Maiden Ranobe Ore Reserves Estimate

AIM and Media Release 

6 December 2019

BASE RESOURCES LIMITED
Maiden Ranobe Ore Reserves Estimate

The Company’s announcement on 27 November 2019 (“Maiden Ranobe Ore Reserve Estimate”) has been updated to provide further supporting information for the Ranobe Ore Reserves estimate, including Sections 1, 2 and 3 of Table 1 of the JORC Code.  The Ranobe Ore Reserves estimate detailed in this announcement is unchanged from the estimate included in the Company’s announcement on 27 November 2019.

HIGHLIGHTS

  • Ranobe Ore Reserves estimate of 586Mt of ore at an average heavy mineral grade of 6.5%, containing 38Mt of in-situ HM.
  • The Ore Reserves estimate is consistent with the Mineral Resources assumptions underpinning the pre-feasibility study.
  • Samples from a 26,141m drilling program completed during 2019 are currently being processed, seeking to upgrade the Mineral Resources and Ore Reserves estimates for Ranobe over the course of 2020.

Base Resources Limited (ASX & AIM: BSE) (Base Resources or the Company) is pleased to release its maiden Ranobe Ore Reserves estimate which forms the foundation of its Toliara Project in Madagascar.

The Company completed the acquisition of the Toliara Project in January 2018 and, following positive findings from the Pre-Feasibility Study (PFS) completed in March 20191, is currently progressing the project through a Definitive Feasibility Study (DFS) phase due for completion later this month.  With the PFS demonstrating a positive economic outcome, an initial Ore Reserves estimate has been prepared (the Ranobe Ore Reserves).

The Ranobe Ore Reserves estimate shown below underpins an expected 33-year mine life, consistent with the PFS.

Table 1: 2019 Ranobe Ore Reserves estimate

Ranobe Ore Reserves
as at 27 November 2019
Category Tonnes
(Mt)		 HM
(Mt)		 HM
(%)		 SL
(%)		 OS
(%)		 HM Assemblage (% of HM)
ILM RUT LEUC* ZIR
(%) (%) (%) (%)
Proved 347 24 7.0 3.8 0.1 75 1.0 1.0 5.9
Probable 239 14 5.8 4.2 0.2 73 1.3 0.8 5.7
Total 586 38 6.5 3.9 0.1 74 1.1 0.9 5.9

Table subject to rounding differences.
** Recovered Leucoxene will be split between Rutile and Chloride Ilmenite products depending on product specification requirements.

Base Resources is the operator of the Toliara Project and has a net attributable interest of 100% in the Ranobe Ore Reserves estimate.

The Ranobe Ore Reserves estimate has been prepared by Base Resources and IHC Robbins and is based on the Ranobe Mineral Resources estimate released on 23 January 2019 (2019 Ranobe Mineral Resources), which was reported in accordance with the JORC Code2.  The Ranobe Ore Reserves are contained within the Measured and Indicated categories of the 2019 Ranobe Mineral Resources estimate.

Figures (graphics) referenced in this announcement have been omitted.  A full PDF version of this announcement, including all figures (graphics), is available from the Company’s website:  www.baseresources.com.au.

Information material to understanding the Ranobe Ore Reserves estimate

The Ranobe Ore Reserves estimate is reported in accordance with the JORC Code.  The information set out below is a summary of the information material to understanding the Ranobe Ore Reserves estimate.  This information should be read in conjunction with the information provided for the purposes of Sections 1 to 4 of Table 1 of the JORC Code, included as Appendix 1 to this announcement.

The Toliara Project is based on the Ranobe deposit which is located on the 125.4 km2 Mining Lease (Permis D’Exploitation) 37242 (PDE 37242), approximately 40 kilometres north of the regional town of Toliara in south west of Madagascar and 15 kilometres inland from the coast (see Figure 1)3. 

The Ranobe deposit comprises a single continuous body of mineralisation, comprising three units: the upper sand unit (USU), the intermediate clay sand unit (ICSU) and the lower sandy unit (LSU) (see Figure 2)3.  The Ranobe Ore Reserves estimate only comprises material in the Measured and Indicated resource categories from the USU, refer to Table 2 below.  A 26,141m drilling program was completed over the course of 2019 with the samples currently being analysed.  The aim of this drilling program is to increase the volume of Mineral Resources in the Measured and Indicated categories in all three mineralised units and provide a basis to update the Ranobe Ore Reserves estimate over the course of 2020.

Table 2: The 2019 Ranobe Mineral Resource Estimate at a 1.5% HM cut-off

Ranobe Mineral Resources
as at 23 January 2019
Zones Upper Sandy Unit Intermediate Clay Sandy Unit Total
Category Measured Indicated Total M&I Inferred Total USU Indicated Inferred Total ICSU USU + ICSU
Tonnes 420 300 720 420 1,140 73 79 150 1,290
HM % 6.6 5.3 6.1 4.1 5.3 3.2 3.1 3.2 5.1
HM tonnes 28 16 44 17 61 2.4 2.5 4.8 66
Slimes % 3.8 3.9 3.9 3.9 3.9 26 25 25 6.4
OS % 0.1 0.2 0.1 0.2 0.2 2.6 2.1 2.4 0.4
ILM % of HM 75 72 74 70 73 71 71 71 72
RUT* % of HM 2.0 2.1 2.0 2.1 2.0 2.2 2.3 2.2 2.1
ZIR % of HM 5.9 5.7 5.8 5.4 5.7 5.6 5.8 5.7 5.7

Table subject to rounding differences.
*RUT reported in the table is rutile + leucoxene mineral species

The Ranobe Mineral Resources reported in Table 2 above are inclusive of the Ranobe Ore Reserves.

The Ranobe deposit has been assigned Mineral Resources classifications of Measured, Indicated and Inferred under the JORC Code.  The criteria used to support those classifications was:

  • Regular drill hole spacing that defines the geology and HM mineralisation distribution and trends.
  • Domain controlled variography for HM that supports the drill spacing for each of the classifications.
  • The distribution of mineral assemblage composites having adequately identified the various mineralogical domains as well as the variability within those domains.

Generally, where the drill hole spacing was 100 x 200 meters and the mineralogy was sourced from Base Resources’ MinMod mineralogy system, material was classified as Measured.  Drill hole spacing up to 100 x 400 metres and with MinMod mineralogy was classified as Indicated, and wider hole spacing or with the prior owner’s mineralogy (where there were no samples available for MinMod) was accorded Inferred classification.  The Mineral Resources classifications and drill hole locations are shown in Figure 10 and the classifications and mineralogy sample locations are shown in Figure 113.

The Ranobe Ore Reserves estimate was restricted to the Measured and Indicated Resource categories and to the USU.

In addition to the 2019 Ranobe Mineral Resources estimate, the Ranobe Ore Reserves estimate is also based on the Toliara Project PFS metrics.  The key findings from the PFS were:4

  • Post-tax / pre-debt (real) NPV @ 10% discount rate of US$671m, measured from the date of the final investment decision.
  • Revenue to cost of sales ratio of 3.06.
  • Stage 1 capex cost of US$439m – to establish 13 million tonnes per annum (Mtpa) operation consisting of a single 1,750 t/hr dozer mining unit paired with a relocatable primary wet concentrator plant (WCP).
  • Stage 2 capex cost of US$67m – to increase the operation to 19Mtpa from year 3.5 onwards through the addition of a smaller 825 t/hr dozer mining unit paired to a second fixed location WCP.
  • Annual averages (excluding first and last partial operating years):
    • Production of 806kt ilmenite (sulphate, slag and chloride), 54kt zircon and 8kt rutile.
    • Revenue of US$254m – 62% ilmenite, 34% zircon and 4% rutile.
    • Operating costs of US$77m, or US$82m including assumed 2% royalty5.
    • Non-operating costs of US$7m (community, external affairs, marketing etc.)5.
    • EBITDA of US$165m, NPAT US$110m.
    • Free cash flow of US$133m.

For the purposes of the PFS, Base Resources’ internal price forecasts were used up to 2030.  From 2035, TZMI’s forecast long term inducement prices were used, with prices transitioning between 2030 and 2035 in a straight line.  Refer to Table 6 for details of the product sale prices assumed for the PFS.

The reference point for the Ranobe Ore Reserves estimate was 2022, being operating year 1 for the PFS.  The estimation methodology for the Ranobe Ore Reserves estimate used an economic derived cut-off.  Material Modifying Factors drawn from the PFS were operating costs, product recoveries and yields, and expected product pricing.  MaxiPit (a Datamine product which performs Lerch-Grossman pit optimisations) was then used to determine, on a model cell by model cell basis, whether material is ore or waste.  Because the Lerch Grossman algorithm cannot know when material is mined, flat operating costs and product pricing, selected from operating years 3 and 5, respectively, were assumed.

Year 3 operating costs were selected as they are most representative of the forecast operating costs in the early years of operations and allowed detailed Stage 1 mine scheduling (which occurs later in the process) to be completed to a high level of accuracy.  Further details of the assumed year 3 operating costs are not separately disclosed as they are considered commercially sensitive, however the assumed costs are not materially different from the combined Stage 1 and 2 operating costs shown in Table 7 below.

The operating year 5 product prices assumed for the purposes of the Ranobe Ore Reserves estimate are Base Resources’ own internal price forecasts for each product for that year.  Base Resources’ internal price forecast is derived from its internal supply and demand analysis.  In relation to forecast demand, TZMI’s five-year forecast demand outlook is utilised, before transitioning to a steady annual growth rate, generally consistent with global GDP growth forecasts, but adjusted for product specific considerations, where applicable.  In relation to forecast supply, over the short term, Base Resources’ supply forecast is generally aligned with TZMI’s five-year outlook for existing producers, but Base Resources forms its own view on the anticipated timing of new brownfield and greenfield projects coming into production.  Base Resources’ medium to long term supply forecast is based on the Company’s internal view of future production from existing operations, as well as new brownfield and greenfield projects.

Operating year 5 product prices were selected as these were considered more conservative than those forecast for operating year 3.  Further details of the assumed product prices are not disclosed as these are considered to be commercially sensitive, however the assumed product prices are not materially different from the average revenue assumptions used for the PFS for the 2022 – 2030 period as shown in Table 6 below.  As a result of this approach, cut-off grades were not used.

The mining activity cycle commences with scrub clearing, followed by the removal of topsoil.  Topsoil is either directly placed onto rehabilitation areas or stockpiled for later rehabilitation, with the aim to preserve seed viability by minimising time in stockpile.  Mining is based on conventional dozer mining units (DMU), using Caterpillar D11T dozers operating in approximately 100m radius semi-circular blocks to feed ore to the DMU where it is slurried and screened.  It is non-selective and there is no ore/waste discrimination.  However, sub-economic material that cannot be selectively left in the void is included as planned dilution in the ore feed for Stage 1.  Due to an insignificant volume of dilution and mining losses in Stage 1, no global dilution factor has been applied for Stage 2 where detailed design has not yet been undertaken.  Mining recovery of 100% was assumed after consideration of mining shape design, planning and scheduling. The entire mining cycle is expected to take three to four years from initial clearing to final rehabilitation.  The mine path derived from the Ranobe Ore Reserves is shown in Figure 4.  The mine site layout at commencement of operations is shown in Figure 33.

Ore is pumped from the DMU to the Wet Concentration Plant (WCP) where it is processed via a desliming circuit and spirals, typical of many mineral sands operations, to produce a heavy mineral concentrate (HMC).  Course tailings (quartz sand) separated by the WCP is pumped initially to an out of pit storage facility and later to the mining pit void where a moveable tails stacker de-waters the slurry.  Flocculated clay tailings (fine tailings) from the WCP thickener are pumped to the evaporation ponds, formed during the deposition of the course tailings, to a depth of approximately 1.5 metres where they dry to form a clay layer approximately 0.4 metres thick.  The desiccated fine tails are then worked by dozer into the coarse tails to make a nominal two metres thick water retention surface layer, graded into final landform and topsoil replaced ready for rehabilitation.  The course and fine tailings schedules from the Ranobe Ore Reserves are shown in Figures 5 and 63.  The DMU process flow is depicted in Figure 73.

The HMC is further processed in the Mineral Separation Plant (MSP), primarily using magnetic and electrostatic separators, with secondary gravity separation to produce ilmenite, rutile and zircon.

In early 2018, three bulk samples from the Ranobe deposit were excavated (low grade - 4.8% HM, medium grade – 8.2% HM and high grade – 10.5% HM) to represent a range of ore grades on which to base the WCP design.  Base Resources’ resource mineralogy methodology, MinModel, was adapted for the Ranobe deposit and used to estimate WCP performance during the testwork to ensure consistency between Resource definition and process design selection.  The selected three stage spiral wet gravity circuit was tested on the three bulk samples by Mineral Technologies in Brisbane.  The testwork results were modelled using industry proven programs to determine the flowsheet design, mass balance and resultant performance metrics.  HMC samples were produced from these bulk samples for further confirmatory MSP testwork and market sample generation.  Pilot tests on oversize removal, fines removal and fines thickening were also undertaken to verify design.  The three stage WCP flowsheet is shown in Figure 83.

In 2013, previous owners, World Titanium Resources, generated bulk HMC samples from two test pits which were used for PFS MSP design testwork and to estimate recoveries.  A comprehensive and iterative series of tests were completed to establish flowsheets for each MSP stage consistent with the design intent:

  • Feed preparation – removal of coarse and fine quartz using wet gravity.
  • Ilmenite circuit – produce three ilmenite products and generate a non-magnetic stream through magnetic and electrostatic separation.
  • Wet non-magnetic circuit – remove residual quartz to enable efficient rutile separation via wet gravity separation.
  • Rutile circuit – produce a rutile product and a non-conductor zircon stream using electrostatic separation.
  • Wet zircon circuit – remove alumina silicates with wet gravity separation.
  • Dry zircon circuit – remove iron and titanium contaminants to produce a standard zircon product through a combination of electrostatic and magnetic separation.

The MSP flowsheet is shown in Figure 93.

Processing recoveries are summarised in Table 3 (WCP) and Table 4 (MSP).  The split of ilmenite into three products shown in Table 5.

Due to the high level of confidence in the Modifying Factors, the classification of Ore Reserves into Proved and Probable generally followed the Mineral Resources estimate classification, i.e. Measured Mineral Resources convert to Proved Ore Reserves and Indicated Mineral Resources convert to Probable Ore Reserves.  The only exception to this is for material found in the lowest 1.5 metres of blocks scheduled for mining in Stage 2 where detailed design has not yet been undertaken to provide confidence in the level of the pit floor.  As a result, this material has been classified as Probable Ore Reserves notwithstanding its Mineral Resources estimate classification of Measured.  Inferred Mineral Resources are excluded from the Ranobe Ore Reserves estimate.

The right to mine the Ranobe deposit is provided by PDE 37242, a mining lease under Malagasy law.  PDE 37242 was granted on 23 October 2017 and is valid for a period of 40 years from 21 March 2012 (the date of grant of the original PDE 37242) and may be renewed in 20-year increments thereafter.  Before the Toliara Project construction and subsequent mining operations can commence, surface rights need to be secured, which requires completion of the land acquisition process currently in progress.

The Company holds a valid Permis Environnemental (Environment Permit No 55-15/MEEMF/ONE/DG/PE) and approved Plan de Gestion Environnementale (PGE) (Environmental Management Plan).  More detailed environmental management plans and specific work instructions addressing construction, operational and decommissioning matters are required to be prepared and submitted three months prior to the commencement of each stage.

The Toliara Project requires significant infrastructure which does not presently exist, primarily the product haulage road and bridge and the export facility.  These are within the scope of project development and the costs are included in the PFS capital expenditure estimates. 

Table 3: PFS reported WCP recoveries

Low Grade Ore %* Medium Grade Ore % High Grade Ore % Avg % PFS Design %
Ilmenite 97.1 96.6 96.4 96.7 94.9
Zircon 98.5 98.6 98.7 98.6 97.2
Rutile 97.1 95.8 93.8 95.6 92.3
Leucoxene 85.0 80.0 70.0 78.3 75.0
% HM in HMC 91.0 91.0 91.0 91.0 91.0

* low, medium and high grade refer to the HM grade (4.8%, 8.2% and 10.5%) of the three bulk samples processed during the PFS.  The PFS design recoveries were used in the MaxiPit Optimisation.

Table 4: PFS reported MSP recoveries

Base % After leucoxene re-distributed %
Ilmenite 93.6 93.9
Zircon 79.0 79.0
Rutile 59.5 73.7
Leucoxene 53.4 0

Table 5: PFS reported average ilmenite split

Ilmenite Proportion % Target % TIO2
Sulphate Ilmenite 36.5 48.3
Slag Ilmenite 35.0 50.5
Chloride Ilmenite 28.4 57.0

Table 6: PFS product sales prices

Product Prices US/t Average
2022 – 2030		 Average
2031-2034		 From
2035		 LOM
Average
Sulphate ilmenite $154 $174 $183 $174
Slag ilmenite $162 $183 $193 $183
Chloride ilmenite $241 $256 $233 $238
Rutile $1,267 $1,321 $1,142 $1,198
Zircon $1,822 $1,650 $1,450 $1,576

Table 7: PFS derived operating costs

Operating cost category LOM Total US$m US$m per annum US$/t mined US$/t produced Comments
Power 671 20 1.14 24 Power sourced from an independent power producer (IPP) and based on a solar hybrid solution using HFO as a fuel source.  Assumes an HFO price of US$0.73/L, which results in an average power price of US$0.20/kWhr.
Maintenance 577 18 0.98 21 Maintenance is based on experience gained from the Company’s Kwale mineral sand operation in Kenya and scaled where appropriate.
Labour – Expatriates 122 4 0.21 4 Operations commence with 71 expats, dropping to 27 after four years before reaching a steady state of six senior managers from FY31 onwards.
Labour – Nationals 186 6 0.32 7 Operations commence with 707 national employees, before peaking at 861 in FY25 following completion of the Stage 2 expansion.
Fuel – Drying 187 6 0.32 7 Diesel for the MSP drying process.  Cost based on actual usage at the Company’s Kwale mineral sands operations in Kenya and a delivered diesel fuel price is US$0.88/L.
Fuel – Mobile Equip. 167 5 0.28 6 Mobile equipment fuel burn rates are based on actual usage at the Company’s Kwale mineral sands operations in Kenya and a delivered diesel fuel price is US$0.88/L.
Product Transport & Port Rates 200 6 0.34 7 All products transported in bulk to the export facility at an estimated cost of US$3.99/t.
Flocculant 11 1 0.02 1 Flocculant usage between 0.08 and 0.12kg/t slime at cost of US$3.67/kg.
Other Operating Costs 358 11 0.61 12 Other fixed operating costs, including insurance, camp management and laboratory.
Total Operating Costs 2,479 77 4.22 89
Royalties 162 5 0.27 6 Government royalty rate of 2%5
Total Operating Costs (incl. Royalties) 2,641 82 4.49 95

[Notes:

1:  For further information refer to Base Resources’ announcement on 21 March 2019 “Toliara Project PFS confirms status as a world-class mineral sands development” available at https://www.baseresources.com.au/investor-centre/asx-releases/ (PFS Announcement).

2:  For further information refer to Base Resources’ announcement on 23 January 2019 “Updated Ranobe Deposit Mineral Resources (corrected)” available at https://www.baseresources.com.au/investor-centre/asx-releases/.

3:  Figures (graphics) referenced in this announcement have been omitted.  A full PDF version of this announcement, including all figures (graphics), is available from the Company’s website:  www.baseresources.com.au.

4:  For further information in relation to the PFS, refer to the PFS Announcement.

5:  Fiscal terms applicable to the Toliara Project are yet to be agreed with the Government of Madagascar. For further information refer to Base Resources’ announcement on 7 November 2019 “Toliara Project – Government of Madagascar statement” available at https://www.baseresources.com.au/investor-centre/asx-releases/.]

Competent Persons' Statement

In respect of the 2019 Ranobe Mineral Resources contained in this announcement, Base Resources confirms that it is not aware of any new information or data that materially affects the information included in the announcement of 23 January 2019 “Updated Ranobe Deposit Mineral Resources (corrected)” available at https://www.baseresources.com.au/investor-centre/asx-releases/ and all material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed.

The information in this announcement that relates to Ore Reserves is based on, and fairly represents, information and supporting documentation prepared by Mr. Chris Sykes and Mr. Scott Carruthers.  Mr. Sykes and Mr. Carruthers are members of the Australasian Institute of Mining and Metallurgy.  Mr. Sykes acts as Consultant Mining Engineer for Base Resources.  Mr. Carruthers is employed by Base Resources, he holds equity securities in Base Resources, and is entitled to participate in Base Resources’ long-term incentive plan and receive equity securities under that plan.  Details about that plan are included in the Company’s 2019 Annual Report.  Both Mr. Sykes and Mr. Carruthers have sufficient experience that is relevant to the style of mineralisation and type of deposits under consideration and to the activity which they are each undertaking to qualify as a Competent Person as defined in the JORC Code, and both are considered Qualified Persons for the purposes of the AIM Rules for Companies.  Mr. Sykes and Mr. Carruthers have each reviewed this announcement and consent to the inclusion in this announcement of the Ranobe Ore Reserves estimate and the supporting information in the form and context in which the relevant information appears.

Other Announcements

Information in this announcement should be read in conjunction with other announcements made by Base Resources, particularly the Company’s announcements on:

  • 21 March 2019 titled “Toliara Project PFS confirms status as a world-class mineral sands development”.
  • 23 January 2019 titled “Updated Ranobe Deposit Mineral Resources (corrected)”.

The PFS Announcement contains further information about the PFS, including key pre and post FID risks and an NPV sensitivity analysis in respect of the Toliara Project.  Base Resources confirms that the material assumptions underpinning the production information and the forecast financial information disclosed in the PFS Announcement continue to apply and have not materially changed.

The Company’s announcements are available at https://www.baseresources.com.au/investor-centre/asx-releases/.

Forward Looking Statements

Certain statements in or in connection with this announcement contain or comprise forward looking statements.  Such statements include statements with respect to the anticipated production and financial performance for the Toliara Project.

By their nature, forward looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future and may be outside Base Resources’ control.  Accordingly, results could differ materially from those set out in the forward-looking statements  as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory environment and other government actions, fluctuations in product prices and exchange rates and business and operational risk management.  Subject to any continuing obligations under applicable law or relevant stock exchange listing rules, Base Resources undertakes no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this announcement or to reflect the occurrence of unanticipated events.

No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information contained in this announcement (or any associated presentation, information or matters).  To the maximum extent permitted by law, Base Resources and its related bodies corporate and affiliates, and their respective directors, officers, employees, agents and advisers, disclaim any liability (including, without limitation, any liability arising from fault, negligence or negligent misstatement) for any direct or indirect loss or damage arising from any use or reliance on this report or its contents, including any error or omission from, or otherwise in connection with, it.

Nothing in this report constitutes investment, legal or other advice.  You must not act on the basis of any matter contained in this announcement but must make your own independent investigation and assessment of Base Resources and obtain any professional advice you require before making any investment decision based on your investment objectives and financial circumstances.  This document does not constitute an offer, invitation, solicitation, advice or recommendation with respect to the issue, purchase or sale of any security in any jurisdiction. 

Appendix 1

JORC Code, 2012 Edition

Section 1 Sampling Techniques and Data

Criteria Explanation Comment
Sampling techniques Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.
Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.
Aspects of the determination of mineralisation that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1m samples from which 3kg was pulverised to produce a 30g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.		 All holes were drilled vertically

All holes were sampled over a consistent 1 – 3 m interval

All holes were drilled using a reverse circulation Wallis Drill setup to collect the complete sample with a basic cyclone separation by means of a swivel outlet feeding two alternate sample bags

No sample splitting was performed on the drill site for earlier drill programs, however sample splitting was carried out for the 2018 drilling program.
Drilling techniques Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc). All holes were drilled vertically

All drilling was undertaken using an air pressured reverse circulation Wallis Mantis drill

Core diameter is NQ (76 mm external diameter), with 3m rod lengths fitted with a face discharge drill bit
Drill sample recovery Method of recording and assessing core and chip sample recoveries and results assessed.
Measures taken to maximise sample recovery and ensure representative nature of the samples.
Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.		 Wallis Mantis drill rig uses face discharge bits, at low air pressures (105 - 140kPa) and low rotation speeds (45-65RPM) to maximize recovery

There is no correlation between recovery and grade resulting in no sample bias
Logging Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.
Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.
The total length and percentage of the relevant intersections logged.		 All samples were visually checked and logged on site by rig geologist and logged for lithotype, grain size, sorting, colour, competence, moisture content

A small subsample was taken for each drill interval and manually panned for estimation of HM and clay content
Sub-sampling techniques and sample preparation If core, whether cut or sawn and whether quarter, half or all core taken.
If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.
For all sample types, the nature, quality and appropriateness of the sample preparation technique.
Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.
Measures taken to ensure that the sampling is representative of the in-situ material collected, including for instance results for field duplicate/second-half sampling.
Whether sample sizes are appropriate to the grain size of the material being sampled.		 The material was split using a 40 mm single tier riffle to produce a sample for submission of approximately 1 kg in a calico sample bag. The calico sample bags were sundried before being shipped

For one sample in every 20, an additional two 1 kg calico bagged samples were taken for checking purposes. These are referred to as the B and C samples, the primary sample being designated as the A sample

2001 drill samples were dispatched to Western Geochem Labs in Perth, Australia. WGL was retained for the analysis of check samples in 2003 and 2005

The A samples were sent to IMP Laboratory in Boksburg, South Africa in 2003, ACT Laboratory in Pretoria, South Africa in 2005 and 2012, and to Bureau Veritas, South Africa in 2018

All laboratories: separation of concentrates was by heavy liquid (tetrabromoethane (TBE) at density 2.95 g/cc)

All samples were:
 
Quality of assay data and laboratory tests The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.
For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.
Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.		 Analytical procedure conforms to AS4350.2-1999; Australian Standards Heavy mineral sand concentrates - Physical testing using TBE.

Quality control procedures:
Verification of sampling and assaying The verification of significant intersections by either independent or alternative company personnel.
The use of twinned holes.
Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.
Discuss any adjustment to assay data.		 Assay data was compared with geology logs of panned HM grades for out of range assay produced by site geologist

Replicate assaying undertaken 2003 and 2005 drilling and sample assaying undertaken independently by Ticor/Kumba Resources

2012 drilling, logging and sampling undertaken by independent site geologist

2018 drilling, logging and sampling undertaken by Base Resources company geologists

Validation of the drill database was undertaken independently by IHC Robbins
Location of data points Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.
Specification of the grid system used.
Quality and adequacy of topographic control.		 2003, 2005, 2012, and 2018 drill hole collars were surveyed using DGPS. 2001 drill collars were surveyed by GPS

Topographic data was derived from ground controlled LIDAR survey undertaken by Southern Surveys

All drill holes are vertical, down hole surveys were deemed inappropriate

Grid system used throughout the program UTM Grid, Zone 38S, WG84

IHC Robbins adjusted the RL of the 2001 collars using CAE software 'Datamine Studio RM' to the LIDAR topographic surface to increase accuracy and precision for mineral resource or ore reserve estimation for the deposit
Data spacing and distribution Data spacing for reporting of Exploration Results.
Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.
Whether sample compositing has been applied.		 Three basic drill patterns used:


Variography demonstrates that drill spacing of 100 mE x 200 mN sufficient to classify as Measured Resource; 100 mE x 400 mN sufficient to classify as Indicated Resource

No sample compositing has been applied
Orientation of data in relation to geological structure Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.
If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.		 All drill holes were drilled vertically

Drill line were drilled north - south, east - west within 12 degrees of the deposit anisotropy

No bias to drill grid sampling has been introduced
Sample security The measures taken to ensure sample security. All samples were placed in calico bags and grouped in rice bags by drill hole

The samples bags were labelled by both marker and aluminium tags for drill hole number and sample depth.

The samples were delivered to the laboratory sealed with cable ties and with a shipment form
Audits or reviews The results of any audits or reviews of sampling techniques and data. Audits and reviews or the sampling data and techniques have been carried out by:
  • Ticor 2004
  • Kumba Resources 2006
  • Exxaro 2007
  • McDonald Speijers and Associates 2012
  • World Titanium Resources (WTR) 2016
  • IHC Robbins 2018
All review and audits considered the sampling and analysis to be of good quality and suitable for resource estimation.

Section 2 Reporting of Exploration Results

Criteria Explanation Comment
Mineral tenement and land tenure status Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.
The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.		 The Ranobe deposit is 100% owned by Base Resources subsidiary, Base Toliara SARL which is 85% owned by Base Resources and is located wholly within Mining Lease PDE (Permis D’Exploitation) 37242 (Figure 13).

Base Resources will acquire the remaining 15% interest upon payment of deferred consideration on achievement of key milestones as the project advances to mine development. If the key milestones have not been achieved within two years of the acquisition date, the remaining 15% interest automatically transfers to Base Resources.
  
October 2017 saw Mining Lease PDE 37242 merge with both Mining Lease 39130 and Exploration Lease 3315 to form one complete footprint of the previous three leases.
Exploration done by other parties Acknowledgment and appraisal of exploration by other parties. 1999 - 2002 Deposit first discovered and explored by Madagascar Resources NL:
  • 120 RC air core holes for 3,068 m
2003 - 2009 Ticor/Kumba Resources (Exxaro) joint venture:
  • 689 RC air core holes for 15,559 m
  • Pre-Feasibility Study completed
 2012 WTR:
  • 361 RC air core holes for 8,088 m
 2018 Base Resources:
  • 78 RC air core holes for 3,617 m
Geology Deposit type, geological setting and style of mineralisation. Project comprises a Heavy Mineral Sand deposit and is located on the southwest coast of Madagascar within the Mesozoic Morondava Basin along a 30 km wide coastal plain juxtaposed to an Eocene limestone scarp. The coastal plain which is floored by faulted limestone is overlain by a succession of progressively shallowing sequence of beach and lagoon type unconsolidated clastic and subaerial dunes which successively overstep and on-lap onto the basement limestone scarp in the east.

The deposit is hosted within a stabilized mega dune system which is arrested along the basement scarp slope and extends for approximately 20 km north northwest south southeast.  The entire dune unit is mineralized by an assemblage of ilmenite, zircon, rutile and monazite concentrated within the unit by aeolian winnowing. The unit generally thickens westwards away from the scarp slope from 3 metres to 60 m. The deposit anisotropy parallels the scarp slope, with higher HM grades concentrated along the mega- dune crest line.
Drill hole Information A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes:
  • easting and northing of the drill hole collar
  • elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar
  • dip and azimuth of the hole
  • down hole length and interception depth
  • hole length.
If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.		 All holes were drilled vertically
 
Air core holes averaged 24 m long for the project
 
2018 drilling had an average depth of 46.4 m as the program looked to also target a lower mineralisation zone
 
See drill hole location plan in Figure 103.
Exploration Results are not being reported at this time
 
Data aggregation methods In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.
Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.
The assumptions used for any reporting of metal equivalent values should be clearly stated.		 Exploration results are not being reported at this time

No metal equivalent values were used

No aggregation of short length samples was used as samples were consistently sampled at 1 - 3 m intervals
Relationship between mineralisation widths and intercept lengths These relationships are particularly important in the reporting of Exploration Results.
If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.
If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).		 The deposit is flat lying and intersected by vertical holes

The 1.5% HM cut-off zone averages 17.5 m thick and ranges in thickness from 6 to 21 m
Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Plan of Mineral Resources see Figures 10 and 113.

Oblique sections see Figures 5 and 6 of the Company’s announcement on 23 January 2019 titled “Updated Ranobe Deposit Mineral Resources (corrected)”.
Balanced reporting Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results. Exploration results are not being reported at this time
Other substantive exploration data Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances. Exploration results are not being reported at this time
Further work The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large-scale step-out drilling).
Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.		 Future work will consist of extending the drilling to the western extents of the deposit to further determine the extents of the lower mineralisation zone

Section 3 Estimation and Reporting of Mineral Resources

(Criteria in this section apply to all succeeding sections)

Criteria Explanation Comment
Database integrity Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.
Data validation procedures used.		 The original drill data derived by Madagascar Resources, Ticor/Kumba Resources (Exxaro), WTR, and Base Resources drill data have been independently reviewed and validated by IHC Robbins. 
Data review included:

- Checks of data by visually inspecting on screen (to identify translation of samples)
- Cross checking of laboratory analysis certificates with from/to assay data
- Validation of reported assay data against field value estimates
- Cross checking lithology log interpretation with oversize, slimes and HM content
- Visual and statistical comparison was undertaken to check the validity of results

An Access data base is updated and maintained by Base Resources, which has been reviewed by IHC Robbins.

Validation checks of the drill database include:

- Assay comparison for out of range values
- Sample gaps
- Overlapping sample intervals
Site visits Comment on any site visits undertaken by the Competent Person and the outcome of those visits.
If no site visits have been undertaken indicate why this is the case.		 A site visit was undertaken in 2018 by Greg Jones, the Competent Person for the IHC Robbins.  The 2018 site visit also included training and mentoring for the Malagasy geologists (which was carried out in conjunction with Ian Reudavey - Geological Superintendent)

Review of key geological units was possible by comparing drill hole residual samples from a selected type section with the logging and undertaking a side-by-side re-logging exercise
Geological interpretation Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.
Nature of the data used and of any assumptions made.
The effect, if any, of alternative interpretations on Mineral Resource estimation.
The use of geology in guiding and controlling Mineral Resource estimation.
The factors affecting continuity both of grade and geology.		 The previous geological interpretation for the Toliara deposit was undertaken by WTR in 2012 and the data was used by IHC Robbins which was validated using all logging data, sampling data, and observations and modified where appropriate. The geological interpretation undertaken by IHC Robbins was in collaboration with the companies Resource Manager

Current data spacing and quality is sufficient to confirm or indicate geological and grade continuity

Interpretation of modelling domains was restricted to the main mineralised zones using THM sinks, oversize material, slimes, and lithological logging (including colour changes)

There is a high degree of confidence in the geological interpretation of the sand units (aeolian and shallow marine sands)

The extent of the upper mineralized sand unit was determined by a combination of LIDAR and drill hole data, with no assumptions made

A further interpretation of the lower mineralised sand unit was determined primarily along the western boundary of the Toliara deposit with more recent drilling adding to the confidence of its stratigraphic positioning within the Toliara deposit

The lower mineralised sand unit has been excluded from this current resource estimate and report at this point in time on the basis that mineralogical data is available for this unit

Only the aeolian Upper Sand Unit and the Intermediate Clay Sand Unit have been considered for this resource estimate and report

The primary factor controlling grade and geology continuity is mega-dune morphology. The limestone morphology also impacts continuity of grade, primarily along the eastern extents of the Toliara deposit

Dune morphology and grade trends have been used with cross-sectional data to define search ellipsoid orientation in populating the resource model
Dimensions The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource. The resource extends for 20 km north - south and averages 2.2 km wide east-west

The average depth of mineralization from the surface to the 3% HM cut-off is 17.5 m
Estimation and modelling techniques The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.
The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.
The assumptions made regarding recovery of by-products.
Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).
In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.
Any assumptions behind modelling of selective mining units.
Any assumptions about correlation between variables.
Description of how the geological interpretation was used to control the resource estimates.
Discussion of basis for using or not using grade cutting or capping.
The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.		 CAE mining software Datamine Studio RM was used to estimate the mineral resources

Inverse distance weighting techniques were used to interpolate assay grades from drill hole samples into the block model and nearest neighbour techniques were used to interpolate index values and non-numeric sample identification into the block model

The mostly regular dimensions of the drill grid and the anisotropy of the drilling and sampling grid allowed for the use of inverse distance methodologies as no de-clustering of samples was required

Appropriate and industry standard search ellipses were used to search for data for the interpolation and suitable limitations on the number of samples and the impact of those samples was maintained.  An inverse distance weighting of three was used so as not to over smooth the grade interpolations

Hard domain boundaries were used and these were defined by the geological wireframes that were interpreted

Topographic surface was created from LIDAR data

Resource was modelled to key geological boundaries and then reported at cut-off grades of 1.5 and 3.0% THM (no minimum thickness)

The average parent cell size used for the interpolation was approximately half the standard drill hole width and a half of the standard drill hole section line spacing

The average drill hole spacing for the Ranobe deposit was 100 m east-west and 200 m north-south and with a 1.5 m samples and so the selected parent cell size was 50 x 100 x 1.5 m (where the Z or vertical direction of the cell was nominated to be the same distance as the sample length)

Four Mineral Resources estimates have been undertaken previously; Ticor 2004, Exxaro 2006, Milne 2010, MacDonald Speijers and Associates 2012. The current resource model has been reviewed against these previous estimates

No assumptions have been made regarding recovery of by-products

No deleterious elements or non-grade variables are present

All resource blocks are assumed to be mined from the surface with no overburden

Mineral assemblages show little statistical variation over the deposit, and correlate well with HM content

Drill hole declustering was not used during the interpolation because of the regular nature of sample spacing

Sample distributions were reviewed, and no extreme outliers were identified either high or low that necessitated any grade cutting or capping

Validation of grade interpolations were done visually In CAE Studio (Datamine) software by loading model and drill hole files and annotating and colouring and using filtering to check for the appropriateness of interpolations

Statistical distributions were prepared for model zones from drill hole and model files to compare the effectiveness of the interpolation

Along strike distributions of section line averages (swath plots) for drill holes and models were also prepared for comparison purposes
Moisture Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content. Tonnages were estimated on an assumed dry basis. 

The bulk density used for the Ranobe deposit is one that has been utilised by previous workers and is based on a simple linear algorithm originally developed by John Baxter (1977).  IHC Robbins from experience of working with these styles of ore bodies considers that this algorithm is a fair approximation of the in situ dry bulk density
Cut-off parameters The basis of the adopted cut-off grade(s) or quality parameters applied. Cut-off grades were used for reporting the Mineral Resources estimate.  No top or bottom cuts were used for grade interpolation
Mining factors or assumptions Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made. No specific mining method is assumed other than potentially the use of dry mining methods for the deposit using dozer trap and/or front-end loader

Deposit is planned to be mined from surface with no minimum dimensions
Metallurgical factors or assumptions The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made. Test work completed by Ticor/Kumba Resource 2004 Pre-Feasibility Study

Test work completed Exxaro 2009 Feasibility Study

Test work undertaken by AML 2007 and 2009

Process design TZMI 2012, Definitive Engineering Study

Ongoing test work at Mineral Technologies and IHC Robbins, Brisbane
Environmental factors or assumptions Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfield project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made. EMP (Environmental Management Plan) approved by Government of Madagascar June 2015
Bulk density Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.
The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.
Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.		 The bulk density used for the Ranobe deposit is one that has been utilised by previous workers and is based on a simple linear algorithm originally developed by John Baxter (1977).

IHC Robbins from experience of working with these styles of ore bodies considers that this algorithm is a fair approximation of the in situ dry bulk density, where BD = 1.61 + (0.01 x HM)
Classification The basis for the classification of the Mineral Resources into varying confidence categories.
Whether appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).
Whether the result appropriately reflects the Competent Person’s view of the deposit.		 The resource classification for the Ranobe deposit was based on the following criteria:  drill hole spacing and the distribution and influence of bulk samples

The classification of the Measured, Indicated, and Inferred Resources was supported by the uncomplicated geology, continuity of mineralisation, confidence in the drill hole data and all the supporting criteria as noted above

As a Competent Person, IHC Robbins Geological Services Manager Greg Jones considers that the result appropriately reflects a reasonable view of the deposit categorisation
Audits or reviews The results of any audits or reviews of Mineral Resource estimates. An audit and review was undertaken on the previous resource estimate carried out by WTR
Discussion of relative accuracy/ confidence Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.
The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.
These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.		 No statistical or geo-statistical review of the accuracy of the resource estimate has been undertaken

Variography was undertaken to determine the drill hole support of the selected JORC classification

Validation of the model vs drill hole grades by direct observation and comparison of the results on screen, swathe plot and population distribution analysis were favourable

The resource statement is a global estimate for the entire known extent of the Ranobe deposit within the Exploration Permit

There has been no production to date

Section 4 Estimation and Reporting of Ore Reserves

Criteria Explanation Comment
Mineral Resource estimate for conversion to Ore Reserves Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.
Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.		 The Ranobe Ore Reserves estimate is based entirely on the Measured and Indicated portion of the 2019 Ranobe Mineral Resources estimate.

Mineral Resources are reported inclusive of the Ore Reserve.
Site visits Comment on any site visits undertaken by the Competent Person and the outcome of those visits.
If no site visits have been undertaken indicate why this is the case.		 One of the Competent Persons has visited the site on several occasions.
Study status The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.
The Code requires that a study to at least Pre-Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.		 The Toliara Project pre-feasibility study (PFS) study supports the Ore Reserves.

Modifying factors accurate to the study level have been applied. The resulting mine plan is technically achievable and economically viable.
Cut-off parameters The basis of the cut-off grade(s) or quality parameters applied. A value model was developed that assigns mining and processing recoveries, costs, and revenue to the geological model.  This value model follows the entire mining process from initial land clearing to final rehabilitation.

There is no ore/waste definition due to the mining method selected.
Mining factors or assumptions The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).
The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc.
The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope sizes, etc), grade control and pre-production drilling.
The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate).
The mining dilution factors used.
The mining recovery factors used.
Any minimum mining widths used.
The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion.
The infrastructure requirements of the selected mining methods.		 Mineral Resources are converted to Ore Reserves by open pit optimisation software (Datamine MaxiPit) to provide a guide for detailed design and scheduling.  The software uses the Lerch-Grossman algorithm to generate a series of nested pit shells.  A subset of the shells were preliminarily scheduled to test heavy mineral concentrate production profiles, final production requirements, and financial investment decisions.  The preferred pit shell was selected for more detailed mine planning and scheduling.

The initial mining area (Stage 1) was selected based on its high grade and location. Detailed mining shapes based on circular dozing push profiles to a centrally located Dozer Mining Unit (DMU) were developed.  Mining shapes that were identified as too small (less than nominal 150kt) and inefficient to direct feed (greater than 100m away) a DMU by dozer mining, were marked for auxiliary mining using truck and excavator, where the material would be hauled to feed an existing DMU.

Only material identified as Upper Sand Unit (USU) was included in the PFS and the Ore Reserves estimate.

There is no ore/waste discrimination and sub-economic USU material that cannot be selectively left in the void is included as planned dilution in the ore feed for Stage 1. No global dilution factor has been applied.

Pit slopes for the Stage 1 mining shapes have been assumed at 30 degree, with a maximum target of a 100m dozing distance.  Where possible, the mining locations and sequence was developed to avoid uphill dozing.

For the purposes of scheduling the ore for Stage 2, mining shapes have been assumed as rectangular sides up to a maximum size of 200m by 400m for the remainder of the LOM schedule.

A mining recovery factor of 98% was applied when using the Lerch-Grossman algorithm to undertake economic evaluation and the generation of the pit shells.  Following more detailed mining shape design, planning and scheduling, a mining recovery factor of 100% was applied in the Ranobe Ore Reserves estimate.  Mining recovery also makes provision for a 0.25m topsoil profile.
Metallurgical factors or assumptions The metallurgical process proposed and the appropriateness of that process to the style of mineralisation.
Whether the metallurgical process is well-tested technology or novel in nature.
The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied.
Any assumptions or allowances made for deleterious elements.
The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole.
For minerals that are defined by a specification, has the ore reserves estimation been based on the appropriate mineralogy to meet the specifications?		 The ore is processed via screens, thickeners and spirals as in almost every other mineral sand operation to produce a heavy mineral concentrate (HMC).  The HMC is processed using magnetic and conductor separators to produce ilmenite and rutile products.  The remaining material is further processed using classifiers, wet tables and cleaned with conductor separators to produce zircon and recover some more rutile.  This is a typical process for mineral sands.

The plant design is based on the results of metallurgical test work conducted as part of the PFS.

Wet Concentrator Plant (WCP) recovery is ilmenite - 94.9%, rutile - 92.3%, zircon - 97.2% and leucoxene - 75.0%.
Mineral Separation Plant (MSP) recovery is ilmenite - 93.6%, rutile - 59.5%, zircon - 79.0% and leucoxene - 53.4%.  Leucoxene will ultimately report to rutile and ilmenite – chloride products at 25.7% and 74.3% respectively.

Due to the expected variation in ilmenite product split to satisfy market demands, a single overall ilmenite recovery (of the combined three ilmenite recoveries) has been used rather than separate ilmenite product recovery.

The 2019 Ranobe Mineral Resource estimate, upon which the Ranobe Ore Reserves estimate is based, incorporates 1,249 individual drill holes and 10,717 individual drill samples.
Environmental The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported. The Company holds a valid Permis Environnemental (Environment Permit No 55-15/MEEMF/ONE/DG/PE) and approved Plan de Gestion Environnementale (PGE) (Environmental Management Plan).  More detailed environmental management plans and specific work instructions addressing construction, operational and decommissioning matters are required to be prepared and submitted three months prior to the commencement of each stage.

As required by the PGE, base-line monitoring programs have been established and will continue through the construction, operational and decommissioning phases.

There are two tailings streams: sand and clay.  The sand tails are clean sand having been washed in the WCP.  The fine (clay) tails are flocculated and thickened prior to pumping to solar drying areas.

Sand tails will be pumped initially to an ex-pit tailings storage facility until sufficient mining void is established, after which appropriate in-pit tails deposition assumptions have been applied.

Fine tails will be dried and mixed with coarse tails, prior to return of topsoil.
Infrastructure The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided or accessed. The Toliara Project mine site is approximately 40km due north of the existing port of Toliara and approximately 15km inland from the coastline.  The Ranobe deposit lies west of the north-south escarpment running parallel with the coast at an elevation of between 80m and 160m above current sea level. 

Existing transport links are via a bituminised road to within 15km of the proposed mine site with only minor dirt tracks leading to the mine site.  Existing infrastructure at site is limited and designed to support an exploration camp only.  There is no power or water distributed in the area.

The development of the Toliara Project will incorporate all the infrastructure required to support the mining, concentration, separation, haulage and shipment of approximately 875ktpa of ilmenite, zircon and rutile products.  Temporary infrastructure will be required to support the early construction activities.

The Toliara Project pre-feasibility study estimates the costs for the development of all infrastructure items.
Costs The derivation of, or assumptions made, regarding projected capital costs in the study.
The methodology used to estimate operating costs.
Allowances made for the content of deleterious elements.
The source of exchange rates used in the study.
Derivation of transportation charges.
The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc.
The allowances made for royalties payable, both Government and private.		 The mine planning underpinning the Ranobe Ore Reserves estimate was conducted using capital and operating costs derived from the Toliara Project PFS, which are suitable for block model coding, strategic planning and mine design.  All costs have been estimated in US Dollars.

The PFS capital cost is estimated at US$439m (+20%/-10%) based on preliminary engineering and budget quotes from vendors, following an extensive budget quotation request process on major contract packages to establish unit rates that reflect the market conditions in Madagascar for all earthworks, concrete, SMP and buildings contractors.

The PFS estimated operating costs have been derived from experience gained operating the Company’s Kwale mineral sands mine in Kenya, incorporating local Malagasy cost inputs where appropriate. With the benefit of this experience, operating cost were modelled using a bottom up approach which considered the equipment being used, manning schedules and work rosters, and local supplier quotes for inputs such as product haulage, power, diesel and HFO prices.

The fiscal terms applicable to the Toliara Project have not yet been agreed with the Government of Madagascar.  A royalty of 2% of sales revenue payable to Government of Madagascar has been assumed, on the basis that it is consistent with the prescribed rate under the Malagasy Mining Code.
  
There are no additional treatment or refining charges applied, and minerals are sold as finished products.
Revenue factors The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.
The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.		 The revenue is a function of block modelled grade and mineral assemblage, which is then comprehensively modelled through the mining, wet and dry separation processes to estimate final products which is expected to be delivered to an off taker at a forecast price.

During the evaluation of the resource model, various pit shells where generated using a range of 5% revenue decrements from the original 100% of revenue using the MaxiPit Software.  A subset of these pit shells (65% to 80%) were selected for high level scheduling and financial modelling to identify a pit shell (70%) that met production requirements and an acceptable EBITDA and return on investment.  This pit shell provided the basis for more detailed mine planning and scheduling.

The mine planning underpinning the Ranobe Ore Reserves was conducted using preliminary product pricing that was suitable for block model coding, strategic planning and mine design.  In the final financial analysis, revenue from ore deliveries were then recalculated using the PFS pricing, sales product mix and shipping schedules.

The PFS product pricing forecasts through to 2030 are derived from Base Resources’ internal supply/demand analysis then moving to TZMI’s long term inducement prices from 2035, with prices transitioning between 2030 and 2035 in a straight line.   While the PFS prices vary over time, the pit optimisation software (MaxiPit) cannot know when a block of material will be mined, so a flat pricing regime from PFS operating year 5 (FY2026) is used.

The Ranobe Ore Reserves are feasible and economic under both pricing schedules.

Prices for products used in the evaluation of the resource model are drawn from the PFS.
Market assessment The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.
A customer and competitor analysis along with the identification of likely market windows for the product.
Price and volume forecasts and the basis for these forecasts.
For industrial minerals the customer specification, testing and acceptance requirements prior to a supply contract.		 Demand for mineral sands products has historically been closely linked to growth in global GDP, which has grown at close to 3% per annum.
  
Base Resources performs its own internal assessment of the market and also subscribes to the various market outlook and commentaries provided by TZMI.  The Toliara Project PFS covers the supply and demand outlook for all products and highlights future supply deficits that in turn provide support for the development of the Toliara Project.

Base Resources has existing customers for ilmenite, rutile and zircon products from its Kwale mineral sands mine in Kenya.  Product samples produced from Toliara Project PFS and DFS test work indicates the product quality will meet customer requirements and have been assessed as such by potential customers.  Contracts and agreements pertaining to Base Resources are confidential.
Economic The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc.
NPV ranges and sensitivity to variations in the significant assumptions and inputs.		 The Toliara Project PFS NPV of US$671 million is reported on a post-tax, pre-debt, real basis using a 10% discount rate.  Sensitivity to changes in capital costs, operating costs, product recoveries, product prices, discount rate etc are shown in the PFS.
Social The status of agreements with key stakeholders and matters leading to social licence to operate. Base Resources is working closely with local communities, government and other key stakeholders to ensure all agreements will be in place to allow construction, mining and processing to commence.

The Company operates a comprehensive Stakeholder Engagement Plan in concert with a Community Development Plan.  Close liaison with stakeholders will be maintained through the operation by a series of liaison committees representing those affected by the mine’s presence.

This is discussed in detail in the Toliara Project PFS.
Other To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:
Any identified material naturally occurring risks.
The status of material legal agreements and marketing arrangements.
The status of governmental agreements and approvals critical to the viability of the project, such as mineral tenement status, and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.		 All naturally occurring risks are assumed to have adequate prospects for control and mitigation.

The right to mine the Ranobe deposit is provided by Mining Lease (Permis d’Exploitation) 37242, a mining lease under Malagasy law.  PDE 37242 was granted on 23 October 2017, and is valid for a period of 40 years from 21 March 2012 (the date of grant of the original PDE 37242) and may be renewed in 20-year increments thereafter.  Before the Toliara Project construction and subsequent mining operations can commence, surface rights need to be secured, which requires completion of the land acquisition process.

The Company holds a valid Permis Environnemental (Environment Permit No 55-15/MEEMF/ONE/DG/PE) and approved Plan de Gestion Environnementale (PGE) (Environmental Management Plan).  More detailed environmental management plans and specific work instructions addressing construction, operational and decommissioning matters are to be prepared and submitted three months prior to the commencement of each stage.

Fiscal terms applicable to the Toliara Project are yet to be agreed with the Government of Madagascar.

The Competent Persons consider there are reasonable grounds for the Toliara Project to obtain the remaining approvals required.

Marketing arrangements are commercially sensitive but detailed test work suggests that the expected product specifications are within marketable ranges.
Classification The basis for the classification of the Ore Reserves into varying confidence categories.
Whether the result appropriately reflects the Competent Person’s view of the deposit.
The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).		 Measured Mineral Resources are converted to Proved Ore Reserves and Indicated Mineral Resources are converted to Probable Ore Reserves.  The only exception to this is for material found in the lowest 1.5 metres of blocks scheduled for mining in Stage 2 where detailed design has not yet been undertaken to provide confidence in the level of the pit floor and as a result this material is classified as Probable Ore Reserves regardless of its Mineral Resources estimate classification as Measured. Approximately 18 Mt of Probable Ore Reserves have been derived from Measured Mineral Resources.

Inferred Mineral Resources are not included in the Ore Reserves estimate.

The results reflect the views that both Competent Persons have of the deposit.
Audits or reviews The results of any audits or reviews of Ore Reserves estimates. No external audit of the Ranobe Ore Reserves estimate has been undertaken.
Discussion of relative accuracy/ confidence Where appropriate a statement of the relative accuracy and confidence level in the Ore Reserves estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the reserve within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors which could affect the relative accuracy and confidence of the estimate.
The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.
Accuracy and confidence discussions should extend to specific discussions of any applied Modifying Factors that may have a material impact on Ore Reserves viability, or for which there are remaining areas of uncertainty at the current study stage.
It is recognised that this may not be possible or appropriate in all circumstances. These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.		 Mining and processing methods selected are typical for mineral sands and have been demonstrated in various other mineral sand operations, they are considered a low risk of impacting the Ore Reserves.

The Ranobe Ore Reserves estimate is a global estimate for the entire known extent of the Ranobe deposit within the Mining Lease.

No production data is available against which the Ranobe Ore Reserves estimates may be reconciled.

Stage 1 and Stage 2 capital cost estimate is considered to be -10% to +20%.

Stress testing of operating cash flow shows this remains positive well beyond the stated accuracy of the cost estimates.

Detailed mine design has been undertaken for Stage 1. As additional resource definition drilling, processing test work and other key project parameters and costs are updated, the mine design will be updated accordingly.

The PFS provides a higher degree of confidence in the modifying factors than usual because Base Resources PFS studies are conducted in two stages: the first analyses options for mining and processing and the second analyses the selected option in greater detail.

The MSP and mining throughputs are based on detailed assessment of market capacity to absorb the mine production, and the impact of the additional production on expected pricing.  This gives confidence that the product price expectations are realistic.

The metallurgical test work has been conducted with those throughputs in mind, giving confidence that the recovery estimates are accurate.

The 2019 Ranobe Mineral Resources estimate used as the basis for the Ranobe Ore Reserves estimate was made in accordance with JORC Code, and only Measured and Indicated categories have been considered.

Generally, there is a high level of confidence in the technical and economic aspects of modifying factors.  The confidence in social and government related modifying factors is moderate to high.  Overall, the confidence in the Ranobe Ore Reserves estimate is high.

Glossary

Competent Person The JORC Code requires that a Competent Person must be a Member or Fellow of The Australasian Institute of Mining and Metallurgy, or of the Australian Institute of Geoscientists, or of a ‘Recognised Professional Organisation’.
A Competent Person must have a minimum of five years’ experience working with the style of mineralisation or type of deposit under consideration and relevant to the activity which that person is undertaking.
Indicated Mineral Resource An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit.
Inferred Mineral Resource An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.
JORC Code The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, as published by the Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.
Measured Mineral Resource A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit.
Mineral Resources Mineral Resources are a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade (or quality), and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade (or quality), continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.  Mineral Resources are sub-divided, in order of increasing geological confidence, into Inferred, Indicated and Measured categories.
Ore Reserves Ore Reserves are the economically mineable part of Measured and/or Indicated Mineral Resources.
Probable Ore Reserves The economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the Modifying Factors applying to a Probable Ore Reserve is lower than that applying to a Proved Ore Reserve.
Proved Ore Reserves The economically mineable part of a Measured Mineral Resource. A Proved Ore Reserve implies a high degree of confidence in the Modifying Factors.
Variography A geostatistical method that investigates the spatial variability and dependence of grade within a deposit.  This may also include a directional analysis.

ENDS.

For further information contact:

James Fuller, Manager Communications and Investor Relations UK Media Relations
Base Resources Tavistock Communications
Tel: +61 (8) 9413 7426 Jos Simson and Barnaby Hayward
Mobile: +61 (0) 488 093 763 Tel: +44 (0) 207 920 3150
Email: jfuller@baseresources.com.au 

About Base Resources

Base Resources is an Australian based, African focused, mineral sands producer and developer with a track record of project delivery and operational performance.  The company operates the established Kwale Operations in Kenya and is developing the Toliara Project in Madagascar.  Base Resources is an ASX and AIM listed company.  Further details about Base Resources are available at www.baseresources.com.au

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