Sunday 11th Nov 2018
Base Resources was a 'buy' for Midas in the Mail on Sunday. The company mines rutile and ilmenite, which are used to make titanium dioxide, a key ingredient for sunscreen, paints, paper, plastics and rubber, coated fabrics and textiles, floor coverings, cosmetics, toothpaste, soap and catalysts. The titanium dioxide market is valued at above £10bn and growing 5% a year.

Base Resources operates the Kwale mine in Kenya, which also produces another industrial mineral, zircon, and for the year to next June is expected to deliver around 90,000 tons of rutile, 430,000 tons of ilmenite and 35,000 tons of zircon, with an average price of just over $350 (£270) per ton. While the cost of production is just $100 per ton, there is some investor concern that this mine has a limited life span as it is due to run out of steam in the mid to late-2020s. A new mining project was acquired in Madagascar last year, forecast to deliver 800,000 tons of ilmenite and 75,000 tons of rutile and zircon per year for several decades. The company hopes to start mining by the end of 2021, using a combination of cash from Kwale and bank debt.

Investors also have concerns about funding the Madagascar mine and about how profitable it will be. Within the next six months or so, Base should update the market about Kwale's life expectancy and the dynamics around the Madagascar project. "The information is widely expected to be positive," the column said.

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