Quarterly Activities Report

BASE RESOURCES LIMITED - Quarterly Activities Report

PR Newswire

London, April 30

ASX, AIM and Media Release

30 April 2013

BASE RESOURCES LIMITED

QUARTERLY ACTIVITIES REPORT - March 2013

Highlights

Base Resources Limited (ASX:BSE) ("Base") has made further significant progressin the development of the Kwale Project during the quarter, closing theMakurumudzi Dam wall, completing the second drawing down on the debt facilityand advancing overall development to 71% complete.

Kwale Project Implementation

The March quarter has seen a significant increase in construction activity,most notably on the process plant and port facilities. With the overalldevelopment 71% complete, the Kwale Project continues to be on schedule forproduction to commence in Q3 2013 and first bulk shipments to occur in Q4 2013.

Project elements

The development approach for the Kwale Project is for the project to beseparated into six discrete contract packages, as well as a number of smallerowner's projects, with an integrated management team overseeing their executionand integration. This approach has been adopted to ensure that "best of breed"expertise is applied to what are technically diverse and effectively separateproject elements and risk is more effectively minimized and managed. The sixcontract packages, each covered by an EPCM (or EPC for CP3) contract and theirstatus are:

CP1 - Processing Plants (Ausenco)

Construction and procurement progress is 66% complete.

CP2 - Marine Facilities (WSP Group)

Marine works are ongoing. Softer than expected ground conditions have resultedin some increased piling work.

CP3 - Power Line (CG Global)

CP4 - Mukurumudzi Dam (Wave)

CP5 - Tailings Storage Facility (Wave)

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 full senior operationsmanagement team have already been recruited and are integrated into the overallproject team to ensure operability of design and smooth transition tooperations.

Safety Performance

The total man-hours for the project to date are now over 3,700,000 with onlyone Lost Time Injury recorded. A big focus in the March quarter has been onpositive performance indicators, or lead indicators. Base staff and thecontractors working on the various CP's have completed over 800 formal safetyinspections and reported over 1,000 hazards or near misses. Added to this, thecorrective action closures from these reports are well above 90%. With safetyparamount in all business activities, a continual drive to maintain and improvethese high standards will continue.

Community and Environment

The Base Labour Recruitment Centre has now registered over 10,000 job seekersincluding registration of those from the Likoni area associated with our portfacility. Project contractors are required to draw their semi-skilled andunskilled workforces, with some 800 currently employed on mine site works andapproximately 100 at the port facility. It is also from this database that Basewill recruit the majority of its operational workforce.

Community infrastructure works continued during the quarter with the completionof the Magaoni Secondary School, close to the mine access road, where classeshave now commenced. The Kibwaga Feeder School, near the Mukurumudzi Dam, is nowin operation with 25 students currently enrolled. Discussions are underway withlocal administration and the community to locate another feeder school atMiembeni to the north of the mining lease. Construction tenders for Phase I ofthe Magoni health centre were received following design amendments requested bythe Ministry of Health and the project is expected to commence in Q2 2013.Infrastructure projects now complete include 4 schools, a community hall, 3water schemes, a dispensary and road and access improvements. A further schooland dispensary will be constructed once the Fingirika Settlement Scheme isestablished by the Government or suitable alternatives identified incollaboration with local communities.

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. Following the general election, newly elected leaders will beinducted into these committees.

The implementation of the environmental and social management systems continuedduring the quarter. Dust was a challenge toward the end of the quarter after aprolonged dry season. Community concerns were raised about availability ofwater and Base assisted by establishing three water points and rehabilitated 4existing hand-pump boreholes to ensure water supplies continued. The recentonset of the wet season has brought relief to the situation.

Budget

The total approved project development budget is US$298 million, includingcontingencies. To 31 March, US$192 million has been incurred and a furtherUS$87 million has been committed (ordered).

Financing

In February, the second drawdown of US$72 million was completed on the KwaleProject debt facilities. Total debt drawn at 31 March is US$126 million. Underthe terms of the debt facility, drawdowns will be made on a quarterly basiswith the next scheduled for June 2013.

Subsequent to the end of the quarter, Base secured a US$20 million extension tothe existing US$20 million cost overrun facility, bringing the total KwaleProject debt facilities to US$190 million. The additional US$20 million is notrequired to meet forecast project commitments but Base believes it prudent tohave sufficient funding in place to meet any unforseen costs or delays.Utilisation of the additional US$20 million is subject to execution of thesecurity documentation, including consent of the Commissioner of Mines &Geology to the security interests.

Marketing

The market for titanium dioxide feed stocks remained subdued through the Marchquarter. Low pigment plant utilisation and pigment de-stocking continuedthrough the quarter. There is an expectation of a pick-up in pigment activitythrough the June quarter as the northern hemisphere painting season commences.Continued strength in the US housing market together with a recent re-bound ofthe Chinese housing market supports the expectation of a market recovery by thesecond half of 2013.

Market conditions for zircon improved during the quarter with an increase intrade activity. While end markets for zircon based products remain sluggish,some zircon users have begun re-stocking raw materials. This supports the viewthat zircon prices may have bottomed and that thrifting and substitutionactivity has now effectively worked its way through the supply chain. Some ofthe major producers, including Iluka Resources Limited, continued theirstrategy of adjusting supply to align with demand. However, overall producerstocks remain high and conditions for the zircon supply chain are likely toremain subdued well into 2013.

The long term outlook for all mineral sands products remains very positive.Enquiry levels for Base's products are strong and discussions are progressingwell with customers wishing to enter off-take agreements for the share ofBase's products that are not yet contracted. Terms have been agreed withcustomers for most of the remaining ilmenite production over the first 5 yearswith contracts now being prepared.

Kenyan Exploration Projects

As part of the Kwale Project acquisition, Base acquired an option to purchasethree further exploration projects - Kilifi, Mambrui and Vipingo. On 28December 2012, the then Kenyan Minister of Environment & Mineral Resourcespublished a gazette notice purporting to cancel the three exploration licensescovering these projects. The Company has not as yet received formalnotification from the Department of Mines & Geology or any explanation of therationale for this action. Base believes it is in full compliance with theterms of these licenses and has submitted all required quarterly activityreports. Furthermore, the Company successfully had these three licenses renewedin 2011 and 2012 as such, Base can see no legal basis for the gazette noticepurporting to now cancel them. Consequently, the Company has taken theappropriate legal action to protect the rights and has received a court orderstaying the cancellation pending a hearing. Scheduled court hearings during thequarter have been postponed but Base continues to pursue the matter and isconfident of a positive outcome.

Exploration activity during the quarter was focused on enhancing the KwaleNorth Dune resource estimate. Drilling comprised 3,231 meters in 65 holes totest depth, grade, geo-metallurgical domains and assemblage. Analysis of theresults is progressing and an updated resource estimate is scheduled forcompletion in the September quarter. The North Dune is not currently includedin the Kwale Project.

Corporate

In summary, at 31 March 2013:

* Cash and cash equivalents were A$108.7 million.

* Debt drawn of US$126.0 million.

* 560,440,029 shares on issue.

* 18,000,000 unlisted options.

A full PDF of the announcement including recent images depicting thesignificant progress achieved at the Kwale Project is available at theCompany's website: www.baseresources.com.au.

ENDS

For further enquiries contact:

RFC Ambrian Limited (Nominated Adviser and Broker)

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

Base 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 developmentcurrently in place, funding in place and construction of all project elementsheading towards completion.

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.