PERTH (miningweekly.com) – Mineral sands miner Base Resources has inked a deed of variations with the Government of Kenya for its Kwale special mining lease (SML), allowing the company to incorporate the Kwale South Dune ore reserve into the project, while also increasing the rate of royalties payable to the government.

Prior to being varied, the applicable royalty rate under SML was 2.5% and it is on this basis that royalties have been paid. However, from first export of minerals, royalty costs have paid at an assumed royalty rate of 5%, based on an expected outcome from the long running discussions with the government.

In consideration for entry into the deeds of variation, in particular agreement to a royalty for the period to June 2018 at a rate lower than had been accrued, Base subsidiary Base Titanium will withdraw its claim for refund of Value Added Tax receivables related to the construction of Kwale operations.

The royalty rate for the period from the first date of mineral exports to the end of June 2018 has now increased to 3%, while increasing to 5% for the period from July 2018 until the end of the SML.

“We are pleased to have reached this agreement with the Government of Kenya. With the land acquisition processes proceeding to plan and nearing completion, mining is now scheduled to continue on the Kwale South Dune until December 2023,” said Base MD Tim Carstens.

“With the recently released Bumumani prefeasibility study (PFS) supporting further extension to Kwale mine life to mid-2024, the focus is on completing the definitive feasibility study and securing the required tenure arrangements. Looking further ahead, we are pursuing wider exploration opportunities in both Kenya and northern Tanzania.”

The PFS into the Bumamani and Kwale North Dune deposits has confirmed that the mine life at the Kwale mineral sands operation, in Kenya, could be extended until mid-2024.

The PFS estimated that an up-front capital investment of $13.6-million would be required for the project, for the acquisition of land and the additional mine services and infrastructure that would be required. Mining operations would use existing hydraulic mining units relocated from the South Dune and the mined material would be processed through Kwale operations’ existing concentrator and mineral separation plants.

The enlarged project is expected to produce 34 000 t of rutile, 113 000 t of ilmenite and a further 13 000 t of zircon at an operating cost of $261/t produced.