Base Resources Outlines Growth Strategy Centered on World-Class Toliara Project

• Base Resources is an Australian-listed company operating in Kenya and Madagascar, with a focus on sustainability and community engagement.
• They have successfully sourced 80% of their imports for the Kwale project in Kenya, have a 99% Kenyan workforce, and invest heavily in community programs.
• Base Resources places a strong emphasis on safety, achieving zero lost time injuries and total recordable injuries over the years.
• The company is nearing the end of the Kwale project and is exploring the economic potential of extending operations while also preparing for the Toliara project, which is a significant opportunity for diversification and rare earth production in Madagascar.

Australian mineral sands producer Base Resources recently provided an update on its operations and growth strategy at the Africa Down Under conference in Perth. Managing Director Tim Carstens outlined the company's plans to transition from its successful Kwale mine in Kenya to the large-scale Toliara project in Madagascar.

Kwale Mine – A Strong Foundation But Approaching End of Life

Base Resources' foundation asset is the Kwale mineral sands mine in Kenya, which began production in late 2013. Kwale has performed exceptionally well over the past decade, underpinned by Base Resources' focus on sustainability and community engagement.

The company has established extensive local supply chains in Kenya, with 80% of Kwale's imports now sourced domestically. The workforce is 99% Kenyan, numbering approximately 1,000 employees. Base Resources invests heavily in community programs, spending nearly US$6 million in FY2022. It is also a major taxpayer, contributing over US$50 million to the Kenyan government last year.

Safety performance has been exceptional, with over 35 million man-hours worked at Kwale with only two lost-time injuries. Base Resources has rehabilitated mined areas progressively, planting over 300,000 trees to date. The aim is to leave the Kwale area in better environmental condition than when mining began.

However, Kwale is approaching the end of mine life. Reserves will be depleted by end-2024, with mining focused on lower grade areas over the next two years. Base Resources is actively exploring potentially extending operations, but it is also planning for Kwale's eventual closure.

Outstanding Toliara Project Offers Growth and Diversification

In January 2018, Base Resources acquired the world-class Toliara mineral sands project in Madagascar from ASX-listed WMG Resources. Since then, the company has published two definitive feasibility studies showing Toliara's exceptional economics.

The latest DFS outlines a US$1.1 billion pre-tax NPV, with revenue-to-operating cost ratios averaging 3.5 times over the 38-year initial mine life. There is substantial upside from resource expansion, as only one-third of the current 2.6 billion tonne mineral resource is incorporated in the DFS mine plan.

Toliara will produce mainstream mineral sand products but also contains a significant monazite rare earth deposit. Base Resources is progressing studies on monazite extraction, with results due in Q1 2023.

Subject to fiscal terms approval and FID in 2023, Toliara could commence exports in 2027. The prolonged development timeline is due to extended negotiations with the Madagascan government regarding fiscal terms applicable to the project. However, Base Resources is optimistic of securing an agreement with the incoming government early next year.

Positioned as an Emerging Critical Minerals Producer

Base Resources MD Tim Carstens believes Toliara can transform the company into a diversified and globally relevant critical minerals producer. While delays are frustrating, Toliara remains a world-class growth opportunity.

Base Resources' strong track record in Kenya, robust financial position, experienced management and high-quality Toliara assets underpin its strategic value. As the largest undeveloped mineral sands project globally, Toliara provides exposure to global mineral sands and rare earths markets. The company is progressing discussions with potential partners across the electric vehicle, clean energy and broader technology sectors. Strategic partners could accelerate Toliara's development, unlocking significant value for Base Resources shareholders.

In summary, Base Resources retains solid fundamentals but is transitioning from a single-asset developer to multi-project producer. Despite delays, the Toliara project provides a clear pathway for long-term growth and diversification. Base Resources is positioned to emerge as a leading ASX-listed critical minerals company over the next decade.

The Investment Thesis for Base Resources

• Strong track record of operational excellence at Kwale mine - Base Resources has demonstrated its ability to develop and operate a large-scale, low-cost mining operation profitably and sustainably. This provides confidence in management's capabilities.
• World-class Toliara project with robust economics - The Toliara Project has very attractive estimated financial returns over its long mine life. Once in production, it should generate strong cash flows for investors.
• Exposure to key critical minerals - Toliara will produce mineral sands products (titanium, zircon) which are seeing growing demand. It also contains monazite rare earths, which are vital for electric vehicles, wind turbines and other clean energy applications. This leverages Base Resources to key global mega-trends.
• Potential for further resource growth - Only about one-third of the current 2.6Bt mineral resource at Toliara is incorporated into the mine plan. Significant potential exists to expand the resource and extend the mine life.
• Strategic partnering opportunities - Base Resources' large-scale Toliara project is attracting interest from potential partners across EV, tech and renewable energy sectors. This creates potential value-accretive partnering options.
• Strong balance sheet - Base Resources has a robust financial position, with no debt and A$290m in cash. This provides funding capacity to progress Toliara's development.

In summary, Base Resources offers investors exposure to a high-quality asset portfolio and critical minerals thematics under proven management. While Toliara's development timelines have been extended, its long-term growth outlook remains attractive.