20th Jan 2015 09:53
LONDON (Alliance News) - Base Resources Ltd Tuesday said it has mined more ore but produced less heavy mineral concentrate in the fourth quarter due to declining grades, but it saw production of ilmenite, zircon and rutile significantly increase during the period.
In the fourth quarter ended December 31, the company mined more ore totalling 2.3 million dry metric tonnes compared to 2.2 million dry metric tonnes in the third quarter. The company mined more ore due to mining proceeding closer to the perimeter of the mine where there are lower grades.
Despite the increased tonnage and improved recovery rates from the concentrator of 96% to 97%, the company produced less heavy mineral concentrate, totalling 165,953 dry metric tonnes in the fourth quarter, a 4% reduction from the immediately previous quarter when it produced 172,885 tonnes. The reduction is due to the lower grades at the Kwale project in Kenya.
Production of ilmenite rose to 107,893 dry metric tonnes from 100,533 tonnes in the third quarter on improved recovery rates, whilst rutile production increased to 18,672 dry metric tonnes from 16,612 tonnes. Zircon production also increased to 5,308 dry metric tonnes from 5,210 tonnes.
Cash operating costs for the fourth quarter, including royalties, were USD14.4 million, or USD109 per tonne of product produced, which consists of ilmenite, rutile and zircon.
Despite the increase in production, ilmenite sales significantly fell during the fourth quarter to 53,345 dry metric tonnes from 116,578 tonnes in the third quarter. This was caused by the company switching to 50,000 tonne cargoes at the Likoni port facility to take advantage of savings in freight rates.
"This change in shipping strategy, combined with the normal seasonal slowdown towards year end, has resulted in lower ilmenite sales during the quarter with additional sales volume pushed into January," said the company.
Sales of ilmenite are set to return to above 100,000 dry metric tonnes per quarter during 2015.
"Inventories of ilmenite feedstocks are expected to remain at elevated levels until the pigment market picks up late in the March quarter and through the June quarter," said Base.
Sales of rutile in the fourth quarter doubled to 23,328 dry metric tonnes from 12,923 tonnes in the third quarter, and zircon sales also doubled to 5,883 dry metric tonnes from 2,601 tonnes.
"There is potential for some zircon price growth in 2015 provided that major producers continue to manage their production output in line with market demand," said Base.
At the end of December, Base reported a cash balance of AUD12.7 million, which is "lower than expected" due to reduced ilmenite sales, poor weather impacting demand, and customer shipping sales being delayed into 2015, as well as the impact of tightened credit conditions in China.
Base said it has drawn down USD215 million in debt at the end of 2014, with USD20 million of undrawn debt remaining.
Base shares were untraded on Tuesday morning, last trading at 8.50 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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