Mineral sands developer Base Resources is in the process of securing further offtake parties for its Kwale product, as the miner looks to start construction of the Kenyan project in April or May of this year.

Speaking to Mining Weekly ahead of the Mining Indaba, in Cape Town, Base Resources MD Tim Carstens says the company has already secured an offtake partner for basically all its rutile production, which accounts for around 47% of the project’s total revenue.

“We also have a number of other offtake agreements in various stages of completion,” says Carstens.

The company is expected to make an offtake announcement for a third of its ilmenite production, which covers around 7% of Kwale’s total revenue, while also securing an offtake agreement for 50% of the expected zircon production, which will account for a further 14% of the project’s revenue stream.

With the imminent offtake agreement announcements, Base Resources is just 2% shy of its debt facility conditions, which stipulate that the miner has to secure offtake arrangements for 70% of the project’s proposed revenue, before it is allowed to draw down on the $170-million syndicated project facility, which was secured in November of last year.

The Kwale project was expected to require some $310-million in funding, and with the financing facility in place, along with an earlier completed A$163-million capital raising, Carstens says Base Resources is now fully funded to develop the project.

Construction of the early works for the Kwale project kicked off in October last year, with the construction of the access road to the project area, as well as early works on the dam.

Carstens explains that Base Resources will take take an inte- grated management approach to the project construction to coord- inate six separate contract packages, covering the construction of the port facilities, the dam, the processing plant and the power lines, rather than dealing with the project under one engineering, procurement and construction management contract.

“The project elements are all geographically separated and are quite different so we took the view that we are better off getting the best of breed for each of those operations and keeping it all together with an integrated management team,” he adds.

“There is a huge amount of work going on in the background on the detailed design, but we are still progressing well in line with our timeline. “We are still comfortable with our ability to complete the project and have the first shipment leaving in the fourth quarter of 2013,” asserts Carstens.

He notes that while 2011 had been a year of financing and paperwork, 2012 promises to be a year of action.

“And that’s the real exciting part of this project: the Kenyans are starting to see concrete action on a project that is of real significance for them,” he concludes.

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.