Base Resources released their quarterly report for the period ending June 30 2015 about Kwale Mineral Sands Operations (commonly known as Base Titanium)
Managing Director Tim Carstens gave updates on various aspects during the quarter including:
- It’s been an excellent performance over 20 months with operations on target and with a very good safety record.
- They shipped 100,000 tons from their Likoni port to customers during the quarter. However, for their rutile, ilmenite, and zircon, prices are now 1/3 of what they were two years ago. They export all over, but with Ilmenite, of which China is the largest market, 60% of companies shipping there are losing money.
- Carstens said the proposed Kenyan mining bill is a good thing, and soon there will be a new mining act but they want things to be addressed that meet global best practices. They pay royalties of 2.5% of sale value as per their agreement. The Cabinet Secretary wants this to be much higher, and they have offered 5% which is the highest in the world. Note: the senate passed the mining bill on July 29. Also there have been no more invoices from Kwale county who sent one in June 2014, a move that they fought, along with the attorney general.
- Of the $25 million of VAT owed to the company by the Kenya Revenue Authority, they received a payment of $2 million in July and are grateful that KRA has commenced payments
- Kenyans still don’t invest in mining. The shareholding of Kenyans is still 1%, and that’s not going to change for a few more years when Kenyans get more comfortable taking on mining risk. They hope to turn base titanium into a more Kenyan company with more local shareholders and board members.
- In June, they made a first principal repayment of US$11 million on their $258 million. In July, they got a loan from one shareholder, Taurus Funds and are seeking to refinance other loans to smooth their cash flows as debt repayments are eating most of the current operating profit. While they had an operating surplus of $20 million in the quarter, $11 million went to the principal debt, and $8 million went to interest payments. They expect to complete the debt rescheduling in the next quarter.
- Staff: 92% of the 600 employees are Kenyan, and they plan to go to 97% through training. 25% of the manager are Kenyans and 62% of staff are from Kwale, with 16% of the staff being female which is high for the mining sector.
- They are involved in CSR work with over 100 projects in the community 20 of these are educational, and 200 students are getting scholarships from the company. The company planted 9,000 indigenous tree seedlings in the quarter and is working with local farmers on cotton, chicken, and potato projects to help them graduate to industrial-scale farming.