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(Alliance News) - Base Resources Ltd on Monday said it has stopped all exploration activities at Kwale East project, and expects mining to cease at the end of next year.
The stock was down 25% to 6.55 pence on Monday in London.
The Africa-focused mineral sands producer and developer said that Phase 2 assay results had confirmed the existence of mineralisation at the project in southern Kenya.
However, "land access was a particular challenge" during the Phase 1 programme, and Base Resources said it was ultimately unable to secure access to the more prospective areas at Magaoni and Zigira, two of the three targets it had identified.
Base Resources said it evaluated the likely mineralisation for the targets using the assay results, and "concluded that there is unlikely to be sufficient volume or heavy mineral grade to support an economically viable mining development". This was the case even when "applying optimistic assumptions" on the continuity of mineralisation in the areas it was unable to drill.
The company also noted that the Kwale tailings storage facility has limited remaining capacity, and an alternative solution would require significant capital expenditure and higher operating expenses.
"We have explored all avenues for further extending the life of Kwale operations," said Managing Director Tim Carstens. "However, despite these efforts and broad support from the local community, we have been unsuccessful in identifying additional mineral deposits of sufficient grade or scale to support a further extension."
Kwale, he noted, "has been the foundation on which we have built Base Resources".
The company expects existing ore reserves to be fully depleted by December 2024, after which Kwale will transition to post-mining activities.
"With Kwale operations now coming to an end, the next phase of shareholder value creation will come from progression of the world-class Toliara project to development and realising its rare earth potential, accelerating our wider Kenyan exploration efforts...and pursuing attractive business development opportunities to broaden our option set," Carstens proclaimed. "We are tackling the challenge with focus, urgency and resolve."
By Emma Curzon, Alliance News reporter
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