Titanium miner Base Resources in Sh730m cash call to ease debt burden

Workers at the Base Resources titanium mining site in Kwale County. PHOTO | FILE 

By GEORGE NGIGI

In Summary

• The company plans to raise Sh730 million (A$10 million) from the sale of discounted shares to existing shareholders in the ratio of one share for every three held. Base Resources reported it had sunk deeper into losses in the six months to December due to high financing costs.

Australian-based mining company Base Resources has announced a rights issue to raise ...
cash to ease a debt burden arising from financing titanium extraction in Kwale.

The company plans to raise Sh730 million (A$10 million) from the sale of discounted shares to existing shareholders in the ratio of one share for every three held. Base Resources reported it had sunk deeper into losses in the six months to December due to high financing costs.

READ: Base sinks into Sh1.6bn loss on rising operating costs

“To provide continuity and certainty of funding and allow progression of the strategic plan on a timeline to capitalise on window of opportunity, additional funding at the corporate level is required. An A$10 million entitlement offer is considered the most appropriate solution,” said Base Resources in a statement.

It is offering one share for every 3.35 held at Sh4.4 (A$0.06) per share. The company, listed in the Australian stock market, reported an after-tax loss of Sh817 million (A$11.2 million) for the half year ended last December, being a 10 per cent increase in losses from Sh744.6 million (A$10.2 million) the previous year.

Heavy debt burden

This was due to increase in financing expenses of Sh1.3 billion (A$18.06 million) up from Sh856 million (A$11.73 million) in 2014.

Base Resources has rescheduled its loan repayments twice in the last two years underlining the heavy debt burden.

The company said it had limited access to cash available in its accounts as it is required to leave a minimum of Sh1 billion (US$10 million) cash balance.

It can only withdraw half of any surplus cash in the account as it was mandatory to use the other half in making early loan repayments.