Mining firm faces revenue reduction over delayed product purchase

The government is also expected to feel the ripple effect of the delayed purchase as it earns royalties from sales of the mineral.

Thursday January 14 2016

Base Resources, the Australian company licensed to mine titanium in Kwale, which posted a Sh1.6 billion ($16 million) net loss for its global operations for the year ending June 30, faces reduction in its revenue following a notice to delay purchase of up to 100,000 tonnes of ilmenite by an undisclosed buyer. FILE PHOTO | NATION MEDIA GROUP

Base Resources, the Australian company licensed to mine titanium in Kwale, which posted a Sh1.6 billion ($16 million) net loss for its global operations for the year ending June 30, faces reduction in its revenue following a notice to delay purchase of up to 100,000 tonnes of ilmenite by an undisclosed buyer. FILE PHOTO | NATION MEDIA GROUP 

By IMMACULATE KARAMBU
More by this Author

An Australian company licensed to mine titanium in Kwale faces reduction in its revenue following a notice to delay purchase of up to 100,000 tonnes of ilmenite by an undisclosed buyer.

Base Resources, in a statement released on Thursday said that the buyer delayed in commissioning its factory, consequently impacting on its intake of ilmenite for an unspecified period.

It was due to buy 100,000 tonnes of ilmenite from Base Resources at a price of $116 per tonne by the end of June this year with the sales agreement applying for another further three years.

The government is also expected to feel the ripple effect of the delayed purchase as it earns royalties from sales of the mineral.

“Base advises that it has received a force majeure notice from a counterparty to an ilmenite sales agreement seeking to suspend the counterparty’s obligations under the agreement. Base is continuing to assess the potential impacts of the notice including the company’s rights,” the company said in a statement.

Ilmenite is one of the minerals processed from the titanium ore. The affected quantity is about a quarter of the company’s annual sales of the mineral.

Base Resources, posted a Sh1.6 billion ($16 million) net loss for its global operations for the year ended June 30 on account of increased operating costs and royalties.

The company incurred Sh1.1 billion ($10.5 million) in royalties expenses up from Sh201 million ($1.9 million) during the previous year.

Its operating costs went up from Sh1.6 billion ($15.5 million) to Sh6.8 billion ($64.7 million) during the period under review.

advertisement