Base Resources Ltd. said March 21 that a pre-feasibility study for the Toliara mineral sands project in Madagascar outlined a posttax net present value, discounted at 10%, of US$671 million and a 22.4% internal rate of return with a four-year payback period.
A total measured and indicated resource of 588 million tonnes grading 6.6% heavy mineral supports a 33-year mine life.
Stage-one capital expenditure, which will establish a 13 million-tonne-per-annum processing operation, is estimated at US$439 million. The company allocated capex of US$67 million for a stage-two expansion, which will increase operation to 19 mtpa.
The operation is estimated to produce 25.7 million tonnes of ilmenite, 1.7 Mt of zircon and 266,000 tonnes of rutile. The annual average over the mine's life is pegged at 806,000 tonnes of ilmenite, 54,000 tonnes of zircon and 8,000 tonnes of rutile.
Operating costs, including royalties, are pegged at US$95 per tonne produced. In full production, the project is estimated to generate annual revenue of about US$250 million and net profit after tax of US$110 million.
EBITDA for the operation is targeted at US$165 million.
The company will do further drilling during the Toliara operation's definitive feasibility study stage to investigate extending the mine's life.