Base Resources (ASX: BSE) (LON: BSE) shares are down 18% on the Australian quote, 9% so far today on the London one. We would normally expect equal price moves in something like this except here we’re also dealing with time zones - so the London price move could be after a little rethink of the information being given.
The base problem is that the Kwale operations are now a bust. This is a disappointment rather than a disaster. Those operations always were intended to close at the end of next year: “African mineral sands producer, Base Resources Limited (ASX & AIM: BSE) (Base Resources or the Company) advises that, following an exhaustive exploration and evaluation process seeking to further extend the life of the Company’s Kwale Operations in Kenya, mining is expected to end in December 2024 as per the current mine plan.”
Well, if it’s all expected then why any price movement at all? Because exploration was ongoing to see if the deposit could be extended: “While the Phase 2 assay results confirmed the existence of the mineralisation identified from the Phase 1 auger program, the Company has decided to discontinue exploration activities at Kwale East. This decision followed an evaluation of the likely mineralisation for the three targets using the results from both Phase 1 and Phase 2 drill programs and applying optimistic assumptions on the continuity of mineralisation in the Magaoni and Zigira target areas that were not able to be drilled. Even on these optimistic assumptions, the evaluation concluded that there is unlikely to be sufficient volume or heavy mineral grade to support an economically viable mining development.”
Base Resources share price from Google Finance
It’s not, not wholly at least, that the extended area contained nothing of interest. It’s rather that to be able to mine there would have to be a considerable upgrade to the extant facilities - the tailings dam being the one that loomed largest. The new areas didn’t meet the test of being able to pay for that capital upgrade.
This isn’t a crippling blow for Base Resources, there are other projects and so on. All it is is a mild disappointment that the Kwale operations cannot be continued. Thus the rather muted response to the news in the share price.
