Base Resources (BSE.AX, BSE.L) has provided an updated resource estimate at the Ranobe zone, part of the Toliara HMS project in Madagascar, which now also includes a mineable reserve of 586 million tonnes of ore at an average heavy mineral grade of 6.5%. The reserve is divided into 347 million tonnes in the proved reserves at an average grade of 7% heavy minerals (of which 75% consists of ilmenite with values of 1% rutile, 1% leucoxene and almost 6% zirconium).
The reserve estimate doesn’t take the in excess of 26,000 meters of drilling in 2019 into account and Base is hinting at an additional update and upgrade of the existing reserves in 2020. The additional drilling was also helpful to go from a pre-feasibility study to a definitive feasibility study at Toliara. The definitive feasibility study doesn’t contain any negative surprises as all results are in line with the pre-feasibility study. The 13M tpa operation will have an initial capex of US$442M and will generate an after-tax NPV10% of US$652M. Using a discount rate of 8% would boost the NPV to US$910M.
Base’s share price has lost approximately 30% of its value since the peak in April, so hopefully an updated economic study at Ranobe will help the company to regain some of the ground it lost in 2019.
Disclosure: The author has no position in Base Resources
