Titanium firm plans second drawdown for Kwale mine
Exploration work at a mining site in Kwale District. Base Resources Ltd expects to start exporting titanium by December Photo/FILE
What you need to know:
The company’s quarterly report for December 2012 shows that it secured a $170 million debt in November, and has already spent $52 million of the amount on developing its titanium mines and processing plant.
Australian miner Base Resources says it has secured enough money to finance operations at its Kwale mines.
The company’s quarterly report for December 2012 shows that it secured a $170 million (Sh14.9 billion) debt in November, and has already spent $52 million (Sh4.56 billion) of the amount on developing its titanium mines and processing plant.
The miner said in the report released last week that the extra cash would finance operations until the firm starts shipments by the end of this year.
“This was a critical milestone as Base now has access to the full funding required to complete development of the Kwale Project and bring it to positive cash flow,” said the report released last week.
Base Resources got the funds from seven lenders; West LB AG, Caterpillar Structured Finance, DEG Deutsche Investitions, The Standard Bank of South Africa, Nedbank Capital, FMO Netherlands, and Proparco.
The miner added that it would make another debt draw-down this month.
“Under the terms of the debt facility, subsequent drawdowns will be made on a quarterly basis with the next scheduled for February,” said the report.
The mineral sands project is Kwale County is projected to cost $298 million (Sh26 billion). The report says that Base Resources has spent $143 million (Sh12.5 billion) of the amount by the end of last year. The project budget rose by 14 per cent due to rising labour costs and additional designs, said the miner.
Earlier, analysts raised concern about rising costs and the ability to raise additional capital to meet the expenditure.
“In this environment of rising costs, there will always be concerns that this sum may be insufficient to build and successfully commission Kwale.
‘‘However, $70m (Sh6.1 billion) of the $298m (Sh26 billion) has already been spent and the project was 22 per cent complete in August. Furthermore, design is complete and 70 per cent of funds have been committed,” said a coverage note by RBC Capital dated October 2012.
Off the mining field, the firm is involved in a court case with Environment minister Chirau Ali Mwakwere over the cancellation of three out of its four licences. The case is to be heard on February 4 after the High Court froze cancellation of the miner’s licences.
