Revenues climbed to 2.8 times Base Resources’ (BSE) cost of sales in the 12 months to June, up from 2.4 in 2017. For any miner, that’s a good trend. The measure, favoured by managing director Tim Carstens, says more about strong commodity prices than efficiency gains
Output from the Kwale mineral sands project hasn’t stuttered. Though sales decline in the period, better recoveries led to higher production of rutile, ilmenite and zircon, alongside price rises of 17, 28 and 46 per cent respectively.
But with this year’s output set to decline by up to 4, 10 and 14 per cent for each, investors will want markets to remain tight. In the case of zircon, there are reasons for optimism. Demand from Base’s long term customers “has continued to exceed the company’s ability to supply”, and buyers have already agreed to an 11 per cent price increase since the year-end. Ilmenite prices could fluctuate, while a tight rutile market is expected to bring “further price gains”.
The higher and faster prices rise, the quicker Base can retire its project debt facility and move into a net cash position, which broker Numis thinks could happen before 2019. On average, analysts expect full-year adjusted pre-tax profits and EPS to narrow to $44m and 3.4¢, down from estimates of $51.5m and 4.5¢ in the 12 months to June 2018.
| BASE RESOURCES (BSE) | ||||
| ORD PRICE: | 15.3p | MARKET VALUE: | £ 172m | |
| TOUCH: | 15-15.5p | 12-MONTH HIGH: | 20p | LOW: 13p |
| DIVIDEND YIELD: | NIL | PE RATIO: | 5 | |
| NET ASSET VALUE: | 25.5¢ | NET DEBT: | 12% | |
| Year to 30 Jun | Turnover (A$m) | Pre-tax profit (A$m) | Earnings per share (¢) | Dividend per share (¢) |
| 2015 | 146 | -16.0 | -2.85 | nil |
| 2016 | 169 | -20.9 | -3.41 | nil |
| Year to 30 Jun | Turnover (US$m) | Pre-tax profit (US$m) | Earnings per share (¢) | Dividend per share (¢) |
| 2017 | 162 | 21.7 | 2.14 | nil |
| 2018 | 199 | 43.4 | 3.66 | nil |
| % change | +22 | +99 | +71 | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| £1=$1.29 | ||||
