PERTH (miningweekly.com) – The Toliara mineral sands project, in Madagascar, is expected to generate annual revenues of $248.2-million, a definitive feasibility study (DFS) has found.

ASX- and Aim-listed Base Resources on Thursday stated that the DFS was based on a Stage 1 operation, that would cost $442-million to establish a 13-million-tonne-a-year processing operation.

The Stage 2 operation would see the operation increase to 19-million tonnes a year, at an additional cost of $69-million.

Over the initial 33-year mine life, the Toliara operation is expected to produce an average of 780 000 t/y of ilmenite, 53 000 t/y of zircon and a further 7 000 t/y of rutile, generating annual earnings before interest, taxes, depreciation and amortization of $164.3-million.

The DFS estimated that the project would also generate a net profit after tax of $110.2-million a year, and free cash flows of $132.4-million.

“We are very pleased that the DFS has re-confirmed our view that the Toliara project is a world class mineral sands development opportunity. In the first 26 years of full production, the project is expected to produce an average of 814 000 t of ilmenite, 55 000 t of zircon and 7 000 t of rutile annually, over a period when a global supply deficit of titanium dioxide feedstock and zircon is expected,” said Bass executive director of operations and development Colin Bwye.

Bwye noted that the production profile, combined with a highly competitive revenue to cost of sales ratio, would generate estimated average annual free cash flows of $140.2-million over this period.

Base MD Tim Carstens told shareholders that the company would now focus on concluding offtake and funding arrangements, as it works towards a final investment decision, planned for September next year.

“Over the course of 2020, we also aim to upgrade the Ranobe mineral resource and ore reserve estimates following the geological interpretation of definition drilling completed earlier this year.”

Carstens said Base was engaging with the government of Madagascar in relation to fiscal terms applicable to the mining sector, including the Toliara project.

“We are confident that mutually beneficial terms can be secured and will support a sound and sustainable Toliara project and broader mining sector, while delivering clear benefits to the communities, the nation of Madagascar, and shareholders.”