Quarterly Activities Report

ASX, AIM and Media Release31 January 2013

QUARTERLY ACTIVITIES REPORT - December 2012

Highlights

* Kwale Project is 50% complete and on schedule for practical completion in

Q3 2013.

* Initial US$52 million drawdown on the Kwale Debt Finance Facility completed

on 22nd November 2012.

* Successful completion of A$40 million capital raising to complete funding

package. * Kenyan Attorney General confirms that the Local Equity Participation Regulations cannot be applied to the Kwale Project. Base Resources Limited (ASX:BSE AIM:BSE) ("Base") has made further significantprogress in the development of the Kwale Project, achieving first utilisationof the debt facility and reaching the 50% complete milestone.

Kwale Project Implementation

The December quarter has seen a significant increase in construction activity.With the overall development 50% complete, the Kwale Project continues to be onschedule for practical completion in Q3 2013 and first shipment in Q4 2013.

Project elements

The development approach being adopted for the Kwale Project is for the projectto be separated into six discrete contract packages, as well as a number ofsmaller owner's projects, with an integrated management team overseeing theirexecution and integration. This approach has been adopted to ensure that "bestof breed" expertise is applied to what are technically diverse and effectivelyseparate project elements and risk is more effectively minimized and managed.The six contract packages, each covered by an EPCM (or EPC for CP3) contractand their status are:

CP1 - Processing Plants (Ausenco)

* Overall progress is on target with 44% complete. Delivery of this construction package is on the overall project critical path and is on schedule for practical completion during Q3 2013. * Bulk earthworks were substantially completed during the quarter, civil works are ongoing and erection of the structural steel has commenced. * Construction progress is 19% complete.

CP2 - Marine Facilities (WSP Group)

* The overall progress to date is 51% and on target for delivery prior to the

first planned bulk shipment in Q4 2013.

* Onshore construction works are well advanced with the steel structures for

the storage shed progressing well.

* After a slow ramp up, good progress was made on the manufacture of the ship

loader in the later part of the quarter. * Marine works are underway. Softer than expected ground conditions has resulted in some increased piling.

CP3 - Power Line (CG Global)

* Overall, the project is 82% complete and on schedule for completion in Q2

2013.

* All overhead power line towers have been erected and the stringing of high

voltage cables completed. * Kwale substation control room is completed up to the roof level.

* The transformers are now installed, steel gantries for the substations are

on site and the switchgear is due to arrive in January.

CP4 - Mukurumudzi Dam (Wave)

* Overall delivery is 63% complete. * The concrete river diversion channel and intake tower were completed in December and the river is now diverted. * Stage 1 of the coffer wall has been completed.

* The project is on target for early April delivery, ahead of the main wet

season.

CP- 5 - Tailings Storage Facility (Wave)

* Construction works are behind schedule but a recovery plan is currently

being agreed with the contractor.

* Current forecast completion date (Q2 2013) is still well in advance of the

required date for plant commissioning in Q3 2013.

* Overall, the project is 43% complete.

CP-6 - Access Road, Construction Camp and Shared Facilities (Howard Humphries)

* The road construction is 88% complete with the planned completion by the

end of January.

* Phase One of the contractor accommodation units have been completed with

Phase Two due for completion by the end of Q1 2013.

* During the quarter the kitchen facilities were commissioned, staff trained

in the use of all equipment and three meals a day are currently being

served.

Owners Projects

In addition, a suite of owner's projects are being managed directly by the Baseoperations team. These include the procurement of the mobile fleet , theinstallation of a supplementary borefield and the procurement of the dozer trapmining unit. As part of our implementation approach, the key members of thesenior operations management team have already been recruited and areintegrated into the overall project team to ensure operability of design andsmooth transition to operations.

Safety Performance

With all project elements now in physical construction, total project hoursworked have reached 2,500,000. The rapid increase in site activity over thequarter, with a third of total project hours worked during the quarter, hasseen an increase in the number of minor injuries. However, there has not beenan LTI since the projects only such injury in July 2012, reflecting the onsitetraining, effort to increase hazard reporting and pro-active safety inspectionsas well as increased awareness on hazard identification and control atpre-start and safety/toolbox meetings.

Community and Environment

Base's Labour Recruitment System has placed almost 700 people from localcommunities in employment with various contractors associated with mineinfrastructure. Control measures have been implemented to audit contractorcompliance with a view to maximise local employment.

Community infrastructure works continued with two schools completed in Kibwaga,near the Mukurumudzi Dam, and Magaoni village, close to the mine access road.These facilities will be handed over to the local community on completion ofthe school committee training programme. Both schools have been furnished andthe secondary school in Magaoni provided with laboratory equipment.Consultation with local communities to identify the location of the mine areaprimary school has begun. The tender process for Magaoni Health Centre wasdelayed until a new design can be provided by the Ministry of Health inNairobi. The plans submitted earlier by the Ministry of Public Works requiredupdating.

Three workshops were held with various communities on the implementation ofBase's Community Development Management Plan (CDMP). The CDMP describes theprocess that will be undertaken to identify and prioritise community investmentin consultation with affected stakeholders. Discussions over the next fewmonths will culminate in an agreed program of community projects.

Community engagement continues with monthly meetings held with three districtbased liaison committees and six community based committees dealing with directimpacts related to construction of the various Project infrastructurecomponents. Community groups were engaged as part of Base's waste managementprocess to assist with recycling material from the mine site. Training andimplementation is expected in first quarter of 2013. Community groups were alsoinvited to participate in the vegetation clearance at site. Two women's groupsand a youth organisation are now processing charcoal from trees cleared in theTailings Storage Facility footprint. Specialised charcoal kilns were purchasedfor the teams and they were provided with training and protective equipment.The proceeds from the sale of charcoal will go towards funding communityprojects in the area.Continued monitoring is being undertaken as dust remains an ongoing issueduring construction with increased frequency of watering required during hotand dry weather recently experienced. Lower year-on-year rainfall figures havehad an impact on the whole region and neighbouring communities have been givenaccess to perennial water points within the mine site in areas not affected byconstruction. Additional measures were taken to assist surrounding communitieswith deepening of local wells and repairs to broken down hand-pump boreholes.

Budget

The total approved project development budget is US$298 million, includingcontingencies. To 31 December, US$143 million has been incurred and a furtherUS$135 million has been committed (ordered).

Financing

In early October, the Company completed a A$40 million share placement andentitlement offer in order to meet the additional funding requirements from therevised Kwale Project capital cost estimate of US$298 million.

On 22 November 2012, financial close was achieved on the US$170 million projectdebt facilities and the first drawdown of US$52 million completed. This was acritical milestone in the development of the Kwale Project as Base now hasaccess to the full funding required to complete the development of the KwaleProject and bring it to positive cash flow.

Under the terms of the debt facility, subsequent drawdowns will be made on aquarterly basis with the next scheduled for February 2013.

Marketing

The short term market for titanium dioxide feed stocks continued its softnessthrough the December quarter with pigment producers maintaining their effortsto de-stock high inventory levels. Weaker than expected demand has resulted inhistorically low levels of pigment plant utilisation through the second half of2012. In this environment, the pigment industry has generally shown apreference for lower grade, lower priced titanium dioxide feed stocks such asilmenite. Iluka Resources Ltd (Iluka) recently announced that several leadindicators are pointing to an improved pigment demand environment in 2013.Recent comments from TZMI indicate that there is general consensus for thetitanium feed stock and pigment sectors to see a recovery in demand and pricingby the second half of 2013.Market conditions for zircon remained weak through the December quarter.Exacerbating the soft global economic environment has been the structuralimpact of modernised processes and substitution on zircon demand - mostly inthe ceramics sector. Iluka's recent comments indicate that such structuralimpacts have now largely worked through the industry and will have a diminishedeffect on the market through 2013. While customer stocks of zircon areconsidered to be low, producer stocks are reported to remain high. Someproducers, including Iluka, continue to adjust production to better managestock positions and align supply with demand. However, the response is notuniform across all producers and the overall market conditions for zircon arelikely to remain soft well into 2013.The long term outlook for all mineral sands products remains very positive. Inthis light, Base continues to receive strong interest in all of its productsfrom the market. Discussions continue with a number of parties in relation tothe balance of Base's production not already secured by the previously reportedofftake agreements.Kenyan Exploration ProjectsAs part of the Kwale acquisition, Base acquired an option to purchase threefurther exploration projects, Kilifi, Mambrui and Vipingo. On 28 December 2012,the Kenyan Minister of Environment & Mineral Resources published a gazettenotice purporting to cancel the three exploration licenses covering theseprojects. The Company has not as yet received formal notification from theDepartment of Mines & Geology or any explanation of the rationale for thisaction. Base believes it is in full compliance with the terms of these licensesand has submitted all required quarterly activity reports. Furthermore, theCompany successfully had these three licenses renewed in 2011 and 2012, assuch, Base can see no legal basis for the gazette notice purporting to nowcancel them. Consequently, the Company has taken the appropriate legal actionto protect the rights and has received a court order staying the cancellationpending a hearing.

Following the confirmatory drilling program completed in the March quarter,updated JORC-compliant resource estimates have been completed for the Kilifiand Mambrui projects. Resource statements at a 1% THM cut-off are presentedbelow:

Project Classification Resource HMC Rutile Zircon Ilmenite Mt % Mt % Mt % Mt % Mt Kilifi Indicated 1,520 2.8% 43.0 0.13% 2.0 0.12% 1.8 1.80% 27.3 Inferred 593 2.4% 14.0 0.10% 0.6 0.10% 0.6 1.40% 8.3 Total 2,110 2.7% 57.0 0.12% 2.6 0.11% 2.4 1.69% 35.6Project Classification Resource HMC Rutile Zircon Ilmenite Mt % Mt % Mt % Mt % Mt Mambrui Indicated 490 4.1% 20.2 0.10% 0.5 0.10% 0.5 2.61% 12.8 Inferred 259 2.8% 7.2 0.08% 0.2 0.07% 0.2 1.54% 4.0 Total 750 3.7% 27.4 0.09% 0.7 0.09% 0.7 2.24% 16.8The significant increase in tonnes and the reduction in average grade comparedwith previous estimates are a consequence of the inclusion of the deeper, lowergrade zones tested by the new drilling. Tables showing resource estimates atvarying cut off grades are included as an appendix.Preliminary mineralogical and processing testwork has shown the titaniumdioxide content of the ilmenite to be very low at around 32% to 35% for boththe Kilifi and Mambrui projects. With these levels likely to preclude sale totraditional consumers, a range of niche marketing and downstream processingoptions are being explored as part of scoping studies to be undertaken over thecourse of 2013.

Kenyan Local Equity Participation Regulations

Base received formal notification that the Attorney General of Kenya hasdetermined that the recently introduced 35% Local Equity ParticipationRegulation (Regulation) cannot be applied to the Special Mining Lease No. 23covering the Company's 100% owned Kwale Mineral Sands Project.

The Attorney General's advice that the Regulation can only be applied to mininglicenses issued after the Regulation came into force, being 12 October 2012,corroborates the legal advice previously received by Base in this respect.Notwithstanding this determination, Base will continue to work constructivelywith the Government of Kenya to facilitate greater Kenyan equity participationover time in both Base and the mining industry in general.

Corporate

In summary, at 31 December 2012:

* Cash and cash equivalents were $94.5 million.

* Debt drawn of US$52.0 million.

* 560,440,029 shares on issue.

* 18,000,000 unlisted options.

A full PDF version of the announcement is available at the Company's website: www.baseresources.com.au.

ENDS

For further enquiries contact:

Contacts:

Base Resources LimitedTim CarstensManaging DirectorEmail: [email protected]: +61 (8) 9413 7400

RFC Ambrian Limited (Nominated Adviser and Broker)As Nominated Adviser

As Broker

Andrew Thomson or Trinity McIntyre Caspar Shand-KyddPhone: +61 (8) 9480 2500

Phone: +44 20 3440 6800Tavistock Communications (UK Media Relations)Jos Simson/ Jessica Fontaine / Emily FentonPhone: +44 20 7920 3157Cannings Purple (Australian Media Relations)Annette Ellis / Warrick HazeldineEmail: [email protected]@canningspurple.com.auPhone: +61 (8) 6314 6300Corporate Details:Board of Directors:Andrew King Non-Executive ChairmanTim Carstens Managing Director Colin Bwye Executive DirectorSam Willis Non-Executive DirectorMichael Anderson Non-Executive DirectorTrevor Schultz Non-Executive DirectorWinton Willesee Non-Executive Director/ Company SecretaryPrincipal & Registered Office: Contacts:Level 1 Email: [email protected] Kings Park Road Phone: +61 (8) 9413 7400West Perth Fax: +61 (8) 9322 8912WA 6005About Base ResourcesBase Resources Limited (ASX:BSE AIM:BSE) is developing the world-class KwaleMineral Sands Project in Kenya, East Africa. Kwale is an advanced and highlycompetitive project in a sector with a significant forecast supply shortfallwidely expected to emerge in the medium term.

The Kwale Project represents an advanced development opportunity with allmaterial project approvals, permits and licenses required for developmentsecured, funding in place and construction of all project elements underway.

The Project enjoys a high level of support from the Government of Kenya as wellas the local community and, located just 50km from Mombasa, Kenya's principalport facility, is well serviced by existing physical infrastructure.Importantly, two pilot plant operations at Kwale provide confidence inprocessing behaviour and indicate a suite of readily marketable products. TheProject's high value mineral assemblage and low stripping ratio result in aprojected revenue to cash cost ratio that would place Kwale in the top quartileof world producers.

A realistic development time line should see the Kwale Project in production inthe second half of 2013.

Competent Persons StatementInformation on this announcement that relates to Mineral Resources at theKilifi and Mambrui Projects are based on information compiled by ScottCarruthers, who a full time employee of Base Titanium Limited (a wholly ownedsubsidiary of Base Resources Limited) and is a member of The AustralasianInstitute of Mining and Metallurgy. Mr Carruthers has sufficient experience (>20 years) in exploration, assessment, resource estimation and mining of heavymineral sand projects and qualifies as a Competent Person as defined in the2004 Edition of the `Australasian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves'. Mr Carruthers consents to the inclusion inthis announcement of the information based on his work in the form and contextin which it appears.Appendix

Kilifi Resource Estimates at Various HM Cut-off Grades

Classification HM Resource HMC Rutile Zircon Ilmenite Cut-off Mt % Mt % Mt % Mt % Mt Indicated 1 1,520 2.8% 43.2 0.13% 1.99 0.12% 1.80 1.80% 27.3 2 1,020 3.5% 35.5 0.16% 1.59 0.14% 1.38 2.25% 23.0 3 585 4.2% 24.7 0.19% 1.07 0.15% 0.90 2.79% 16.3 4 249 5.3% 13.2 0.22% 0.56 0.19% 0.47 3.53% 8.8 5 114 6.3% 7.2 0.26% 0.30 0.22% 0.25 4.30% 4.9 Inferred 1 593 2.4% 14.0 0.10% 0.61 0.10% 0.59 1.40% 8.3 2 314 3.2% 10.1 0.14% 0.43 0.12% 0.39 2.10% 6.6 3 173 3.8% 6.6 0.16% 0.27 0.13% 0.23 2.60% 4.5 4 48 4.8% 2.3 0.19% 0.09 0.17% 0.08 3.33% 1.6 5 15 5.8% 0.9 0.27% 0.04 0.20% 0.03 4.00% 0.6 Total 1 2,110 2.7% 57.2 0.12% 2.59 0.11% 2.39 1.69% 35.6 2 1,330 3.4% 45.6 0.15% 2.02 0.14% 1.77 2.23% 29.7 3 757 4.1% 31.4 0.17% 1.34 0.15% 1.14 2.75% 20.8 4 297 5.2% 15.5 0.22% 0.65 0.19% 0.55 3.50% 10.4 5 129 6.2% 8.1 0.26% 0.33 0.21% 0.27 4.26% 5.5

Mambrui Resource Estimates at Various HM Cut-off Grades

Classification HM Resource HMC Rutile Zircon Ilmenite Cut-off Mt % Mt % Mt % Mt % Mt Indicated 1 490 4.1% 20.2 0.10% 0.55 0.10% 0.50 2.61% 12.8 2 390 4.8% 18.7 0.13% 0.49 0.13% 0.46 3.15% 12.3 3 310 5.4% 16.6 0.13% 0.42 0.13% 0.40 3.58% 11.1 4 224 6.1% 13.6 0.15% 0.34 0.14% 0.32 4.06% 9.1 5 135 7.1% 9.6 0.17% 0.23 0.16% 0.22 4.74% 6.4 Inferred 1 259 2.8% 7.2 0.08% 0.20 0.07% 0.18 1.54% 4.0 2 151 3.7% 5.6 0.10% 0.15 0.09% 0.14 2.32% 3.5 3 89 4.6% 4.1 0.12% 0.11 0.11% 0.10 3.03% 2.7 4 52 5.4% 2.8 0.13% 0.07 0.13% 0.07 3.65% 1.9 5 24 6.5% 1.6 0.17% 0.04 0.17% 0.04 4.17% 1.0 Total 1 750 3.7% 27.4 0.09% 0.75 0.09% 0.68 2.24% 16.8 2 550 4.5% 24.3 0.11% 0.64 0.11% 0.60 2.87% 15.8 3 399 5.2% 20.7 0.13% 0.53 0.13% 0.50 3.43% 13.7 4 276 5.9% 16.4 0.15% 0.41 0.14% 0.39 3.99% 11.0 5 159 7.0% 11.2 0.17% 0.27 0.16% 0.26 4.65% 7.4