Ilmenite is used in color pigments

BASE Tim Carstens, CEO of Resources, downplayed an outbreak of Covid-19 at the company’s Kwale mineral sand mine in Kenya, saying a warning in third quarter production results of a possible restriction on the mine was “just a restriction.”

“I’m not concerned while things are going right,” he said in an interview today. “We have strong protocols.” The likelihood of downtime was “very low”.

Base Resources said in its third quarter report that ilmenite production could be up to 50,000 tons higher than the lower end of the previous forecast of 270,000 tons, while zircon production could also be higher. This was the result of increased availability of heavy mineral concentrate in the processing facility. The production guidelines for rutile remained unchanged.

It warned of a restriction in Kwale or even a cessation of mining “at some point in the future due to a severe local Covid-19 outbreak”. A change in Kenyan government regulations regarding Covid-19 controls could also jeopardize the guidelines, it said. For now, the company had reintroduced work-from-home protocols for non-operational personnel.

Ilmenite production in the March quarter was 84,178 tons compared to 78,500 tons in the December quarter and 105,035 tons in the March quarter of FY 2020 for Base. The production of rutile was also higher compared to the previous quarter.

The company sold more ilmenite and rutile in the March quarter and benefited from an improving mineral sands market. At 97,179 tons, sales of ilmenite exceeded 53,798 tons in the December quarter. Sales of rutile were more than double what they were in December. Mineral sands are mainly used for the production of color pigments.

According to Base, global pigment manufacturers have seen a strong recovery in the past two quarters, offsetting normally weak demand in the first three months of the calendar year.

Commenting on the company’s outlook, Carstens said investors were waiting for two developments. The first was the result of a new feasibility study to extend my kwale life via its North Dune prospects.

A study that covered much of the area found that the project expansion was not feasible because the grades were too low and too much money would be spent building tailings dams and other infrastructure.

The results of the new study, which relates to smaller natural resources, are to be published in the current quarter. Carstens said he anticipates my kwale life will be extended to around 2025.

The second development was an agreement with the government of Madagascar on the tax regulations for the Toliara mineral sand project. The project has been in mothballs since late 2019 after the government called for a tax and license fee overhaul.

Carstens anticipated short-term progress, but added that the major headaches from Covid-19 restrictions were obstacles to international travel.

Once the Toliara project resumed, the company would rethink its current capital management program. It paid an interim dividend of three Australian cents per share, but Carstens said there was no point in “throwing cash away” when the $ 439 million project was back on the agenda.

He wasn’t afraid of missing out on the market due to Toliara’s project delays. “There has been a structural improvement in the mineral sand market,” he said.