AIM and Media Release
22 November 2017
BASE RESOURCES
LIMITED
Chairman’s Address to Annual General Meeting
Wednesday, 22 November 2017,
10.30am (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 10.30am (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
During the year we have achieved profitability, reduced net debt
significantly, initiated exploration in support of mine-life
extension and have begun construction of the Kwale Phase 2
project. Our company is in a robust position and is
well-placed to take advantage of an improving commodity market with
sound long-term fundamentals.
Shareholders will be only too aware that since commencing
production three years ago, we have been selling our products into
a depressed international pricing environment. Fortunately,
our Kwale Operation in Kenya has
been able to weather this difficult period, on the back of its
quality ore body, low cost-base and excellent operational track
record, to emerge in the right shape to benefit from the strong
recovery in the ilmenite price we have experienced over the past 12
months.
It is against this backdrop that I am very pleased to highlight
that for the 2017 financial year, Base Resources achieved a maiden
net profit after tax of A$21 million
and a record EBITDA of A$110m.
The strong cashflows have enabled the reduction in net debt by
A$76 million to A$128 million
(US$98 million) at year end, the
repayment in full of the Taurus facility in August and an improving
financial flexibility.
Our increased revenues and profitability are reflective of not
just rising realised prices but also of our continued sharp focus
on maximised production, operational consistency, innovation and
cost management. The year saw record production for all
products with over 625,000 tonnes of primary products
exported. After three years of relentlessly improving our
cost structures, we have locked in these gains and now have a low,
tight and predictable operating cost base. The successful
introduction of the hydro-mining method, which has proved to be
more efficient and flexible than the current dozer trap mining
method, particularly when mining the lower grade, peripheral ore
blocks, has paved the way for its progressive adoption as the
exclusive mining method over the coming year.
Most importantly, these operational and financial results
continue to be achieved with an uncompromising focus on the safety
of our people and the operation itself. There were no lost
time injuries during the past year and only two medical treatment
injuries in the course of 3.1 million hours worked by our employees
and contractors. The Kwale Operation has not had a lost time
injury since February 2014 and our
employees and contractors have now worked almost 10 million
man-hours LTI free.
With the Kwale Operation performing to a high standard, a
significant focus has shifted to adding value to the assets through
optimisation of the remaining life of the mine and the extension of
that life. In May, the Board were pleased to approve the
Kwale Phase 2 project (“KP2”) following completion of a
compelling, definitive feasibility study. The KP2 project,
the majority of which will be implemented over the course of the
2018 financial year at a capital cost of approximately A$31m, will facilitate the maintaining of
production volumes at around the levels currently achieved over the
remaining life of the mine through faster mining and processing of
Ore Reserves, significantly enhancing asset economics. The
introduction of multiple hydro-mining units and a 69% increase in
the number of spiral starts in the wet concentrator plant lie at
the core of the project, making it a low risk enhancement
project.
The KP2 enhancements increase the importance of, and the value
leverage from mine life extensions emerging from the exploration
program that is underway. An expanded exploration tenure was
secured a little over a year ago and the first drilling campaign
was completed around the South Dune during the 2017 financial
year. The next phase of drilling, which is planned to
commence in early 2018, will be focused to the north-east of the
Central Dune. We are optimistic that further mine life
extension will result.
These operational and developmental achievements of the 2017
year are made possible by a highly capable, settled and engaged
team throughout our organisation. Building on our early
success in establishing a strongly Kenyan workforce at the Kwale
Operation of around 97%, our structured training and skills
development program is seeing pleasing progression in the quality
of jobs, with a further Kenyan appointment to the management team
this year.
Representing some 60% of the Kenyan mining industry, our impact
reaches well beyond simple employment and Government revenue.
Our model of operations is yielding benefits to Kenya in the areas of supply chain
development, safety and industrial training approaches,
environmental and community engagement benchmarks, agricultural
sector development and mining sector investment promotion, amongst
many others. It is in recognition of this broad-based impact
and leadership role that in July this year the Kwale Operations
were formally granted “flagship project” status within Kenya’s
Vision 2030 framework. In doing so, Kenya is explicitly seeking to build on the
success of the Kwale Operation as it goes about realising its bold
aspirations for what has been a nascent mining industry.
Looking ahead, the 2018 financial year has a positive
outlook. Product markets for rutile, ilmenite and zircon have
returned to balance with conditions conducive to a continuation of
the recent price improvements. Demand is such that we are
carrying no inventory from shipment to shipment. On the back
of these continuing market conditions we look forward to further
substantial inroads on our net debt position.
I believe our company is soundly positioned with the ingredients
in place to drive significant gains in shareholder value. We
have an outstanding operating asset in the Kwale Operations with
strong cash generation and extensional potential, an outstanding
team with a recognised and growing reputation for successful
mineral development, an improving commodity price outlook and
opportunities for growth emerging. We are firmly of the view
our cash generation and longer-term value proposition have yet to
be appropriately appreciated by equity markets. We are
working hard to see this change in the year ahead.
I’d like to thank the Board, our people, suppliers, local
communities and host governments for the steadfast support and
commitment you consistently display. I’d like to particularly
thank Michael Anderson who left the
Board in August, having made a considerable contribution since
joining in 2011 in guiding the company through a transformational
period.
Finally, thank you to you our shareholders for your confidence
and ongoing support as we drive into what I am confident is an
increasingly 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 Stirzaker (Non-Executive
Director)
Malcolm Macpherson (Non-Executive
Director)
Company Secretary
Chadwick Poletti
NOMINATED ADVISOR & BROKERS
RFC Ambrian Limited
As Nominated Adviser:
Andrew Thomson / Stephen Allen
Phone: +61 (0)8 9480 2500
As Joint Broker:
Jonathan Williams
Phone: +44 20 3440 6800
Numis Securities Limited
As Joint Broker:
John Prior / James Black / Paul
Gillam
Phone: +44 20 7260 1000
SHARE REGISTRY: ASX
Computershare Investor Services Pty Limited
Level 11, 172 St Georges Terrace
PERTH WA 6000
Enquiries: 1300 850 505 / +61 (3) 9415 4000
www.computershare.com.au
SHARE REGISTRY: AIM
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
BRISTOL BS99 6ZZ
Enquiries: +44 (0) 870 702 0003
www.computershare.co.uk
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 / 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