Base Resources Looks to Expand Resources and Pursue Government Negotiations

• Base Resources has a highly cash generative mineral sands operation in Kenya, with significant growth potential from its Toliara project in Madagascar.
• In Kenya, the company is focused on extending the life of its Kwale mine beyond 2024 through additional exploration and government approvals.
• The updated DFS for Toliara shows a world-class, 38-year project with NPV over $1 billion. Engagement with Madagascar government on fiscal terms is the key next step.
• Funding plans for Toliara include debt financing and a potential JV partner. Dividends from Kwale cash flows may also be redirected.
• The company is evaluating options to add assets and jurisdictions to create multiple cash flow streams before Kwale winds down and ahead of Toliara production.

About Base Resources

Base Resources is a mineral sands company focused on expanding resources and production in Kenya and pursuing project development in Madagascar. The company has been operating its flagship Kwale Mineral Sands Operations in Kenya since 2013, which has generated significant cash flow. Base Resources is looking to extend Kwale's mine life through additional exploration and resource definition. The company is also advancing its large-scale Toliara Sands Project in Madagascar, recently releasing an updated definitive feasibility study showing improved project economics. However, development of Toliara is dependent on agreeing acceptable fiscal terms with the Madagascar government.

Interview with Tim Carstens, Managing Director of Base Resources

Pursuing Mine Life Extension in Kenya

A key priority for Base Resources is extending Kwale's remaining mine life, which is currently projected to end by 2023-2024. The company has been pursuing additional mining licenses and conducting exploration to identify new mineral sands deposits near Kwale.

In Kenya, Base Resources was recently granted a key mining lease extension to the end of 2023. The company has also completed a pre-feasibility study on the North Dune and Bumamani deposits, which could extend operations at Kwale until mid-2024. Beyond that timeframe, further mine life relies on additional exploration success.

Base Resources is especially focused on exploring the Kuranze region straddling the Kenya-Tanzania border. The company has secured licenses to explore the Tanzanian side of Kuranze and will soon mobilize exploration crews. Base Resources is hopeful that an exemption to the current moratorium on mining licenses in Kenya will be granted soon, allowing exploration of Kuranze on the Kenyan side of the border. This region represents the most prospective opportunity for significantly expanding Kwale's resources and mine life.

Optimizing the Toliara Project in Madagascar

In Madagascar, Base Resources is advancing the large-scale Toliara Sands Project, which has the potential to be a long-life, low cost producer of mineral sands products. The company recently completed an updated definitive feasibility study, supporting expanded production and an improved 38 year mine life for Toliara. The updated DFS increased the potential net present value of the project to over US$1 billion.

However, development and construction of Toliara is on hold until Base Resources can finalize acceptable fiscal terms with the Madagascar government. The company has been engaged in ongoing discussions regarding the government's proposed mining code changes and royalty structure. Base Resources is optimistic that an agreement can be reached on a competitive fiscal framework.

The company is targeting a potential final investment decision on Toliara by end of 2022, subject to settling the fiscal terms and lifting of the project's suspension. This would allow first production from Toliara to commence around Q1 2025. In the meantime, Base Resources continues to optimize the project and advance funding discussions in anticipation of a green light from the Madagascar government.

Pursuing New Opportunities

With Kwale's mine life finite and development of Toliara stretched out pending government approvals, Base Resources is also evaluating potential merger and acquisition opportunities. The aim is to add production assets in new jurisdictions to provide additional cash flow and create a more diversified, multi-project company.

No specific acquisition targets have been identified at this stage. However, the company is focused on value-accretive opportunities that would be a strategic fit with its existing asset portfolio. Any prospective deals will be considered on their merits based on upside potential, risks and synergies.

Conclusion

Base Resources offers investors exposure to a profitable, cash-generative mineral sands producer in Kenya with considerable upside potential from resource expansion and its large-scale Toliara Project. The company is maintaining a robust balance sheet, funded through operating cash flows, as it looks to extend Kwale's mine life and eventually transition to becoming a multi-project producer.

While awaiting government approvals to advance Toliara, Base Resources' focus in the near-term will be on exploration efforts to expand its resource base in Kenya and potentially elsewhere. The company may also pursue M&A opportunities to add new production assets and cash flow streams. Although some uncertainties remain around mine life extensions and Toliara's development timeline, Base Resources appears well positioned to continue delivering value for shareholders.