Encouraged by a significantly bigger mineral resource at the Ranobe mineral sands deposit, Africa-focused Base Resources has scaled up its Toliara project, in Madagascar.
Announcing the outcomes of an enhanced definitive feasibility study on Monday, Base reported that the scaled-up project supported production of 960 000 t/y of ilmenite, 66 000 t/y of zircon, 8 000 t/y of rutile, with the first ten years of operations in Stage 2 materially higher at 1.2-million tons a year of ilmenite and 82 000 t/y of zircon.
“The true size and value of the Ranobe mineral sands deposit is only just beginning to reveal itself, as evidenced by the significant increase in Ranobe mineral resources and ore reserve estimates, with more expected to come once we can complete the mineralogy work required to incorporate the lower sandy unit, which holds great potential,” said executive director operations and development Colin Bwye.
The mineral resource estimate has almost doubled to 2.58-billion tons at an average heavy mineral grade of 4.3%. The ore reserves increased to 904-million tons at an average heavy mineral grade of 6.1%, a 45% increase in contained heavy minerals, supporting an initial mine life of 38 years.
The enhanced project increased the Stage 1 capital expenditure costs to establish a 13-million-ton-a-year mining processing operation by 18% to $520-million, mainly owing to cost escalation. For a scaled-up 25-million-ton-a-year Stage 2 operation, a capital expenditure of $137-billion would be required.
However, MD Tim Carsten commented that while the capital costs had increased, the subsequent expansion in production materially improved the financial performance of the project.
The forecast net present value, at an 10% discount, increased by 55% to $1-billion and the internal rate of return by 11% to 23.8%. Free cashflow of $5.9-billion would be generated over the life of the project.
“Despite the increased development costs, the capital payback period is still only 4.5 years,” said Carstens.
He stated that Toliara had the potential to be a “catalyst for growth” for Madagascar and that the company maintained a high degree of engagement with the government in seeking to secure fiscal terms and the lifting of the current suspension of on-ground activities as soon as possible.
Base in 2020 announced plans to delay a final investment decision (FID) on the Toliara project, after the Madagascar government in 2019 suspended activities at the project area as negotiations around the fiscal terms applicable to the proposed mine were initiated.
The company previously said that, once the fiscal terms of the Toliara project had been secured, it would take about 11 months to make an FID on the project, with a further 26-month construction period required before first production.