BASE RESOURCES LIMITED: Quarterly Activities Report

ASX, AIM and Media Release 
30 July 2013 
BASE RESOURCES LIMITED 
QUARTERLY ACTIVITIES REPORT - June 2013 
Highlights 
* Kwale Project is 87% complete with mining and concentrate production 


    scheduled to commence in Q3 2013.
      * Commissioning of the Mineral Separation Plant expected to be delayed by 4
    weeks into the 4th quarter.
      * Power line and substation completed and energised.
      * Mukurumudzi Dam embankment completed and holding more than sufficient water
    for the first year's production requirements.
      * Entire operational management team in place.
      * Third US$46 million drawdown on the Kwale Project Debt Facility completed.


Base Resources Limited (ASX & AIM: BSE) ("Base") has made further significant
progress in the development of the Kwale Project during the quarter, completing
the power line, closing the Mukurumudzi Dam embankment, and advancing overall
development to 87% complete. 
KWALE PROJECT IMPLEMENTATION 
The June quarter has seen substantial construction activity, most notably on
the process plant and port facilities. With the overall development 87%
complete, the Kwale Project is expected to commence production of heavy mineral
concentrate ("HMC") in Q3 2013 and finished products in Q4 2013 with first bulk
shipments to commence in the 2nd half of Q4 2013. 
Project elements 
The development approach for the Kwale Project is for the project to be
separated into six discrete contract packages, as well as a number of smaller
owner's projects, with an integrated management team overseeing their execution
and integration. This approach has been adopted to ensure that "best of breed"
expertise is applied to what are technically diverse and effectively separate
project elements and risk is more effectively minimized and managed. The six
contract packages, each covered by an EPCM (or EPC for CP3) contract and their
status are: 
CP1 - Processing Plants (Ausenco) 
* Overall progress is at 84% complete. 


      * The mining unit and concentrator are on schedule to commence HMC production
    during Q3 2013.
      * The Mineral Separation Plant ("MSP") completion is expected to be delayed
    by approximately 4 weeks as a consequence of slower than anticipated
    structural, mechanical and pipework installation.
      * In response, the MSP completion and ramp-up schedule has been revised to
    prioritise the ilmenite and rutile circuits ahead of the zircon circuit in
    order to minimise the cashflow impacts of the delay.
    CP2 - Marine Facilities (WSP Group)

  * The overall progress to date is 90% complete and on target for delivery
    prior to the first planned bulk shipment in Q4 2013.
      * Onshore construction works are well advanced with the storage shed complete
    and administration buildings progressing.
      * Following construction and trial assembly in South Africa, the ship loader
    arrived in Mombasa and final erection on the wharf platform is underway.
    CP3 - Power Line (CG Global)

  * The project is complete, commissioned and providing power for construction.
    CP4 - Mukurumudzi Dam (Wave)

  * Overall delivery is 89% complete.
      * The water capacity in the dam is currently at 5.9GL, which is more than
    sufficient for the first year's production requirements.
      * Construction of the main embankment to the final elevation is now complete.
      * The spillway construction is in its final stages.
    CP5 - Tailings Storage Facility (Wave)

  * Overall progress at 79% complete.
      * While construction works are behind schedule, forecast completion date is
    still in advance of the required date for plant commissioning.
    CP-6 - Access Road, Construction Camp and Shared Facilities (Howard Humphries)

  * The road construction and A14 road junctions are complete.
      * Phase two of the construction camp and associated infrastructure is
    complete with 695 people currently accommodated.
    Owners Projects

In addition, a suite of owner's projects are being managed directly by the Base
operations team. The dozer trap mining unit is on site with assembly and
commissioning on target for completion in Q3. The full mobile fleet has been
delivered, commissioned and is in operation in construction support and
training activities.

The full senior operations management team are in place and 90% of all
operational employees are either in-place or have accepted positions.
Pre-commissioning training is well advanced.

Safety Performance

Safety performance continues to be an area of intense focus and effort with
particular emphasis on system development, training and supervisor
accountability. The Lost Time Injury frequency rate for the project is
currently 0.2 per million man hours with over four million hours worked since
the last (and only) lost time injury in July 2012.

Community and Environment

The Base Labour Recruitment Centre has now registered over 12,000 job seekers
from Kwale and Likoni which has been used to recruit much of the construction
and operational workforces. Around 2,200 people were employed on the project at
the peak of construction activity with approximately 90% of these being Kenyan
nationals, of which 40% were from the local communities surrounding the
project. As Project contractors reach completion of their packages, planning is
underway to manage the demobilisation of workers in these local communities.

Community infrastructure works continued during the quarter with rehabilitation
work on Muslim Primary School in Likoni. Following completion of the Magaoni
Secondary School in Q1 2013, there are now 45 students enrolled with Phase II
works scheduled for Q3 2013. The proposed Miembeni feeder school has been
approved by the local authorities pending identification of a suitable, central
location to provide optimal access for the community. The community have been
requested to provide land for this purpose. Construction of Phase I of the
Magoni health centre has commenced with completion expected in Q4 2013. Three
existing drinking water boreholes have been rehabilitated and applications for
drilling of three additional boreholes in villages near the mine site have been
submitted. This infrastructure will improve water quality in the area and
provide more reliable supplies. Bwiti Dispensary was officially opened by the
Hon. Mwashetani, MP for Lunga Lunga Division, with provision of medicines by
Base.

Infrastructure projects now complete include four schools, a community hall,
three water schemes, a dispensary as well as road and access improvements. A
further primary school and health dispensary will be constructed at locations
agreed in conjunction with the Mining Project Liaison Committee and in
collaboration with local communities.

Budget

The anticipated delay in the completion of the MSP and increases in the cost of
the ship loader have been the principal contributors to an increase in the
total forecast capital cost for the project of around 2% to US$305 million.

To 30 June, US$249 million has been incurred.

Financing

In June, the third drawdown of US$46 million was completed on the Kwale Project
debt facilities. Total debt drawn at 30 June is US$170 million, inclusive of
the original $20 million cost overrun facility. A further $20 million extension
to the cost overrun facility which was finalised early in the June quarter
remains undrawn, with utilisation subject to receiving the consent of the
Commissioner of Mines & Geology to the resultant extension of security
interests which we have been advised to expect shortly.

As a consequence of the anticipated delay in the start-up of the MSP, the
timing of shipments, continued subdued product prices expected in Q4 2013 and
the increase in forecast capital cost, Base considers it prudent to increase
the funding buffer available for working capital and will be pursuing a further
extension of the existing debt facilities.

Marketing

The short term market for titanium dioxide feedstocks showed some signs of
improvement through the June quarter with some of the major pigment producers
reporting a significant reduction in final product stocks. Continued strength
in the US housing market together with improvement in the Chinese housing
sector provides support for market conditions to continue improving through the
second half of 2013. However, ilmenite and rutile stock levels in the supply
chain are considered likely to maintain subdued pricing for the remainder of
2013.

Market conditions for zircon remained firm through the June quarter. Demand
from Chinese customers, in particular, increased significantly throughout the
first half of 2013. Some of the major zircon producers, including Iluka
Resources Limited, managed to reduce zircon stocks through the first half of
2013 and have advised customers that the availability of zircon for prompt
sales is diminishing. While zircon demand through the September quarter, and
the remainder of the second half of 2013, is expected to remain firm, a
recovery in pricing will be dependent on the pace of stock re-balancing
throughout the supply chain.

The long term outlook for all mineral sands products remains very positive.
Enquiry levels for Base's products remains strong and Base is now well advanced
in finalising additional off-take contracts for both ilmenite and zircon.

Kenyan Exploration Projects

As part of the Kwale Project acquisition, Base acquired an option to purchase
three further exploration projects - Kilifi, Mambrui and Vipingo. As reported
previously, on 28 December 2012, the then Kenyan Minister of Environment &
Mineral Resources published a gazette notice purporting to cancel the three
exploration licenses covering these projects. The Company has taken the
appropriate legal action to protect the rights and has received a court order
staying the cancellation pending a hearing. Base continues to pursue the matter
and is confident of a positive outcome.

Exploration activity during the quarter was focused on enhancing the Kwale
North Dune resource estimate.  Drilling comprised 5,474 meters in 111 holes to
test depth, grade, geo-metallurgical domains and assemblage.  Analysis of the
results is nearing completion and an updated resource estimate is scheduled for
completion in the September quarter .The North Dune is not currently included
in the Kwale Project.

Corporate

In summary, at 30 June 2013:

  * Cash and cash equivalents were A$98.1 million.
      * Debt drawn of US$170.0 million.
      * 561,840,029 shares on issue.
      * 16,600,000 unlisted options.


A full PDF of the announcement including recent images depicting the
significant progress achieved at the Kwale Project is available at the
Company's website: www.baseresources.com.au. 
ENDS 
For further enquiries contact: 
Base Resources Limited
Tim Carstens
Managing Director
Email: tcarstens@baseresources.com.au
Phone: +61 (0)8 9413 7400 
RFC Ambrian Limited (Nominated Adviser and Broker)
As Nominated Adviser                 As Broker
Andrew Thomson or Trinity McIntyre   Caspar Shand-Kydd
Phone: +61 (0)8 9480 2500            Phone: +44 20 3440 6800 
Tavistock Communications (UK Media Relations)
Jos Simson / Jessica Fontaine / Emily Fenton
Phone: +44 (0)20 7920 3157 
Cannings Purple (Australian Media Relations)
Annette Ellis / Warrick Hazeldine
Email: aellis@canningspurple.com.au
whazeldine@canningspurple.com.au
Phone: +61 (0)8 6314 6300 
Corporate Details: 
Board of Directors:
Andrew King             Non-Executive Chairman
Tim Carstens            Managing Director 
Colin Bwye              Executive Director
Sam Willis              Non-Executive Director
Michael Anderson        Non-Executive Director
Trevor Schultz          Non-Executive Director
Michael Macpherson      Non-Executive Director
Winton Willesee         Non-Executive Director/ Company Secretary 
Principal & Registered Office:      Contacts:
Level 1                             Email: info@baseresources.com.au
50 Kings Park Road                  Phone: +61 (0)8 9413 7400
West Perth                          Fax: +61 (0)8 9322 8912
WA 6005 
About Base Resources 
Base Resources Limited is an ASX and AIM listed (BSE) resources developer, with
a portfolio of assets in Africa. Its flagship project is the Kwale Mineral
Sands Project ("Kwale") in Kenya, East Africa. Kwale is fully funded and with
construction nearing completion, the project is on schedule to commence
production and shipment of a high-value assemblage of rutile, ilmenite and
zircon minerals in the latter half of 2013. 
Kwale is expected to generate a cash surplus of more than US$1 billion over its
13-year mine life. With a front-ended production profile forecast to deliver an
enviable cash flow of more than US$500 million in the first 5 years of
operations, Kwale will provide a strong foundation for Base's emergence as a
significant global resources company. 
END 
-0- Jul/30/2013 06:00 GMT
 
 
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