The Competition Authority of Kenya (CAK) has approved the takeover of Kwale miner Base Titanium’s Australian parent by American mineral resources firm Energy Fuels, paving the way for the deal to be concluded next month.
The Sh32.3 billion (375 million Australian dollars) cash-and-stock buyout of Base Resources will give Energy Fuels indirect control of the Kwale operation, which will be wound down at the end of the year after the exhaustion of titanium minerals.
The CAK said in a statement that the transaction is unlikely to negatively impact competition in the market for titanium minerals in Kenya, given that Base mainly exports its products to China, the US, Japan, Malaysia and Spain.
The domestic market accounts for less than one percent of Base Titanium’s total sales, the CAK noted.
“Post-merger, the merged entity’s market share will not change since the target and the acquiring group do not operate in Kenya. Therefore, the proposed transaction will not affect the structure and concentration of the market for titanium minerals in Kenya,” said the CAK.
The two firms first announced the deal in April, stating that the buyout offer priced the company’s shares at A$0.302 (Sh26) each, representing a 188 percent premium on the trading price of A$0.105 (Sh9) on April 19 at the Australian Securities Exchange.
The announcement said Base shareholders would receive 0.026 Energy Fuels common shares plus a special dividend of A$0.065 (Sh5.60) per share in the transaction. At the conclusion of the deal, the Base shareholders will hold approximately 16.4 percent of the combined group while Energy Fuels will hold a majority 83.6 percent stake.
Base is bringing in the strategic partner ahead of its shift in focus to Madagascar’s Toliara titanium mining operation, and the closure of the Kenyan operation whose viable ore has been depleted.
Energy Fuels said in the April update that it will retain Base Resources’ leadership team, who will continue to oversee the development and operation of the Toliara Project and the completion of operations and closure of Kwale Operations.
In Kenya, Base acquired the Kwale project in 2010 from Canada’s Vaaldiam Resources (formerly known as Tiomin Resources) for $3 million —Sh395 million at current exchange rates— and has been paying royalties and taxes since 2014 when shipment of titanium minerals ilmenite, rutile and zircon started.
Base Resources’ latest operational update—issued last week—showed that revenue from the Kwale operation fell by 42 percent to Sh5.5 billion in the quarter ending June 2024 compared to the corresponding period in 2023.
The decline was primarily due to a fall in titanium ore export volumes by 40 percent to 63,500 tonnes, as production at the mine declined by nine percent to 71,200 tonnes. There was also a decline in average price per tonne of ore to $655 (Sh86,178) from $695 (Sh91,441) a year earlier.
The company has already depleted ore in areas known as the south and central dunes, and is currently mining the remainder of the north dune and a separate area known as Bumamani.
