REG-Base Resources Limited: Additional critical mineral product stream doubles Toliara Project's NPV

Base ResourcesAnnouncement

14/12/2023 07:15

 

 

 

AIM and Media Release 

14 December 2023

 

Base Resources Limited 
Additional critical mineral product stream doubles Toliara Project’s NPV

Key Points
 
* Pre-feasibility study on the production of monazite has significantly
enhanced the forecast financial returns from the Toliara Project. 
* With an incremental NPV10 of US$1.0 billion (post-tax, real), the Monazite
PFS has doubled the Toliara Project’s overall NPV10 to US$2.0 billion
(post-tax, real). 
* Monazite is a rich source of rare earth elements critical to the world’s
green energy transition and represents 2.0% of the heavy mineral in the
Toliara Project’s Mineral Resources estimate. 
* The Monazite PFS demonstrates that tails from the mineral sands processing
planned under the Mineral Sands DFS2 can be easily upgraded to a monazite
product, for modest additional capital expenditure. Capitalising on what is
essentially a ‘waste’ stream will make the Toliara Project one of the
largest and most cost-competitive sources of rare earth oxides globally. 
* Other key incremental outcomes from the Monazite PFS include: 	* IRR of 79%.

* Capex of US$71 million and a capital payback period of 1 year. 
* Average annual monazite production of 21.8kt, containing 2.8kt of NdPr. 
* LOM free cash flow of US$4.7 billion, averaging US$130 million per annum. 
* Average annual EBITDA of US$164 million. 
	
* Key overall outcomes from incorporating the Monazite Project in the Toliara
Project include: 	* Average revenue to cash cost of sales ratio of 4.3 over
the 38-year modelled mine life. 
* Increase of LOM free cash flow by 80% to US$10.6 billion, averaging US$306
million per annum. 
* Average annual EBITDA of US$371 million.
 

African mineral sands producer and developer, Base Resources Limited (ASX &
AIM: BSE) (Base Resources) is pleased to release the outcomes of its
pre-feasibility study on exploitation of the contained monazite at its Toliara
Project in Madagascar through concentration of the existing waste stream from
the project’s mineral sands processing facilities to produce a valuable
monazite product (Monazite PFS). 

 

On an incremental basis, the Monazite PFS has delivered exceptional outcomes
and is a significant enhancement of the Toliara Project as outlined in the
enhanced definitive feasibility study on the project’s mineral sands
(Mineral Sands DFS2).  For modest additional estimated capital expenditure of
US$71 million, the Monazite PFS outcomes include an incremental
post-tax/pre-debt (real) NPV10 of US$1.0 billion, IRR of 79% and an average
revenue to cost of sales ratio of 7.9, over an initial 38-year mine life. 
When combined with the Mineral Sands DFS2, the Toliara Project has an overall
post-tax/pre-debt (real) NPV10 of US$2.0 billion.

 

Managing Director of Base Resources, Tim Carstens, said:

 

“Put simply, the outcomes from our Monazite PFS reinforce our belief that
Toliara is the best undeveloped mineral sands project in the world. 
Unsurprisingly, adding another critical mineral stream through concentrating
what would otherwise have been ‘waste’ from the mineral sands processing
has materially improved the forecast financial performance of the project,
with a 100% increase in NPV and free cash flow of almost US$10.6 billion over
the initial modelled life of the project.  Utilising the waste stream as an
essentially free source of monazite feed will make the Toliara Project one of
the largest and most cost-competitive sources of rare earth oxides
globally.”

 

“We have always believed in the Toliara Project’s potential to be a
catalyst for growth in Madagascar, creating transformational opportunities for
our communities, economic stimulus for the Toliara region and being a flagship
investment for the Government.  The addition of the monazite product stream
enhances these opportunities for all stakeholders, with the project now
forecast to generate over US$4.7 billion in direct government revenue and
community development expenditure over the initial 38-year mine life.”  

 

“With the recent conclusion of Presidential elections in Madagascar and
reform of the mining regulatory regime well progressed, we believe that 2024
will see conditions supportive of the Toliara Project’s progression.  We
look forward to resuming discussions with the newly formed Government early in
the new year.  We remain confident that acceptable fiscal terms can be
secured that will support development of the Toliara Project, delivering clear
and compelling benefits to our host communities, the nation of Madagascar and
our shareholders.”

 

Investment evaluation

 

Below are the key financial and production outcomes from the Monazite PFS,
together with the outcomes from Mineral Sands DFS2. 

 

Attached to this release are supporting slides titled “Toliara Monazite
Project Pre-Feasibility Study” containing detailed information about the
Monazite PFS and its outcomes. 

 

                                                                Unit             Monazite PFS  Mineral Sands DFS2  Combined  
 NPV 10 (discount rate of 10%), post tax, real                  US$ millions     999           1,008               2,006     
 NPV8 post tax, real1                                           US$ millions     1,281         1,385               2,666     
 NPV10 spot monazite price post tax, real1                      US$ millions     679           1,008               1,687     
 IRR                                                            %                78.6%         23.8%               32.4%     
 Initial (Stage 1) Capex                                        US$ millions     71            520                 591       
 Construction time (Stage 1)                                    Months           29            27                  27        
 Stage 2 Capex                                                  US$ millions     N/A           137                 137       
 Capital Payback Period (Stage 1 + 2)                           Years            1.0           4.5                 3.6       
 Production – Monazite                                          kt pa            21.8          N/A                 21.8      
 Production – ILM/RUT/ZIR                                       kt pa            N/A           1,033               1,033     
 Life of mine (LOM)                                             years            38            38                  38        
 LOM Operating Costs + Royalty                                  US$/t ore mined  0.98          3.78                4.92      
 LOM Operating Costs + Royalty         (A)                      US$/t produced   1,089         88                  112       
 LOM Revenue                           (B)                      US$/t produced   8,648         306                 477       
 LOM Cash Margin                       (B-A)                    US$/t produced   7,559         218                 365       
 LOM Revenue: Cost of Sales Ratio      (B/A)                    Ratio : 1        7.9           3.5                 4.3       
 LOM Free Cash Flow                                             US$ millions     4,733         5,922               10,655    

[Note (1): Alternative NPV calculations are provided for illustrative and
comparative purposes.  Spot monazite price assumed to be US$5,900/t.  Base
Resources considers a 10% discount rate to be the most appropriate for
evaluation purposes.] 

 

Investor briefings

 

Base Resources will host two investor briefings to discuss the outcomes from
the Monazite PFS on 19 December 2023 at 8.30am (AWST) and 5.00pm AWST / 9.00am
BST.  The briefings will be hosted by Tim Carstens (Managing Director), Kevin
Balloch (Chief Financial Officer), Stephen Hay (General Manager – Marketing)
and Andre Greyling (General Manager – Growth).

 

The briefings will be by webcast and teleconference.  Details for accessing
each are below.  Participants will only be able to ask questions via the
teleconference line.  Participants that propose using the teleconference line
will need to pre-register their details using the teleconference registration
URL provided below.  Upon registering, participants will receive an email
with their unique PIN and dial-in details so that they can join the call on
the day without needing to speak to an operator.

 

Australia webcast and teleconference

Date: Tuesday, 19 December 2023
Time: 8.30am AWST / 11.30am AEST
Webcast URL: https://webcast.openbriefing.com/bse-mu-2023-au/

Teleconference pre-registration URL:
https://registrations.events/direct/OCP60911

 

UK webcast and teleconference

Date: Tuesday, 19 December 2023

Time: 5.00pm AWST / 9.00am BST 
Webcast URL: https://webcast.openbriefing.com/bse-mu-2023-uk/

Teleconference pre-registration URL:
https://registrations.events/direct/OCP61023

 

Further information about the Monazite PFS and the PFS Materials

 

The supporting slides attached to this release titled “Toliara Monazite
Project Pre-Feasibility Study” form part of this release (together, this
release and the supporting slides are the PFS Materials).  This release
should be read together with these slides.  The information contained in the
slides includes information in relation to the modifying factors in JORC Code
Table 1, and the material assumptions (including in respect of the modifying
factors) and underlying methodologies and inputs used for the Monazite PFS and
from which the financial and production outcomes and other forward-looking
statements set out in the PFS Materials were derived. 

 

Base Resources has concluded that it has a reasonable basis for providing the
forward-looking statements set out in the PFS Materials.  This includes a
reasonable basis to expect that Base Resources will, when required, be able to
fund development of the Toliara Project, including the additional capital
expenditure required to produce a monazite product, and obtain a legal right
to exploit monazite2.  The Disclaimer & Important Notices on pages 2 and 3 of
the supporting slides apply to all the PFS Materials, including this
announcement.

 

The PFS Materials also contain the outcomes from Mineral Sands DFS2 and select
information from that study.  This information has been provided to
contextualise the outcomes of the Monazite PFS and because the Monazite PFS
was based on concentration of the monazite waste stream from the Mineral Sands
DFS2.  For this reason, and to the extent material to the production and
financial outcomes from the Monazite PFS, the assumptions and underlying
methodologies and inputs used for the Mineral Sands DFS2 have also been
included in the PFS Materials.

 

For further information in relation to the Mineral Sands DFS2, refer to Base
Resources’ announcement on 27 September 2021 “DFS2 enhances scale and
economics of the Toliara Project” available at
https://baseresources.com.au/investors/announcements/.  Base Resources
confirms that all the material assumptions underpinning the production
information and forecast financial information disclosed in that announcement
continue to apply and have not materially changed.

 

[Note (2): The Toliara Project’s existing mining tenure, Permis
d’Exploitation 37242, does not currently provide the right to exploit
monazite.]

 

ENDS.

 

The information contained within this release is considered inside information
as stipulated under the retained EU law version of the Market Abuse Regulation
(EU) No. 596/2014 (the UK MAR) which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018.  The information is disclosed in
accordance with the Company's obligations under Article 17 of the UK MAR. 
Upon the publication of this release, this inside information is now
considered to be in the public domain.

 

For further information contact:

 Australian Media Relations        UK Media Relations             
 Citadel Magnus                    Tavistock Communications       
 Cameron Gilenko and Michael Weir  Jos Simson and Gareth Tredway  
 Tel: +61 8 6160 4900              Tel: +44 207 920 3150          

 

This release has been authorised by the Board of Base Resources.

About Base Resources

Base Resources is an Australian based, African focused, mineral sands producer
and developer with a track record of project delivery and operational
performance.  The Company operates the established Kwale Operations in Kenya
and is developing the Toliara Project in Madagascar.  Base Resources is an
ASX and AIM listed company.  Further details about Base Resources are
available at www.baseresources.com.au.

 

PRINCIPAL & REGISTERED OFFICE
Level 3, 46 Colin Street
West Perth, Western Australia, 6005
Email:  info@baseresources.com.au
Phone: +61 8 9413 7400
Fax: +61 8 9322 8912

 

NOMINATED ADVISER & JOINT BROKER
Canaccord Genuity Limited
James Asensio / Raj Khatri / George Grainger
Phone: +44 20 7523 8000

 

JOINT BROKER
Berenberg
Matthew Armitt / Detlir Elezi
Phone: +44 20 3207 7800

 Toliara Monazite Project Pre-Feasibility Study (https://mb.cision.com/Public/22548/3893356/89a168c3d231921e.pdf)  



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