Shares in Base Resources tumbled nearly 18% after the company said exploration had failed to extend the resources of its Kwale mineral sands deposit in Kenya.
As a result mining would stop at the end of 2024, the company said. Shares in Base Resources last traded at 14 Australian cents apiece on the Australian Stock Exchange. The company has a market capitalisation of A$164.9 million.
Even after applying optimistic assumptions on the continuity of two mineralised zones at its Kwale East exploration site, Base concluded there was unlikely to be sufficient volume or heavy mineral grade to economically support mining.
Other factors behing the decision to cease mining in at Kwale is the cost and operating expense of extending the existing tailings facilities as well as human resettlement and a likely deterioration in mineral sands prices over the period of the development.
In addition to Kenya, Base Resources is also exploring in Tanzania and is waiting on Madagascar to resume discussions on the development of the Toliara mineral sands project. But both developments have run into roadblocks.
Base reported limited success at the Umba South in Tanzania. While the company confirmed mineralisation of rutile a number of factors were identified limiting the project’s economic potential”, it said in July. Further exploration was planned.
It also didn’t expect to register progress on the development of its Toliara project in Madagascar until the African island nation concluded elections as well as a review of its minerals code.
Toiliara is a potentially transformative project for the Australian-listed miner. A 2019 feasibility study said production could total 13 million tons (Mt) annually in a $442 million first phase. A $69 million second phase would increase output to 13Mt a year.
But finalisation of a mining licence was stalled after the Malagasy government decided to revamp tax regulations.
