Base Resources Regulatory News (BSE)

ASX, AIM and Media Release 7 April 2014 Quarterly Activities Report March 2014 HIGHLIGHTS: * Maiden shipment of 25,000 tonnes of ilmenite departed port in February bound for China. * First product sales proceeds were received in March. * Zircon production through the mineral separation plant commenced in February with containerized zircon sales commencing in April. * Fifth and final US$25 million drawdown on the Kwale Project Debt Facility completed in January. * The Kwale Project has now made the transition to the Kwale Operations. Base Resources Limited (ASX & AIM: BSE) ("Base") ("Base" or the "Company") ispleased to provide a quarterly production and commissioning update at its KwaleMineral Sands Operations ("Kwale Operations") in Kenya, East Africa. All workpackages are now complete and operational with only minor defect list itemsremaining outstanding. The shiploader successfully underwent `load on'commissioning during the quarter and regular bulk shipments of finishedproducts have commenced. KWALE OPERATIONS Following the commissioning of the ilmenite and rutile circuits of the mineralseparation plant ("MSP") in December 2013, first production from the zirconcircuit occurred in February. The main focus is now on balancing anddebottlenecking the zircon circuit as well as the metallurgical optimisation ofthe remaining MSP circuits in order to progress the ramp-up to achieve designthroughput, recoveries, availability and runtime. Mining activities proceeded according to plan with a number of dry mining unit("DMU") moves successfully carried out. Mining rates increased steadilyaveraging over 1,200tph with nameplate tonnages being demonstrated. Valuableheavy mineral ("VHM") recovery in the wet concentrator is nearing designperformance. Heavy mineral concentrate ("HMC") production was in line with ramp upexpectations and the grade of ore mined. Slime and sand deposition proceeded according to plan and sealing of theupstream sand wall face of the tailings storage facility with bitumenimpregnated geotextile commenced. MSP commissioning proceeded well and by the end of the quarter debottleneckingof the ilmenite and rutile circuits was virtually complete. Design ilmenite recoveries have been achieved and by the end of the quarterrutile recoveries were steadily improving with the implementation of somedesign modifications. Further planned design modifications, seeking to addressthe remaining identified areas of recovery losses, are currently underway andare expected to result in achievement of design rutile recoveries over thecoming months. The wet and dry zircon circuits were commissioned during February andoptimisation of throughput and recovery is in progress. A focus ondebottlenecking and defect rectification, prior to the EPCM engineerdemobilising from site at quarter end, meant that zircon production wassacrificed in the short term. With the areas of concern now addressed, ourefforts are now concentrated on ramping up the zircon circuits and optimisingproduction which, due to the complexity of these circuits, will take place overthe next 12 months as planned. The Likoni Port bulk loading facility was successfully commissioned with twoships loaded during the quarter and the first shipment of containerised zirconwas despatched to Mombasa Port. SUMMARY PHYSICAL DATA Oct-13 Nov-13 Dec-13 Q4-13 Jan-14 Feb-14 Mar-14 Q1-14 Total Total Ore mined (dmt) 105,304 275,315 451,373 831,992 583,928 661,725 695,298 1,940,951HMC produced(dmt) 4,080 10,163 28,229 42,472 28,746 42,998 41,452 113,196 Production (dmt)Ilmenite 0 0 5,539 5,539 15,686 24,872 27,635 68,193Rutile 0 0 152 152 1,969 2,902 3,972 8,843Zircon 0 0 0 0 0 37 319 356 Sales (dmt)Ilmenite 0 0 0 0 0 25,300 22,000 47,300Rutile 0 0 0 0 0 0 0 0Zircon 0 0 0 0 0 0 0 0 SAFETY PERFORMANCE Kwale Operations suffered its first Lost Time Injury (LTI) when a traineeoperator suffered a hand injury in a conveyor incident. The injury was non-lifethreatening and the employee is back at work on alternate duties. The incidentinvestigation recommended a number of corrective actions, including designchanges, which have been fully implemented. COMMUNITY AND ENVIRONMENT Rehabilitation of construction areas following contractor demobilisation isongoing, with successful revegetation and indigenous tree planting continuingto take place across all areas. Road safety remains an important feature of our community sensitisationprogramme and 37 schools were visited along the transport corridor to discussthe hazards, with an emphasis on heavy vehicles including Base's mineral haultrucks. Plans are well advanced with respect to the preliminary agricultural trials fora series of projects being conducted in conjunction with Business forMillennium Development aimed at significantly improving agriculturallivelihoods in the region. Several community construction programmes have been completed in the quarterincluding a training centre in Bwiti, emergency repairs to Matuga GirlsSecondary School, construction of new ablution facilities for Mwapala PrimarySchool and work commenced on replacing a Likoni primary school roof blown offby high winds. Base's collaboration with Little Sports Organisation in providing after schoolsports to primary school children has shown very positive results. Thisprogramme has recently expanded from 6 schools to 11 schools in nearbycommunities and is focussed on teaching life skills through play and sportsactivities. BUDGET The estimated cost at completion for the Kwale Project remains at US$310million. FINANCING In January, the additional US$25 million project finance facility executed inDecember 2013 was drawn, bringing the total debt facilities drawn to US$215million. MARKETING Base completed two bulk shipments of ilmenite during the March quarter (a totalof 47,300 tonnes) and have vessels booked for three further bulk ilmeniteshipments during April and May. A bulk shipment of rutile and a container shipment of zircon were previouslyscheduled for the latter part of March but vessel availability has resulted inthe bookings for these shipments falling into the early part of April. Reports from major pigment producers indicate continued improvement in pigmentdemand, with inventory levels and plant utilisation rates normalising in theearly part of 2014. Producer inventory of titanium dioxide feedstock remains atelevated levels which is maintaining pressure on feedstock prices. However, asthe excess inventory position is run down, the pricing position of titaniumdioxide feedstock is expected to improve. Recent industry results commentarypoints towards possible feedstock price improvement (including rutile andilmenite) during the second half of 2014. Demand for zircon has remained firm through the March quarter with reports ofgood trade activity. Stocks of zircon held by producers continued to be rundown and prices stabilised through the March quarter with some major zirconproducers increasing their offered pricing for zircon sales in the Junequarter. CORPORATE In summary, at 31 March 2014: • Cash and cash equivalents were A$27.8 million.• Debt drawn of US$215.0 million.• 561,840,029 shares on issue.• 16,600,000 unlisted options. A full PDF version of the announcement is available at the Company's website:www.baseresources.com.au. ENDS For further enquiries contact: Base Resources LimitedTim CarstensManaging DirectorEmail: tcarstens@baseresources.com.auPhone: +61 (0)8 9413 7400 RFC Ambrian Limited (Nominated Adviser and Broker)As Nominated Adviser As BrokerAndrew Thomson or Trinity McIntyre Jonathan WilliamsPhone: +61 (0)8 9480 2500 Phone: +44 20 3440 6800 Africapractice (East Africa) (Kenyan Media Relations)David Maingi/ James Njuguna/Joan KimaniPhone: +254 (0)20 239 6899Email: jkimani@africapractice.com Tavistock Communications (UK Media Relations)Jos Simson / Emily Fenton / Nuala GallagherPhone: +44 (0) 207 920 3150 Cannings Purple (Australian Media Relations)Annette Ellis / Warrick HazeldineEmail: aellis@canningspurple.com.auwhazeldine@canningspurple.com.auPhone: +61 (0)8 6314 6300 TENEMENT SCHEDULE: Tenement Number Interest LocationSpecial Mining Licence 23 100% Kwale - KenyaExploration Licence 173 100% Kwale North - Kenya CORPORATE DETAILS Board of Directors:Andrew King Non-Executive ChairmanTim Carstens Managing DirectorColin Bwye Executive DirectorSam Willis Non-Executive DirectorMichael Anderson Non-Executive DirectorTrevor Schultz Non-Executive DirectorMichael Macpherson Non-Executive DirectorWinton Willesee Company Secretary Principal & Registered Office: Contacts:Level 1 Email: info@baseresources.com.au50 Kings Park Road Phone: +61 (0)8 9413 7400West Perth Fax: +61 (0)8 9322 8912WA 6005