Base Titanium spent Sh1.1 billion ($9.2 million) on preparatory work on a new mining site at its Kwale operation in the three months to September, with ore extraction expected to start next March.
The company’s Australian parent—Base Resources—said in a trading update that it commenced land acquisition and procurement of equipment during the third quarter for the new mining site, known as Bumamani.
Through the Bumamani project, Base Titanium expects to extend the life of the Kwale operation by about 13 months to December 2024, setting itself and the government up for additional revenue at a time when the price of titanium has gone up in the global market.
The new mining area, which covers what is known as the Kwale North Dune, is expected to yield up to 17.9 million tonnes of titanium ore, out of which the firm expects to get 42,000 tonnes of rutile, 171,000 tonnes of ilmenite and 20,000 tonnes of zircon.
In the second quarter of the year, capital expenditure on the new site stood at just Sh12 million ($0.1 million), indicating that activities only commenced from July onwards.
“Implementation of the Bumamani Project continued during the quarter and mining activities on the Kwale North Dune remain on schedule to commence in March 2023,” Perth-based Base Resources said of the local subsidiary's operations in the trading update.
“Expenditure on the Bumamani Project during the quarter was $9.2 million (last quarter: $0.1 million) with land acquisition, earthworks and procurement activities taking place.”
In total, the company expects a total capital expenditure of Sh3.4 billion ($28.1 million) on the new site, which will cover the acquisition of land and the additional mine services and infrastructure that will be required.
Capital costs will be funded from internally generated cash flows, the firm said in a June update.
Base Titanium started mining at the Central Dune — whose minerals were exhausted in 2019 — and shifted its operations to the South Dune where it is currently producing titanium products and where it expects production to continue until May 2024.
The mining firm has also lined up exploration work in more areas in Kwale and Lamu counties, and also has an eye on Tanzania.
Base Resources said its prospecting licence application for a new area in Kwale known as Kuranze, which lies 70 kilometres west of its current mining site, as well as that of an area to the south of Lamu, remain on hold pending the lifting of the moratorium placed in 2019 by the government on the issuance of new mineral rights.
“The company is working with the Government of Kenya, and other mining sector stakeholders, to see the moratorium lifted,” it said in the trading update.
In Tanzania, Base said it continued its exploration with a new drilling programme commencing during the quarter.
Samples were sent to Kenya for analysis, the company said, with results expected to be released in the March 2023 quarter.
