Kwale Mineral Sands Operations Quarterly Operational Update
Base Resources Limited (ASX & AIM: BSE) (“Base” or the “Company”) is pleased to provide a quarterly operational update at its Kwale Mineral Sands Operations (“Kwale Operations”) in Kenya, East Africa. With the consistent achievement of design availabilities and throughputs in both the wet concentrator plant (“WCP”) and mineral separation plant (“MSP”) and recoveries in the WCP, the focus remains firmly on continuing to drive product recovery and throughput increase opportunities in the MSP.
Average mined ore grades remained high at 9.2% heavy mineral (“HM”) as mining continued through a high grade section of the Central Dune ore body (9.3% HM during the previous quarter and 8.6% year to date). Tonnage mined remained steady at 2.3Mt in the quarter.
Above design WCP availabilities of 89% for the quarter (84% in the previous quarter) have offset the marginally lower HM grades, allowing quarterly HMC production to remain steady at 206kt, continuing to exceed design and allowing for the building of a HMC inventory of 114kt as part of our risk management and production optimisation plan.
Slime and sand deposition in the Tailings Storage Facility continued to operate according to plan. The Mukurumudzi Dam volume increased to full capacity of 8.6GL with the onset of the ‘long rains’, the main wet season of the year.
MSP throughput of 169kt was 6% higher than the previous quarter due to a combination of marginally higher MSP availability at 94% (93% in the previous quarter) and higher average feed rate of 82tph (80tph in the previous quarter).
The increased MSP feed rate achieved in the quarter was the result of plant optimisation, with further rate increases from planned modifications expected during the course of 2015.
Rutile production for the quarter of 19.5kt represented an increase of 16%, predominantly due to higher throughputs achieved and average MSP recoveries of 98% (91% in the previous quarter). A proportion of this improvement (429t of rutile product) was attributable to the implementation in June of a programme to retreat an accumulated rutile oversize reject stockpile, which will continue into the next quarter. After adjusting for retreat gains, underlying rutile recoveries increased 5% this quarter to 96% and are now approaching the design target of 97%. Further improvements are expected from planned modifications to be progressively completed over the remainder of 2015, notably a larger rutile screen and additional magnet stages.
Ilmenite production continued above design capacity, increasing 7% to 113kt due to further improvements in MSP recoveries (109% versus 105% in the previous quarter) and increased MSP throughput. With some altered ilmenite species that are not defined as “ilmenite” in the Resource being recovered to ilmenite production, ilmenite recoveries (or yields) of over 100% are now consistently being achieved.
Zircon production improved again during the quarter, consistent with the planned ramp-up to design capacity. Average recoveries increased to 62% from last quarter’s 54% and production was further boosted through the higher MSP throughput. Planned upgrades to the wet zircon pumping systems have been deferred to the September quarter due to delays in delivery of the requisite equipment. The wet zircon pumping system upgrade is intended to increase recoveries by providing greater flow control and flexibility. Further improvements to primary magnet separation capacity and efficiencies are planned during the course of 2015, which, along with on-going optimisation work, is expected to further improve zircon recovery towards design levels of 78%.
With the aim of maximising overall zircon recoveries and revenue, Base is progressing with plans to upgrade non-magnetic tailings streams to produce a saleable zircon low grade product on an ongoing basis. Implementation has unfortunately been delayed to the September quarter as a consequence of the delays in the upgrade of the wet zircon circuit discussed above.
Bulk loading operations at Base’s Likoni Port facility continued to run well, dispatching more than 100,000 tonnes during the quarter directly to customers. Sales continue to be made from Base’s China warehouse as part of our strategy for securing market share in China by offering product for immediate delivery and in smaller volumes than could be justified for a shipment direct from Kenya. By adopting this strategy, Base is tapping into smaller scale customers not able to commit to large shipment volumes and also able to offer prospective large new customers sample size volumes for testing. Containerised shipments of rutile and zircon proceeded according to plan.
Cash operating costs for the quarter (inclusive of royalties) were US$13.5 million, lower than the US$14.2 million of the prior quarter. Costs per tonne produced (rutile, ilmenite and zircon) were considerably lower at US$97 than the $111 of the prior quarter, due to the combination of lower total costs and higher production volumes this quarter. Operating costs in the coming quarter are expected to increase due to mid-life servicing of mobile mining fleet. It can be expected that maintenance costs will trend up over time as the plant and equipment ages.
Marketing
The global TiO2 pigment industry experienced its usual seasonal improvement in pigment sales volumes through the quarter, but prices came under pressure as some producers competed to improve market share. Some gains in pricing for Chinese pigment were seen early in the quarter but stabilised on the back of the increased competition in the global market.
Pricing pressure in the pigment industry is maintaining pressure on the pricing of high grade titanium dioxide feedstock (including rutile) despite the increase in demand for such feedstock. Increases in supply of high grade titanium dioxide feedstock is contributing to this pricing pressure as some major feedstock producers discount prices to compete for sales.
Further reductions in global ilmenite supply,