Base Resources’ (ASX:BSE) Toliara project in Madagascar is another step closer to the finish line with the release of a maiden ore reserve that underpins an expected 33 year mine life.

The company estimates that the Ranobe deposit has an ore reserve of 586 million tonnes grading 6.5 per cent heavy minerals.

Base noted that due to the high level of confidence, its previous measured and indicated resources had largely been converted to proved and probable ore reserves respectively.

Proved ore reserves are the highest confidence category of a reserve estimate and represents material that can be mined in an economically viable fashion, while probable reserves indicate material that could, in some circumstances, be mined economically.

The only exception is material found in the lowest 1.5m of blocks scheduled for mining in stage two where detailed design has not yet been undertaken to provide confidence in the level of the pit floor. This has been classified as a probable ore reserve.

Further upgrades to the project’s resources and reserves are expected over the course of 2020 once samples from a 26,141m drilling program that was completed earlier this year are processed.

Base is currently working on a definitive feasibility study for Toliara that is due for completion in December this year.

It follows a positive pre-feasibility study that estimated project net present value (NPV) at $US671m ($989m) and internal rate of return (IRR) at 22.4 per cent.

NPV and IRR are metrics used to assess the profitability of a project. The higher the NPV and IRR, the more profitable a project will be.

The capital expenditure to establish the first stage of operations, which will be for a 13-million-tonne-per-annum (Mtpa) operation, is expected to be about $US439m while expanding this to a 19Mtpa operation in the second stage will cost a further $US67m.

Toliara is expected to generate average annual revenue of $US254m and free cash flow of $US133m from the production of 806,000 tonnes of ilmenite, 54,000 tonnes of zircon and 8000 tonnes of rutile.

It will be the company’s second producing mineral sands asset after the Kwale operation in Kenya, which generated sales revenue of $US209.5m in the 2018-19 financial year.

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