Quarterly Activities Report

ASX, AIM and Media Release 30 October 2013 BASE RESOURCES LIMITED QUARTERLY ACTIVITIES REPORT - September 2013 Highlights * Commencement of ore processing through the mining unit and wet concentrator at the Kwale Project. * All Kwale Project supporting infrastructure completed and operational including - water supply dam, tailings storage facility, power line and ancillary borefield. * Three new, three-year, take or pay off-take agreements signed with leading Chinese off-takers, securing a large portion of the previously un-contracted sales volumes for ilmenite and zircon. * Malcolm Macpherson appointed to the Board, bringing significant additional mineral sands, African and corporate development experience to the Company. Base Resources Limited (ASX & AIM: BSE) ("Base" or the "Company") has commencedore processing through the mining unit and wet concentrator at the KwaleMineral Sands Project ("Kwale Project" or the "Project") in Kenya, East Africa.All work packages are now complete and operational with the exception of themineral separation plant ("MSP") and port facilities which are nearingcompletion, and the Project remains on schedule to make the first bulk productshipments in January 2014. KWALE PROJECT IMPLEMENTATION The mining unit and wet concentrator are now operational and, in October,commenced the ramp up process and the building of a stockpile of heavy mineralconcentrate ("HMC") ahead of the commissioning of the MSP. Construction work onthe MSP is now in its final stages with commissioning of the ilmenite andrutile circuits and commencement of concentrate processing expected towards theend of November, which will be followed by the zircon circuit. Onshore construction works at the Likoni port facility are in the final stageswith the 60,000 tonne capacity storage shed complete and administrationbuildings progressing on track. Following construction and trial assembly inSouth Africa, the ship loader was successfully erected on the wharf platform inAugust and its installation is on target for completion prior to the firstplanned bulk shipment in January 2014. The 16 kilometre 132kVA power line was commissioned in June and subsequentlyprovided power for the latter stages of construction and continues to be thesource for ongoing operations. The Mukurumudzi Dam main embankment has now been completed to its finalelevation, providing a storage capacity of eight gigalitres, and the spillwayis functionally complete. The dam currently holds some six gigalitres of water,which is more than sufficient for the first year's production requirements. The tailings storage facility was completed in August and is now acceptingtails from HMC production through the wet concentrator. Safety Performance The Company's safety performance remains high following its transition fromconstruction, into commissioning. Operations having been relatively incidentfree to date with only minor permit to work, or systems breaches occurring. TheLost Time Injury frequency rate for the project is currently 0.15 per millionman hours with over six million hours worked since the last (and only) losttime injury in July 2012. Community and Environment With the completion of many project infrastructure components during thequarter, demobilisation of construction workers is underway. Base has conducteddemobilisation workshops to assist local workers with skills that will improvetheir employability. Local residents are also assisting with severalenvironmental projects in and around the mine site. The Company has now recruited the permanent operational workforce of around 370with 60% being from Kwale County, 70% from Coast Province and 90% Kenyan.Base's Labour Recruitment Centre, which currently has over 14,000 peopleregistered on the database, is no longer registering new job seekers. The nextopportunity to be pursued is opening the recruitment centre up and making itavailable to other regional employers as an ongoing employment portal for thelocal community. Construction of social infrastructure continued during the quarter with thecommencement of Magaoni Health Centre. Discussions are still taking place withlocal administration and the community to locate another feeder school atMiembeni to the north of the mining lease. Permitting and authorisations havebeen received for the installation of three boreholes intended to provide cleanwater to villages near the mine site. In Likoni, the Muslim Primary School wasrehabilitated to improve learning conditions for the 900 students enrolled. Afurther school and dispensary will be constructed once the Fingirika SettlementScheme is established by the Government or suitable alternatives identified incollaboration with local communities. Establishment of Base's indigenous tree nursery continued and it is now one ofthe largest in Kenya. The nursery will provide the stock for the BiodiversityOffset Programme and, ultimately, the rehabilitation of the mine site. Budget The estimated cost at completion for the Project is currently US$306 million,of which US$287 million had been incurred to 30 September 2013. Financing Subsequent to quarter end, the final US$20 million tranche of the existing debtfacilities was drawn in October 2013, bringing the total Kwale Project debtfacilities drawn to US$190 million. As previously indicated in the June 2013 quarterly report, Base considers itprudent to increase the funding buffer available for working capital during theramp up phase of operations and is currently pursuing a further extension ofthe existing debt facilities. Marketing The short-term market for titanium dioxide feedstocks continued to show signsof improvement through the September quarter with major pigment producersreporting a significant reduction in final product stocks and announcingpigment price increases. Continued strength in the US housing market, togetherwith improvement in the Chinese housing sector, provides support for marketconditions to continue improving through the December quarter of 2013 and into2014. However, ilmenite and rutile stock levels in the supply chain are likelyto result in subdued pricing through until at least the end of the first halfof 2014. Zircon demand, from Chinese customers in particular, increased significantlythroughout the first half of 2013. Due to the extent of re-stocking by zirconusers that occurred during the first half of 2013, demand growth is expected tooccur at a slower rate through the second half of 2013, as evidenced in theSeptember quarter. The timing of a recovery in zircon pricing will be dependenton the pace of stock re-balancing throughout the supply chain. The long term outlook for all mineral sands products remains very positive.Enquiry levels for Base's products remains strong and during the Septemberquarter Base finalised three new, three-year, take or pay off-take agreementswith leading Chinese off-takers, securing a large portion of the previouslyun-contracted sales volumes for ilmenite and zircon. Kenyan Exploration Projects As part of the Kwale Project acquisition, Base acquired an option to purchasethree further exploration projects - Kilifi, Mambrui and Vipingo. As reportedpreviously, on 28 December 2012, the then Kenyan Minister of Environment &Mineral Resources published a gazette notice purporting to cancel the threeexploration licenses covering these projects. The Company has taken theappropriate legal action to protect the rights and has received a court orderstaying the cancellation pending a hearing. Base continues to pursue the matterand is confident of a positive outcome. Further exploration activity, focused on enhancing the Kwale North Duneresource estimate has been completed. Composite samples have been sent forassaying, which is to be followed by the preparation of the updated resourcemodel in the December quarter. The North Dune is not currently included in theKwale Project. Corporate In summary, at 30 September 2013: * Cash and cash equivalents were A$44.3 million. * Debt drawn of US$170.0 million. * 561,840,029 shares on issue. * 16,600,000 unlisted options. A full PDF of the announcement is available at the Company's website:www.baseresources.com.au. ENDS For further enquiries contact: Base Resources LimitedTim CarstensManaging DirectorEmail: [email protected]: +61 (0)8 9413 7400 RFC Ambrian Limited (Nominated Adviser and Broker)As Nominated Adviser As BrokerAndrew Thomson or Trinity McIntyre Jonathan WilliamsPhone: +61 (0)8 9480 2500 Phone: +44 20 3440 6800 Africapractice (East Africa) (Kenyan Media Relations)David Maingi/ James Njuguna/Joan KimaniPhone: +254 (0)20 239 6899Email: [email protected] Tavistock Communications (UK Media Relations)Jos Simson / Emily Fenton / Nuala GallagherPhone: +44 (0)20 7920 3150 Cannings Purple (Australian Media Relations)Annette Ellis / Warrick HazeldineEmail: [email protected]@canningspurple.com.auPhone: +61 (0)8 6314 6300 Corporate Details: Board of Directors:Andrew King Non-Executive ChairmanTim Carstens Managing DirectorColin Bwye Executive DirectorSam Willis Non-Executive DirectorMichael Anderson Non-Executive DirectorTrevor Schultz Non-Executive DirectorMichael Macpherson Non-Executive DirectorWinton Willesee Non-Executive Director & Company Secretary Principal & Registered Office: Contacts:Level 1 Email: [email protected] Kings Park Road Phone: +61 (0)8 9413 7400West Perth WA 6005 Fax: +61 (0)8 9322 8912