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BASE RESOURCES LIMITED - Annual Financial Report – period ended 30 June 2020

AIM and Media Release 

24 August 2020

Annual Financial Report – period endedBASE RESOURCES LIMITED
30 June 2020

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 the Annual Financial Report) for the year ended .Base Resources LimitedBase ResourcesCompany30 June 2020

These extracts should be read with reference to the notes and graphics contained in the full version of the 2020 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 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 maintained operational continuity, adapting smoothly for the COVID-19 pandemic, and achieved the upper end of production guidance while ongoing firm demand supported price improvement for ilmenite and rutile.  progressed with completion of the definitive feasibility study () reinforcing the Company’s view that the is a world class mineral sands development opportunity.The Toliara ProjectToliara ProjectDFS

Financial highlights for FY20

Maiden dividend

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.

Reflecting this policy, the Board has determined a maiden dividend of AUD per share, unfranked, with a record date of and payment date of .3.5 cents21 September 20207 October 2020

Operational highlights for FY20

Managing Director of , , said:Base ResourcesTim Carstens

“Kwale Operations has continued to perform strongly throughout the year resulting in achieving the upper end of our production guidance, a particularly pleasing result in what was our first year of operations on the South Dune and with the adaptations necessitated by the COVID-19 pandemic drawing focus.  As the current engine of our business, extending mine life at Kwale is a priority and commencement of a pre-feasibility study for mining the North Dune, which should be completed in early 2021, was significant in these efforts.”Base Resources

“The Toliara Project continued to progress with the release of a robust definitive feasibility study in , a significant milestone and confirming the project’s status as one of the best mineral sands development opportunities in the world.  Assay results completed from the 2018 and 2019 drilling campaign have revealed significant additional high-grade mineralisation beyond the existing mineral resources, demonstrating the potential to extend the well past the current planned 33-year mine life.”December 20191Toliara Project

“On-the-ground activity remains suspended as we continue to engage with the Government of in relation to the fiscal terms applicable to the .  While progress has been encouraging, discussions have been limited as the Government focuses on managing its response to the COVID-19 pandemic.  With the effective shutdown of Government, international travel restrictions and broader COVID-19 measures and impacts both in and globally, the final investment decision () to proceed with development of the has been delayed with FID now unlikely to occur before September 2021.”MadagascarMadagascarToliara ProjectToliara ProjectFID

“In light of the Company’s strong financial performance and position, and the delay to the Toliara Project FID, and consistent with our determination to deliver concrete returns to shareholders, the Board has determined to implement our maiden dividend.  We believe a AUD per share dividend strikes the right balance between delivering returns to shareholders, retaining balance sheet strength in uncertain times and allowing for the sensible progression of the as uncertainty resolves.”3.5 centToliara Project

[  For further information in relation to the drill results, refer to Base Resources’ announcement on “Toliara Project drill assays reveal significant high-grade mineralisation” available at .  confirms that it is not aware of any new information or data that materially affects the information included that announcement.]Note (1):21 January 2020https://www.baseresources.com.au/investors/announcements/Base Resources

Investor and shareholder webcast

Base Resources’ Managing Director, , CFO, and GM Marketing, , will host an investor and shareholder webcast today to discuss Base Resources’ FY20 results. Tim CarstensKevin BallochStephen Hay

Participants will be able to ask questions via the messaging function on the webcast platform or via the teleconference line, see details below.  Participants using 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 number and dial in details so that they can join the call on the day without needing to speak with an operator.

conference callEurope

: Monday, : /DateTimeWebcast URL:24 August 20204.00pm9.00am BST

AWSThttps://edge.media-server.com/mmc/p/z6sqt7r2

Teleconference registration URL:https://s1.c-conf.com/diamondpass/10009485-invite.html

1. Operations Summary

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 .Base ResourcesKenyaEast Africa

Kwale Operations is designed to process ore to recover three main products: rutile, ilmenite and zircon.  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.Base Resources

Mining

Following the transition of mining operations to the lower grade South Dune in , mining volume increased by 1% to 18.1 million tonnes in the reporting period (the year ended ) compared to the prior period (the year ended ).  The average heavy mineral grade of ore mined was 3.63%, lower than the prior period (3.90%) due to the lower average ore grade in the South Dune compared with the Central Dune mined in prior years.July 201930 June 202030 June 2019

606,553 tonnes of HMC was produced in the reporting period, lower than the prior period (644,180 tonnes) due to the lower grade of ore mined.  With HMC now the primary constraint on production, all HMC produced was fed to the mineral separation plant (MSP) and HMC stocks closed the year at 16,450 tonnes (prior period: 20,100 tonnes).

Processing

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

Sales

Across each of its products, 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 the Kwale Operations by securing minimum offtake quantities. Sales prices in these agreements are derived from prevailing market prices, based on agreed price indices or periodic price negotiations.

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

2. Operational COVID-19 Response

As the COVID-19 pandemic developed in early 2020, its impacts on the Company’s business, people and stakeholders was the subject of close monitoring and response development.

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.  However, it must be acknowledged that a halt to, or curtailment of, operations remains possible if circumstances change and the balance of factors shifts as the pandemic runs its course.

implemented a number of changes to operational workplaces in the reporting period to protect the health and safety of employees and neighbouring communities.  These included:Base Resources

The Company continues to monitor and manage the various risks associated with COVID-19, including the following specific to our Kwale Operations:

3. Business Development

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

Toliara Project

is founded on the Ranobe deposit, located approximately 45 kilometres north of the regional town of Toliara in south west .  The Company acquired the in 2018 and is currently progressing the project towards development, with a DFS being completed in .  The DFS outcomes confirm the Company’s view that the 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 the assumed 33-year mine life.The Toliara ProjectToliara ProjectToliara ProjectMadagascarDecember 20192

Following completion of the DFS, work commenced on the front-end engineering design, including the equipment selection, tender evaluation and preferred contractor selection for a number of key packages including export facility marine works, bridge, power and fuel supply.  Completion of the DFS also allowed the prospective lenders due diligence process to commence, with independent technical and environmental and social experts appointed.

In , the Government of required the Company to temporarily suspend on-the-ground activity on the while discussions on fiscal terms applying to the project were progressed.  Activity remains suspended as continues to engage with the Government in relation to the fiscal terms applicable to the , with encouraging progress made.November 2019MadagascarToliara ProjectBase ResourcesToliara Project

The Toliara Project DFS anticipated a final investment decision (FID) being made in .  However, with the effective shutdown of Government, international travel restrictions and broader COVID-19 measures and impacts both in and globally, FID will be delayed.  At this time, it is not considered appropriate to provide a revised FID date until there is greater clarity on the trajectory of resumption of global economic activity.September 2020Madagascar

Over the course of 2018 and 2019, the Company completed 29,753m of drilling from 770 holes to test the extent of mineralisation to the west of the existing Ranobe Mineral Resources and at depth.  While assaying is still ongoing, with only 67% of samples completed to date, results received have revealed significant additional high-grade mineralisation, particularly to the west of the current Ranobe Ore Reserves.  These results demonstrate the potential to extend the well beyond the current planned 33-year mine life.3Toliara Project

[Notes:

(2):  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 . 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/announcementsBase Resources

(3):  For further information in relation to the drill results, refer to Base Resources’ announcement on “Toliara Project drill assays reveal significant high-grade mineralisation” available at .  Base Resources confirms that it is not aware of any new information or data that materially affects the information included that announcement.]21 January 2020https://baseresources.com.au/investors/announcements

Kwale Operations extensional exploration

Mining tenure arrangements continued to progress with the as a precursor to an anticipated updated Ore Reserves estimate based on the expanded 2020 Kwale South Dune Mineral Resources.  However, progress has slowed as the government focuses on combating the COVID-19 pandemic.Kenyan Ministry of Petroleum and Mining

Following completion of a concept study for mining the Kwale North Dune deposit in early , a pre-feasibility study was commenced to assess its potential to offer mine life extension and is on target for completion in early 2021.January 2020

Completion of the remaining drilling program in the Kwale North-East Sector and the northern sections of the Vanga prospecting licence remain on hold pending community access being secured.  A number of additional prospecting licences were applied for in the reporting period, including over an area in the Kuranze region of Kwale county about 70 km west of Kwale Operations, as well as over an area south of Lamu.

4. Markets

With ongoing supply constraints, and despite the emergence of COVID-19, secured further price gains for rutile and ilmenite in the reporting period.  Sluggish demand meant that zircon experienced a subdued first half of the reporting period before supply discipline, in response to COVID-19 related demand uncertainty, stabilised pricing.Base Resources

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 (Ti0) minerals and are used predominantly to produce pigments for paint, paper, plastics, textiles and inks.  Ti0 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 Ti0 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.2

The global pigment industry experienced a steady start to the reporting period following a period of de-stocking between late 2018 through to mid-2019.  Optimism was building through the first half of the reporting period with an expectation that pigment demand, fuelled by improved underlying consumption and some re-stocking, would increase through calendar year 2020.  The pigment market was strong through the January to period and production rates among Western producers increased.  However, growing concerns around COVID-19 through March and started to weigh on industry sentiment with COVID-19 related shutdowns and economic impacts taking effect from .  Towards the end of the reporting period, pigment producers reported expectations for a drop in demand and, in response, began to scale back pigment production at some plants.April 2020April 2020May 2020

Conditions within the titanium metal sector strengthened through much of the reporting period.  A significant and growing backlog of orders with the major aircraft manufacturers had led to strong demand for titanium metal from the aerospace industry.  However, COVID-19 related shutdowns of aerospace manufacturing, followed by the emergence of aircraft order cancellations, have resulted in a much more subdued outlook for this sector.

Supply constraints on high grade titanium feedstocks (which includes rutile) continued through the reporting period. This was the result of some rutile deposits coming to the end of their life and ongoing production issues at some major rutile operations, further exacerbated by COVID-19 related shutdowns in impacting chloride slag and rutile output. Despite reduced pigment production at the end of the reporting period, demand for high grade feedstocks from all three end-user segments (pigment, Ti0 metal and welding) exceeded supply through most of the reporting period which resulted in steady price gains. The average price for Base Resources’ rutile in the reporting period was 18% higher than in the prior period.South Africa2

Supply constraints on ilmenite also persisted through the course of the year as bans on all private mining of mineral sands deposits in have remained in place and Vietnamese ilmenite exports continue to be constrained by the absence of export quota renewals.  Ilmenite supply from has been lower than expected during the second half of the reporting period and COVID-19 related shutdowns in resulted in the suspension of ilmenite production from India’s government-owned mineral sands producer.IndiaMozambiqueIndia

Chinese pigment plants operated at high utilisation levels through most of the reporting period, delivering strong production.  While COVID-19 related shutdowns in resulted in the temporary suspension of some pigment production, overall output was not significantly impacted.  The Chinese domestic market for pigment softened through February and but the loss in domestic pigment sales was offset by record exports during this period.  From onwards, an improvement in the Chinese domestic market for pigment has been offset by declining export demand.  The overall impact has been a modest net decrease in demand which is expected to result in some production consolidation and an overall reduction of Chinese pigment production. Ilmenite demand remained firm for the reporting period and this, combined with the restrictions on ilmenite supply, resulted in ilmenite prices trending upwards through the year.  The average price for Base Resources’ ilmenite in the reporting period was 30% higher than in the prior period.ChinaMarch 2020April 2020

Expectations of declining pigment and titanium metal production are likely to see reduced demand for rutile through the initial part of the coming period, which could be expected to result in downward price pressure.

Ilmenite demand is expected to decline modestly at the start of the coming period but supply constraints are expected to offset this and keep pricing stable.

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.

Global trade tensions and economic uncertainties, combined with increased environmental inspections in some of the major zircon consuming regions in , led to cautious buying behaviour from consumers and an overall dampening of demand through the first half of the reporting period.  As some major suppliers pushed increased zircon volume into the market, prices experienced downward pressure at the end of 2019 and into the start of 2020.  Sentiment in the zircon sector began to improve through as consumers became increasingly optimistic on the back of progress being made on international trade issues and a general improvement in the economic outlook.ChinaJanuary 2020

However, COVID-19 related manufacturing shutdowns in during , followed by shutdowns in and , resulted in a drop in zircon demand and a renewed negative outlook.  The reduced demand was partially offset by the impact of COVID-19 related shutdown of major zircon producers in , which subsequently led to a number of large zircon consumers becoming concerned over securing supply into the June quarter.  Some major zircon suppliers have indicated an intent to manage supply to the market conditions to support market prices.  As a result, zircon pricing remained very stable through the second half of the reporting period.ChinaItalySpainSouth AfricaFebruary 2020

While zircon demand is expected to remain subdued into the coming year, zircon prices are likely to remain stable for as long as supply from major producers is managed to suit the conditions.

Demand for zircon from Base Resources’ customers remains firm and continues to match the Company’s production levels.  Given the characteristics of zircon in the South Dune, has amended its production profile from two grades of zircon to a single high quality grade zircon product, which has been very well received by the market.  The average price for Base Resources’ standard zircon in the reporting period was 9% lower than the prior period.Base Resources

5. Corporate

achieved a profit after tax of for the reporting period compared to in the prior period with lower sales volumes offset by higher product pricing.Base ResourcesUS$39.6 millionUS$39.2 million

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

Sales revenue decreased 1% to for the reporting period (prior period: ), achieving an average price of product sold of per tonne (prior period: per tonne), with higher average realised prices for rutile and ilmenite, partially offset by lower prices for zircon. In addition, due to lower production as a consequence of lower ore grades, sales volumes decreased by 11% in comparison to the prior period, offsetting the increase in sale prices.US$208.0 millionUS$209.5 millionUS$445US$401

Total operating costs of for the reporting period were 8% higher than the prior period () due to increased pumping costs associated with the mining operations being further from the wet concentrator plant following the transition to the South Dune, and non-cash movements in the rehabilitation and mine closure provision.  Operating cost per tonne produced was 22% higher at per tonne for the reporting period (prior period: per tonne), due to the increase in operating costs and a 12% reduction in production as a result of lower ore grades.US$68.6 millionUS$63.2 millionUS$146US$120

Total cost of goods sold, excluding depreciation and amortisation, was for the reporting period, 3% higher than the prior period () due to a combination of higher unit operating costs, lower sales volumes and stockpile inventory movements.  The average unit cost was per tonne of product sold, 16% higher than the prior period ( per tonne) due to the higher unit operating costs.US$82.6 millionUS$79.9 millionUS$177US$153

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: 2.6), the Company remains well positioned amongst mineral sands producers.US$268US$248

The Company’s COVID-19 response included providing assistance to the governments and communities in both and through programs that included construction of hygiene facilities, distribution of food and provision of medical supplies and equipment.  The cost of these programs was in , which was expensed, and in , which was capitalised to the , consistent with our treatment of all community relations costs.KenyaMadagascarKenyaMadagascarUS$1.1 millionUS$0.1 millionToliara Project

Higher operating costs together with marginally lower revenue and COVID-19 response costs have delivered a reduced Kwale Operations EBITDA for the reporting period of (prior period: ) and a Group EBITDA of (prior period ).US$115.7 millionUS$120.3 millionUS$108.7 millionUS$113.5 million

The majority of Kwale Operations assets are depreciated on a straight-line basis over the remaining mine life. Depreciation and amortisation has increased 10% in the reporting period to (prior period: ) due to capital expenditure incurred on the transition of mining operations to the South Dune being depreciated over the short remaining period during which the existing estimated Ore Reserves will be mined.  Mining tenure arrangements to extend the Kwale Special No.23 are progressing with the .  Should the extension be successful there is the potential to increase the estimated Ore Reserves and extend mine life, thereby spreading future depreciation and amortisation charges over a longer period.US$57.2 millionUS$52.1 millionMining LeaseKenyan Ministry of Petroleum and Mining

A net profit after tax of was recorded by Kwale Operations (prior period: ) and Group net profit after tax of (prior period: ).  Basic earnings per share for the Group was US3.38 cents per share (prior period: US3.39 cents per share).US$47.4 millionUS$47.9 millionUS$39.6 millionUS$39.2 million

Cash flow from operations was for the reporting period (prior period: ), lower than Group EBITDA due to the payment of in corporate income tax to the during the reporting period, offset by a reduction in trade receivables and other working capital movements.  The operating cashflows were partially applied to the funding of capital expenditure at Kwale Operations, progression, as well as debt servicing.US$105.5 millionUS$96.6 millionUS$27.5 millionUS$10.3 millionKenya Revenue AuthorityToliara Project

Total capital expenditure for the Group was in the reporting period (prior period: ), with at Kwale Operations (prior period: ), primarily for pumping, piping and associated infrastructure required to progress mining operations further along the South Dune.  was spent on the progression of the (prior period: ), including the definitive feasibility study which was released in .  A further was spent on Corporate capital works (prior period: ).US$33.6 millionUS$36.1 millionUS$10.6 millionUS$18.5 millionUS$22.8 millionUS$17.3 millionUS$0.2 millionUS$0.3 millionToliara ProjectDecember 2019

Net cash

Having repaid the outstanding balance of the Revolving Credit Facility (RCF) earlier in the reporting period, in , the Company drew down the full available under the RCF to secure enhanced liquidity and provide flexibility as part of a prudent risk management strategy for navigating the rapidly evolving uncertainty associated with the COVID-19 pandemic.  With a net cash position at of (prior period: ), consisting of cash reserves of and the fully drawn RCF balance of , the Company is in a robust financial position.US$20.0 millionUS$75.0 millionUS$87.6 millionUS$19.2 millionUS$162.6 millionUS$75.0 millionMarch 202030 June 2020

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.

Reflecting this approach, the Board determined a maiden dividend of per share, unfranked, with a record date of and payment date of .A$0.03521 September 20207 October 2020

Kenyan VAT receivable

has refund claims for VAT paid in , relating to both the construction of the and the period since operations commenced, totalling approximately at .  These claims are proceeding through the process, with a number of operational period claims, totalling approximately , settled during the reporting period.  Base Resources is continuing to engage with the Kenyan Treasury and the to seek to expedite the remainder of the refunds.Base ResourcesKwale ProjectKenya Revenue AuthorityKenya Revenue AuthorityKenyaUS$17.9 millionUS$11.0 million30 June 2020

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.

After balance date events

Since the end of the reporting period, on , the Board has determined a maiden 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 .21 August 202021 September 20207 October 202030 June 20203.5 centsUS$28.2 million

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 exploration, and progress the towards development.Toliara Project

6. Consolidated Statement of Profit or Loss and Other Comprehensive Income for the Year Ended30 June 2020

The notescontained in the full version of the Annual Financial Report (contained within the 2020 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 2020

The notescontained in the full version of the Annual Financial Report (contained within the 2020 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 2020

The notescontained in the full version of the Annual Financial Report (contained within the 2020 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 2020

The notescontained in the full version of the Annual Financial Report (contained within the 2020 Annual Report) form part of these consolidated financial statements, a copy of which is available from the Company’s website: .www.baseresources.com.au

ENDS.

For further information contact:

AboutBase 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 in Madagascar.  is an ASX and AIM listed company.  Further details about are available atBase ResourcesToliara ProjectBase ResourcesBase ResourcesKenyawww.baseresources.com.au

Level 1, , 6005 Email:  Phone: +61 (0)8 9413 7400 Fax: +61 (0)8 9322 8912PRINCIPAL & REGISTERED OFFICE




50 Kings Park RoadWest Perth, Western Australia[email protected]

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


Stephen Allen

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



Matthew Armitt

1. Operations Summary.
  2. Operational COVID-19 Response.
  3. Business Development.
  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 product price increases mitigating the
        impact of lower production.
    --  EBITDA of .
    --  NPAT of .
    --  Free cashflow of  (Operating cashflows of  less investing cashflows of ).
    --  Net cash position of  as at .US$208.0 millionUS$108.7 millionUS$39.6 millionUS$72.2 millionUS$105.5
        millionUS$33.3 millionUS$87.6 million30 June 2020
--  A COVID-19 response that has been effective in maintaining the health
        and wellbeing of employees, whilst continuing to deliver operational
        performance.
    --  With the production of 78,920 tonnes of rutile, 355,093 tonnes of
        ilmenite and 31,657 tonnes of zircon, Kwale Operations exceeded
        expectations in its first full year of mining the South Dune deposit and
        achieved results at the upper end of FY20 production guidance.
    --  Firm demand saw continued strengthening of prices with higher average
        prices achieved for rutile (18% increase) and ilmenite (30% increase)
        relative to the prior period, while a more subdued market for zircon
        persisted (9% decrease).
    --  Kwale Operations mine life extension opportunities progressed with
        commencement of a pre-feasibility study for mining the North Dune
        deposit.
    --  Completion of the Toliara Project DFS, following which front-end
        engineering design and lender due diligence commenced.
    --   drill results revealed significant additional high-grade
        mineralisation extending beyond the current mineral resources estimate
        but within the existing mining lease, demonstrating the potential for a
        considerably longer mine life than the 33 years assumed in the DFS.
    --  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  in navigating the impacts of the COVID-19 pandemic.Toliara ProjectUS$3.4mUS$1.2mKenyaMadagascar
Mining and Wet Concentrator Plant (WCP)                 2020       2019

Ore mined (tonnes)                                18,056,841 17,822,324

Heavy mineral (HM) %                                    3.63       3.90

WCP heavy mineral concentrate production (tonnes)    606,553    644,180
Mineral Separation Plant Performance              2020    2019

MSP feed (tonnes of heavy mineral concentrate) 608,563 702,082

MSP feed rate (tph)                                 81      84

MSP recovery %

Ilmenite                                           100     102

Rutile                                             100     101

Zircon                                              85      76

Production (tonnes)

Ilmenite                                       355,093 402,698

Rutile                                          78,920  92,393

Zircon                                          31,657  31,941

Zircon low grade                                 2,370   1,960
--  Ilmenite production was 355,093 tonnes in the reporting period (prior
        period: 402,698 tonnes).
    --  Rutile production was 78,920 tonnes in the reporting period (prior
        period: 92,393 tonnes) with higher contained rutile in the feed
        partially offsetting the reduced feed rate.
    --  Zircon production was 31,657 tonnes for the reporting period (prior
        period: 31,941 tonnes) with a higher proportion of contained zircon in
        the HMC and improved MSP recoveries offsetting the lower feed tonnes.
        The higher zircon recovery is a function of the mineral properties
        encountered in the South Dune, which contributed to improved separation
        efficiency, as well as lower MSP feed rates enabling further
        optimisation of the zircon wet circuit.
    --  Production of a low-grade zircon product continued with a contained
        2,370 tonnes produced during the year (prior period: 1,960 tonnes).
Product Sales       2020    2019

Sales (tonnes)

Ilmenite         356,836 395,378

Rutile            79,644  94,070

Zircon            30,267  32,992

Zircon low grade   2,971   1,173
--  Substantially modifying workplace practices, such as reducing the number
        of personnel on site where possible and focusing on hygiene and social
        distancing measures to minimise the risk of COVID-19 transmission.
    --  Working with local authorities to adjust practices to ensure compliance
        with government COVID-19 transmission reduction measures while
        maintaining operational continuity. These included altering rosters to
        fit within curfews as well as modifying arrangements to comply with
        county border travel restrictions.
    --  Providing the option for fly-in-fly-out employees to return to their
        home country, as the practicalities of complying with isolation or
        quarantine restrictions in both  and their home country have
        rendered roster travel impractical.
    --  Temporarily closing offices in  and  in alignment with
        applicable government measures.KenyaMadagascarPerth
--  Community support – Base Resources’ operations in  enjoy broad
        community and government support due to recognition of the benefits the
        mine brings to the region and nation. However, the Company’s social
        licence to operate could be compromised by any mishandling of its
        COVID-19 response.  monitors community sentiment closely
        and, in addition, has instigated a wide-ranging community support
        program to assist local communities manage the impacts of COVID-19 (see
        page 19 of the Annual Report for further details).
    --  Employee health – employee health is monitored closely and there were no
        recorded infections of COVID-19 in our workforce during the reporting
        period. However, subsequent to year end, a handful of cases were
        detected in the workforce. Isolation, contact tracing and testing
        measures have seen this effectively contained.
    --  Market demand – demand for Kwale Operations products remained firm in
        the reporting period and in the early months of FY21. However, signs are
        emerging of more subdued demand for the balance of the year. In the
        longer-term, robust demand for mineral sands products is expected to
        re-emerge.
    --  Continued supply of inputs (spares, fuel, etc.) – the Company is closely
        managing its supply chain which is supported by its close proximity to
        the port of Mombasa. No supply issues arose in the reporting period.
    --  Security - the Company closely monitors the security environment around
        Kwale Operations and has not registered any indications of concerning
        civil unrest emerging to date.
    --  Government policy –  worked closely with national and
        county governments to ensure compliance with any measures required and
        has the support of the government to continue operations.KenyaBase ResourcesBase Resources
2020                                2019

                   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    208,016       -       -  208,016    209,456       -       -  209,456

Cost of goods
sold
excluding
depreciation
&
amortisation:

Operating       (68,553)       -       - (68,553)   (63,234)       -       - (63,234)
costs

Inventory            502       -       -      502    (2,075)       -       -  (2,075)
movement

Royalties       (14,557)       -       - (14,557)   (14,597)       -       - (14,597)
expense

Total cost of   (82,608)       -       - (82,608)   (79,906)       -       - (79,906)
goods sold
(i)

Corporate &      (3,340)    (85) (6,581) (10,006)    (4,024)   (249) (5,859) (10,132)
external
affairs

Community        (3,559)       -       -  (3,559)    (3,607)       -       -  (3,607)
development

Selling &        (2,388)       -       -  (2,388)    (2,501)       -       -  (2,501)
distribution
costs

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

Other income         641       -   (327)      314        850       -   (649)      201

EBITDA (i)       115,680    (85) (6,908)  108,687    120,268   (249) (6,508)  113,511

Depreciation    (56,725)   (186)   (273) (57,184)   (51,885)       -   (183) (52,068)
&
amortisation

EBIT (i)          58,955   (271) (7,181)   51,503     68,383   (249) (6,691)   61,443

Net financing    (5,524)       -   (349)  (5,873)    (9,729)       - (1,826) (11,555)
expenses

Income tax       (6,042)       -       -  (6,042)   (10,735)       -       - (10,735)
expense

NPAT (i)          47,389   (271) (7,530)   39,588     47,919   (249) (8,517)   39,153
Note 2020 US$000s 2019 US$000s

Sales revenue                                    3        208,016      209,456

Cost of sales                                    4      (139,333)    (131,791)

Profit from operations                                     68,683       77,665

Corporate and external affairs                           (10,465)     (10,315)

Community development costs                               (3,559)      (3,607)

Selling and distribution costs                            (2,388)      (2,501)

COVID-19 response costs                                   (1,082)            -

Other income                                                  314          201

Profit before financing costs and income tax               51,503       61,443

Financing costs                                  5        (5,873)     (11,555)

Profit before income tax                                   45,630       49,888

Income tax expense                               7        (6,042)     (10,735)

Net profit for the year                                    39,588       39,153

Other comprehensive income

Items that may be reclassified subsequently to
profit or loss:

Foreign currency translation differences -                    364      (1,915)
foreign operations

Total other comprehensive loss for the year                   364      (1,915)

Total comprehensive income for the year                    39,952       37,238

Earnings per share                                          Cents        Cents

Basic earnings per share (US cents per share)    6           3.38         3.39

Diluted earnings per share (US cents per share)  6           3.34         3.34
Note 2020 US$000s 2019 US$000s

Current assets

Cash and cash equivalents                        162,559       39,242

Trade and other receivables             9         46,620       62,397

Inventories                             10        19,492       19,574

Other current assets                               7,313        6,313

Total current assets                             235,984      127,526

Non-current assets

Capitalised exploration and evaluation  11       139,633      115,891

Property, plant and equipment           12       158,751      205,586

Total non-current assets                         298,384      321,477

Total assets                                     534,368      449,003

Current liabilities

Trade and other payables                13        39,617       33,138

Borrowings                              14        25,195           19

Provisions                              15         5,908        3,398

Income tax payable                      16           539       14,463

Deferred consideration                  17        17,000       17,000

Other liabilities                                      -          625

Total current liabilities                         88,259       68,643

Non-current liabilities

Borrowings                              14        48,940       18,913

Provisions                              15        25,408       24,355

Deferred tax liability                  7          9,027       16,500

Total non-current liabilities                     83,375       59,768

Total liabilities                                171,634      128,411

Net assets                                       362,734      320,592

Equity

Issued capital                          18       307,063      306,512

Reserves                                        (17,227)     (19,230)

Retained earnings                                 72,898       33,310

Total equity                                     362,734      320,592
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 as at 305,277      (7,671)       5,806    (20,714)  (1,476) 281,222
1 July 2018

Profit for          -       39,153           -           -        -  39,153
the year

Other               -            -           -     (1,915)        - (1,915)
comprehensive
income/(loss)

Total               -       39,153           -     (1,915)        -  37,238
comprehensive
income for
the year

Transactions with owners, recognised directly in equity

Share based     1,235        1,828     (2,407)           -    1,476   2,132
payments

Balance at 30 306,512       33,310       3,399    (22,629)        - 320,592
June 2019

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/(loss)

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
Note 2020 US$000s 2019 US$000s

Cash flows from operating activities

Receipts from customers                                     216,818      188,493

Payments in the course of operations                       (83,750)     (91,146)

Income taxes paid                                          (27,543)        (704)

Net cash from operating activities                 8        105,525       96,643

Cash flows from investing activities

Purchase of property, plant and equipment                  (10,377)     (17,493)

Payments for exploration and evaluation                    (23,212)     (18,557)

Other                                                           299          661

Net cash used in investing activities                      (33,290)     (35,389)

Cash flows from financing activities

Proceeds from borrowings                                     75,000       48,180

Repayment of borrowings                                    (20,000)    (120,653)

Receipts from restricted cash                                     -       29,591

Payments for debt service costs and re-scheduling           (2,512)      (8,060)
fees

Net cash from/(used in) financing activities                 52,488     (50,942)

Net increase in cash held                                   124,723       10,312

Cash at beginning of year                                    39,242       29,686

Effect of exchange fluctuations on cash held                (1,406)        (756)

Cash at end of year                                         162,559       39,242
,  and Investor  Media Relations
Relations

                                    

Tel: +61 (8) 9413 7426                             and 

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

Email:James FullerJos SimsonBarnaby HaywardManager CommunicationsBase ResourcesTavistock CommunicationsUK[email protected]

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Market: AIM
Market Cap: £164.92 m
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