Base Resources Limited Chairman's Address to Annual General Meeting
23 November 2016 - 6:00PM
UK Regulatory
TIDMBSE
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
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 / 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
END
(END) Dow Jones Newswires
November 23, 2016 02:00 ET (07:00 GMT)