Base Resources raises budget for Kenyan titanium project
www.cnchemicals.com Time：2013-06-09 Sources of information：Reuters
Australia＇s mining firm Base Resources said on Monday it has raised its costs estimate for its Kenyan titanium project by 14 percent due to design improvements and labour costs.
The firm said it now expects to spend $275 million in addition to $23 million in unspecified contingencies.
"While much of the increase in capital cost can be attributed to design improvements and scope changes during the design phase, a significant proportion of the cost increase is related to labour costs in construction," Managing Director Tim Carstens said in a statement.
Carstens said the firm was pursuing various financing options to accommodate the increased capital cost.
"These alternatives include extended or additional debt facilities, an equity raising, the reallocation of internal funding, or some combination thereof," he said.
When completed the project south of Mombasa is expected to produce 330,000 tonnes of ilmenite a year, about 10 percent of the world＇s supply and another 80,000 tonnes of rutile per year, which represents 14 percent of global output, and a further 40,000 tonnes of zircon.
In May last year the Australian firm increased its ore reserve estimates for the project by 20 percent after a feasibility study. The miner said it now estimates there are 140.6 million tonnes of viable ore reserves at Kwale.
The Kwale project, which was first started in 2006 by Canada＇s Tiomin, ran into difficulties when financing for the project fell through.
An attempt to transfer ownership to China＇s Jingchuan also failed, before Base Resources stepped in.
The project has also been delayed by a series of setbacks including demonstrations by environmental groups, disputes with local farmers over compensation for land and protracted talks with the government.
Base Resources said it plans to start drawing down its $170 million debt facility with a syndicate of six lenders towards the end of this year, as part of the Kwale financing package.
Kwale is due to start production in the second half of 2013, the statement said.
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