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Base Resources sees continued improvement in zircon markets; lifts output guidance for 2018

Zircon production increased significantly due to higher contained zircon in the feed and average recoveries increasing to 75%..
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Base Resources workers

Base Resources Ltd (LON:BSE) has updated on a positive September quarter at its Kwale mineral sands operation in Kenya and has raised its 2018 production guidance for zircon and ilmenite.

"The quarter was characterised by continuing improvement in zircon markets, stabilising ilmenite prices and a positive outlook for rutile," the group said, adding that net debt had been reduced by a further US$11.9mln in the three months.

The group mined 2.023mln tonnes of ore versus 2.325mln in the same quarter of 2016, and produced 119,376 tonnes of ilmenite (121,821 in same quarter of 2016), 22,789 tonnes of rutile (21,886) and 9,136 (9,050) tonnes of zircon.

It sold 106,260 tonnes of ilmentite (139,441 in the 2016 quarter), 12,594 tonnes of rutile (23,023) and 9,283 tonnes of zircon (8,525).

Zircon production increased significantly due to higher contained zircon in the feed and average recoveries increasing to 75% (73% last quarter) with 78% achieved in September following process optimisation and circuit changes, the group noted.

The unit revenue per tonne of product sold rose to US$271 in the latest quarter, compared to US$200 in the same period last year.

Notably, the firm has secured an increase of US$150 per tonne on zircon contracts for the December quarter -  making a total gain of US$300 per tonne or 34% since the end of 2017.

Base is now guiding for full year 2018 production of 33,000 to 39,000 tonnes of zircon, compared to 32,000 to 37,000 previously. The rutile forecast is unchanged at 88,000 to 94,000, while ilmentite output is expected to go to between 420,000 and 450,000 tonnes (from 400 to 430,000 previously).

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