Quarterly Activities Report

ASX, AIM and Media Release

8 October 2014

QUARTERLY ACTIVITIES REPORT - SEPTEMBER 2014


HIGHLIGHTS
  * 10% increase in production of final products quarter on quarter to 122,355
    dmt.
      - Ongoing process design enhancements and optimisation work achieving
        consistent improvements in rutile recovery throughout the quarter with MSP
        recovery in September of 90%.
      - WCP and MSP availabilities for the quarter well above expectations at 87%
        and 92% respectively.
  * Over 130,000 tonnes of ilmenite, rutile and zircon shipped in the quarter.
  * Containerised rutile sales commenced in July.
  * No lost time injuries.
  * Credit approval received for restructure of debt facilities.
   
Base Resources Limited (ASX & AIM: BSE) ("Base" or the "Company") is pleased to
provide a quarterly production and ramp-up update at its Kwale Mineral Sands
Operations ("Kwale Operations" ) in Kenya, East Africa. Following the
completion of commissioning in the March quarter, strong focus has been
maintained on availability, throughput and recovery optimisation in both the
wet concentrator plant ("WCP") and mineral separation plant ("MSP") with
considerable success achieved.

KWALE OPERATIONS

Mined ore grades remained high at 8.4% heavy mineral ("HM") as mining proceeded
through the centre of the Central Dune (8.1% HM during the previous quarter).
Following completion of concentrator spiral launder modifications at the end of
the June quarter, tonnage mined improved by 25% from 1.8mt to 2.2mt in the
September quarter.

Heavy Mineral Concentrate ("HMC") production increased by 22% to 172,885 tonnes
and Valuable Heavy Mineral ("VHM") recoveries in the concentrator improved by
3% to 96%. WCP utilisation increased from 79% to 87%.

Slime and sand deposition continued to operate according to plan. By the end of
the quarter, stacking of the third 5 metre sand wall lift was underway on the
perimeter of the tailings storage facility ("TSF").

Unseasonal rains during the quarter maintained the full 8.6GL water capacity at
the Mukurumudzi Dam.

MSP throughput of 164,000 tonnes was 7% above the previous quarter and feed
rates were consistently at design levels of 80tph or higher during the quarter.
MSP utilisation improved substantially from 87% to 92% over the quarter.

Ilmenite production continued at or above design capacity. Zircon production is
consistent with the planned twelve month ramp-up to design capacity and average
recoveries increased from last quarter's 35% to 47% this quarter. Rutile
production ramp-up continued with significant success being achieved and a good
understanding gained of the metallurgical characteristics of the various ore
types. Rutile production increased 9% over the prior quarter, from 15,221
tonnes to 16,612 tonnes with MSP recoveries averaging 86% for the quarter, and
increasing to 90% for the month of September. Further rutile recovery
improvements are expected to come from screen optimisation during the December
quarter and ongoing design enhancements. The focus over the next quarter for
zircon is on improving recoveries through final product handling design changes
to allow better grade control.

Bulk loading at Base's Likoni Port facility continued to perform well
throughout the September quarter, dispatching more than 130,000 tonnes during
the quarter, with a further 10,000 tonne rutile bulk shipment leaving shortly
after quarter end.

Base commenced container shipments of rutile in July and completed a total of 7
individual shipments (a total of approximately 3,100 tonnes) through the
September quarter and 12 shipments of containerised zircon (a total of
approximately 2,600 tonnes).

SUMMARY PHYSICAL          Mar-14              Jun-14              Sep-14
DATA                      Quarter             Quarter             Quarter       
                                                                                                             
   
Ore mined (dmt)          1,940,951           1,759,211           2,191,455     
                                                                               
HMC produced (dmt)        113,196             141,753             172,885      
                                                                               
Production (dmt)                                                               
                                                                               
Ilmenite                  68,193              91,620              100,533      
                                                                               
Rutile                     8,843              15,221              16,612       
                                                                               
Zircon                      356                4,130               5,210       


SAFETY AND TRAINING

No serious injuries occurred during the quarter. A serious potential incident
involving a permit to work breach occurred, which resulted in a number of
corrective actions being implemented post investigation. A HazOp study was
completed for all aspects of the Kwale operation from the mine through to the
port. Positive performance indicators continue to be a focus and a safety forum
was held with all managers and superintendents with a number of initiatives now
being actioned with positive outcomes are already evident.

A comprehensive training and development program is underway aimed at a
sustainable workforce transition to national employees with leadership
development, apprenticeship programs and graduate traineeships underway.

COMMUNITY AND ENVIRONMENT

Agricultural trials run in conjunction with partners Business for Millennium
Development and DEG, are progressing well with harvesting of a good quality
potato crop underway and cotton plants nearing maturity. Leveraging the
existing significant agricultural activity and experience in Kwale County,
these projects have the potential to deliver significant improvement in
livelihoods in the area through increased crop diversity, enhanced agricultural
practices, output aggregation and access to stable markets.

The Magaoni Health Centre, a joint project between the community, who donated
the land, and Base was completed during the quarter and the official opening
ceremony was attended by the Governor of Kwale. A number of other community
construction projects were completed during the quarter including the Magaoni
Secondary School multi-purpose hall, a joint project between Base and the
Ausenco Foundation.

On the environmental front, site revegetation is continuing with increased tree
planting from our extensive indigenous tree nursery. Local community based
organisations have been assisted with training to establish their own
indigenous species nurseries and educated on the importance of maintaining the
local eco-system as opposed to introducing exotic species.

MARKETING

Sales of all products have continued to progress in line with expectations
through the September quarter. The first container shipments of rutile
commenced in early July as planned and have been continuing on a steady basis.
A total of six consignments (a total of 126,000 tonnes of ilmenite and rutile)
were loaded onto bulk vessels during the quarter. A further bulk shipment of
10,000 tonnes of rutile was due to load in late September, but delays in the
arrival of the ship pushed it to early October. The majority of ilmenite
shipments occurred in the second half of the quarter.

The global TiO2 pigment industry recovered further throughout the September
quarter. The Chinese pigment market continued its upward momentum with
increases in both volumes and sales prices, including a notable increase in
pigment exports. Inventories of titanium dioxide feedstock continue to be
worked down but are likely to stay at elevated levels for the remainder of
2014. Pricing of high grade titanium dioxide feedstock (including rutile) has
remained stable for the past two quarters and should continue to do so for the
remainder of the year. Ilmenite prices appeared to have reached a bottom during
the start of the September quarter. Recent feedback from China suggests that
prices achieved for small volume sales, by domestic ilmenite producers,
marginally increased in the latter part of the quarter. Output from some of the
main ilmenite-producing regions continues to be suppressed which should support
ongoing price stability at, or near, current levels.

Zircon trade activity remained firm through the September quarter. Stocks of
zircon held by producers continued to be depleted and prices have remained
relatively flat since the early stages of 2014. It appears more certain that
the zircon market has reached the bottom of the cycle and is trending towards a
firm recovery. The ongoing improvement in market conditions should support
zircon price improvement towards the end of 2014 or the beginning of 2015.
However, any such price recovery will be largely dictated by the supply-side
response of the major zircon producers.

CORPORATE

DEBT RESCHEDULING

Confirmation of credit approval for the restructure of the Kwale Project debt
facility ("Debt Facility") has been received from all lenders. The rescheduling
has the primary effect of realigning the Debt Facility repayment schedule to
reflect the delay in commencement of sales from the Kwale Project to February
2014 from the original expectation of October 2013 when the facility was
arranged in 2011.

Under the approved terms of the restructure, all principal repayments and
funding of the debt service reserve account will be deferred by six months with
some re-profiling to suit future cash flows. Once implemented, the first
principal repayment will be deferred from December 2014 to June 2015 and the
debt repayments during the 2015 financial year will be reduced from US$45.9
million to US$11.0 million.

The finalisation of the restructure is subject to the agreement and execution
of final documentation, which is expected to be concluded over the next two
months.

KWALE COUNTY MINERAL LEVY

Base is currently continuing to work with both the Kwale County Government and
the Kenyan National Government to have the export levy purported to be imposed
by the Kwale County withdrawn or rescinded (see ASX and AIM Release dated 5
June 2014) on the basis that it is unconstitutional. Base remains comfortable
with its legal position and expects to have the matter resolved in the near
future. Political considerations are the prime impediment to the definitive
resolution of this issue.

CLOSING CASH POSITION

Due to the timing of bulk ilmenite shipments during the quarter, the value of
trade receivables grew by US$11.5 million, resulting in the Company's cash
position at 30 September 2014 falling to A$10.9 million. Cash receipts from
customers during October will return the cash position to normal operating
levels.

In summary, at 30 September 2014:

• Cash and cash equivalents (unrestricted) were A$10.9 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 Limited
Tim Carstens
Managing Director
Email: [e-mail]
Phone: [phone]

RFC Ambrian Limited (Nominated Adviser and Broker)
As Nominated Adviser                   As Broker
Andrew Thomson or Trinity McIntyre     Jonathan Williams
Phone: [phone]              Phone: [phone]

Africapractice (East Africa) (Kenyan Media Relations)
David Maingi/ James Njuguna/Joan Kimani
Phone: [phone]
Email: [e-mail]

Tavistock Communications (UK Media Relations)
Jos Simson / Emily Fenton / Nuala Gallagher
Phone: [phone]

Cannings Purple (Australian Media Relations)
Annette Ellis / Warrick Hazeldine
Email: [e-mail]
[e-mail]
Phone: [phone]

Corporate Details:

Board of Directors:
Andrew King          Non-Executive Chairman
Tim Carstens         Managing Director 
Colin Bwye           Executive Director
Sam Willis           Non-Executive Director
Michael Anderson     Non-Executive Director
Trevor Schultz       Non-Executive Director
Malcolm Macpherson   Non-Executive Director
Winton Willesee      Company Secretary

Principal & Registered Office:            Contacts:
Level 1                                   Email: [e-mail]
50 Kings Park Road                        Phone: [phone]
West Perth                                Fax: [phone]
WA 6005