The owners of Kwale miner Base Titanium anticipate that the operation will generate about $24 million (Sh3.1 billion) in net cash from June 2024 until the closure of the operation, new disclosures show.
Base Resources, the Australian parent of the Kwale miner, estimates that the operation will generate top line revenue of $116.2 million (Sh15 billion) between July 2024 and June 2025.
The bulk of outflows will go towards operating expenses (opex) at $40.2 million (Sh5.2 billion) and mine closure and rehabilitation costs at $49.2 million (Sh6.4 billion).
Base Titanium is also expected to spend $7 million (Sh907 million) towards laying off workers once it shuts down the Kwale mine. It had earlier disclosed that it had made a provision equal to this amount in anticipation of the redundancies.
The firm is also projecting that it will pay about $4.5 million (Sh544 million) to the government in withholding taxes—levied at 15 percent— upon distribution of the cash to its Australian parent as a dividend at the end of the year to June 2025.
The forward-looking revenue and expense estimates are contained in an independent expert’s report prepared by PricewaterhouseCoopers Securities Ltd of Australia as part of the proposed buyout of Base Resources by American mineral resources firm Energy Fuels in a Sh32 billion cash-and-stock deal. Base Resources shareholders will hold approximately 16.4 percent of the combined group at the conclusion of the deal, giving Energy Fuels the majority 83.6 percent stake.
“Opex costs associated with the remaining operations include all mining costs, mining technical services, processing costs, metallurgy operations, maintenance, port operations, commercial, facilities and other support services and environment and security costs and royalty expenses,” PwC Securities said in its report.
“Other expenses include external affairs, community development, exploration, project management and land use costs, offset by interest income, net VAT and a working capital adjustment. Redundancy costs include US$7.7 million in respect of costs on the cessation of operations at the Kwale project.”
Base Titanium is set to wind up the Kwale operation in December following the depletion of commercially viable titanium sands, but sales are expected to spill over into early 2025 as the company clears the stock of mined ore.
For the quarter to June 2024, the company reported a 42 percent fall in revenue to Sh5.5 billion, compared to Sh9.6 billion in the quarter to June 2023.
This 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.
The company is due to release its full-year financial results for the 12 months to June 2024 by the end of this month.
Disclosures in a separate activities report published by Base Resources last month showed that the Kwale mine’s expected output of titanium minerals ilmenite, rutile and zircon in the 2025 financial year will be less than half of the output achieved in the year to June 2024.
The company expects to produce between 55,000 and 63,000 tonnes of ilmenite in the 2025 financial year, compared to the output of 159,395 tonnes in the 2024 financial year.
