Money Markets
Base Titanium facility in Mombasa. PHOTO | FILE
By GEORGE NGIGI
In Summary
- Base Resources is pushing for up to four-month extension from its financiers who loaned it Sh18.3 billion ($215 million) for exploratory works at Kwale and construction of infrastructure, including a port at Likoni.
- The company started making sales from the Kwale project in February this year against the schedule of October 2013.
- As of June, it had sold ilmenite and zircon deposits worth Sh1.9 billion.
Coast-based Base Resources is seeking to reschedule its loans following delayed exports at its titanium mines in Kwale.
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The Australian mining company is pushing for up to
four-month extension from its financiers who loaned it Sh18.3 billion
($215 million) for exploratory works at Kwale and construction of
infrastructure, including a port at Likoni.
“Base is currently working with the syndicate of
lenders that has provided the Kwale project debt facility to realign the
repayment schedule to reflect the delay in commencement of sales,”
reads part of the company’s half-year report.
The company started making sales from the Kwale
project in February this year against the schedule of October 2013. As
of June, it had sold ilmenite and zircon deposits worth Sh1.9 billion.
The sales proceeds helped Base register a positive
operating cash flow of Sh338 million (A$4.1 million) during the three
months to June. The company is, however, still in a negative cash flow
position of Sh297 million (A$3.6 million).
Base completed four bulk shipments of ilmenite (a
total of more than 90,000 tonnes) and two bulk shipments of rutile (a
total of approximately 14,000 tonnes) during the June quarter.
A further bulk shipment of 10,000 tonnes of rutile scheduled for late June was delayed to the first week of July.
The company expects the price of zircon to go up in
the second half of the year as global stocks shrink but rutile and
ilmenite prices are expected to remain flat.
Zircon is currently estimated to be trading
at Sh100,000 per tonne ($1,200) while rutile is at Sh50,000 per tonne
($575). Ilmenite is trading at an estimated Sh23,000 ($275).
Exportation of the titanium ores pushed United
States to be Kenya’s largest export market ahead of traditional market
of Uganda in the month of May underlining the possible impact the
deposits would have on Kenya’s trade.
Data from Kenya National Bureau of Statistics
showed that Kenya exported 7,000 tonnes of titanium ores, used by
aircraft makers, to the US in May valued at Sh563 million.
The Kwale project is expected to produce 330,000
tonnes of ilmenite (used to line blast furnaces) a year, about 10 per
cent of the global supply.
The mine will also churn out 80,000 tonnes of
rutile per year, representing 14 per cent of global output, and a
further 30,000 tonnes of zircon.
The company is also in a tussle with the county
government of Kwale which wants to slap it with an export levy but the
miner feels the governor is overstepping his authority.
Base Resources share price at the Australian Stock
Exchange has gained by four per cent since the half year numbers were
released with each unit trading at Sh26 per unit (A$0.315).
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