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Kwale is a high-tonnage, low-grade project that remains profitable, despite the fact the orebody's grades have been lower than expected as mining moves to the fringes of the Central Dune deposit, but Base has been able to partially offset the impact with 5% higher mining rates and stronger rutile and zircon prices.
The operation produced 108,465 tonnes of ilmenite, 24,505t rutile and 8252t higher-value zircon for the December quarter, slightly off from the September period, and sold most of what it produced, with the income helping pay off remaining debts of almost US$25 million during late 2018.
The company has updated its production guidance for the fiscal year to reflect ore characteristics being encountered in the remnants of Central Dune with zircon production now expected to be lower at between 31,000-34,000t compared with 32,000-37,000t and around 40,000t less ilmenite, but rutile could rise see an additional 1000t to as much as 94,000t.
Total operating costs were marginally higher than the previous quarter due to higher tonnes mined, which, when combined with a decrease in overall production volumes, resulted in a higher unit operating cost of US$115/t, up from $92 one year earlier, while the costs of goods sold was also up to $146/t with revenue of $377/t.
The move to South Dune has been brought forward several weeks, and will require a two-week shutdown at the concentrator in June for the changeover. At the same time there will kick off a 20% drop in feed rates for three months from next month, four weeks longer than planned, to allow for stockpile build up for the $12.3 million transition.
A five-day maintenance plant shutdown postponed almost a year due to contractor availability, which should help revenue in the short term.
A resource upgrade for the North Dune is expected by mid-year, and the company plans to begin drilling at the Vanga prospecting lease this quarter looking for new deposits.
Looking further ahead, the company continues to advance Toliara, defining its mining and processing options, and getting samples into the hands of customers.
The project remains on track to complete the prefeasibility study in the March quarter, ahead of delivering a definitive feasibility study in the December quarter and a start of construction planned for early 2020 with first production before the end of 2021.
The miner had net cash of $1 million at the end of December, and plans to sink future cash into its Toliara project.
Base shares were last traded at A24c, valuing the company at $278 million.
