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AIM and Media Release
20 August 2021
BASE RESOURCES LIMITED
Updated Kwale South Dune Mineral Resources and Ore Reserves estimates
The South Dune Ore Reserves estimate has been updated to incorporate existing estimated Mineral Resources located within the proposed expanded Kwale Special Mining Lease 23, increasing ore by 19Mt and contained heavy mineral by 0.6Mt and taking Kwale mine life to December 2023 following such expansion.
South Dune Mineral Resources and Ore Reserves estimates were reduced by mining depletion in the year to 30 June 2021.
The combined effect is that:
estimated South Dune Mineral Resources have reduced by 22Mt containing 0.7Mt of in situ heavy mineral; and
estimated South Dune Ore Reserves remain the same at 40Mt of ore but contained heavy mineral has reduced by 0.1Mt.
African mineral sands producer, Base Resources Limited (ASX / AIM: BSE) (Base Resources) announces an update to the estimated Kwale South Dune Mineral Resources (2021 Kwale South Dune Mineral Resources) and Ore Reserves (2021 Kwale South Dune Ore Reserves) at its 100% owned and operated Kwale Operations in Kenya.
The 2021 Kwale South Dune Mineral Resources are estimated at 30 June 2021 to be 54 million tonnes (Mt) at an average heavy mineral (HM) grade of 3.2% for 1.7Mt of contained HM, at a 1% HM cut-off grade. The 2021 Kwale South Dune Mineral Resources estimate represents a decrease of 22Mt of material and 0.7Mt (or 26%) of contained HM compared with the previously announced Kwale South Dune Mineral Resources estimate as at 30 June 2020 due to mining depletion, inclusive of sterilisation of sub-economic low-grade material (see Figure 1).
Table 1: 2021 Kwale South Dune Mineral Resources and Ore Reserves estimates compared with the 2020 estimates.
Table subject to rounding differences, Mineral Resources estimated at a 1% HM cut-off grade and are inclusive of Kwale South Dune Ore Reserves.
The 2021 Kwale South Dune Ore Reserves are estimated at 30 June 2021 to be 40Mt at an average HM grade of 3.3% for 1.3Mt of contained HM. While ore tonnage did not change, the updated Ore Reserves estimate represents an overall decrease of 2% in contained HM tonnes from the previously reported 2020 Kwale South Dune Ore Reserves estimate due to:
depletion due to mining of 19Mt of ore and 0.7Mt of contained HM, inclusive of unmined material caused by an elevated basement floor in some areas compared to that predicted in the underlying model; and
an additional 19Mt of ore and 0.6Mt of contained HM being included as a result of incorporation of additional Kwale South Dune Mineral Resources located within the proposed expanded SML 23.
The effect of these changes is shown in plan view in Figure 2.
The 2020 Kwale South Dune Ore Reserves estimate was constrained within the current SML 23 boundary and did not include any additional estimated Mineral Resources within the much larger Prospecting licence 2018/0119 (PL119). Following the Cabinet Secretary for the Ministry of Petroleum and Mining’s previously disclosed public statements that the proposed extension to SML 23 had been approved and the licence will be issued soon, the Company has greater certainty as to the timing for finalising the necessary mining tenure arrangements with the Kenyan Ministry of Petroleum and Mining. As a consequence, Base Resources has incorporated the portion of the Mineral Resources estimate within the proposed expanded SML 23 into the 2021 Kwale South Dune Ore Reserves estimate.
On the basis of the 2021 Kwale South Dune Ore Reserves estimate, following the expansion of SML 23, mining is scheduled to continue on the Kwale South Dune until December 2023.
Base Resources has a net attributable interest of 100% in the 2021 Kwale South Dune Mineral Resources and Ore Reserves.
The 2021 Kwale South Dune Mineral Resources and Ore Reserve estimates are reported in accordance with the JORC Code. Further information about both estimates is set out in the sections below and includes the information prescribed by the ASX Listing Rules. For both the 2021 Kwale South Dune Mineral Resources and Ore Reserve estimates, the information provided should be read in conjunction with the explanatory information provided for the purposes of Sections 1 to 3 of Table 1 of the JORC Code, included as Appendix 1 to this announcement. For the 2021 Kwale South Dune Ore Reserves estimate, the information provided should also be read in conjunction with the explanatory information provided for the purposes of Section 4 of Table 1 of the JORC Code.
A glossary of key terms used in this announcement is contained at the end of this announcement. Figures (maps and graphics) referenced in this announcement have been omitted. A full PDF version of this announcement, including all figures (maps and graphics), is available from Base Resources’ website: https://baseresources.com.au/investors/announcements/.
Further information about the 2021 Kwale South Dune Mineral Resources estimate
Kwale Operations is located on SML 23, which lies within PL119. The Prospecting Licence has an area of 88.7 km2 and is located approximately 50 kilometres south of Mombasa and approximately 10 kilometres inland from the Kenyan coast (see Figure 3).
The Kwale Project initially comprised three areas that contained concentrations of heavy minerals. They were the South Dune, Central Dune (now totally depleted by mining and currently the repository for sand tailings from the South Dune) and the North Dune deposits, with the Bumamani deposit being discovered subsequently (see Figure 4).
The project was initially owned by Tiomin Resources Inc. (Tiomin) which conducted drilling in 1997 and then by Base Titanium Limited (a wholly owned subsidiary of Base Resources) (Base Titanium) which purchased the project late in 2010 and commenced confirmatory drilling of the Central, South and North Dune deposits.
Mineral Resources estimation work previously carried out on the Kwale deposits is as follows:
2006 by Tiomin;
2010 by Base Resources via a consulting company, Creative Mined Pty Ltd, and under the direction of Base Resources Competent Person, Scott Carruthers;
2014 by GNJ Consulting, and under the direction of the Competent Person, Greg Jones;
2016 by Base Resources Competent Person, Scott Carruthers;
2017 by Base Resources Competent Person, Richard Stockwell; and
2020 by Base Resources Competent Person, Scott Carruthers.
The rocks of the area are of sedimentary origin and range in age from Upper Carboniferous to Recent. Three divisions are recognised: the Cainozoic rocks, the Upper Mesozoic rocks (not exposed on the area) and the Duruma Sandstone Series giving rise to the dominant topographical feature of the area: the Shimba Hills. The Shimba grits and Mazeras sandstone are of Upper Triassic age and form the Upper Duruma Sandstone.
The Margarini sands form a belt of low hills running parallel to the coast. They rest with slight unconformity on the Shimba grits and Mazeras sandstone. This formation was deposited during Pliocene times and consists of unconsolidated fluviatile sediments derived from the Duruma Sandstone Series.
The Kwale deposits are an aeolian subset of the Margarini sands and are generally poorly stratified and contain a fraction of silt/clay of around 25 per cent. Heavy minerals, mainly ilmenite, rutile and zircon, are locally concentrated and are abundant in some places, giving rise to deposits such as the Central, South and North Dunes.
The geological interpretations for each deposit considered the data in the drill logs, HM assay results, microscopic logging of HM sinks, detailed mineralogy, knowledge gained from mining the Central Dune deposit and the results of pilot plant-scale test work conducted on trial mining pits at the South Dune deposit. Two mineralised geological domains were identified at the South Dune deposit. These were used and honoured during the geological modelling. Mining of the South Dune deposit commenced in June 2019 and this has not altered the geological interpretation.
The right to mine the Kwale South Dune deposit was granted to the previous owner of Kwale Operations by the Government of Kenya under SML 23 on 6 July 2004. SML 23 was assigned to Base Titanium (a wholly owned subsidiary of Base Resources) in July 2010, with consent from the Commissioner of Mines and Geology of the Government of Kenya.
SML 23 has a term of 21 years from 6 July 2004 and provides the right to carry out mining operations for the production of ilmenite, rutile and zircon. Prior to expiry of SML 23, Base Titanium may apply for a new mining lease on a priority basis pursuant to the Mining Act 2016. The original prospecting licence, SPL173, which was granted under the previous Mining Act, was replaced by PL119, which was granted on 26 May 2018 under the 2016 Mining Act, for a three-year term. A renewal application for a further three-year term was lodged in February 2021 and is awaiting approval.
The environment and land use in Kwale County is defined as humid and intensive subsistence agriculture/mixed farming/forestry. The approximate population of Kwale County is 860,000.
Tiomin conducted drilling in 1997 at Kwale using an open-hole, rotary mud drilling technique. Subsequent resource drilling by Base Titanium was completed using the reverse circulation air core (RCAC) method. Aircore drilling has been conducted in three campaigns: October to November 2010, January to February 2013 and November 2016 to March 2017 (see Figure 5). Drilling within SML 23 comprises predominantly pre 2016 holes at, generally, 100 x 100 metre spacing. Drilling from 2016 onwards is at 100 x 50 metre spacing.
Predominantly 3m sample intervals in previous RCAC drilling was replaced by sampling at 1.5m intervals from November 2016 to provide greater control on geological boundaries. Sample size averaged close to 3kg at this sample interval when collecting 25% of the rotary splitter cycle. Samples were dried, weighed, and screened for material less than 45micrometres (slimes) and +1mm (oversize).
Approximately 100 grams of the screened sample was subjected to a HM float/sink technique using the heavy liquid, Lithium polytungstate (LST with an SG of 2.85gcm-3). The resulting HM concentrate was dried and weighed as were the other separated constituent size fractions (the minus 45micrometre material being calculated by difference).
Mineral assemblage analyses were conducted by Base Titanium in order to characterise the mineralogical and chemical characteristics of specific mineral species and magnetic fractions. These mineral assemblage samples were subjected to magnetic separation using a Mineral Technologies, Reading, induced-roll magnetic separator, which captured magnetic (mag), middling (mid) and non-magnetic (non-mag) fractions. The mid and mag fractions were combined and, with the non-mag fraction, subjected to XRF analysis using a Bruker, S8 Tiger XRF. Data from the mag and non-mag XRF analyses were processed through Base’s proprietary mineralogy system, Minmod, that ran approximately 100,000 iterations in assigning key chemical species to a calculated mineralogy determination.
Drill hole collar and geology data were captured by industry-specific, field logging software with on-board validation. Field and assay data were managed in an MS Access database and subsequently migrated to a more secure, SQL database. Population of the SQL database was completed in July 2017 and was the final stage of data validation for the 2021 Kwale South Dune Mineral Resource estimate.
Standard samples were generated and certified for use in the field and laboratory. Accuracy of HM and slimes (SL) analysis was verified by standards and monitored using control charts. Standard error greater than three standard deviations from the mean prompted batch re-assay. A standard precision analysis was conducted on the key assay fields: HM, SL and Oversize (OS) for both laboratory and field duplicate samples. Normal scatter and QQ plots were prepared for HM, SL and OS for laboratory and field duplicates.
A twin drilling program was introduced to quantify short-range variability in geological character and grade intersections. A water injection versus dry drilling assessment was included in the twin drilling analysis. Field and laboratory duplicate, standard and twin drilling analysis show adequate level of accuracy and precision to support resource classifications as stated. Analysis of the twin drilling, length of geological zones and grade distributions led to the decision to exclude the Tiomin data from the Mineral Resource estimate.
A topographic DTM was prepared by Base Resources in Geovia (Surpac) software format which was based on a LIDAR survey.
Construction of the geological grade model was based on coding model cells below open wireframe surfaces, comprising topography, geology (Ore Zones 1 & 4) and basement (see Figure 6). Model cell dimensions of 50m x 50m x 1.5m in the XYZ orientations was applied to the 2021 Kwale South Dune Mineral Resources estimate.
Interpolation was undertaken using various sized search ellipses to populate the model with primary grade fields (HM, SL, OS, and mineralogy), and index fields (hardness, Induration percent, Composite ID). Inverse distance weighting to a power of three was used for primary assay fields whilst nearest neighbour was used to interpolate index fields.
The bulk density applied to the Kwale South Dune model was a component-based algorithm, validated by Troxler density measurements taken in the active Kwale Central Dune mine. The character of the Kwale South Dune is sufficiently similar to that of the Kwale Central Dune to validate this approach. This bulk density algorithm was used for the 2017 Kwale South Dune Mineral Resources estimate. However, from mine reconciliation calculations following the commencement of mining at the South Dune, this was found to be overestimating bulk density. This prompted a bulk density algorithm that reduced bulk density by 5% compared to the 2017 algorithm to be used for the 2020 Kwale South Dune Mineral Resources estimate. No further changes to bulk density have been made for the 2021 Kwale South Dune Mineral Resources estimate.
The criteria used for classification was primarily the drill spacing and sample interval, with consideration also given to the continuity of mineral assemblage information and confidence in post-depositional modification of mineralisation (e.g. induration in Ore Zone 4). Generally, 100 x 100 was considered sufficient for Measured Resources and 200 x 100 for Indicated Resources. A reduced level of confidence was applied to the Ore Zone 4 material at Kwale South Dune due to the unpredictable ironstone induration and lower density of mineralogical information.
Modifying factors were considered during the Ore Reserves estimation process; they were not considered during the Mineral Resources estimation process. The mining method is hydraulic mining.
The 2021 Kwale South Dune Mineral Resources estimate is reported using a 1% HM bottom cut as that is close to the economic cut-off and allows for comparison to the previous Mineral Resource estimates.
Further information about the 2021 Kwale South Dune Ore Reserves estimate
The feasibility study that led to the final investment decision for the Kwale Project was completed in 2011 and is no longer relevant given production commenced in late 2013. Accordingly, data derived from actual production statistics and financial reports were used to form the assumptions underpinning the 2021 Kwale South Dune Ore Reserves estimate. The operating cost, recovery and other material assumptions are detailed in Tables 2 to 5 below and were used to create a value model to determine economic pit limits. After this, a two-stage pit limit selection process was followed to determine the optimum raw pit shell. This was then subject to detailed mine planning and scheduling, with the outputs used to perform detailed financial analysis to demonstrate the technical and economic viability of the extraction of the Ore Reserves.
The reference point for the 2021 Kwale South Dune Ore Reserve estimate is 30 June 2021.
Table 2: Assumed mineral recoveries
HM recovery – wet concentrator plant
Ilmenite recovery – wet concentrator plant
Rutile recovery - wet concentrator plant
Zircon recovery - wet concentrator plant
Ilmenite recovery – mineral separation plant
Rutile recovery - mineral separation plant
Zircon recovery - mineral separation plant
Table 3: Assumed operating costs
USD / T (Waste)
Ore mining - fuel
USD / T (Ore)
Ore mining – pumping power
USD / kWhr
Slime - flocculant
USD / T (Slime)
HMC dryer - fuel
USD / T (HMC)
Rutile circuit reheater - fuel
USD / T (HMC – Ilmenite T)
Zircon circuit dryer - fuel
USD / T (HMC – Ilmenite T – Rutile T)
Process plant - power
kWhr / HMC T
Ilmenite product haulage and port costs
USD / T (Ilmenite Product)
Rutile product haulage and port costs
USD / T (Rutile Product)
Zircon product haulage and port costs
USD / T (Zircon Product)
Fixed – power
kWhr / Operating Hour
Fixed - other
USD / Annum
Table 4: Process throughput rates (used to limit assumed feed rate during optimisation)
Maximum HMU throughput
Maximum process rougher feed throughput
Maximum process tails throughput
Maximum process thickener throughput
Maximum process HMC throughput
Table 5: Product prices (FOB)
USD / T
USD / T
USD / T
*Assumed average prices over the life of Ore Reserves at time of optimisation.
The criteria used for classification of the Ore Reserves followed that used for the Mineral Resources classification, so Proven Ore Reserves comprise Measured Resources and Probable Ore Reserves comprise Indicated Resources.
The mining method is hydraulic mining, which Base Titanium has used successfully since 2017. It is non-selective, with hydraulic mining units (HMU) using high pressure water jets to sluice the entire ore face, which flows as a slurry to a sump and is then pumped, ultimately, to the concentration plant.
Due to the geometry of the deposit and the non-selective mining method, there is no ore/waste discrimination (other than topsoil stripping) and it is not considered appropriate to add additional dilution factors. A 0.2m allowance for topsoil has been incorporated into the model and this material is excluded from Ore Reserves reporting as non-recoverable.
The wet concentrator plant is typical of a mineral sands operation, using screens, spirals and cyclones to separate the heavy minerals from the quartz sand and clay.
Heavy mineral concentrate is fed to a mineral separation plant which uses magnetic and electrostatic separators, classifiers, spirals and wet tables to produce ilmenite, rutile and zircon products. Recovery factors are reported in Table 2.
Pit optimisation was undertaken using CAE NPV Scheduler software (NPVS). A Value model was first prepared in DATAMINE Studio 5DP Mine Planning software and revenue and cost adjustment attributes subsequently imported into NPVS for Lerch-Grossman optimisation. Because a value model was used to determine the pit limits, cut-off grades were not used.
The estimation methodology comprised developing nested pit limits (as described above) by reducing the revenue in 1 per cent decrements, selection of the most appropriate pit shell by comparison of several factors (including NPV, life of mine, revenue to cost ratios, incremental cash flow etc.), mine planning and scheduling of the selected pit shell and finally confirmation of positive economics by feeding the scheduled tonnes into the project financial model.
The material modifying factors impacting the deposit economics are disclosed in the tables above. As stated above, for Base Titanium to have the right to mine the whole of the 2021 Kwale South Dune Ore Reserves estimate, its existing mining tenure, SML 23, needs to be expanded and the necessary environmental licencing (an EIA Licence) issued. As previously disclosed, the Cabinet Secretary for the Ministry of Petroleum and Mining has stated publicly that the proposed SML 23 extension has been approved and Base Titanium is working with the Government to finalise the form of Deed of Variation that will give effect to the proposed extension. In parallel, Base Titanium is also working with the Kenyan National Environmental Management Authority with respect to its application for the necessary EIA Licence, which Base Titanium anticipates receiving in the near term. As an operating mine, the other modifying factors, being infrastructure (power, water, roads etc.), regulatory approvals, social considerations etc. are all in place.
There is only limited potential to add to the 2021 Kwale South Dune Ore Reserves estimate.
Competent Persons' Statements
2021 Kwale South Dune Mineral Resources
The information in this announcement that relates to the 2021 Kwale South Dune Mineral Resources estimate is based on, and fairly represents, information and supporting documentation prepared by Mr. Scott Carruthers. Mr. Carruthers is a Member of The Australasian Institute of Mining and Metallurgy. Mr. Carruthers is employed by Base Resources, he holds equity securities in Base Resources, and is entitled to participate in Base Resources’ long-term incentive plan and receive equity securities under that plan. Details about that plan are included in Base Resources’ 2020 Annual Report. Mr. Carruthers has sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the JORC Code and is considered a Qualified Person for the purposes of the AIM Rules for Companies. Mr. Carruthers has reviewed this announcement and consents to the inclusion in this announcement of the 2021 Kwale South Dune Mineral Resources estimate and supporting information in the form and context in which the relevant information appears.
2021 Kwale South Dune Ore Reserves
The information in this announcement that relates to the 2021 Kwale South Dune Ore Reserves estimate is based on, and fairly represents, information and supporting documentation prepared by Mr. Per Scrimshaw and Mr. Scott Carruthers. Mr. Scrimshaw and Mr. Carruthers are Members of The Australasian Institute of Mining and Metallurgy. Mr. Scrimshaw is employed by Entech, a mining consultancy engaged by Base Resources. Mr. Carruthers is employed by Base Resources, he holds equity securities in Base Resources, and is entitled to participate in Base Resources’ long-term incentive plan and receive equity securities under that plan. Details about that plan are included in Base Resources’ 2020 Annual Report. Mr. Scrimshaw and Mr. Carruthers each have sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they are each undertaking to qualify as Competent Persons as defined in the JORC Code and both are considered a Qualified Person for the purposes of the AIM Rules for Companies. Mr. Scrimshaw and Mr. Carruthers have each reviewed this announcement and consent to the inclusion in this announcement of the 2021 Kwale South Dune Ore Reserves estimate and supporting information in the form and context in which the relevant information appears.
Forward Looking Statements
Certain statements in or in connection with this announcement contain or comprise forward looking statements.
By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside Base Resources’ control. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in product prices and exchange rates and business and operational risk management. Subject to any continuing obligations under applicable law or relevant stock exchange listing rules, Base Resources undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this announcement or to reflect the occurrence of unanticipated events.
No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information contained in this announcement (or any associated presentation, information or matters). To the maximum extent permitted by law, Base Resources and its related bodies corporate and affiliates, and their respective directors, officers, employees, agents and advisers, disclaim any liability (including, without limitation, any liability arising from fault, negligence or negligent misstatement) for any direct or indirect loss or damage arising from any use or reliance on this announcement or its contents, including any error or omission from, or otherwise in connection with, it.
Nothing in this report constitutes investment, legal or other advice. You must not act on the basis of any matter contained in this announcement but must make your own independent investigation and assessment of Base Resources and obtain any professional advice you require before making any investment decision based on your investment objectives and financial circumstances. This document does not constitute an offer, invitation, solicitation, advice or recommendation with respect to the issue, purchase or sale of any security in any jurisdiction.
JORC Code, 2012 Edition
Section 1 Sampling Techniques and Data
(Criteria in this section apply to all succeeding sections.)
Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.
The 2021 Kwale South Dune Mineral Resources estimate drill data were collected using the RCAC method.
Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).
RCAC drilling utilising 71 mm diameter air-core tooling accounts for all drill sample data applied to the 2021 Kwale South Dune Mineral Resources estimate. All holes were drilled vertically with no downhole surveying to confirm hole direction.
Drill sample recovery
Method of recording and assessing core and chip sample recoveries and results assessed.
Ground conditions vary and, as such, Base Resources logged sample quality/condition at the rig as either good, moderate or poor, with ‘good‘ meaning not contaminated and of an appropriate sample size (recovery), ‘moderate’ meaning not contaminated, but sample over or undersized, and ‘poor’ meaning contaminated or grossly over/undersized.
Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.
Base Resources collected detailed qualitative logging of geological characteristics to allow a comprehensive geological interpretation to be carried out.
Sub-sampling techniques and sample preparation
If core, whether cut or sawn and whether quarter, half or all core taken.
All samples were unconsolidated and comprised sand, silt, clay and rock fragments.
Quality of assay data and laboratory tests
The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.
The Base Resources laboratory flow sheet comprises a sample preparation stage (completed by Base personnel) and an HM assay stage completed by contracted laboratories. Assay was completed by Western Geolabs (Perth) for previous resource drilling using a TBE heavy liquid separation. The Kwale site lab, managed by SGS, was used for the 2016-17 Kwale drill program samples. A LST heavy liquid separation medium was used by SGS.
Verification of sampling and assaying
The verification of significant intersections by either independent or alternative company personnel.
The deposit type and consistency of mineralization leaves little room for unexplained variance. Verification of intersections was limited to checking for variance between logged estimates of grade and the assayed grades. Where there was unexplained variance, samples were re-submitted for assay.
Location of data points
Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resources estimation.
Base Resources used a RTK GPS to survey drill sites.
Data spacing and distribution
Data spacing for reporting of Exploration Results.
The drill data spacing is nominally 100m North, 50m East, and 1.5m down hole for the 2016-17 Kwale drill program. Previous drilling is nominally spaced at 200m North, 100m East and has a 3m down-hole sample interval. Variations occur when lower-density drilling was applied to exploration areas or from line-clearing difficulties prior to drilling and drill site survey.
Orientation of data in relation to geological structure
Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.
Sample orientation is vertical and approximately perpendicular to the dip and strike of the mineralisation resulting in true thickness estimates. Drilling and sampling were carried out on a regular rectangular grid that is broadly aligned and in a ratio consistent with the anisotropy of the mineralisation.
The measures taken to ensure sample security.
All samples were numbered, with samples split and residues stored securely at the Kwale site, along with HM sinks.
Audits or reviews
The results of any audits or reviews of sampling techniques and data.
GNJ Consulting Pty Ltd and IHC Robbins conducted reviews of previous Mineral Resources estimates completed by Base Resources.
Section 2 Reporting of Exploration Results
(Criteria listed in the preceding section also apply to this section.)
Mineral tenement and land tenure status
Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.
The 2021 Kwale South Dune Mineral Resource lies within PL119. Mining is currently taking place on the Kwale South Dune deposit within SML 23.
Exploration done by other parties
Acknowledgment and appraisal of exploration by other parties.
The previous owners of the project (Tiomin Kenya Ltd) undertook exploration over the Kwale Project prior to purchase by Base Resources. Analysis of twinned holes, grade distributions and geological zone thickness has led to Tiomin’s data being excluded from this Mineral Resource estimation.
Deposit type, geological setting and style of mineralisation.
The Kwale South Dune deposit is an aeolian detrital heavy mineral sand deposit.
Drill hole Information
A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes:
There are no particular drill hole results that are considered material to the understanding of the exploration and resource drill out. Identification of the wide and thick zone of mineralisation is made via multiple intersections of drill holes and to list them all would not give the reader any further clarification of the distribution of mineralisation throughout the deposit.
Data aggregation methods
In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.
No grade cutting was undertaken, nor compositing or aggregation of grades made prior or post the grade interpolation into the block model. Selection of the bottom basal contacts of the mineralised domains were made based on discrete logging and grade information collected and assayed by Base Resources and Tiomin.
Relationship between mineralisation widths and intercept lengths
These relationships are particularly important in the reporting of Exploration Results.
All drill holes are vertical and perpendicular to the dip and strike of mineralisation and therefore all interceptions are approximately true thickness.
Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.
Refer to main body of this announcement.
Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.
Reporting of results is restricted to Mineral Resources and Ore Reserves estimates generated from geological and grade block modelling.
Other substantive exploration data
Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.
Bulk density is derived from algorithm.
The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large-scale step-out drilling).
No further work is planned at this stage.
Section 3 Estimation and Reporting of Mineral Resources
(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)
Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resources estimation purposes.
The surveying, logging and assay data were stored in a Microsoft Access database prior to being imported into a more secure SQL database format.
Comment on any site visits undertaken by the Competent Person and the outcome of those visits.
Industry-leading procedures for data capture and storage were established for the 2016-17 Kwale drill program. Three site visits were completed by Mr Richard Stockwell during data capture stages and recommendations were made where improvements were required. There were no issues observed that might be considered material to the Mineral Resource under consideration.
Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.
The geological interpretation was compiled from field geological observations during drill sample logging, microscope investigation of heavy mineral sinks and interpretation of sample assay data. A strong correlation between these three sources of information was observed and a high degree of confidence results.
The extent and variability of the Mineral Resources expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resources.
The Kwale South Dune deposit is approximately 6.5km long, 300-1,000m wide and approximately 12-20 m thick on average. Mineralisation is present from surface over the majority of the deposit.
Estimation and modelling techniques
The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.
Geovia Surpac software was used to estimate the Mineral Resource. Inverse distance weighting techniques were used to interpolate assay grades from drill hole samples into the block model and nearest neighbour techniques were used to interpolate index values into the block model. The regular dimensions of the drill grid and the anisotropy of the drilling and sampling grid allowed for the use of inverse distance methodologies as no de-clustering of samples was required.
Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.
Tonnages were estimated on a dry basis. This is based on test work carried out on the bulk density which was determined on a dry weight basis.
The basis of the adopted cut-off grade(s) or quality parameters applied.
A 1% HM bottom cut has been applied to the Mineral Resources estimate. This cut-off is used on a sub-economic basis in consideration of the valuable heavy mineral content indicated by mineral assemblage analysis.
Mining factors or assumptions
Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.
The mining method is high pressure hydraulic mining, which blends the ore from top of the face to the bottom.
Metallurgical factors or assumptions
The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.
The metallurgical recovery and separability factors are similar to other mineral sand operations. There are no fine grained lower shoreface sediments. The level of kyanite is greater than at other deposits, and the mineral separation plant has been designed to cater for this.
Environmental factors or assumptions
Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.
Thickened clay tailings are being disposed inside a tailing storage facility that was constructed from sand tailings. The construction of the facility was completed in 2018. Since then, sand tailing has taken place in the Kwale Central mined void. Mineral separation plant tailing is disposed with the sand tails.
Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.
An extensive program of test work was designed by GNJ Consulting and implemented by Base Resources utilising a procedure to collect Troxler nuclear density meter measurements and HM and SL assays. These were used in the development of an algorithm to estimate the bulk density of in situ material within the deposit based on variable HM and clay (SL).
The basis for the classification of the Mineral Resources into varying confidence categories.
The classification for the 2021 Kwale South Dune Mineral Resources estimate was based on the following criteria: drill hole spacing; experimental semi-variograms; the quality of QA/QC processes; post-depositional modification and the distribution of mineral assemblage samples.
Audits or reviews.
The results of any audits or reviews of Mineral Resources estimate.
SRK undertook an audit of the resource estimate and found it to be suitable for reserve optimisation.
Discussion of relative accuracy/ confidence
Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resources estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.
Variography was completed for the 2021 Kwale South Dune Mineral Resources estimate. Results of variography, qualitative assessment of the Mineral Resource estimate and comparison with previous resource estimates indicates the robustness of this particular resource estimation exercise.
Section 4 Estimation and Reporting of Ore Reserves
Mineral Resource estimate for conversion to Ore Reserves
Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.
The 2021 Kwale South Dune Mineral Resources estimate by Base Resources, reported at 30 June 2021, was used as the basis for this Ore Reserve.
Comment on any site visits undertaken by the Competent Person and the outcome of those visits.
One of the competent persons visits frequently during the operational phase.
The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.
The most recent study prior to operations commencing was a detailed feasibility study (DFS).
The basis of the cut-off grade(s) or quality parameters applied.
Cut-off is economic by maximum cash flow method. A value model is constructed that assigns costs and revenue after application of appropriate process recoveries.
Mining factors or assumptions
The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).
Mineral Resources were converted to Ore Reserves by pit optimisation as a guide for detailed design and scheduling. Potential pit shells were created by decreasing the revenue by 1% intervals and scheduled at a high level. These were short listed by analysis of various factors including NPV, IRR, revenue:cost ratio, marginal cashflow, product output production rates etc. The schedules for the short-listed shells were input to the project financial model and the ultimate shell for detailed mine planning and scheduling selected.
Metallurgical factors or assumptions
The metallurgical process proposed and the appropriateness of that process to the style of mineralisation.
The ore is processed via screens, thickeners, and spirals, as in almost every other mineral sands operation to produce a concentrate. Concentrate is processed using magnetic and conductor separators to produce ilmenite and rutile products. The remaining material is further processed using classifiers, wet tables and cleaned with conductor separators to produce zircon and recover additional rutile. This is not an unusual process for mineral sands but has been tailored to suit the higher-than-normal proportion of kyanite, which has similar physical properties to zircon.
The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.
All environmental approvals are in place and appropriate monitoring and reporting processes implemented. There is no waste material. There are two tailings streams: sand and clay. The sand tails are clean sand having been washed in concentrator. The clay tails are flocculated and thickened prior to pumping. There is an approved tailing storage facility, which is a dam with walls constructed from sand tails to contain the clay tails.
The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided, or accessed.
The Kwale Operations processing plant has been in operation since 2013. All infrastructure required to service processing plant is in existence, including a 132kV power line, an 8Gl dam on the Mukurumudzi River and supplementary bore field for all water requirements, a camp to house operational shift workers, an 8km bitumen access road from the highway for finished product transportation to the Likoni port and a dedicated ship loading facility.
The derivation of, or assumptions made, regarding projected capital costs in the study.
Capital has been expended and is sunk.
The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.
Product price forecasts were based on the Company’s internal price assumptions over the period for which Kwale South Dune Ore Reserves are projected to be mined.
The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.
Ilmenite and rutile are primarily used as feedstock to produce titanium dioxide (TiO2) pigment, with a small percentage also used in the production of titanium metal and fluxes for welding rods and wire. TiO2 is the most widely used white pigment because of its non-toxicity, brightness, and very high refractive index. It is an essential component of consumer products such as paint, plastics, and paper. Pigment demand is therefore the major driver of ilmenite and rutile pricing.
The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc.
As an operating mine with sunk construction cost, optimisation inputs are based on actual operating costs, design and mine plan, together with Base Resources’ internal price forecasts. Economic analysis has been conducted by incorporating these inputs into the Kwale Operations life of mine financial model.
The status of agreements with key stakeholders and matters leading to social licence to operate.
Base Resources has all agreements in place to allow ongoing mining and processing. The company operates a comprehensive Stakeholder Engagement Plan in concert with a Community Development Plan. Close liaison with stakeholders is maintained through the operation of series of liaison committees representing those affected by the mine’s presence.
To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:
The material legal agreements relating to the Kwale Operation are SML 23 and Investment Agreement with the Government of Kenya. Both legal instruments remain valid, legally binding, and enforceable as warranted by the Government most recently in September 2012 in a direct agreement with Base Resources and its lenders.
The basis for the classification of the Ore Reserves into varying confidence categories.
Based on the geological resource estimation categories: Measured = Proved, Indicated = Probable, Inferred = excluded from Ore Reserves estimation.
Audits or reviews
The results of any audits or reviews of Ore Reserve estimates.
No audit or review of this Ore Reserves estimate has been undertaken.
Discussion of relative accuracy/ confidence
Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserve estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.
There are no assumptions used in this Ore Reserves estimate that differ from current operating practice and hence subject to a greater degree of uncertainty.
The relative proportion of valuable heavy mineral components of ilmenite, rutile, zircon and, where applicable, leucoxene.
The JORC Code requires that a Competent Person be a Member or Fellow of The Australasian Institute of Mining and Metallurgy, of the Australian Institute of Geoscientists, or of a ‘Recognised Professional Organisation’. A Competent Person must have a minimum of five years’ experience working with the style of mineralisation or type of deposit under consideration and relevant to the activity which that person is undertaking.
The lowest grade of mineralised material that is thought to be economically mineable and available. Typically used by Base Resources to define which material is reported in a Mineral Resource estimate.
Digital Terrain Model.
A physical or chemical measurement of the characteristics of the material of interest. In this context, the grade is always a percentage and the characteristics are heavy mineral, oversize, slime and the various product minerals (ilmenite, rutile etc).
In mineral sands, minerals with a specific gravity greater than 2.85 t/m3.
Ilmenite, a valuable heavy mineral.
Indicated Resource or Indicated
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.
Inferred Resource or Inferred
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
Inverse distance weighting
A statistical interpolation method whereby the influence of data points within a defined neighbourhood around an interpolated point decreases as a function of distance.
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition, as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
LIDAR is a remote sensing technology that measures distance by illuminating a target with a laser and analysing the reflected light to produce a DTM.
Measured Resources or Measured
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.
Mineral Resources are a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling. Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.
A company developed mineralogy modelling technique, it comprises an XRF analysis of the magnetic and non-magnetic fractions of each composite or sample, the results from which are then back-calculated to determine in-ground mineralogy.
Ore Reserves are the economically mineable part of Measured and/or Indicated Mineral Resources.
Probable Reserve or Probable
A Probable Ore Reserve is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is lower than that applying to a Proved Ore Reserve.
Proved Reserve or Proved
A Proved Ore Reserve is the economically mineable part of a Measured Mineral Resource. A Proved Ore Reserve implies a high degree of confidence in the Modifying Factors.
Is an acronym for Quantitative Evaluation of Materials by Scanning Electron Microscopy, an integrated automated mineralogy and petrography solution providing quantitative analysis of minerals and rocks.
Quantile quantile plot. Used to graphically compare data distributions.
The term Reduced Level is denoted shortly by 'RL'. National survey departments of each country determine RL's of significantly important locations or points. RL is used to describe the relative vertical position of drill collars.
Real time kinematic DGPS uses a base station GPS at a known point that communicates via radio with a roving unit so that the random position error introduced by the satellite owners may be corrected in real time.
Rutile, a valuable heavy mineral.
SEM, SEM EDX
A Scanning Electron Microscope is a type of electron microscope that produces images of a sample or minerals by scanning the surface with a focused beam of electrons. EDX is short for energy dispersive X-ray and is commonly used in conjunction with SEM.
Slimes, being a waste product from the processing of mineral sands.
Material or Ore that is depleted from Mineral Resources or Ore Reserves, but which was not mined. This material still remains in ground but mining has passed by and, in the competent person’s opinion, it has no reasonable prospects for eventual economic extraction.
A geostatistical method that investigates the spatial variability and dependence of grade within a deposit. This may also include a directional analysis.
A spectroscopic method used to determine the chemical composition of a material through analysis of secondary X-ray emissions, generated by excitation of a sample with primary X-rays that are characteristic of a particular element.
Zircon, a valuable heavy mineral.
For further information contact:
James Fuller, Manager Communications and Investor Relations
UK Media Relations
Tel: +61 (8) 9413 7426
Jos Simson and Gareth Tredway
Mobile: +61 (0) 488 093 763
Tel: +44 (0) 207 920 3150
About Base Resources
Base Resources is an Australian based, African focused, mineral sands producer and developer with a track record of project delivery and operational performance. The Company operates the established Kwale Operations in Kenya and is developing the Toliara Project in Madagascar. Base Resources is an ASX and AIM listed company. Further details about Base Resources are available at www.baseresources.com.au
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