Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Base Resources Expands Project Finance Facility For Kwale By US$25 Million

Base Resources (ASX: BSE) has increased the working capital buffer available during ramp up of its Kwale mineral sands project in Kenya with the extension of its existing project finance facility by US$25 million to US$215 million.

Work to satisfy the conditions for the additional funding is well advanced and expected to be completed over the next month or so.

These include final approval of the operating licence for the Likoni Marine Terminal and a report from the Lenders' Technical Advisor on the start of production, including confirmation that nothing has been identified that could substantially impede the ramp up of the processing plant.

The initial US$190 million has been drawn down for the project with the company holding US$50 million in cash as of 31 October 2013.


The company had yesterday announced the first production of ilmenite and rutile from Kwale and will over the next several weeks, ramp up processing rates to build inventories ahead of the start of bulk shipments in January 2014.

Construction work on the zircon circuit is now in its final stages with commissioning expected during January.

The majority of the supporting infrastructure is now complete, with access road, power supply, tailings storage facility and Mukurumudzi dam now functionally complete.

In addition, the Likoni marine facility is scheduled for completion in early December, well ahead of the first bulk shipment.

Kwale is located 10 kilometres inland from the Kenyan coast and 50 kilometres south of Mombasa, Kenya's principal port facility; well serviced by existing physical infrastructure and a supported by the Kenyan government and the local community.

Offtake arrangements are in place with global customers covering the first five years of production.

Mining rate is anticipated to be about 8 million tonnes per annum by the end of 2014 delivering expected annualised production rate of 360,000, 77,000 and 25,000 tonnes of ilmenite, rutile and zircon respectively.

Mine life from the Central and South dunes is estimated at 13 years.

Based on current TZMI price outlook and refined operating cost estimates, Kwale has an estimated NPV10 of US$400 million and Life of Mine cash surplus of about US$700 million.


The additional US$25 million provides a capital buffer during ramp up for Base Resources' at its Kwale project.

Proactive Investors wrote on 4 December, "Base has reached a milestone with the first production of ilmenite and rutile from its Kwale mineral sands project in Kenya which should continue to see the shares re-rated.

We expect the re-rating of Base to continue, today's first production of ilmenite and rutile is a milestone. There are further catalysts ahead:

- Commissioning of the zircon circuit;
- First bulk shipments of ilmenite and rutile;
- First product of zircon; and
- First bulk shipmnets of zircon.

On our calculations, Proactive Investors estimates a share price value and target of $0.54 - $0.68 within 6-9 months for Base Resources based on the above."

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.