AIM and Media Release
23 November 2016
BASE RESOURCES
LIMITED
Chairman’s Address to Annual General Meeting
Wednesday, 23 November 2016,
10.00am (Perth Time)
Base Resources Limited (ASX & AIM: BSE) (“Base
Resources”) advises that the following address was delivered by
Base Resources’ Chairman at the company’s Annual General Meeting
held today at 10.00am (Perth time) at West
Perth, Western Australia.
A PDF copy of the Chairman’s address, and the presentation given
by the Managing Director at the Annual General Meeting, are
available from the company's website:
www.baseresources.com.au.
Chairman’s AGM Address
Ladies and Gentlemen
The 2016 financial year has seen your company weather the storm
of a challenging, low commodity price environment and emerge into
an improving market in sound shape, well positioned to capitalise
on opportunities.
The past year, our second full year of operations, has seen
production volumes at our Kwale Operations in Kenya exceed original project design across
all three products. We have consistently achieved or exceeded
plant design availabilities, concentrate production, mineral
separation throughput and ilmenite, rutile and zircon
recovery. This is testament to the quality of the resource,
our plant and equipment and, most importantly, to the experience,
quality and dedication of our operations team.
With the operation now at steady state, our focus has turned to
further enhancing throughputs in the mineral sands separation
plant, which has driven a further material lift in our production
guidance for the 2017 financial year.
Strong cost discipline is firmly entrenched in the company, as
illustrated by our annual cash operating costs per tonne for the
2016 financial year of US$89/tonne,
down from US$104/tonne in the prior
year. While further improvements are challenging, we are
continuing to seek innovative approaches to refine our operations,
with the introduction of a hydro mining unit in recent months a
good example.
Most importantly, these results continue to be achieved with an
uncompromising focus on the safety of our people and the
operation. There were no lost time injuries during the past
year and Total Recordable Injury Frequency was a low
1.42 cases per million hours worked. The Kwale Operation
has not had a lost time injury since February 2014 and did not record a medically
treated injury for the first three quarters of 2016.
In a challenging market, Base Resources exported just short of
600,000 tonnes of products from the Kwale Operation over the 2016
financial year, with shipments made to customers with existing
offtake agreements, regular customers buying on a spot basis and
some new spot customers buying Base Resources’ products for the
first time. While all of our rutile and most zircon
production is contracted, our ilmenite marketing strategy into
China has been highly successful
with minimal inventory on hand at year end and with Base Resources
being the single largest importer of ilmenite into China.
These significant achievements for the year are reflective of a
highly capable, settled and engaged team throughout the
organisation. We have been highly successful in establishing
a Kenyan workforce at the Kwale Operation, with 96% of the team
being Kenyan and 63% coming from our local community. Our
structured training and skills development programme is also seeing
progression in quality of jobs, with a further two Kenyan
appointments to the management team in the 2016 financial year.
Base Resources’ local subsidiary, Base Titanium, has continued
to enhance its strong track record of positive community
engagement. Base Titanium, increasingly in partnership with
various local and international development organisations, supports
a wide range of programmes to address community-led
priorities. In the past year, our programmes have been
particularly focused on agricultural development, with a view to
sustaining local communities’ economic potential and quality of
life beyond the life of the Kwale Operations. The past year
has seen additional financial support secured from new
organisations, reflecting the quality, scope and potential of these
agricultural programmes to drive regional socioeconomic
development.
We continue to work closely, and enjoy positive relationships,
with our host governments in Kenya, both at Kwale County and national
level, supported by a common objective of establishing a healthy,
vibrant mining sector. With the appointment of a new Cabinet
Secretary for Mining in December
2015, Kenya has articulated
bold aspirations for what has been a nascent mining industry,
building on the success of Base Resources’ Kwale Operation.
Kenya is implementing a
competitive and stable administrative and fiscal regime and is now
actively seeking to directly engage with foreign mining companies
and attract investment.
While the 2016 financial year was a challenging one from a
commodity price perspective, our success in driving production and
managing costs has meant that Base Resources was still able to
generate an EBITDA in excess of A$60 million, and with a
revenue to cash cost ratio of 2:1, placing the company in the top
few of the top quartile of mineral sands producers. This also
enabled us to reduce net debt by US$36
million to US$151 million as at the end of the 2016
financial year.
After three years of consistently declining prices for our
products, we are now seeing strong signs of the ilmenite and rutile
markets returning to balance with excess inventories having been
substantially worked down. We have now seen prices for our
ilmenite improve from the lows in the June
2016 quarter by around 90% for deliveries in December
2016. With supply also tightening in the rutile market, we
are encouraged by the outlook for 2017.
Base Resources closed the 2016 financial year in sound financial
shape. We are generating significant cashflow with an
improving market outlook. We are rapidly paying down debt
with a repayment schedule well suited to the current environment
following the successful rescheduling in December 2015. We
are on a robust financial footing from which to grow the
business.
Our plan for growth involves, firstly, adding value to the
current asset suite. In this respect, we have recently
secured a significantly expanded exploration tenure around the
Kwale Operations to take in some previously identified
targets. Drilling of these targets in pursuit of mine life
extensions is expected to be completed over the coming year.
In addition, the company recently secured exploration tenure over a
significant land area in northern Tanzania. The “Kwale Phase
2” project, which seeks to optimise the Kwale Central and South
dunes mining tonnage and methodology, and to increase concentrate
production rates, is progressing through a Definitive Feasibility
Study to be delivered in the June quarter of 2017.
Looking beyond Kwale, we see opportunities to capitalise on our
capabilities and positioning to create shareholder value through
acquisition and discovery. With much work already done, we
will continue to assess and progress these opportunities in a
disciplined manner in the coming year. We are well positioned
for growth.
I wish to thank the Board, management and teams of Base
Resources and Base Titanium, our suppliers, local communities and
host governments for your support and commitment during the
year. Finally, thank you to you our shareholders for your
confidence and ongoing support. I am confident of a bright
future for Base Resources.
ENDS
CORPORATE PROFILE
Directors
Keith Spence (Non-Executive
Chairman)
Tim Carstens (Managing Director)
Colin Bwye (Executive Director)
Sam Willis (Non-Executive
Director)
Michael Anderson (Non-Executive
Director)
Michael Stirzaker (Non-Executive
Director)
Malcolm Macpherson (Non-Executive
Director)
Company Secretary
Chadwick Poletti
NOMINATED ADVISOR & BROKER
RFC Ambrian Limited
As Nominated Adviser:
Andrew Thomson / Stephen Allen
Phone: +61 (0)8 9480 2500
As Broker:
Jonathan Williams
Phone: +44 20 3440 6800
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Enquiries: 1300 850 505 / +61 (3) 9415 4000
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SHARE REGISTRY: AIM
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AUSTRALIAN MEDIA RELATIONS
Cannings Purple
Annette Ellis / Andrew Rowell
Email: aellis@canningspurple.com.au /
arowell@canningspurple.com.au
Phone: +61 (0)8 6314 6300
UK MEDIA RELATIONS
Tavistock Communications
Jos Simson / Emily Fenton
Phone: +44 (0) 207 920 3150
KENYA MEDIA RELATIONS
Africapractice (East
Africa)
Evelyn Njoroge / James Njuguna/Joan
Kimani
Phone: +254 (0)20 239 6899
Email: jkimani@africapractice.com
PRINCIPAL & REGISTERED OFFICE
Level 1, 50 Kings Park Road
West Perth, Western Australia, 6005
Email: info@baseresources.com.au
Phone: +61 (0)8 9413 7400
Fax: +61 (0)8 9322 8912