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Base Resources Limited

BASE RESOURCES LIMITED - Annual Financial Report – period ended 30 June 2021

AIM and Media Release 

30 August 2021

BASE RESOURCES LIMITED Annual Financial Report – period ended
30 June 2021

African mineral sands producer and developer, (ASX & AIM: BSE) ( or the ) is pleased to provide the following extracts from the Company’s Annual Report (which includes its Annual Financial Report) for the year ended .Base Resources LimitedBase ResourcesCompany30 June 2021

These extracts should be read with reference to the notes and graphics contained in the full version of Base Resources’ 2021 Annual Report, a copy of which is available from the Company’s website:  .  The Company has also released an Investor Presentation to accompany its Annual Report, a PDF copy of which is also available from the Company’s website:  . www.baseresources.com.auwww.baseresources.com.au

All figures are reported in unless otherwise stated.US dollars

Highlights

Kwale Operations performed strongly, maintaining operational continuity throughout the year with effective controls to mitigate COVID-19 risks and impacts, and achieved the FY21 production guidance.  Markets for all mineral sands products were robust and saw demand increasing throughout the year, supporting continued price improvement for ilmenite in particular.  While zircon and rutile prices improved strongly toward the end of the year, the average realised price for both were in line with the prior year.

The Toliara Project in continues to represent a significant and attractive growth opportunity for the Company, with discussions with the Government of Madagascar on the fiscal terms applicable to the project and the lifting of the on-the-ground suspension progressing.Madagascar

Financial highlights for FY21

Full-year dividend of AUD per share (unfranked) determined4.0 cents

The Company’s capital management policy is that cash not required to meet the Company’s near-term growth and development requirements, or to maintain requisite balance sheet strength in light of prevailing circumstances, could be expected to be returned to shareholders.  With net cash of at the end of the year and the timing of the Toliara Project final investment decision still uncertain, the Board has determined a full-year dividend of AUD per share (unfranked), totalling , which will be paid wholly from conduit foreign income.  This will bring total dividends in respect of FY21 to , representing AUD per share (unfranked).  The record date for the full-year dividend is and the payment date is – refer to Base Resources’ accompanying AIM release “FY21 Full-Year Dividend – Key dates and information” for further information about the dividend.US$64.9 million4.0 centsUS$34.2 millionUS$60.8 million7.0 cents13 September 202129 September 2021

Operational highlights for FY21

Managing Director of Base Resources, , said:Tim Carstens

“Kwale Operations’ performance has been consistently strong throughout the year, meeting our FY21 production guidance.  We have successfully navigated our business through the challenges of COVID whilst, critically, maintaining our outstanding safety performance.  We have made sound progress towards extending mine life with the extension to the Kwale Special 23 to incorporate the updated Kwale South Dune Ore Reserves expected shortly, the Bumamani pre-feasibility study nearing completion and prospecting licences secured in .  As a group, we are pleased to be once again delivering meaningful returns to shareholders via dividends.”Mining LeaseTanzania

“The Toliara Project in continues to represent a significant growth opportunity for the Company. Positive progress was made in our discussions with the Government of Madagascar in relation to fiscal terms applicable to the project and we remain confident that acceptable terms should be able to be secured.  The process of updating the Ranobe Mineral Resources and Ore Reserves estimates to incorporate completed drilling work, as well as the project’s definitive feasibility study to refine and enhance outcomes, are well advanced and we expect to release these significant pieces of work shortly.”Madagascar

“While we remain committed to the ultimate development of the Toliara Project, and the value generation opportunity this represents for all stakeholders, we are close to complete with the preparatory work that makes sense for now.  We will be maintaining a high degree of engagement with the Government of Madagascar in seeking to secure fiscal terms and lifting of the suspension and will await their decision as to when they are ready to move forward with the project.  In the meantime, we hold our focus on extending the life of our Kwale Operations as well as actively considering wider opportunities in a sector that is continuing to evolve.”

Investor and shareholder webcast

The webcast will be hosted by Base Resources’ Managing Director, , Chief Financial Officer, , and General Manager - Marketing, , who will each also be available to answer questions following a presentation of the Company’s results.Tim CarstensKevin BallochStephen Hay

Details for the webcast are below.  Participants will be able to ask questions via the messaging function on the webcast platform or via the teleconference line.  Participants proposing to use the teleconference line will need to pre-register their details using the teleconference registration URL provided below.  Upon registering, participants will receive an email with their unique PIN and dial-in details so that they can join the call on the day without needing to speak with an operator.

1.Operations Summary

Base Resources operates the 100% owned Kwale Operations in , which commenced production in late 2013. Kwale Operations is located 50 kilometres south of Mombasa, the principal port facility for .KenyaEast Africa

Kwale Operations is designed to process ore to recover three main products: rutile, ilmenite and zircon.  Base Resources employs a hydraulic mining method which has proven cost effective and well suited to the Kwale deposit and involves blasting the mining face directly with high pressure jets of water to create an ore slurry.  The ore slurry is then pumped to the wet concentrator plant () where slimes are removed before a number of gravity separation steps reject most of the non-valuable, lighter gangue minerals to produce a heavy mineral concentrate ().  The heavy mineral concentrate is then processed in the mineral separation plant () which cleans and separates the rutile, ilmenite and zircon minerals into finished products for sale.WCPHMCMSP

Mining

Mining volume was steady at approximately 18.0 million tonnes in the reporting period compared to the prior period. The average heavy mineral grade of ore mined was 3.46%, lower than the prior period (3.63%).

558,084 tonnes of HMC was produced in the reporting period, lower than the prior period (606,553 tonnes) due to the lower grade of ore mined and marginally lower HM recoveries.  With HMC now the primary constraint on production, all HMC produced was fed to the MSP and HMC stocks closed the year at 19,841 tonnes (prior period: 16,450 tonnes).

Processing

As a consequence of MSP operations being constrained by available HMC, plant utilisation and feed rates were lower in the reporting period.  As a result, production of all products was lower than the prior period:

Sales

The Company maintains a balance of multi-year and quarterly offtake agreements with long term customers as well as a small proportion of ongoing spot sales.  These agreements, in place with some of the world’s largest consumers of titanium dioxide feedstocks and zircon products, provide certainty for Kwale Operations by securing minimum offtake quantities.  Sales prices in these agreements are typically either negotiated on a shipment-by-shipment basis or set for periods of up to six months and are derived from prevailing market prices.

The strength of the mineral sands market in the reporting period for all products ensured that sales continued to closely match production, with minimal inventories being maintained.

Operational COVID-19 response

As the COVID-19 pandemic persisted, the Company continued to closely monitor and respond to its impacts on our business, people and stakeholders.  Activities at Kwale Operations have continued to be maintained, balancing the considerations of employee and community health, operational safety, community benefits, government regulation, customer demand and financial prudence.

A suite of controls and mitigations aimed at protecting the health and safety of employees and neighbouring communities, including modified workplace practices and a focus on hygiene and social distancing were implemented and have proved effective, with only a small number of cases being detected in the workforce.

2.Business Development

Business development remained a core focus with the Toliara Project and opportunities to extend Kwale Operations’ mine life progressed.

Toliara Project

The Toliara Project is founded on the Ranobe deposit, located approximately 45 kilometres north of the regional town of Toliara in southwest .  The Company acquired the Toliara Project in 2018 and is currently progressing it towards development.  A definitive feasibility study () completed in 2019 confirmed the Company’s view that the Toliara Project is a world class mineral sands development opportunity, with estimated average annual production of 780 thousand tonnes (kt) of ilmenite, 53kt of zircon and 7kt of rutile over a 33-year mine life based on the current Ore Reserves.MadagascarDFS1

In , the Government of Madagascar required the Company to suspend on-the-ground activity on the Toliara Project while discussions on fiscal terms applying to the project were progressed.  Activity remains suspended as Base Resources continues to engage the Government in relation to the country’s Large Mining Investment Law (LGIM) regime, fiscal terms applicable to the Toliara Project and the lifting of the on-the-ground suspension.  Other Toliara Project workstreams were progressed in the reporting period including front-end engineering design, selection of preferred tenderers for key construction packages and prospective lenders due diligence.November 2019

Once fiscal terms are agreed and the suspension is lifted, there will be approximately 11 months’ work to complete prior to making a final investment decision.  This work includes finalising funding, completing the land access processes and concluding major construction contracts.  The resumption of international travel will also be required to complete a significant portion of this work.

[  Excludes first and last partial operating years. For further information about the DFS, refer to Base Resources’ announcement on “DFS reinforces Toliara Project’s status as a world class mineral sands development” (DFS Announcement) available at . Base Resources confirms that all material assumptions underpinning the production information disclosed in the DFS Announcement continue to apply and have not materially changed.]12 December 2019https://baseresources.com.au/investors/announcementsNote (1):

Kwale Operations extensional initiatives

With increased certainty as to the timing for the extension of Kwale Special No. 23 (), the Kwale South Dune Ore Reserves estimate was updated to incorporate existing estimated Mineral Resources located within the proposed expanded mining lease, extending mine life to following such extension.Mining LeaseSML 23December 2023

Drilling in the northern sections of the Vanga prospecting licence, south of Kwale Operations, was completed with no significant mineralisation found.  The drilling program in the Kwale North-East Sector remained on hold pending community access being secured.

Additional prospecting licences applied for in the Kuranze region of Kwale county, about 70 km west of Kwale Operations, as well as over an area south of Lamu, continued through the granting process.  Prospecting licence applications in , adjacent to the Kuranze region in , were applied for, and granted subsequent to the reporting period.TanzaniaKenya

3.Sustainability

From project development through to operating mines, Base Resources has adopted world-class, inclusive business practices seeking to minimise any negative impacts and maximise positive outcomes of its operations for its employees, its host communities and, more broadly, its host nations.

These practices are based on the understanding that achieving our long-term goals is reliant on building beneficial relationships with the communities in which we operate and establishing a balanced flow of mutual benefit.

Through these mutual benefits we aim to maximise the positive outcomes of our operations for all our stakeholders. Many of our programs seek to extend these positive outcomes past the life of the mine, creating permanent positive change for our communities.

Base Resources focuses its sustainability activities in the following three interrelated areas:

The programs and initiatives within these areas are developed taking into consideration international best practice and feedback from stakeholders, including our communities and host governments.  Base Resources complies with national legislation and international best practice, specifically the International Finance Corporation’s Performance Standards, the Equator Principles, the World Bank Group’s Environmental, Health and Safety Guidelines, the International Labour Organisation’s core labour standards, the Extractive Industries Transparency Initiative and the United Nations Voluntary Principles on Security and Human Rights.

With the objective of further enhancing and cementing a reputation for excellence in the full lifecycle of mining, an Environmental, Social and Ethics () committee of the Board was established during the year.  The Committee is responsible for overseeing the development, and evolution, of the Company’s ESE strategy, performance and reporting mechanisms.ESE

ESE matters are specifically embedded in role descriptions throughout the organisation ensuring both the requisite focus and effective integration into out “business as usual” practices.  For the 2021 financial year, 24% of the Individual Component of the Short Term Incentive Plan remuneration at risk rested on effective management of these ESE matters.

Our People

Health and Safety

Base Resources is committed to safety and has established a best-practice safety culture across all of its operations. There were no workplace lost time injuries during the reporting period.  As such the lost time injury () frequency rate remains at zero.  Base Resources employees and contractors have now worked more than 24.9 million man-hours LTI free, with the last lost time injury recorded in .  In addition, no medical treatment injuries occurred in the reporting period and as such the total recordable injury frequency rate at the end of the reporting period was zero per 1 million hours.LTIFebruary 2014

Local employment and workforce development

Base Resources prioritises the recruitment of local people via a system that is specifically designed to maximise employment opportunities and project benefits for local communities.

Through a ‘fencing system’, established in consultation with governments and local communities, Base Resources gives preference to those residing in the immediate environs of a mine with progressively lower priority given to those living further away.

Base Resources’ employee fencing system has proved highly effective at Kwale Operations and, of the 1,248 employees and contractors, 99% are now Kenyan with 71% drawn from Kwale County.  The same approach is being developed in for the Toliara Project.Madagascar

Base Resources has structured training and skills transfer programs covering on-the-job training for permanent employees, as well as tailored programs for graduates, interns, apprentices and high school students.  Implemented in both and , the programs focus not only on employees, but also on building skills capacity in the broader community.KenyaMadagascar

Reflecting the Company’s continued commitment to skills transfer, Base Resources invested in training and development across its operations during the reporting period, resulting in delivery of over 133,725 hours of training to employees and members of the community.US$800,000

Developing the Malagasy workforce – the Toliara Project apprentice program

In 2019, following an extended period of aptitude assessments and English language training, 24 young Malagasy men and women were selected for the inaugural Toliara Project apprentice program, based at our Kwale Operation in Kenya.  This two-year apprenticeship program saw the apprentices gain skills in the areas of electrical, automotive and industrial mechanics.

Applying learnings from similar previous programs at Kwale Operations the program was designed around a practical on-site component at our producing mineral sands operation and a theoretical component delivered by the Kenyan National Industrial Training Authority (NITA).

All apprentices have now completed their programs, gaining internationally recognised Certificate III qualifications, and are pursuing further work experience at our Kwale Operations until travel restrictions are lifted.

Employee engagement

Base Resources places significant emphasis on establishing and developing a highly engaged, motivated and satisfied workforce, with the sustained operational performance achieved, across production, safety and cost management, reflective of the Company’s success in developing human capital.

Additional key indicators of employee satisfaction and motivation, as well as sources of competitive cost advantage, are staff turnover and industrial action.  The voluntary staff turnover rate of Base Resources and its controlled entities () for the reporting period was 0.5%, a decrease from the prior period’s 1.8%.  Base Resources has not recorded any industrial action since being founded.Group

Diversity

Base Resources values and encourages a diverse workforce and provides a work environment in which everyone is treated fairly, and with respect and can realise their full potential.  Previously set objectives for achieving gender diversity were retained for the reporting period and a further two objectives were added.  The objectives included an increase in the overall percentage of women employed by the Group, maintaining female representation in the intakes for graduate and apprentice programs at or above one third, increasing the number of women in management roles (Manager level and above) and senior management roles (General Manager level and above) and, excluding short term employees, maintaining female turnover that is less than Group turnover.2

Base Resources achieved its objective to increase the overall percentage of women in the workforce, to maintain female representation in the intake for graduate and apprentice programs at or above one third in the reporting period and to achieve greater diversity on the Board.  The number of women in management roles in absolute terms again remained stable, voluntary female turnover was also materially the same as the prior period and no appointment opportunities were available during the reporting period at senior management level.  Further details about the Company’s diversity objectives are set out on page 65 of its 2021 Annual Report.

The Company’s diversity performance for the reporting period and prior period is outlined below:

[  Turnover covers all scenarios which may result in an employment relationship ending, with the exception of termination for cause.]Note (2):

Community

Base Resources engages with its local communities in a structured and inclusive manner. Across its operations, the Company has established various committees to act as an interface between the Company, local communities and governments.  This is an important tool for managing expectations and addressing grievances or concerns, and establishes a mechanism for achieving more participatory and inclusive outcomes.

Through close collaboration with committees and communities across and , programs have been developed based around four key pillars:KenyaMadagascar

During the reporting period, in accordance with new regulations under the Kenyan Mining Act 2016, the Company entered into Community Development Agreements () with three communities affected by Kwale Operations.  In broad terms, each CDA provides for the delivery of specified development projects for the benefit of the relevant community and establishes a dedicated committee to oversee the implementation of these projects.  The process involved extensive community consultation on CDA regulations, the formalisation of CDA committees, training of the committees in their role and further community engagement on development preferences and priorities included in the agreements.CDAs

Select information about some of Base Resources’ community-related initiatives is below.  For more information on Base Resources’ community programs, refer to the Company’s website: .au.baseresources.com

Supporting local businesses

In order to maximise positive outcomes of our operations for local communities, the Company has established diverse and extensive relationships with local and national Kenyan suppliers.  This has included a partnership with Invest in to advertise the Company’s requests for quotations and to provide training to suppliers on how to write and submit tenders.Africa

Covering a broad spectrum from haulage to the supply of indigenous seeds, Base Resources worked with over 390 Kenyan suppliers in the reporting period, placing over 13,000 orders - totalling 77% of total operating expenditure, or .US$53.4 million

Preparing for life after mining – post mining land use study

Although Base Resources is pursuing all opportunities to extend mine life at Kwale Operations, the Company began a post mining land use () project in the reporting period with the intention of creating opportunities to encourage the development of sustainable post-closure options that use the mined land, and tenured area, in a way that meets our vision for mining in .PMLUAfrica

This vision includes post mining land use that is economically sustainable, can maintain or increase local employment, has a demonstrated ability to return mined land to biodiversity, optimises the use of existing infrastructure and is welcomed by the community.

The PMLU will be progressed with key stakeholder involvement to explore three core land use themes being conservation, training and agribusiness.

COVID-19 and our communities

As the COVID-19 pandemic evolved over the past year, Base Resources continued to play an important role in its host communities, working with NGOs and national and local governments, in both and to identify areas of need and provide support to vulnerable communities affected by both health and economic related impacts of the pandemic.  Building on initial programs implemented at the outset of the pandemic last year, the Company invested to help combat COVID-19 in and in the reporting period, including:KenyaMadagascarKenyaMadagascarUS$1.4 million

Base Resources was recognised by the Australia Africa Minerals and Energy Group with an award for best innovation in Corporate Social Development for its COVID-19 community programs.

Environment

The Company is committed to undertaking its activities in a way that prevents, mitigates or offsets any detrimental impacts on the environment.  The Company’s Environmental Policy drives the Company’s commitment to minimising pollution and overall impacts, contributing to protecting and conserving biodiversity and driving environmentally responsible behaviour.

The Company operates a comprehensive environmental management system that was effective in ensuring no significant environmental incidents during the reporting period.

Rehabilitation of the Kwale Operations tailings storage facility external walls continued throughout the reporting period with approximately 54 hectares (85%) classified as rehabilitated, subject to an audit by the National Environment Management Authority.  As mining operations advanced through the South Dune, the mined-out area is being progressively rehabilitated with 104 hectares undergoing planting in the reporting period, taking the total South Dune area that has either been planted or provisionally rehabilitated to 159 hectares (64% of the disturbed area) by the end of the year.  Seeds and topsoil erosion control materials for this rehabilitation work are sourced from local women’s groups, thereby providing additional incomes for villages surrounding the mine site.

Across the Company’s operations, work continued on several programs to improve local biodiversity, and promote conservation and sustainability including the rare and endangered flora propagation research program.  Under this program, Base Resources focuses on species of conservation significance, particularly local and threatened indigenous plant species, for propagation in its nurseries.

The Kwale Operations nursery has 289 indigenous species represented, and over 138,000 plants have been grown to date, of which 103,800 have been planted.  The nursery represents one of the largest of its kind in , with 90 of the species represented appearing in the IUCN Red List of Threatened Species, as either critically endangered, endangered or vulnerable.  The nursery, together with the arboretum established alongside it, function as a training and educational facility for local community projects, schools and other visitors.Africa

For more information on other environmental programs such as biodiversity corridors, wetland restoration and recycling programs visit .au.baseresources.com

4.Markets

With a strong rebound of the Chinese pigment sector from early in the reporting period, Base Resources secured steady price gains for ilmenite. Sluggish demand due to COVID-19 lockdowns in many regions resulted in zircon and rutile experiencing a subdued first half. However, a sharp rebound in downstream demand through the second half of the reporting period resulted in the price of rutile and zircon strengthening.

Mineral sands end products are widely used in everyday life and historical demand has been tightly tied to growth in global GDP.

Ilmenite and rutile

Ilmenite and rutile are different grades of titanium dioxide (TiO) minerals and are used predominantly to produce pigments for paint, paper, plastics, textiles and inks. TiO pigment is prized for its opacity, brightness and whiteness and its ability to absorb and reflect ultraviolet radiation.  It is also non-toxic and inert to most chemical reagents.22

High grade TiO minerals (which include rutile) can also be used to produce titanium metal, which is corrosion resistant and has the highest strength to weight ratio of any metal.  Titanium metal is used across aerospace and defence industries as well as in medical devices, sporting equipment and jewellery.  High grade TiO minerals are also used in the flux in welding consumables such as welding rods and flux-cored wire which is extensively used in ship building.22

The Chinese pigment industry, the biggest consumer of sulphate ilmenite, had fully recovered from COVID-19 restrictions by the start of the reporting period with strong sales growth in both the export and Chinese domestic markets.  Demand for Chinese pigment held up throughout the period with all major pigment plants maintaining near-capacity production levels.  This fuelled ongoing strong demand and solid price gains for ilmenite.

Supply constraints on ilmenite persisted through the first half of the reporting period, contributing to higher prices.  Increasing ilmenite volumes from some African sources, domestic Chinese production and increased export activity from started to close the supply gap, and may slow pricing momentum in the coming financial year.Vietnam

The average price for Base Resources’ ilmenite in the reporting period was 21% higher than the prior period.

The pigment industry outside of , which is more dependent on high grade TiO feedstock (including rutile) and dominated by western producers, experienced a subdued start to the reporting period as COVID-19-related lockdowns impacted operations and pigment demand.  Major pigment producers reduced their production rates through much of the first half of the reporting period which resulted in a sharp reduction in demand for rutile.China2

A very strong recovery in pigment demand occurred as major consuming regions emerged from lockdowns in late 2020 and pigment plants quickly began ramping up to near-capacity levels.  Coupled with a resurgence in the welding industry and parts of the titanium metal industry, surplus rutile in the supply chain was absorbed by early 2021 and, with persistent production issues at several major producers constraining supply, rutile prices began an upward trend.

The average price for Base Resources’ rutile in the reporting period was 4% lower than the prior period.

Demand for ilmenite and rutile from Base Resources’ existing customer base continues to exceed production capacity. Expectations of ongoing strength in all end use sectors is likely to see continued support for strong prices for rutile and ilmenite through the start of the 2022 financial year.

Zircon

Zircon has a range of end-uses, including in the production of ceramic tiles, which accounts for more than 50% of global zircon consumption.  Milled zircon enables ceramic tile manufacturers to achieve brilliant opacity, whiteness and brightness in their products. Zircon’s unique properties include heat and wear resistance, stability, opacity, hardness and strength, making it sought after for other applications such as refractories, foundries and specialty chemicals.

Demand for zircon is closely linked to growth in global construction and increasing urbanisation in the developing world. Under normal conditions there is a close link between zircon demand growth and global GDP growth.

The overall zircon market was relatively subdued through the first half of the reporting period.  Weak demand in , resulting from sluggish activity in most consuming sectors, caused inventory in the supply chain to build up to higher than normal levels in the first half of the reporting period.  Demand in other markets, particularly , was impacted by COVID-19 lockdowns through mid-2020 but began to recover strongly in late 2020, causing zircon prices to stabilise as major producers managed their supply into the market.ChinaEurope

As Chinese demand also began to recover in early 2021, zircon inventory in the supply chain was rapidly absorbed, moving the market into a deficit. Zircon prices picked up sharply towards the end of the reporting period and the strong upward momentum in prices has continued into the start of the 2022 financial year.

The average price for Base Resources’ zircon in the reporting period was 4% lower than the prior period.

Demand for zircon from Base Resources’ existing customer base continues to exceed production capacity.

5.Corporate

Base Resources achieved revenue of and EBITDA of for the reporting period.US$198.2 millionUS$94.6 million

(i)Base Resources’ financial results are reported under International Financial Reporting Standards (IFRS). These Financial Statements include certain non-IFRS measures including EBITDA and EBIT. These measures are presented to enable understanding of the underlying performance of the Group and have not been audited.

Sales revenue decreased 5% to for the reporting period (prior period: ), with lower sales volumes partially offset by the average realised sales price increasing to per tonne (prior period: per tonne), primarily driven by strengthening ilmenite prices.US$198.2 millionUS$208.0 millionUS$467US$445

Total operating costs of were 5% lower than the prior period (), but due to a 10% reduction in production volume, the operating costs per tonne produced was 8% higher at per tonne (prior period: per tonne).US$65.0 millionUS$68.6 millionUS$158US$146

Cost of goods sold (operating costs, adjusted for stockpile movements and royalties), was per tonne of product sold, 8% higher than the prior period ( per tonne) due to higher unit operating costs and draw down of stockpiles.US$191US$177

With a margin of per tonne sold for the reporting period (prior period: per tonne) and an achieved revenue to cost of sales ratio of 2.5 (prior period: 2.5), Base Resources remains well positioned amongst mineral sands producers.US$276US$268

As a result of the reduced sales revenue, Kwale Operations EBITDA was lower in the reporting period at (prior period: ) and Group EBITDA was also lower at (prior period: ).US$102.9 millionUS$115.7 millionUS$94.6 millionUS$108.7 million

The majority of Kwale Operations assets are depreciated on a straight-line basis over the remaining mine life. Depreciation and amortisation increased 4% in the reporting period to (prior period: ) due to capital expenditure incurred at Kwale Operations in the reporting period being depreciated over the short remaining life of existing Ore Reserves.US$59.4 millionUS$57.2 million

With increased certainty as to the timing for the extension of SML 23, the Kwale South Dune Ore Reserves estimate was updated following the reporting period to incorporate existing estimated Mineral Resources located within the proposed expanded mining lease.  This will extend Kwale mine life to following such expansion.  The incorporation of further Mineral Resources will allow future depreciation and amortisation charges to be spread over a longer period.December 2023

From , the Kenyan corporate tax rate increased from 25% to 30%, as economic stimulus measures implemented in response to COVID-19 were wound back.  When coupled with the 50% reduction in corporate tax rate applicable for the first 10 years of Kwale Operations mine life, this resulted in an average Kenyan effective tax rate of 13.75% for the reporting period compared with 12.5% in the prior period.  Further, the change in Kenyan tax rates resulted in a increase in deferred tax movements recognised in the reporting period.  As a result, the Kwale Operations income tax expense was higher in the reporting period at (prior period: ).  A net profit after tax of was recorded by Kwale Operations in the reporting period (prior period: ).1 January 2021US$4.5 millionUS$9.3 millionUS$6.0 millionUS$28.8 millionUS$47.4 million

During the reporting period, the Group’s Kenyan subsidiary, Base Titanium, distributed of surplus cash, via dividend, to the Group’s ultimate parent entity, Base Resources Limited.  The dividend distribution by Base Titanium incurred 15% Kenyan dividend withholding tax of , which has been recorded as an income tax expense, thus contributing to a profit after tax of for the Group (prior period: ).  Previously, surplus cash distributions from Base Titanium occurred by way of redemption of preference shares, however these were fully redeemed during the reporting period. Basic earnings per share for the Group was per share (prior period: US3.38 cents per share).US$60.0 millionUS$9.0 millionUS$11.0 millionUS$39.6 millionUS$0.93 cents

Cash flow from operations was for the reporting period (prior period: ), lower than Group EBITDA due to the payment of in corporate income tax and dividend withholding tax to the Kenya Revenue Authority during the reporting period.  Operating cashflows were used to fund capital expenditure at Kwale Operations, Toliara Project progression, as well as debt reduction and servicing.US$64.5 millionUS$105.5 millionUS$19.1 million

Total capital expenditure for the Group was in the reporting period (prior period: ), comprised of at Kwale Operations (prior period: ), primarily for a co-disposal mixing plant for enhanced land rehabilitation, and for the progression of the Toliara Project (prior period: ).US$24.5 millionUS$33.6 millionUS$11.5 millionUS$10.6 millionUS$12.0 millionUS$22.8 million

Net cash

The previously outstanding balance of the Revolving Credit Facility () of was repaid in full during the reporting period.  With growing confidence in the trajectory of the mineral sands market and greater clarity on the risks and impacts of the COVID-19 pandemic, the Company retired the RCF in , nine months ahead of its final maturity.  The Company is now debt-free and, with cash reserves of (prior period: net cash of ), is in a robust financial position.RCFUS$75.0 millionUS$64.9 millionUS$87.6 millionMarch 2021

Capital management

Consistent with Base Resources’ growth strategy, the Company seeks to provide returns to shareholders through both long-term growth in the Company’s share price and appropriate cash distributions.  Cash not required to meet the Company’s near-term growth and development requirements, or to maintain requisite balance sheet strength in light of prevailing circumstances, could be expected to be returned to shareholders.

Applying this approach, the Board determined a full-year dividend of AUD per share, unfranked, with a record date of and payment date of .  This follows the AUD per share, unfranked half-year dividend paid to shareholders in , and brings total dividends in respect of the reporting period to AUD per share, unfranked.4.0 cents3.0 cent7.0 cents13 September 202129 September 2021March 2021

Significant changes in the state of affairs

There were no other significant changes in the state of affairs of the Group during the reporting period.

Dividends paid or recommended

During the reporting period, Base Resources paid a maiden dividend of AUD per share, unfranked, in , and paid a half-year dividend of AUD per share, unfranked, in .  The financial impact of dividends paid during the reporting period totalled .3.5 cents3.0 centsUS$56.4mOctober 2020March 2021

Since the end of the reporting period, the Board has determined a full-year dividend of AUD per share, unfranked, with a record date of and payment date of .  The financial impact of the dividend amounting to has not been recognised in the Consolidated Financial Statements for the year-ended .4.0 centsUS$34.2 million13 September 202129 September 202130 June 2021

After balance date events

There have been no other significant events since the reporting date.

Future developments, prospects and business strategies

Base Resources’ strategy is to continue to pursue mine life extension at Kwale Operations through the assessment and development of existing near mine deposits and exploration, and progress the Toliara Project towards development.

6.Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Year Ended30 June 2021

The notescontained in the full version of the Annual Financial Report (contained within the 2021 Annual Report) form part of these consolidated financial statements, a copy of which is available from the Company’s website: .www.baseresources.com.au

7.Consolidated Statement of Financial Position as at30 June 2021

The notescontained in the full version of the Annual Financial Report (contained within the 2021 Annual Report) form part of these consolidated financial statements, a copy of which is available from the Company’s website: .www.baseresources.com.au

8.Consolidated Statement of Changes in Equity for the Year Ended30 June 2021

The notescontained in the full version of the Annual Financial Report (contained within the 2021 Annual Report) form part of these consolidated financial statements, a copy of which is available from the Company’s website: .www.baseresources.com.au

9.Consolidated Statement of Cashflows for the Year ended30 June 2021

The notescontained in the full version of the Annual Financial Report (contained within the 2021 Annual Report) form part of these consolidated financial statements, a copy of which is available from the Company’s website: .www.baseresources.com.au

Forward Looking Statements

Certain statements made in or in connection with this release contain or comprise forward-looking statements, including but not limited to statements regarding capital cost, capacity, future production and grades, sales projections and financial performance, estimated mineral resources and ore reserves, trends in commodity prices and currency exchange rates, demand for commodities (in particular mineral sands), plans, strategies and objectives of management, operating costs, anticipated production life of Kwale Operations, provisions and contingent liabilities and tax and regulatory developments.  Such statements may be (but are not necessarily) identified by the use of phrases such as “will”, “expect”, “anticipate”, “believe” and “envisage”.

Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors that are beyond Base Resources’ control. 

No representation, warranty, assurance or guarantee can be given that such forward-looking statements will in fact be achieved or prove to be correct.  Results or outcomes could differ materially from those expressed or implied by the forward-looking statements as a result of, among other factors, changes in economic and market conditions, success of business and operating initiatives and strategies, changes in the regulatory environment and other government actions, fluctuations in product prices and exchange rates and business and operational risk management.  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 release or its contents, including any error or omission from, or otherwise in connection with it.

Subject to any continuing obligations under applicable law or relevant stock exchange listing rules, Base Resources does not undertake to publicly update, review or release any revisions to these forward-looking statements to reflect new information or future events or circumstances.

ENDS.

For further information contact:

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 and is developing the Toliara Project in Madagascar.  Base Resources is an ASX and AIM listed company.  Further details about Base Resources are available atKenyawww.baseresources.com.au

Level 3, , 6005 Email:  Phone: +61 (0)8 9413 7400 Fax: +61 (0)8 9322 8912PRINCIPAL & REGISTERED OFFICE




46 Colin StreetWest Perth, Western Australiainfo@baseresources.com.au

Phone: +61 (0)8 9480 2500NOMINATED ADVISOR RFC Ambrian Limited


Stephen Allen

/ Detlir Elezi Phone: +44 20 3207 7800JOINT BROKER Berenberg


Matthew Armitt

/ / Phone: +44 20 7523 8000  JOINT BROKER Canaccord Genuity



Raj KhatriJames AsensioPatrick Dolaghan

1. Operations Summary.
  2. Business Development.
  3. Sustainability.
  4. Markets.
  5. Corporate.
  6. Consolidated Statement of Profit or Loss and Other Comprehensive Income.
  7. Consolidated Statement of Financial Position.
  8. Consolidated Statement of Changes in Equity.
  9. Consolidated Statement of Cash Flows.
--  Revenue of  with an increase in average realised unit
        sales price partially offsetting lower production due to lower ore grade
        when compared to the prior year.
    --  EBITDA of .
    --  Net profit after tax of , impacted by Kenyan dividend
        withholding tax of  incurred on repatriation of surplus
        cash from operations to the Company.
    --  Full repayment and early retirement of the  Revolving
        Credit Facility. The Company is now debt free.
    --  Free cashflow of  (operating cashflows of 
        less investing cashflows of ).
    --  Net cash position of  at .US$198.2 millionUS$94.6 millionUS$11.0 millionUS$9.0 millionUS$75.0 millionUS$40.0 millionUS$64.5 millionUS$24.5 millionUS$64.9 million30 June 2021
--  Production of 73,248 tonnes of rutile, 317,276 tonnes of ilmenite and
        27,123 tonnes of zircon from Kwale Operations.
    --  Continued strengthening of demand for all products with a 21% increase
        in ilmenite prices.
    --  Kwale Operations mine life extension opportunities progressed with the
        Kwale South Dune Ore Reserves estimate updated and the Bumamani
        pre-feasibility study due for release in early September.
    --  Additional prospecting licence applications lodged in  and
        , with three of the Tanzanian licences now granted.
    --  Toliara Project engineering, supplier selection, systems development and
        funding components all advanced.
    --  Lost Time Injury Frequency Rate of zero across the group, with there
        being no lost time due to injury since 2014.
    --   invested in community and environmental programs, with an
        additional  contribution to support vulnerable communities
        in  and  to navigate the impacts of the COVID-19
        pandemic.KenyaTanzaniaKenyaMadagascarUS$3.7 millionUS$1.4 million
--  Date: Tuesday, 
    --  Time:  AWST / 
    --  Webcast URL: 
    --  Teleconference registration URL:31 August 20215.00pm10.00am BSThttps://edge.media-server.com/mmc/p/bxeb4s8thttps://s1.c-conf.com/diamondpass/10015902-s83kmw.html
Mining and Wet Concentrator Plant                       FY21       FY20

Ore mined (tonnes)                                17,982,578 18,056,841

Heavy mineral (HM) %                                    3.46       3.63

WCP heavy mineral concentrate production (tonnes)    558,084    606,553
Mineral Separation Plant                          FY21    FY20

MSP feed (tonnes of heavy mineral concentrate) 554,693 608,563

MSP feed rate (tph)                                 68      81

MSP recovery %

Ilmenite                                           101     100

Rutile                                             101     100

Zircon                                              85      85

Production (tonnes)

Ilmenite                                       317,276 355,093

Rutile                                          73,248  78,920

Zircon                                          27,123  31,657

Zircon low grade                                 1,878   2,370
--  Ilmenite production was 317,276 tonnes in the reporting period (prior
        period: 355,093 tonnes) with lower contained ilmenite in the MSP feed
        also impacting production.
    --  Rutile production was 73,248 tonnes in the reporting period (prior
        period: 78,920 tonnes).
    --  Zircon production was 27,123 tonnes for the reporting period (prior
        period: 31,657 tonnes) with lower contained zircon in the MSP feed also
        impacting production.
    --  Production of a low-grade zircon product continued with a contained
        1,878 tonnes produced during the year (prior period: 2,370 tonnes).
Product Sales       FY21    FY20

Sales (tonnes)

Ilmenite         320,438 356,836

Rutile            74,339  79,644

Zircon            28,037  30,267

Zircon low grade   1,705   2,971
--  Our people
    --  Community
    --  Environment
Objective                                   FY21                FY20 Change (%)

Overall percentage of women                18.4%               17.7%       0.7%

Female representation in                   33.3%               33.3%  No change
graduate and apprentice
programs at or above one third

Women in management roles                  15.8%               16.7%     (0.9)%
(Manager and above)

Women in senior management                  0.0%                0.0%  No change
(General Manager and above)

Board gender diversity                     28.6%               14.3%      14.3%

Maintain female turnover that     Female - 12.0%       Female - 0.9%       3.7%
is equal to or less than Group      Group - 8.6%        Group - 1.2%
turnover                       Difference - 3.4% Difference - (0.3%)
--  Livelihood Improvement
    --  Community Health
    --  Education
    --  Community Infrastructure
--  Partnering with local organisations to support Toliara women to produce
        81,000 washable facemasks that were subsequently donated to the
        community.
    --  Distributing over 117,000 reusable face masks in  to schools and
        other institutions.
    --  Providing 17,533 food packages to households in  and donating over
        140 tonnes of rice, vegetables and other staples in .
    --  Building and maintaining 319 handwashing stations, set up in high
        community foot-traffic areas across both countries.
    --  Producing training and communication materials to raise awareness of
        COVID-19.
    --  Donating 4,900 desks to Kenyan schools to support social distancing.
    --  Donating 549 thermometer guns.KenyaKenyaMadagascar
2021                                2020

                   Kwale Toliara    Other    Total      Kwale Toliara   Other    Total
              Operations Project  US$000s  US$000s Operations Project US$000s  US$000s
                 US$000s US$000s                      US$000s US$000s

Sales revenue    198,235       -        -  198,235    208,016       -       -  208,016

Cost of goods
sold
excluding
depreciation
&
amortisation:

Operating        (64,963       -        - (64,963)   (68,553)       -       - (68,553)
costs

Inventory        (1,576)       -        -  (1,576)        502       -       -      502
movement

Royalties       (13,823)       -        - (13,823)   (14,557)       -       - (14,557)
expense

Total cost of   (80,362)       -        - (80,362)   (82,608)       -       - (82,608)
goods sold
(i)

Corporate &      (3,759)    (69)  (7,683) (11,512)    (3,340)    (85) (6,581) (10,006)
external
affairs

Community        (4,618)       -        -  (4,618)    (3,559)       -       -  (3,559)
development

Selling &        (3,706)       -        -  (3,706)    (2,388)       -       -  (2,388)
distribution
costs

COVID-19         (1,200)       -        -  (1,200)    (1,082)       -       -  (1,082)
response
costs

Other            (1,727)       -    (537)  (2,264)        641       -   (327)      314
(expenses)/
income

EBITDA (i)       102,863    (69)  (8,220)   94,574    115,680    (85) (6,908)  108,687

Depreciation    (58,948)   (203)    (287) (59,438)   (56,725)   (186)   (273) (57,184)
&
amortisation

EBIT (i)          43,915   (272)  (8,507)   35,136     58,955   (271) (7,181)   51,503

Net financing    (5,800)       -     (78)  (5,878)    (5,524)       -   (349)  (5,873)
expenses

Income tax
expense

Corporate        (9,277)       -        -  (9,277)    (6,042)       -       -  (6,042)
income tax

Dividend               -       -  (9,000)  (9,000)          -       -       -        -
withholding
tax

NPAT              28,838   (272) (17,585)   10,981     47,389   (271) (7,530)   39,588
Note 2021 US$000s 2020 US$000s

Sales revenue                                    3        198,235      208,016

Cost of sales                                    4      (139,310)    (139,333)

Profit from operations                                     58,925       68,683

Corporate and external affairs                           (12,001)     (10,465)

Community development costs                               (4,618)      (3,559)

Selling and distribution costs                            (3,706)      (2,388)

COVID-19 response costs                                   (1,200)      (1,082)

Other (expense) / income                                  (2,264)          314

Profit before financing costs and income tax               35,136       51,503

Financing costs                                  5        (5,878)      (5,873)

Profit before income tax                                   29,258       45,630

Income tax expense                               7       (18,277)      (6,042)

Net profit for the year                                    10,981       39,588

Other comprehensive income

Items that may be reclassified subsequently to
profit or loss:

Foreign currency translation differences -                  3,599          364
foreign operations

Total other comprehensive loss for the year                 3,599          364

Total comprehensive income for the year                    14,580       39,952

Earnings per share                                          Cents        Cents

Basic earnings per share (US cents per share)    6           0.93         3.38

Diluted earnings per share (US cents per share)  6           0.92         3.34
Note 2021 US$000s 2020 US$000s

Current assets

Cash and cash equivalents                         64,925      162,559

Trade and other receivables             9         62,635       46,620

Inventories                             10        18,355       19,492

Other current assets                               8,208        7,313

Total current assets                             154,123      235,984

Non-current assets

Capitalised exploration and evaluation  11       157,909      139,633

Property, plant and equipment           12       104,917      158,751

Total non-current assets                         262,826      298,384

Total assets                                     416,949      534,368

Current liabilities

Trade and other payables                13        21,618       12,984

Borrowings                                            41       25,195

Provisions                              14        38,687       32,541

Income tax payable                                     -          539

Deferred consideration                  15         7,000       17,000

Total current liabilities                         67,346       88,259

Non-current liabilities

Borrowings                                             -       48,940

Provisions                              14        15,088       25,408

Deferred tax liability                  7          4,615        9,027

Deferred consideration                  15        10,000            -

Total non-current liabilities                     29,703       83,375

Total liabilities                                 97,049      171,634

Net assets                                       319,900      362,734

Equity

Issued capital                          16       307,811      307,063

Treasury shares                         17       (2,273)            -

Reserves                                        (14,201)     (17,227)

Retained earnings                                 28,563       72,898

Total equity                                     319,900      362,734
Issued     Retained Share based     Foreign Treasury    Total
              capital   earnings/      payment    currency   shares  US$000s
              US$000s (Accumulated     reserve translation  reserve
                           losses)     US$000s     reserve  US$000s
                           US$000s                 US$000s

Balance at 1  306,512       33,310       3,399    (22,629)        -  320,592
July 2019

Profit for          -       39,588           -           -        -   39,588
the year

Other               -            -           -         364        -      364
comprehensive
income

Total               -       39,588           -         364        -   39,952
comprehensive
income for
the year

Transactions with owners, recognised directly in equity

Share based       551            -       1,639           -        -    2,190
payments

Balance at 30 307,063       72,898       5,038    (22,265)        -  362,734
June 2020

Balance at 1  307,063       72,898       5,038    (22,265)        -  362,734
July 2020

Profit for          -       10,981           -           -        -   10,981
the year

Other               -            -           -       3,599        -    3,599
comprehensive
income

Total               -       10,981           -       3,599        -   14,580
comprehensive
income for
the year

Transactions with owners, recognised directly in equity

Dividends           -     (56,383)           -           -        - (56,383)
paid

Purchase of         -            -           -           -  (3,458)  (3,458)
treasury
shares

Share based       748        1,067       (573)           -    1,185    2,427
payments

Balance at 30 307,811       28,563       4,465    (18,666)  (2,273)  319,900
June 2021
Note 2021 US$000s 2020 US$000s

Cash flows from operating activities

Receipts from customers                                     183,107      216,818

Payments in the course of operations                       (99,524)     (83,750)

Income taxes paid                                          (19,115)     (27,543)

Net cash from operating activities                 8         64,468      105,525

Cash flows from investing activities

Purchase of property, plant and equipment                   (9,310)     (10,377)

Payments for exploration and evaluation                    (15,222)     (23,212)

Other                                                          (13)          299

Net cash used in investing activities                      (24,545)     (33,290)

Cash flows from financing activities

Proceeds from borrowings                                          -       75,000

Dividends paid                                     19      (56,383)            -

Purchase of treasury shares                                 (3,458)            -

Repayment of borrowings                                    (75,000)     (20,000)

Payments for debt service costs and re-scheduling           (2,977)      (2,512)
fees

Net cash (used in) / from financing activities            (137,818)       52,488

Net (decrease) / increase in cash held                     (97,895)      124,723

Cash at beginning of year                                   162,559       39,242

Effect of exchange fluctuations on cash held                    261      (1,406)

Cash at end of year                                          64,925      162,559
, Manager Communications and Investor  Media Relations
Relations

Base Resources                                    Tavistock Communications

Tel: +61 (8) 9413 7426                             and 

Mobile: +61 (0) 488 093 763                       Tel: +44 (0) 207 920 3150

Email:James FullerJos SimsonGareth TredwayUKjfuller@baseresources.com.au
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