(Alliance News) - Base Resources Ltd on Monday reported a sharp decline in the production and sale of minerals, alongside a dive in profit and revenue.
The Africa-focused mineral sands producer and developer said its pretax profit slumped 85% to USD9.5 million in the six months to December 31 from USD64.8 million a year ago.
The company paused its half-year dividend payments, having paid an interim dividend of 2.0 Australian cents a year prior.
Revenue declined 42% to USD73.1 million from USD126.6 million. Cost of sales decreased 13% to USD42.3 million from USD48.8 million.
Notably, the company mined 8.0 million tonnes of ore, down 9.1% from 8.8 million a year prior.
Ilmenite production plunged 54% to 77,663 tonnes from 170,771 tonnes. Ilmenite sales fell 45% to 74,831 tonnes from 136,773 tonnes.
Base Resources' rutile production, meanwhile, dived 51% to 18,909 tonnes from 38,384 tonnes. Rutile sales fell 29% to 20,524 tonnes from 28,859 tonnes.
The company highlighted that ilmenite and rutile are primarily used for the production of titanium dioxide pigment, making that pigment a major driver of ilmenite and rutile pricing.
"The global pigment market was subdued throughout the period due to uncertain global economic conditions and sluggish housing sectors in major markets," Base Resources explained. "Poor pigment demand through the seasonally strong June quarter of 2023 led to pessimism across the pigment industry at the start of the 2024 financial year."
Perhaps more positively, Base noted that looking ahead: "Demand for rutile into the welding and titanium metal sectors has remained firm throughout the reporting period and into 2024. The main driver of demand was a booming ship-building industry. The sharp increase in aerospace manufacturing, combined with sanctions on Russian-supply of raw materials, also drove further demand.
"These sectors continue to attract a price premium and present good opportunities for Base Resources' rutile but they are relatively small sectors and the broader market will continue to be driven by the pigment sector."
The company added: "Sentiment among some major western pigment producers was building at the end of the period on the back of increases in pigment orders leading into the start of 2024. A recovery in pigment demand, if realised, will result in positive demand growth for rutile and reduced pressure
on rutile pricing in the coming months."
Base Resources shares fell 21% to 5.70 pence each on Monday morning in London.
By Tom Budszus, Alliance News slot editor
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Base Resources (BSE)