Proactive Investor's  Instablog

Base Resources (ASX: BSE) has received a vote of confidence with substantial shareholder L1 Capital increasing its stake in the company to 6.59% after acquiring a further 4.5 million shares.

The Melbourne-based fund manager purchased the shares for a total consideration of A$2.2 million, providing an average entry price of about $0.50. L1 now holds a total of 30.3 million Base shares.

Base Resources is in an interesting position at its Kwale Mineral Sands Project in Kenya, having begun development and rapidly advancing towards production.

The company is well positioned to take advantage of the increase in mineral sands prices, with Kwale set to begin production in the second half of 2013.

Since 2010 mineral sands prices have risen steeply and are expected to stay high for the foreseeable future.

The price increase is due to soaring demand from developing nations and a lag of new supply as a result of limited investment in new projects and exploration.

An enhanced Feasibility Study shows robust economics for Kwale including a post-tax net present value of US$500 million and an internal rate of return of 52.8%.

Base Resources has secured US$170 million in debt facilities and has completed the raising of required equity funding.

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