Plan has been completed and will be further refined
through consultation with affected stakeholders once engagement
activities can resume. The tombs relocation program was about
one third complete prior to the suspension of activities.
Land acquisition - DUP process
Compulsory acquisition of land can be
achieved through the DUP process.
An overview of the DUP process:
· The process commences with public
notification of the intention to undertake compulsory acquisition.
This has been completed.
· Those affected are given 30 days to register
their interest. This has been completed.
· Following registration, the DUP Decree is
issued and land parcel identification and socio-economic studies
are undertaken. The DUP Decree for the haul road and export
facility was issued on 15 April 2018
and the mine site issued on 19 July
2018.
· A list of land interests is prepared and
posted in the community for a 30-day public review period.
This has been completed.
· Following a review process, the issuance of
the Act of Transferability confirms land parcels impacted by the
Toliara Project. The applications for the Acts must be
submitted within 12 months of issuance of the DUP Decree or it
expires. This has been completed.
· Concurrently, the CAE is established to
manage the final steps. The CAE is responsible for confirming
the eligibility of landowners of each of the parcels listed and the
evaluation of any associated private assets such as structures and
crops. Following this, negotiation of compensation rates is
undertaken, culminating in agreed amounts for the various assets
involved. The CAE has been established for the Toliara
Project land acquisition and eligibility and values have been
determined subject to field confirmations which are now awaiting
lifting of the suspension.
· Once compensation amounts are finalised, the
CAE will advise Base Resources of the total cost of
compensation.
· Following payment of the compensation amount
to the Government, the compulsory acquisition is finalised by
transfer of land title to the Government.
Community development, employment and
local content
Community development
Base Resources recognises the significance community development
plays in building positive relationships and ensuring locals
benefit from development of the mineral resource.
The approach is focused in specific areas of development:
· The health sector.
· Education programs.
· Community infrastructure.
· Livelihood enhancement projects.
A Community Development Management Plan will be developed in
consultation with affected communities, Non-Government
Organisations (NGOs) and regional authorities to align outputs with
stakeholder priorities and local development plans.
Funding for community development activities is by way of:
· Distribution of 70% of mineral royalties by
legislative requirement to communities in the region affected by
the Toliara Project.
· Planned annual community development
expenditure of US$3m by Base
Resources from commencement of operations is now assumed in the
modelling.
· An upfront community development fund of
US$10m is now assumed to be
established prior to the commencement of operations.
Employment
Affected communities will be prioritised for employment during
both the construction and operations stages. To facilitate
this, community training programs have commenced. Though not
all who participate in this training will be employed, it will give
people, particularly youth and women, valuable skills to secure
employment elsewhere.
Base Resources has developed the LRIMP which has been approved
for use by the Committee for Transparency in Recruitment, a
regional committee set up to oversee the Toliara Project
recruitment process. The LRIMP identifies job seekers and
prioritises them based on impact (i.e. if they were resettled) and
their proximity to the Toliara Project. A lower priority is
assigned to those living further away.
This system is also a commitment under the ESIA approval process
outlining the need for both skills development and local employment
prioritisation as mitigation for social impacts.
Local content
The procurement of goods and services from local organisations
creates benefits through direct and indirect job creation and
helping to build the local economy. Local businesses will be
given training on Base Resources minimum standards to prepare them
for tendering and possible selection as a supplier or
contractor.
Environment
Environmental setting
Madagascar is the world’s
fourth largest island and is recognised as one of the world’s top
ten hotspots for biodiversity, owing to its unique biota and the
high degree of threat to its natural habitats.
It is estimated that there are about 10,000 plant species on the
island. Of these, 80% or more occur nowhere else. Human
settlement commenced in Madagascar
2,000 years ago and has resulted in the clearing of much of the
island’s forest habitats.
Madagascar is globally
important in terms of its biodiversity and is within the
Madagascar and Indian Ocean
Islands Biodiversity Hotspot as designated by Conservation
International. Despite considerable biological interest,
knowledge of the flora and faunal biodiversity in the region is
still hampered by unresolved taxonomic problems and poor
sampling.
The Toliara Project area falls into the Madagascar Spiny Thicket
Ecoregion, which is divided into succulent woodlands and
Madagascar spiny
thickets. The total size of the ecoregion is
124,000km2, falling into the deserts and succulent
shrublands habitat type of Madagascar and is classified as a Critically
Endangered region.
The spiny thicket is exceptional in this regard, with 95% of all
plant species, and 48% of the genera occurring in the ecoregion
endemic to Madagascar. The thicket is dominated by members of
the endemic Didiereaceae family.
Fauna is also important for this region, with Madagascar and the Spiny Thicket Ecoregion
exhibiting high levels of endemicity. The conservation of
forested habitats is a priority as they are subject to the greatest
threats (slash-burn agriculture and charcoal production).
There are few protected areas covering the ecoregion with
very little known about the biodiversity and ecology of the
region.
Reserves protect approximately 3% of the region, leaving the
rest susceptible to degradation. The main threats include
charcoal production, logging for construction, grazing of domestic
animals (primarily zebu cattle, but also goats) and agriculture.
Invasive plant species also cause a loss of habitat, as does
illegal collecting of endemic and endangered species for commercial
trade.
A rare opportunity to make a significant contribution to
conservation
The environmental setting of the Toliara Project within a
Biodiversity Hotspot and one of the ecoregions of the Madagascar and Indian Ocean Islands supporting
a rich fauna and flora with high levels of endemism presents a
significant opportunity for Base Resources to make a meaningful
contribution to the region’s biodiversity and conservation efforts
through:
· Targeted environmental programs.
· Collaboration with conservation partners –
government environmental departments, research institutions, NGOs
and communities.
· Collaborations with regional, national and
international researchers such as Missouri Botanical Garden, Flora
& Faunal International, Reef Doctor and the African Butterfly
Research Institute.
Environment (cont.)
Regulatory framework
· Environment Permit No 55-15/MEEMF/ONE/DG/PE
is granted and valid.
· Approved Plan de Gestion
Environnementale (PGE) (an environmental management plan) in
place.
· Office National Pour l'Environement (ONE),
the Malagasy environmental management authority, have advised that
subsequent amendments to the Toliara Project should be made through
an updated PGE and the Construction and Operations Plan de
Gestion Environnementale Spécifique (PGES’) – see below.
· The Construction PGES’, prepared during FEED
and submitted to ONE three months prior to commencement of
construction, will present project changes to date.
· Operational PGES’ will be prepared and
submitted to ONE three months prior to commencement of
operations.
Environmental and Social Impact Assessment documentation
A number of ESIAs have been prepared and approved over the years
for the Toliara Project, with the principal documents being:
· 2005-2006: Scoping Report prepared and
submitted to ONE.
· 2006-2007: Specialist studies conducted, not
submitted to ONE.
· 2012: Revised Scoping Report submitted to
ONE for public review.
· 2012-2014: Specialist assessments redone,
detailed ESIA completed and submitted to ONE.
· 2015: PGE issued by ONE together with the
Environmental Permit.
· 2017: Addendum ESIA submitted to
ONE. PGE Addendum 1 issued by ONE.
Base Resources is committed to international best practice
The Toliara Project will develop and operate a comprehensive
Environmental and Social Management System (ESMS) to meet the
requirements of Base Resources’ policies, Malagasy legislation and
international best practice, including the Equator Principles, IFC
Performance Standards and the World Bank Group's Environmental,
Health and Safety Guidelines.
Environmental and Social Management System
· ESMS will give effect to Base Resources’
commitments.
· ESMS based on a ‘Plan-Do-Check-Act’ business
performance improvement cycle utilising risk and impact assessments
as a key tool.
· ESMS components will include:
o Update of the PGE to reflect name change and Project
changes.
o Summary ESIA to consolidate ESIAs and reflect Project
changes.
o PGES’ for construction, operational and decommissioning
phases for submission to ONE three months before the start of
associated activities.
o Construction phase, operational phase and
decommissioning phase ESMPs.
o Baseline studies – update of previous studies, new
studies and modelling.
o Comprehensive environmental monitoring program,
including ecological monitoring.
o Environmental programs to support Base Resources’
commitment to improving biodiversity, promoting conservation and
sustainability, including an indigenous tree nursery to research
propagation methods of the region’s unique flora, establishment of
biodiversity corridors and offset and reforestation programs.
Government and political
Overview
Madagascar is a country with a
heightened degree of political risk, with a history of regular
events of instability, most recently with the political crisis in
2009. Madagascar does not
have a history of civil war and most of its troubles are
characterised by political paralysis rather than widespread
violence.
The Presidential elections concluded in December 2018 were relatively free from social
unrest, regarded as materially free and fair and the result met
with general acceptance, including by the key opposition
candidates. Consequently, the President can be considered to
have a clear mandate and there is an expectation of a period of
relative political stability. The presidential term is five
years.
Government engagement
The President has expressed support for development of the
Toliara Project both during the late-2018 election campaign and
subsequently. This, combined with statements from key
advisers, is considered to represent a genuine support for the
Project’s development.
A structured and intensive stakeholder engagement strategy has
been focused on establishing and building relationships with the
relevant national and local government authorities as well as key
influencers who can contribute to a lobbying coalition in shaping
the Government’s policy in relation to mining and, more
specifically, its disposition towards the Toliara
Project.
Proposed changes to the mining regime
The national government has documented its desire to implement a
“new vision for mining” and is undertaking a consultation process
with key stakeholders as it develops its mining policy. While
the scope and timing for any changes to the mining regime remain
uncertain, key aspects being considered for reform are:
· Taxes applicable to mining projects,
including concessions applicable large-scale mining.
· Securing Government free carried interest in
mining projects.
· An increase in royalty rates.
· Increased mining company contribution to
regional development, specifically aligned to the Government’s
development priorities (e.g. roads, power access, food
security).
An intensive, coordinated and broad-based lobbying campaign is
ongoing to ensure that the Government makes informed decisions on
policy and implements them in a way that does not render the
Toliara Project, as well as the wider mining sector in Madagascar, unviable. Separately, Base
Resources is engaged in direct discussions with the Government
seeking to agree the fiscal regime that will apply to the Toliara
Project, which will allow the project to proceed independent of any
reform to the mining regime. While an acceptable outcome
should be achievable, the risk remains significant.
Applicable legal regime
General
The legal system in Madagascar
is based upon the French civil law system. This is a codified
legal system based on the Napoleonic model. As in all civil
law systems, statute law (which is contained in a series of codes)
has the greatest importance. In contrast with common law
systems, the doctrine of precedent (jurisprudence) has little
weight.
Mining law
The Code Minier or Mining Code and the Large Mining
Investment Law (LGIM) (and their implementing decrees) are the main
pieces of legislation that govern the mining sector in Madagascar.
Under the Mining Code, Madagascar is divided into squares of
625m. Only one permit exists per
square.
Mining permits are administered by the Bureau de Cadastre
Minier de Madagascar, the
Madagascar Mining Registry. It operates on a first-come,
first-served basis. The system operates in a generally
reliable, stable fashion and the risk of outright expropriation is
considered low.
A royalty is payable to the Government based on the value of the
product extracted. The Mining Code currently prescribes the
rate as 2% of the value of the first sale.
Environmental laws
Any entity wishing to perform exploration activities is required
to obtain an environmental authorisation, and any entity wishing to
perform exploitation activities is required to obtain an
environmental permit.
Land laws
There is a system of land registration in Madagascar. Land
that is registered is recorded in the books at the land
registry. The Topographic Service holds an official plan
drawn up by a surveyor, showing the boundaries of the land.
In practice, regional land registries (including the one in
Toliara) are largely paper-based and often incomplete.
Foreign controlled entities are not entitled to own land in
Madagascar. Instead, occupation of land by foreign entities
is typically through a long term lease (with a maximum term of
99-years).
LGIM explained
Overview
The Large Mining Investment Law, or LGIM, which was drafted with
the assistance of the World Bank and is intended to create a
beneficial legal and financial platform to attract investment in
the mining sector.
To date, only the Ambatovy project has been certified as
eligible under the LGIM.
Eligibility certification requires submission of environmental
authorisations, obtaining of exploration or exploitation permits,
and certification of the investment plan, including evidence that
the proposed investment will exceed MGA50 billion (approximately
US$15m).
Key benefits of the LGIM
· Guaranteed stability of taxes and custom
duties, and no restrictions on the sale of mining products.
· Entitlement to use foreign currencies and
hold foreign bank accounts.
· Beneficial tax regime, including VAT
exemptions.
· Beneficial customs regime.
· Protections from expropriation.
· Access to international arbitration for the
resolution of disputes with Government.
The process after submission is generally expected to take
five months from the date of application (potentially more)
depending on the number of documents or clarifications required by
the Government. Generally, the LGIM eligibility period runs
from the date of LGIM certification until expiry of the mining
permit granted to the permit holder. For the Toliara Project,
the eligibility period would be expected to end on 20 March
2052, to coincide with the end of the initial term of PE 37242.
LGIM eligibility certification (or equivalent legal and
financial stability regime) is considered a pre-requisite for
successful funding of the Project.
Base Resources filed its application for eligibility
certification under the LGIM in August
2020, based on the outcomes of the DFS, however this
application has not progressed as a result of the Government’s
suspension of the Project’s activities and pending agreement on the
fiscal terms that will apply to the Project. Base Resources
is confident that the Toliara Project satisfies the criteria for
eligibility certification under the LGIM and expects timely
consideration of its application once fiscal terms are agreed and
the Government’s suspension of the Project’s activities is
lifted.
Progress with fiscal terms
negotiations
In November
2019, the Government of Madagascar required Base Toliara to suspend
on-the-ground activity on the Toliara Project. Activity
remains suspended as Base Resources continues to engage with the
Government in relation to the fiscal terms applicable to the
Toliara Project and lifting of the on-the-ground suspension.
Negotiations of fiscal terms with the Government of
Madagascar
· Base Resources is engaged in direct
discussions with the Government seeking to agree the fiscal regime
that will apply to the Toliara Project. Progress is being
made and Base Resources remains confident that an acceptable
outcome is achievable, however the timing for reaching an
agreement, and the precise terms of that agreement, remain
uncertain.
· Upon agreeing the fiscal regime, the intent
is for those terms to be secured through
eligibility certification under the LGIM, a convention, or
another mechanism that achieves an acceptable level of legal and
fiscal stability.
· Base Resources lodged its LGIM eligibility
certification application with the Government in August 2020, supported by the outcomes of the
DFS. However, this application has not progressed pending
agreement on fiscal terms and LOS.
Suspension and COVID-19
· With the Government suspension of activity,
continuing international travel restrictions and broader COVID-19
measures and impacts both in Madagascar and globally, the FID to proceed
with development of the Toliara Project has been delayed.
· Once fiscal terms are agreed, it is expected
that there will be a LOS. There will be approximately 11
months’ work to complete prior to FID following the LOS. This
work includes finalising financing, obtaining LGIM eligibility
certification (or similar legal and fiscal stability), completing
the land acquisition process and concluding major construction
contracts.
· Consequently, in order to achieve the
assumed FID in December 2022, the LOS
would need to be secured by the end of January 2022.
Activities planned upon LOS
· Community engagement to allow access for
geotechnical investigations.
· Land acquisition processes.
· Obtaining the LGIM eligibility certification
or comparable legal and fiscal stability arrangements.
· Securing of required statutory construction
approvals and permits at the local, regional and national
government levels.
· Conducting environmental baseline studies
and monitoring and securing required environmental construction
approvals.
· Negotiation and verification of indicative
offtake terms with customers and finalising term sheets with
offtake partners.
· Completion of project funding, including JV
partner negotiations.
· Early works - water drilling, quarry
investigations and building of contractor access roads.
· Concluding major construction contracts.
Key approvals – Project
Development
Key Approval |
Notes |
Export
facility |
MoU |
Provides the mechanism
for land to be incorporated into the export facility site |
Permission |
Agreement to allow
construction and operation of the export facility site |
Design and
construction approvals, and issue of construction permit |
|
Land
acquisition (export facility, road and mine site) |
Private
contracts and agreement |
Used to acquire
private rights, where possible |
Land decree classifying
lands as State public domain |
Act of Transferability (acte de
classement) to be issued by way of decree |
Government lease |
Long term lease over government land
(Domaine privé de l’Etat) in favour of Base Toliara. Applies
to haulage road and mine site |
Haulage road |
MoU |
Establishes the basis for the
construction and use of the haulage route |
Design and construction
approvals |
|
Camp |
Design and
construction approvals, and issue of construction permit |
|
Borehole construction
and water extraction |
|
Mine
construction |
Design and
construction approvals, and issue of construction permit |
|
Borehole construction
and water extraction |
|
Authorisation to
operate the power facility (Autoproduction authorisation) |
Applies to
larger facilities (over 500kW for thermal, hydraulic and solar
installations, and over 1MW for biomass installations, geothermal,
wind or waste processing). |
Environment |
Environmental impact
assessment approval |
Environmental impact assessment issued and approved through
issuance of PGE. |
Environmental
permit |
Environmental permit issued |
Large
mining law |
Large Mining
Investment Law (LGIM) certification |
Provides
financial and legal stability regime for large scale mining
investments, favourable customs regime, guaranteed foreign exchange
rights and certain tax benefits |
|
|
|
Capital cost
Stage 1 capital cost is estimated at
US$520m (accuracy +10%/-5%) based on
definitive engineering designs, tendered pricing, budget quotes and
escalation allowance. Stage 2 capital cost is US$137m.
· The Capital Cost Estimate (CCE) reflects the
maturity of the design and is based on engineering layout and
design drawings, equipment lists or general arrangement layouts and
prices have been derived from a combination of the following
sources:
o 42% from project specific tenders (marine, export
facility shed piling, bridge, IPP, drilling and equipment), 50%
from project specific budget quotations, 7% estimated or built-up
rates and 1% factored from similar works.
· Approx. 25-30% of engineering has been
completed, underpinning a CCE accuracy of +10 to -5%.
· An extensive Tender and BQR process was
conducted for major contract packages to establish unit rates that
reflect the market conditions in Madagascar. Firm quotes were received
(Q4-2019) for all major mechanical / electrical equipment vendor
packages and over 90% of the CCE is supported by pricing sourced
from reputable suppliers and contractors.
· The onshore piling, offshore marine facility
and bridge costs were obtained via a tender process supported by
post-tender technical and commercial clarification meetings.
· The DFS CCE completed in December 2019 was updated in Q2-2021 for:
o Escalation, including additional owners labour costs,
reflecting the DFS2 revised FID timing. The cost escalation
estimate has been derived from data collected from various African
projects and forward-looking views from 5 different sources.
o Applicable foreign exchange rates - 71% of CCE is USD
based, 14% ZAR, 12% AUD and 3% EUR.
o Contingency provision reduced to 9.7% (down from 10.6%)
due to the increased scope certainty following de-risking and
optimisation work completed since DFS release.
· Owner’s costs were developed from Kwale
Operations experience and the planned production ramp up.
Capital Cost
Estimate (US$m) |
Stage
1 |
Stage
2 |
Mining (including HME
and DMU) |
39 |
20 |
Process Plants |
110 |
67 |
Infrastructure (Camp,
roads, bridge, power, water, buildings) |
86 |
8 |
Product Storage &
Export Facility |
82 |
- |
Professional Services
(EPCM’s, Vendor Reps, Specialists Consultants) |
32 |
6 |
Owner’s costs (see
further breakdown in table below) |
66 |
6 |
Sub total |
415 |
107 |
Escalation (14.2% and
16.0%) |
59 |
17 |
Contingency (9.7% and
10.5%) |
46 |
13 |
Total Project
Capital Costs |
520 |
137 |
Owner’s Costs
Estimate (US$m) |
Stage
1 |
Integrated Management
Team – Labour & Expenses |
12.7 |
Initial Clearing for
mining, TSF & Starter Pit |
1.4 |
Camp operating (based
on Kwale + US$2m fuel) |
5.8 |
Spares, tools and 1st
fills |
8.0 |
In-country operations
(community, environment, external affairs, operations team,
finance, admin) |
32.9 |
Light Vehicles |
2.0 |
1% customs stamp duty
on value of imports |
1.1 |
Plant Mobile
Equipment |
2.6 |
Total Owner’s
Cost |
66.4 |
Project Development expenditure
timeline
Pre-FID expenditure of US$195m includes acquisition costs, feasibility
studies, land compensation, construction early works and in-country
operating costs. Early works expenditure on a number of work
packages will result in a fast ramp up of construction following an
FID and allow construction to meet phased operational
implementation and ramp-ups in line with critical path items.
FID is assumed to be Q4 2022.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the anticipated pre-FID and post-FID expenditure.
Operating costs
Operating costs have been derived
from first principles and experience gained at Kwale Operations,
incorporating local Malagasy cost inputs where appropriate.
Operating cost
category |
LOM
Total US$m |
US$m
per annum1 |
US$/t
mined1 |
US$/t
produced1 |
Comments |
Power |
720 |
19 |
0.79 |
18.2 |
Power is based on a
solar hybrid solution using HFO as a primary fuel source and a
small amount of supplementary diesel. Assumes a HFO price
of US$0.63/L, which results in an average power price of
US$0.16/kWhr. |
Maintenance |
602 |
16 |
0.67 |
15.5 |
Maintenance is based
on Kwale experience and scaled where appropriate. |
Labour –
expatriates |
159 |
4 |
0.16 |
3.8 |
Operations reach 60
expats in early years, before dropping to 17 after 6 years and
reaching a steady state of 8 expatriate senior managers from 2033
onwards. |
Labour –
nationals |
276 |
7 |
0.30 |
6.9 |
Excluding contractors
and corporate staff, operations commence with 631 national
employees, before peaking at 820 in 2033 following completion of
the Stage 2 and transition of managerial roles. |
Fuel – drying |
259 |
7 |
0.29 |
6.6 |
Diesel usage for the
MSP drying process is based on Kwale experience and a delivered
diesel fuel price of US$0.85/L. |
Fuel – mobile
equipment |
161 |
4 |
0.18 |
4.1 |
Equipment fuel burn
rates are from Kwale experience, and a delivered diesel fuel price
is US$0.85/L. |
Product transport
& export facility rates |
342 |
9 |
0.38 |
8.7 |
Bulk transport to the
export facility estimated at US$3.45/t plus US$0.60/t for free
issue diesel. Marine operations will be contracted to a chartering
service at US$2.4M per annum. Port of Toliara export rates are
estimated at US$2/t shipped, plus annual lease costs of
US$0.7M. |
Flocculant |
14 |
1 |
0.02 |
0.4 |
Flocculant usage
between 0.08 and 0.12kg/t slime at cost of US$2.85/kg. |
Other operating
costs |
410 |
11 |
0.44 |
10.3 |
Other fixed operating
costs, including insurance, camp management, security contractors
and training. |
Total operating
costs |
2,943 |
77 |
3.22 |
74.5 |
|
Royalties |
475 |
13 |
0.53 |
12.3 |
Government royalty
rate of 4%. |
Total operating
costs (incl. royalties) |
3,419 |
90 |
3.75 |
86.7 |
|
1 Annual averages, excludes first and last
partial operating years
Unit operating cost per tonne
produced
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the LOM unit operating cost per tonne produced.
Contracts
A comprehensive strategy has been developed for the
key contracts that will be required to obtain FID, construct the
project or operate the assets.
Strategy
· Maintain project knowledge through
continuing successful relationships with customers and key
engineering and construction contractors.
· Selecting contract delivery models (e.g.
EPC, EPCM, build own operate and transfer, supply, services) with a
combination of bespoke and standard FIDIC terms and conditions to
provide optimum benefit/risk balance.
· Consolidate contract packaging to optimise
contractor overhead costs.
· In addition to commercial terms, all
implementation and operating contracts will include clauses related
to Toliara Project specific objectives such as labour recruitment,
remuneration, health, safety and environmental management.
Key FEED/early works agreements
· Mineral Technologies and Lycopodium Alliance
(joint venture) appointed as an EPCM contractor for the FEED and
Early Works program.
· Marine consultant, PRDW, appointed to
provide technical support on the export facility FEED work.
· Zutari and Johnson, Winter & Slattery
appointed to support during power tender evaluation and Power
Agreement negotiations.
· Zutari appointed to support roads design and
contractor procurement.
· Colas Madagascar appointed to conduct river
hydrology, geotechnical investigations and preliminary design for
the Fiherenana bridge.
· Fugro and Subtech appointed to conduct
marine geotechnical investigations and Seismic Survey.
· Wave International appointed to provide
support for project controls.
· Early Works construction packages will be
awarded to a mixture of first tier and local contractors on
re-measurable rates contracts.
Key implementation contracts to be finalised during FEED subject
to FID
· EPCM Contract for EPCM services.
· Marine EPC Contract including the marine
works, ship loader and jetty conveyor contract. Contract
based on FIDIC Yellow Book conditions.
· Fiherenana River Bridge EPC Contract based
on FIDIC Yellow Book conditions.
· Export Facility Piling Contract based on
FIDIC Red Book conditions.
· Haul Road North Construction Contract based
on FIDIC Red Book conditions.
· Haul Road South and Export Facility
Bulk Earthworks Construction Contract based on FIDIC Red Book
conditions.
· Ranobe Road and Processing Plants Bulk
Earthworks Construction Contracts based on FIDIC Red Book
conditions.
· Accommodation Design and Construction
Contract based on FIDIC Red Book conditions for the design and
construction of the balance of the camp.
· Bespoke contract for power.
Contracts (cont.)
A comprehensive strategy has been developed for the
key contracts that will be required to obtain FID, construct the
project or operate the assets.
Key implementation contracts to be finalised after FID
· Civil construction contracts based on FIDIC
Red Book conditions. One contract at the mine site and one at
the export facility. EPCM manage supply and logistics of the
“free issued” reinforcing steel.
· SMP installation contracts based on FIDIC
Red Book conditions. Two contracts at the mine site and one
at the export facility. EPCM manage supply and logistics of
the “free issued” materials and equipment.
· Electrical and instrumentation installation
contracts based on FIDIC Red Book conditions. Two contracts
at the mine site and one at the export facility. EPCM manage
supply and logistics of the “free issued” materials and
equipment.
· Bespoke contract for supply chain and
logistics management.
Key operations contracts to be negotiated during FEED subject to
FID
· Fuel supply contract.
· Camp operations contract.
· Communications contract.
Key operations contracts to be negotiated post FID
· Marine operations contract (tug and line
boat) will be fully chartered. Tendering to commence at
FID.
· Product haulage contract. Tendering
for a five-year contract will commence with prequalified
contractors after FID. Base Toliara will supply fuel on a
flow-through basis.
Offtake agreements
Base Resources has provided potential customers with product
samples and aims to leverage its market reputation and existing
customer base to secure offtake agreements or final term sheets,
prior to FID, that will support project funding activities.
Owner operate
During the DFS, an owner operate approach was selected for
mining and laboratory services.
Mining and production profile
Production Profile |
Life of Mine (LOM) |
Stage 1#
Years 2 - 4.5 |
Peak
Stage 2#
Years 6 - 15 |
Stage 2†
Year 16+ |
Total |
annual
avg* |
annual
avg |
annual
avg |
annual
avg |
Ore mined
(Mt) |
904 |
23.9 |
12.6 |
25.1 |
25.1 |
HM% |
6.1% |
6.1% |
9.4% |
7.1% |
5.4% |
HMC produced
(Mt) |
55.6 |
1.5 |
1.2 |
1.8 |
1.4 |
Period |
38.4 |
37.0 |
3.5 |
10.0 |
23.0 |
Produced
(kt): |
|
|
|
|
|
Sulphate ilmenite |
16,941 |
450 |
388 |
566 |
407 |
Slag ilmenite |
9,804 |
261 |
225 |
327 |
236 |
Chloride ilmenite |
9,371 |
249 |
215 |
313 |
225 |
Total ilmenite |
36,115 |
960 |
828 |
1,206 |
868 |
Rutile |
283 |
8 |
6 |
9 |
7 |
Zircon |
2,468 |
66 |
56 |
82 |
60 |
# excludes ramp up. * Does not
include the first and last partial operating years. † Does
not include the last partial operating year.
Mining and production profile
(cont.)
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the LOM mining and production profile.
Financial performance profile
Financial
Profile |
Life of Mine (LOM) |
Stage 1#
Years 2 - 4.5 |
Peak
Stage 2#
Years 6 - 15 |
Stage 2†
Year 16+ |
|
Total |
annual
avg* |
annual
avg |
annual
avg |
annual
avg |
Ore mined
(Mt) |
904 |
23.9 |
12.6 |
25.1 |
25.1 |
Total production
(kt) |
38,866 |
1,033 |
889 |
1,298 |
935 |
Revenue -
Total |
$11,899m |
$317m |
$265m |
$402m |
$286m |
Operating Costs -
Total |
$3,419m |
$90m |
$80m |
$97m |
$87m |
EBITDA |
$8,163m |
$219m |
$176m |
$297m |
$190m |
Free Cash
Flow |
$5,922m |
$174m |
$117m |
$241m |
$151m |
Revenue - per tonne
produced |
$306 |
$306 |
$298 |
$310 |
$306 |
Operating
Costs^ – per tonne mined |
$3.78 |
$3.75 |
$6.38 |
$3.87 |
$3.49 |
Operating
Costs^ – per tonne produced |
$88 |
$87 |
$90 |
$75 |
$94 |
Cash
Margin |
$218 |
$220 |
$207 |
$235 |
$212 |
Revenue : Cost of
sales ratio |
3.5 |
3.5 |
3.3 |
4.1 |
3.3 |
# excludes ramp up. * Does not
include the first and last partial operating years. † Does
not include the last partial operating year. ^ Operating costs
include royalties.
Project cash flows (excludes
funding)
Strong operating cash flows result in
capital payback (for both stage 1 and 2 capex) occurring after four
and half years of operation.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the LOM project cash flows.
NPV sensitivities
NPV Sensitivities - Post tax / Pre
debt, 10% discount rate, US$m
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a an NPV
sensitivities “tornado” chart.
Pre–FID expenditure
Pre-FID expenditure of US$42.3m is required from October 2021 to FID in December 2022.
In-country operating activities will ramp up when the suspension
is lifted and US$20.9m is forecast to
maintain and support external affairs, community initiatives,
baseline studies, training and administrative activities.
The Project Development Pre-FID forecast of US$12.2m includes cost for:
· Integrated Management Team – Base Resources
team for design management, project controls and contracts
development.
· Front End Engineering and Design:
o Engineering design to “Issue for Tender” status for bulk
earthworks, accommodation camp, haul road and the Ranobe access
road. Detailed design for processing plants and Fiherenana
bridge.
o Consultancy services for marine, power, geotechnical,
ground water investigations and piling.
o Procurement to allow contract award for the bridge,
marine, piling, roads and bulk earthworks.
· Geotech/borehole investigation and
drilling:
o Geotechnical drilling for the haul road, marine works
and bridge.
o Production water borehole drilling.
· Early works construction:
o Toliara Port bridge upgrade.
o Quarry mining and stockpiling contract.
Toliara Pre-FID
Cost |
Forecast (LOS to FID)
US$m |
Labour costs |
6.4 |
Security
contractors |
2.4 |
External
consultants |
2.7 |
Environmental studies
& programmes |
1.3 |
Community
programmes |
2.4 |
Travel &
accommodation |
1.2 |
OHS &
training |
0.3 |
Public & investor
relations |
1.1 |
Employee
overheads |
0.4 |
Other |
2.7 |
Toliara in-country
operating activities |
20.9 |
Land acquisition
costs |
9.2 |
Project Development
(FEED / EW) cost |
12.2 |
Total Toliara
pre-FID cost |
42.3 |
Toliara Project
FEED / EW cost (US$m) |
Forecast (LOS to FID)
US$m |
Integrated Management
Team |
3.2 |
Front End Engineering
and Design |
3.7 |
Geotech/borehole
investigation and drilling |
2.6 |
Early works
construction |
2.7 |
Total PD
cost |
12.2 |
Funding update
Base Resources does not have the
financial capacity to internally fund the project development on
its own. External funding in the form of some combination of
debt, JV interest and/or equity will be required to supplement Base
Resources' internally generated cashflow.
Funding for the Toliara Project can be broken down into three
elements:
1. Deferred acquisition
consideration of US$17m payable to
the Project’s prior owners on receiving LGIM certification
($7m) and on FID ($10m).
2. Pre-FID funding (October 2021 to December
2022) of US$42.3m to advance
the Project, comprising in-country operating activities
($20.9m), land acquisition
($9.2m) and project development cost
($12.2m).
3. Construction and operational
start-up funding of US$700m
(increased from US$595m in the DFS),
consisting of:
· Capex of US$520m.
· Working capital of US$124m, including an estimated US$55m for VAT (legally refundable but assumed
for this funding analysis to not be recovered until
operating year 5).
· Debt establishment and servicing during
construction of US$51m (based on the
funding mix assumed below).
It is anticipated that the deferred acquisition consideration
and pre-FID costs will be funded internally from cash generated by
Kwale Operations.
The ultimate funding mix for construction and start-up will be
determined prior to FID and will be dependent on Base Resources’
internally generated cashflow position and forecasts for the
construction and ramp-up period, market outlook, debt availability
and cost, and scope of any strategic joint venture at the time.
For the purposes of the funding analysis, the following
assumptions have been made for the US$700m of construction and start-up funding:
· 40% equity contribution - US$280m sourced from some combination of cash
generated from Kwale Operations, equity contributions from a joint
venture participant (in conjunction with substantial offtake
arrangements) and/or a capital raising. Additionally,
successful negotiation of a targeted VAT exemption, or timely
refunds, could reduce the overall funding requirement by up to
US$55m and contribute to reducing the
required equity funding.
· 60% debt facility - US$420m sourced from commercial banks, DFIs and
export credit agencies.
Financial modelling confirms the Project’s ability to
comfortably support this debt load.
On the basis of the project economics established by the DFS2
(in particular free cash flow generation), the robust market
outlook for mineral sands products (refer Marketing analysis), Base
Resources’ sound financial position (net cash and cash generation
from Kwale Operations), track record of successfully developing,
operationalising and repaying financing on a similar
project (Kwale Operations), prior success in capital raisings
as and when required (including for the acquisition of the Toliara
Project in early 2018) and preliminary work already undertaken in
relation to debt and JV participation, Base Resources’ considers
that there is a reasonable basis that development of the Toliara
Project can be successfully funded.
Risks
During the DFS, a comprehensive risk
review was completed. The risk outcomes have been
continuously reviewed and updated to capture new risks and track
risk mitigation activities to ensure all information remains
current and relevant. The risks presented in DFS2, reflect
the Toliara Project risk profile as at Q3-2021. 86 project
risks are captured of which 47 had an initial risk rating of “high”
or “extreme”, reduced to 12 risks after factoring in
mitigations.
Risk classification
· A qualitative rating is applied to each risk
or opportunity based on a likelihood and impact matrix.
· Each risk is given an initial risk rating
and, where risk mitigations are identified, a residual risk
rating.
· All risks with ratings of high or extreme
undergo a high-level review by management to ensure the rating is
appropriate, followed by a moderation exercise.
· Risks are generally classified as high or
extreme if there is both a reasonable (or higher) likelihood of
occurrence and the consequence of such an occurrence is serious (or
worse).
· A number of factors are considered when
assessing likely consequence, including impact on finances,
environment, personal safety, company reputation, legal or
regulatory implications, operating continuity and strategic
implications.
· Risks have been classified as pre-FID,
post-FID (or applicable to both) and operational to identify those
that need to be addressed prior to FID or during
implementation. Of the 86 risks identified, there were 22
pre-FID risks, 38 post-FID and 26 risks relevant to both pre-FID
and post-FID periods.
· Operational risks are captured in the
knowledge management system for use in commissioning and
operations.
· No material changes to the captured risks
are expected during the period up to FID.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a graph
showing the initial and residual Project risks across each of the
classifications.
Pre-FID and Post-FID risks
There are 22 pre-FID risks
identified, 14 of which have an initial risk rating of high or
extreme - following mitigations these reduced to one extreme and
five high residual risks. There are 26 risks identified that
apply to both pre-FID and post-FID periods, 13 of which have an
initial risk rating of high or extreme - following mitigations this
reduces to three high residual risks. 38 post-FID risks have
been identified, 20 of which have an initial risk rating of high or
extreme – following mitigations this reduces to three high residual
risks.
Pre-FID risks
Government and legal risks
· DFS2 project valuation assumes higher
royalty rates than the current regulatory obligation.
However, any change to the mining regime through action on
the government’s “new vision for mining” and associated Mining Code
review could increase this further. Any changes to royalties,
contribution to regional development or possible free carried
government interest will impact economics and potential fundability
of the Toliara Project. Depending on the magnitude of the
change, this may cause project delay, possibly for an extended
period or indefinitely. (Initial rating: extreme -> Residual
rating: extreme).
· Project delay associated with obtaining
remaining required approvals from the various regulatory bodies.
(Initial rating: extreme -> Residual rating: high).
· Engagement with the Government to obtain
support continues. Lifting of the suspension is linked to
reaching agreement with Government on fiscal terms, which is
ongoing. (Initial rating: extreme -> Residual rating: high).
· The Project may not be certified as eligible
under LGIM, or there may be a significant delay in obtaining
certification. A LGIM application, based on the DFS, has been
submitted and engagement with Government continues. (Initial
rating: extreme -> Residual rating: high).
· Land acquisition at the Ranobe mine site is
not finalised in time for construction activities to commence.
(Initial rating: high -> Residual rating: high).
Funding risks
· Inability to secure sufficient long-term
take-or-pay product offtake agreements with customers of good
standing to satisfy traditional debt funding requirements. (Initial
rating: extreme -> Residual rating: high).
Pre-FID and Post FID risks
Health and safety risks
· A fatality or serious injury during
construction. (Initial rating: extreme -> Residual rating:
high).
Community risks
· Project delay caused by local political
interference and/or civil unrest. (Initial rating: extreme ->
Residual rating: high).
Delays caused by COVID-19 pandemic.
· COVID-19 has caused upheaval globally with
significant impact on businesses with markets slowing down which
could result in delayed funding, loss of preferred contractors due
to economic strains, closed borders and potential unforeseen new
laws. (Initial rating: extreme -> Residual rating: high).
Post FID risks
Marketing risks
· Inability to form a strategic offtake
relationship with target integrated slag/pigment producers on
acceptable terms. (Initial rating: high -> Residual rating:
high).
Government and legal risks
· VAT incurred during the project construction
phase (~$55m) is not refunded or
significantly delayed by GoM. (Initial rating: extreme ->
Residual rating: high).
Opportunities
17 significant opportunities were identified in the DFS that
could add value to the project. High potential
opportunities are centered around Mineral Resource and Ore
Reserves, mine optimisation, environmental enhancement, community
development, implementation scheduling and exploitation of the
deposit's significant rare earth content.
Mineral Resources & Ore Reserves Opportunities
· Increasing the Mineral Resources and Ore
Reserves estimates through additional drilling. The present
Mineral Resources estimate remains open to the west and does not
include the deep mineralised Lower Sand Unit (LSU).
Mine Planning and Optimisation
· Mine planning design review has been
completed that demonstrated improved productivity and allowed for
increased equipment utilisation. Further optimisation
opportunities with regard to productivity, mined grade and product
mix will be continually reviewed over the life-of-mine.
Adopting Co-Disposal Tailings methodology will eliminate the need
to construct a solar pond for slimes disposal as all slimes will be
mixed with sand tails prior to disposal.
Environmental Opportunities
· Through the implementation of effective
conservation programs, knowledge and practices may improve species
propagation, and may eventually lead to species being removed from
the critically endangered list. While not impacting on
project net present value, this would enhance the Project’s
contribution to regional and national betterment and Base
Resources’ reputation and strength of licence to operate.
Community Opportunities
· Engagement and positive interaction with the
local community facilitated by the early skills training program,
placement of block manufacture and early works contracts may
provide a good foundation to build relationships prior to
commencement of the mine, export facility and process plants.
Implementation Schedule Opportunities
· Reducing the implementation duration
provides earlier project cashflow and improve project net present
value by US$6m for every month the
construction duration is shorter. All options to improve the
schedule will be considered during further FEED work.
Rare Earths
· The 2021 Ranobe Mineral Resources estimate
heavy mineral contains 2.0% monazite, which, given the grade and
size of the deposit, represents a significant potential source of
Rare Earth Oxides that will be investigated in future studies.
Toliara Project indicative
timeline
Planned FID has been delayed due to COVID travel restrictions
and the suspension of on-ground activities. Once fiscal
terms are agreed and this suspension is lifted, there will be
approximately 11 months’ work to complete prior to FID,
including finalising financing, completing the land acquisition
process and concluding major construction contracts. Some
resumption of international travel will also be required to
complete a significant portion of this work. We maintain
readiness to accelerate progress when conditions support. For the
purposes of the DFS2, FID is assumed to be end December 2022.
Refer to the full PDF version of this release (available from
the Company’s website: www.baseresources.com.au) for a
graphic showing the proposed Project timeline pre and post-FID.
Glossary and appendices
Glossary
|
Term |
Meaning |
|
|
$ or US$ or
USD |
United States
Dollars |
|
|
Al2O3 |
Aluminum oxide |
|
|
Base
Toliara |
Base Toliara SARL,
Base Resources’ wholly owned Malagasy operating subsidiary |
|
|
Base Resources or
the Company |
Base Resources Limited
(ABN 88 125 546 910) |
|
|
BQR |
Budget quotation
request |
|
|
CAE |
Evaluation and
Compensation Committee |
|
|
CaO |
Calcium oxide |
|
|
Capex |
Capital
expenditure |
|
|
Ce |
Cerium |
|
|
Competent
Person |
The JORC Code requires
that a Competent Person be a Member or Fellow of The Australasian
Institute of Mining and Metallurgy, of the Australian Institute of
Geoscientists, or of a ‘Recognised Professional
Organisation’. A Competent Person must have a minimum of five
years’ experience working with the style of mineralisation or type
of deposit under consideration and relevant to the activity which
that person is undertaking. |
|
|
Cr2O3 |
Chromium (III)
oxide |
|
|
DFI |
Development finance
institution |
|
|
DFS |
2019 definitive
feasibility study for the Toliara Project, the results of which
were announced on 12 December 2019 |
|
|
DFS2 |
2021 definitive
feasibility study, the results of which are set out in this
document |
|
|
DMU |
Dry mining unit |
|
|
DUP |
Compulsory acquisition
of land through the process called Declaration of Public
Utility |
|
|
Dy |
Dysprosium |
|
EPC |
Engineer-procure-construct |
|
EPCM |
Engineer-procure-construct-manage |
|
ESIA |
Environmental and social impact assessment |
|
ESMS |
Environmental and social management system |
|
FEED |
Front end
engineering development |
|
FEL |
Front end
loader |
|
Fe |
Iron |
|
FeO |
Iron
oxide |
|
Fe2O3 |
Iron (III)
oxide |
|
FID |
Financial
investment decision by the Board of Base Resources to commence
construction of the Toliara Project |
|
FIDIC |
International Federation of Consulting Engineers |
|
FOB |
Free on
board |
|
FY |
Financial
year. 1 July to 30 June. |
|
GARN |
Garnet |
|
GoM or
Government |
Government
of Madagascar |
|
HFO |
Heavy fuel
oil |
|
HiTi |
High grade
leucoxene |
|
HM |
Heavy
mineral |
|
HMC |
Heavy
mineral concentrate |
|
ICSU |
Intermediate clay sand unit |
|
IFC |
International finance corporation |
|
ILM |
Ilmenite |
Indicated Mineral Resource |
An
Indicated Mineral Resource is that part of a Mineral Resource for
which quantity, grade (or quality), densities, shape and physical
characteristics are estimated with sufficient confidence to allow
the application of Modifying Factors in sufficient detail to
support mine planning and evaluation of the economic viability of
the deposit |
Inferred Mineral Resource |
An
Inferred Mineral Resource is that part of a Mineral Resource for
which quantity and grade (or quality) are estimated on the basis of
limited geological evidence and sampling. Geological evidence is
sufficient to imply but not verify geological and grade (or
quality) continuity. It is based on exploration, sampling and
testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill
holes |
IPP |
Independent power producer |
IRR |
Internal
rate of return |
JORC |
The
Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves 2012 Edition, as published by the Joint
Ore Reserves Committee of The Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals
Council of Australia. |
JV |
Joint
venture |
kt |
Thousand
tonnes |
kV |
Kilovolts |
Kwale
Operations |
Base
Resources’ mineral sands operations in Kwale county,
Kenya |
kWhr |
Kilo watt
hour |
La |
Lanthanum |
LEUC |
Leucoxene |
LGIM |
Large
Mining Investment Law |
LOM |
Life of
mine |
LOS |
Lifting of
the on-the-ground suspension |
|
|
|
|
|
LRIMP |
Labour, recruitment
and influx management plan |
LSU |
Lower sand unit |
LST |
Limestone |
M&I |
Measured and Indicated
Mineral Resource |
Measured Mineral
Resource |
A Measured Mineral
Resource is that part of a Mineral Resource for which quantity,
grade (or quality), densities, shape, and physical characteristics
are estimated with confidence sufficient to allow the application
of Modifying Factors to support detailed mine planning and final
evaluation of the economic viability of the deposit |
MG12
spirals |
A new high-performance
spiral separator from Mineral Technologies |
MgO |
Magnesium oxide |
Mineral
Resource |
Mineral Resources are
a concentration or occurrence of solid material of economic
interest in or on the Earth’s crust in such form, grade (or
quality), and quantity that there are reasonable prospects for
eventual economic extraction. The location, quantity, grade (or
quality), continuity and other geological characteristics of a
Mineral Resource are known, estimated or interpreted from specific
geological evidence and knowledge, including sampling.
Mineral Resources are sub-divided, in order of increasing
geological confidence, into Inferred, Indicated and Measured
categories |
Minmod |
A company developed
mineralogy modelling technique, it comprises an XRF analysis of the
magnetic and non-magnetic fractions of each composite or sample,
the results from which are then back-calculated to determine
in-ground mineralogy. |
MnO |
Manganese oxide |
MON |
Monazite |
MRNL |
Madagascar Resources
NL |
MSP |
Mineral separation
plant |
Mt |
Million tonnes |
Mtpa |
Million tonnes per
annum |
MW |
Megawatt |
Nb2O5 |
Niobium pentoxide |
Nd |
Neodymium |
NGO |
Non-governmental
organisation |
NPV |
Net present value |
ONE |
Office National Pour
l'Environement |
Ore
Reserves |
Ore Reserves are the
economically mineable part of Measured and/or Indicated Mineral
Resources. Ore Reserves are sub-divided in order of increasing
confidence into Probable and Proved categories. |
OS |
Oversize |
P2O5 |
Phosphorus
pentoxide |
PE 37242 |
Base Toliara’s Permis
D’Exploitation 37242, which is a mining lease under Malagasy
law |
PFS |
Pre-feasibility study
for the Toliara Project, the results of which were announced on 21
March 2019 |
Pr |
Praseodymium |
Probable Ore
Reserves |
The economically
mineable part of an Indicated, and in some circumstances, a
Measured Mineral Resource. The confidence in the Modifying Factors
applying to a Probable Ore Reserve is lower than that applying to a
Proved Ore Reserve. |
Proved Ore
Reserves |
The economically
mineable part of a Measured Mineral Resource. A Proved Ore Reserve
implies a high degree of confidence in the Modifying Factors. |
ROM |
Run of mine |
RUT |
Rutile |
RWG |
Resettlement working
groups |
SiO2 |
Silicon dioxide |
SL |
Slime or clay |
SMP |
Structural mechanical
and pipework |
Solar PV |
Solar photovoltaic
system |
SSU |
Surficial silt
unit |
t |
Metric tonne |
Tb |
Terbium |
TiO2 |
Titanium dioxide |
Ti |
Titanium |
Toliara Project
or Project |
The mineral sands
development project, based on the Ranobe deposit, located in south
west Madagascar, 45km north of the regional port town of
Toliara |
TSF |
Tailings storage
facility |
tph |
Tonnes per hour |
TZMI |
TZ Minerals
International. An independent consulting group. |
WCP |
Wet concentration
plant |
WTR |
World Titanium
Resources Limited |
UCC |
Up current
classifier |
USU |
Upper sand unit |
USSU |
Upper silty sand
unit |
U + Th |
Uranium and
thorium |
V2O5 |
Vanadium
pentoxide |
VAT |
Value added tax |
ZIR |
Zircon |
ZrO2+HfO2 |
Zirconium and
hafnium |
Appendix - Mineral Resources by
Zone
Ranobe
Deposit Mineral Resources estimate as at 27 September 2021 |
HM Assemblage as % of HM |
Zone |
Category |
Tonnes |
HM |
HM |
SL |
OS |
ILM |
RUT |
LEUC |
ZIR |
MON |
GARN |
(Mt) |
(Mt) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
(%) |
USU
Upper Sand Unit |
Measured |
575 |
36 |
6.2 |
3.7 |
0.1 |
74 |
1.0 |
1.0 |
5.9 |
1.9 |
2.2 |
Indicated |
654 |
30 |
4.6 |
3.6 |
0.2 |
71 |
1.0 |
1.0 |
5.9 |
1.9 |
3.6 |
Inferred |
820 |
27 |
3.3 |
2.8 |
0.1 |
69 |
1.0 |
1.0 |
5.8 |
2.0 |
4.5 |
Total USU |
2,040 |
93 |
4.5 |
3.3 |
0.1 |
72 |
1.0 |
1.0 |
5.9 |
1.9 |
3.3 |
SSU
Surface Silt Unit |
Measured |
4 |
0.2 |
5.2 |
21 |
0.4 |
73 |
1.1 |
0.8 |
5.9 |
2.0 |
4.0 |
Indicated |
8 |
0.3 |
3.7 |
16 |
0.7 |
69 |
0.8 |
1.0 |
5.7 |
2.0 |
4.2 |
Inferred |
6 |
0.2 |
3.0 |
18 |
0.4 |
70 |
0.7 |
1.0 |
7.7 |
1.7 |
4.7 |
Total SSU |
18 |
0.7 |
3.8 |
18 |
0.5 |
71 |
0.9 |
0.9 |
6.3 |
1.9 |
4.3 |
USSU
Upper Silty Sand Unit |
Indicated |
13 |
0.8 |
6.3 |
23 |
2.3 |
72 |
0.9 |
0.8 |
6.5 |
1.5 |
4.4 |
Inferred |
10 |
0.7 |
6.6 |
26 |
0.7 |
73 |
0.8 |
0.8 |
6.4 |
1.6 |
4.8 |
Total USSU |
23 |
1.5 |
6.4 |
25 |
1.6 |
72 |
0.8 |
0.8 |
6.5 |
1.6 |
4.6 |
ICSU
Intermediate Clay Sand Unit |
Measured |
18 |
0.5 |
3.0 |
23 |
3.0 |
68 |
1.3 |
1.2 |
6.4 |
2.2 |
2.3 |
Indicated |
118 |
3.6 |
3.0 |
24 |
1.8 |
68 |
1.1 |
1.1 |
6.1 |
2.2 |
3.5 |
Inferred |
354 |
11 |
3.2 |
25 |
1.8 |
69 |
1.0 |
1.0 |
5.8 |
2.1 |
3.8 |
Total ICSU |
490 |
15 |
3.2 |
25 |
1.8 |
69 |
1.1 |
1.1 |
5.9 |
2.1 |
3.7 |
|
Grand Total |
2,580 |
111 |
4.3 |
7.7 |
0.4 |
71 |
1.0 |
1.0 |
5.9 |
2.0 |
3.4 |
Table subject to rounding
differences. Mineral Resources estimated at 1.5% HM cut off
grade. *Mineral Resources are reported inclusive of Ore
Reserves.
ENDS.
For further information contact:
James Fuller, Manager Communications
and Investor Relations |
UK Media Relations |
Base Resources |
Tavistock Communications |
Tel: +61 (8) 9413 7426 |
Jos Simson and Gareth Tredway |
Mobile: +61 (0) 488 093 763 |
Tel: +44 (0) 207 920 3150 |
Email:
jfuller@baseresources.com.au |
|
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 (0)8 9413 7400
Fax: +61 (0)8 9322 8912
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RFC Ambrian Limited
Stephen Allen
Phone: +61 (0)8 9480 2500
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Berenberg
Matthew Armitt / Detlir Elezi
Phone: +44 20 3207 7800
JOINT BROKER
Canaccord Genuity
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Patrick Dolaghan
Phone: +44 20 7523 8000