More annual reports from Base Resources:
2020 Report6
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Positioned
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Contents
02
04
Highlights
Chairman’s letter
06
Operation
summary
10
16
17
Sustainability in
practice
Business
development
Corporate and
finance
18
19
20
Marketing and
sales
Mineral sands
market outlook
Resources and
reserves
22
Corporate
directory
23
Consolidated
financial
statements
Forward looking statements
Certain statements made in or in
connection with this Annual Report
contain or comprise forward-looking
statements, including but not limited
to statements regarding capital
cost, capacity, future production
and grades, sales projections and
financial performance of the Kwale
Operations, estimated mineral
resources and ore reserves,
trends in commodity prices and
currency exchange rates, demand
for commodities (in particular
mineral sands), plans, strategies and
objectives of management, operating
costs, anticipated production life of
the Kwale Project, provisions and
contingent liabilities and tax and
regulatory developments.
Forward-looking statements can be
identified by the use of terminology
such as “intend”, “aim”, “project”,
“anticipate”, “estimate”, “plan”,
“believe”, “expect”, “may”, “should”,
“will”, “continue” or similar words.
Forward-looking statements
involve known and unknown risks,
uncertainties, assumptions and
other factors that are beyond Base
Resources’ control.
No assurance or guarantee can be
given that such forward-looking
statements will prove to be correct.
Results or outcomes could differ
materially from those expressed
or implied by the forward-looking
statements as a result of, among
other factors, changes in economic
and market conditions, success of
business and operating initiatives
and strategies, changes in the
regulatory environment and other
government actions, fluctuations in
product prices and exchange rates
and business and operational risk
management.
Except as required by applicable
regulations or by law, Base
Resources does not undertake to
publicly update, review or release
any revisions to these forward-
looking statements to reflect new
information or future events or
circumstances.
Base Resources Limited Annual Report 2016 Base Resources’ (ASX & AIM: BSE) successful development of the Kwale
Mineral Sands Project in southern Kenya and growing track record of
operational, safety and community development achievements, provides
a solid foundation to grow a contemporary mid-tier resources company.
With production volumes exceeding design targets and an enviable position
in the market secured, Base Resources is well positioned to capitalise on a
market showing positive signs and renewed investor interest in the sector.
The recent granting of exploration tenure and the imminent commencement
of drilling on identified targets presents exciting potential to extend the
mine life of the Kwale Operations. Demonstrated development capability
provides the basis to drive further shareholder value
from acquisition opportunities.
01
Base Resources Limited
ABN 88 125 546 910
Positioned for growth 02 Highlights
Outstanding safety record
maintained with zero lost-time injuries
during the period
US$105 per tonne sold
Average cost of sales
(operating costs and royalties)
US$205 average sale price
achieved per tonne delivering a revenue to
cost of sales ratio of 2:1
Locked in substantial price
increases
Emerging tightness in TiO2 feedstock
markets is allowing Base Resources to lock
in substantial price increases for ilmenite for
sales in the September 2016 quarter
Rutile 85,654 tonnes
Ilmenite 455,870 tonnes
Zircon 31,389 tonnes
Production of all products
exceeding design and at the top
end of guidance
Rutile 85,536 tonnes
Ilmenite 480,538 tonnes
Zircon 33,062 tonnes
Record sales volumes achieved
for all products
Base Resources Limited Annual Report 2016 03
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Exploration tenure granted
over significant land area covering
previously identified targets surrounding
the Kwale Operations
Advancing to definitive stage
Kwale Phase 2 project pre-feasibility
study completed, with its focus being to
optimise mining tonnages and methodology
$78.6 million net cash generated
from operating activities
Net debt reduced
by $41.0 million (US$36.2 million) to
$204.2 million (US$151.5 million)
Rescheduling of the
Kwale Operations Debt Facility
Completed in December 2015, establishing
a repayment profile more appropriate to the
prevailing commodity price environment
$10 million capital raising
Completed in March 2016, providing
continuity and certainty of corporate
funding and allow progression of
Base’s strategic plan
Positioned for growth 04 Chairman’s
letter
Dear Shareholders,
The 2016 financial year has seen your company weather the
storm of a challenging, low commodity price environment
and emerge into an improving market in sound shape,
well positioned to capitalise on opportunities.
The past year, our second full
year of operations, has seen
production volumes at our
Kwale Operations in Kenya
exceed original project design
across all three products. We
have consistently achieved
or exceeded plant design
availabilities, concentrate
production, mineral separation
throughput and ilmenite, rutile
and zircon recovery. This
is testament to the quality
of the resource, our plant
and equipment and, most
importantly, to the experience,
quality and dedication of our
operations team.
With the operation now at
steady state, our focus has
turned to further enhancing
throughputs in the mineral
sands separation plant, which
has driven a further material
lift in our production guidance
for the 2017 year.
Strong cost discipline is firmly
entrenched in the company, as
illustrated by our annual cash
operating costs per
tonne of US$89/tonne, down
from US$104/tonne in the
prior year. While further
improvements are challenging,
we are continuing to seek
innovative approaches to
refine our operations, with
the introduction of a hydro
mining unit in recent months
a good example.
Most importantly, these
results continue to be achieved
with an uncompromising focus
on the safety of our people and
the operation. There were no
lost time injuries during the
past year and Total Recordable
Injury Frequency was a low
1.42 cases per million hours
worked. The Kwale Operation
has not had a lost time injury
since February 2014 and
did not record a medically
treated injury during the
past two quarters.
In a challenging market, Base
Resources has exported just
short of 600,000 tonnes of
products from the Kwale
Operation over the year,
with shipments made to
customers with existing
offtake agreements, regular
customers buying on a spot
basis and some new spot
customers buying Base
Resources’ products for the
first time. While all of our rutile
and most zircon production
is already contracted, our
ilmenite marketing strategy
into China has been highly
successful with minimal
inventory on hand at year end
and with Base Resources being
the single largest importer
of ilmenite into China. Early
in 2016, we had to deal
with “force majeure” and
contractual volume reduction
notices from two key
customers, indicative of the
prevailing market at the time.
However, as a consequence
of our marketing relationships
and reach, as well as the
encouraging improvement in
market conditions that started
to emerge towards the end
of the year, we were able to
successfully place all of the
affected volume.
These significant
achievements for the year are
reflective of a highly capable,
settled and engaged team
throughout the organisation.
We have been highly
successful in establishing
a Kenyan workforce at the
Kwale Operation, with 96%
of the team being Kenyan and
63% coming from our local
community. Our structured
training and skills development
programme is also seeing
progression in quality of
jobs, with a further two
Kenyan appointments to the
management team this year.
Base Resources’ local
subsidiary, Base Titanium,
has continued to enhance its
strong track record of positive
community engagement.
Base Titanium, increasingly in
partnership with various local
and international development
organisations, supports a
wide range of programmes
to address community-led
priorities. In the past year, our
programmes have been
Base Resources Limited Annual Report 2016 05
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particularly focussed on
agricultural development,
with a view to sustaining
local communities’ economic
potential and quality of life
beyond the life of the Kwale
Operations. The past year
has seen additional financial
support secured from new
organisations, reflecting the
quality, scope and potential of
these agricultural programmes
to drive regional socio-
economic development.
We continue to work closely,
and enjoy positive relationships,
with our host governments in
Kenya, both at Kwale County
and national level, supported
by a common objective
of establishing a healthy,
vibrant mining sector. With
the appointment of a new
Cabinet Secretary for Mining
in December 2015, Kenya has
articulated bold aspirations
for what has been a nascent
mining industry, building on
the success of Base Resources’
Kwale Operation. It is
implementing a competitive
and stable administrative and
fiscal regime and is now actively
seeking to directly engage with
foreign mining companies and
attract investment.
While the 2016 financial year
was a challenging one from a
commodity price perspective,
our success in driving
production and managing costs
has meant that Base Resources
has still been able to generate
an EBITDA of in excess of $60
million, and with a revenue to
cash cost ratio of 2:1, placing
the Company in the top few of
the top quartile of mineral sands
producers. This has also enabled
us to reduce net debt by US$36
million to US$151 million.
After three years of consistently
declining prices for our
products, we are now seeing
strong signs of the ilmenite
and rutile markets returning to
balance with excess inventories
having been substantially
worked down. We have now
seen prices for our ilmenite
improve from the lows in the
June quarter by around 80%
for deliveries in November.
With supply also tightening
in the rutile market, we are
encouraged by the outlook
for 2017.
The close of the 2016 financial
year sees Base Resources in
sound financial shape. We are
generating significant cashflow
with an improving market
outlook. We are rapidly paying
down debt with a repayment
schedule well suited to the
current environment following
the successful rescheduling in
December 2015. We are on a
robust financial footing from
which to grow the business.
Our plan for growth involves,
firstly, adding value to the
current asset suite. In this
respect, we have recently
secured a significantly expanded
exploration tenure around
the Kwale Operations to take
in some previously identified
targets. Drilling of these targets
in pursuit of mine life extensions
is scheduled to commence in
the near future. In addition, we
are pursuing further ground
within an economic radius of
current operations. The “Kwale
Phase 2” project, which seeks to
optimise the Central and South
dunes mining tonnage and
methodology, and to increase
concentrate production rates,
is progressing through a
Definitive Feasibility Study to
be delivered in the June quarter
of 2017.
Looking beyond Kwale, we see
opportunities to capitalise on
our capabilities and positioning
to create shareholder value
through acquisition and
discovery. With much work
already done, we will continue
to assess and progress these
opportunities in a disciplined
manner in the coming year. We
are well positioned for growth.
I wish to thank the Board,
management and teams of Base
Resources and Base Titanium,
our suppliers, local communities
and host governments for
your support and commitment
during the year. Finally, thank
you to you our shareholders
for your confidence and
ongoing support. I am
confident of a bright future
for Base Resources.
Keith Spence
CHAIRMAN
Positioned for growth
06
Operation
summary
KWALE OPERATIONS
Base Resources Limited Annual Report 2016 07
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Base Resources operates the 100% owned Kwale
Operations in southern Kenya, which commenced
production in late 2013. The Kwale Operations are located
10 kilometres inland from the coast and 50 kilometres south
of Mombasa, the principal port facility for East Africa.
Mining and
Separation Process
The current mining at the
Kwale Operations are based
on a conventional dozer trap
mining unit (“DMU”), using
Caterpillar D11T dozers to feed
the DMU. The DMU is a cost
effective method of mining and
is particularly well suited to
the type of ore at Kwale.
During the period under
review, mining activity
continued in the high-grade
regions of the Central Dune,
close to the processing plant,
except for three months mining
lower grade perimeter blocks.
The average ore grade mined
was 8.3% heavy mineral (“HM”)
for the year. Mining activities
will remain focused on the
Central Dune deposit for the
next four years of the operation,
before transitioning to the
South Dune for the remainder
of the mine life.
The coming year will see
the introduction of a second
mining unit, a 400 tonnes per
hour (“tph”) hydraulic mining
unit (“HMU”). Operating
dual mining units will enable
concurrent mining of high-grade
ore with the existing DMU and
allow access to lower grade,
thinner perimeter blocks
more cost effectively utilising
the HMU.
The plants at the Kwale
Operations are designed
to process ore to recover
three separate products –
rutile, ilmenite and zircon.
Ore is received at the
wet concentrator plant
(“WCP”) from the mining
units via a slurry pipeline.
The WCP removes slimes,
concentrates the valuable
heavy minerals (rutile, ilmenite
and zircon) and rejects most
of the non-valuable, lighter
gangue minerals. The WCP
incorporates a number of
gravity separation steps using
spiral concentrators. The heavy
mineral concentrate (“HMC”),
containing 90% heavy minerals,
is then processed in the mineral
separation plant (“MSP”). The
MSP cleans and separates
the rutile, ilmenite and zircon
minerals and removes any
remaining gangue.
OPERATIONAL
PERFORMANCE
With the consistent
achievement of design
availabilities and throughputs
in the WCP, and the high
average grade of ore mined,
HMC production of 734,431
tonnes was achieved in the
reporting period. HMC
production exceeded MSP
consumption, allowing the
continued building of a HMC
stockpile to mitigate risk and
optimise future production.
At year end, the HMC stockpile
was 139,364 tonnes.
During the reporting period,
709,443 tonnes of HMC was
fed into the MSP to produce
455,870 tonnes of ilmenite,
85,654 tonnes of rutile and
31,389 tonnes of zircon.
The successful completion
of a number of MSP upgrade
projects, together with
ongoing process optimisation,
has yielded benefits in both
throughput and downstream
recoveries of rutile and zircon
during the reporting period.
Having achieved design
recovery levels for all products,
ongoing MSP optimisation is
expected to yield sustained
increases in feed rates above
90tph in the 2017 financial year.
Ilmenite production continued
at above design capacity
due to the combination of
Positioned for growth
08
Base Resources Limited Annual Report 2016 120%
100%
80%
60%
40%
20%
0%
MSP Product Recovery % (LHS) & Feed Rate tph (RHS)
Rutile including oversize re-treat
ilmenite101%
rutile 100%
zircon 80%
feed
rate
89tph
2014
June
2015
June
2016
Design target achieved
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95
90
85
80
75
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increased MSP feed rates and
high recoveries. Following the
installation of an additional MSP
magnet stage in November
2015, ilmenite recovery
reduced from a pre-upgrade
average of 110% to an average
of 102%* for the remainder
of the year, still exceeding
design. The additional magnet
stage had the effect of
removing rutile from ilmenite
product and creating a high
chrome stream, which is now
rejected to enhance product
quality. Ilmenite production
continues to benefit from the
proportionally higher ilmenite
content (but lower rutile
content) of the high grade ore in
the Central Dune, a feature of
the Kwale deposit.
Rutile production exceeded
the 80,000 tonnes per annum
design target for the first time
in the reporting period, thanks
to the higher MSP feed rates
and ongoing optimisation of
recoveries, aided by the MSP
upgrade projects. Average rutile
recovery for the reporting
period was 99%, surpassing
design expectations.
Zircon production continued
its steady improvement
throughout the reporting
period, in line with the planned
ramp-up schedule, and
ultimately exceeded the 30,000
tonne design target, driven by
the combination of achieving
design recovery (77.8%) and the
increased MSP feed rate. Zircon
recoveries averaged 78% in the
last quarter and reached as high
as 80% in June.
Transport and
Infrastructure
A key feature of the Kwale
Operations is ready access
to infrastructure, both pre-
existing and Base Resources
own developed infrastructure.
The Kwale Operations are
located eight kilometres from
the main coastal highway
running between Mombasa and
northern Tanzania. Both the
bulk and containerised product
is hauled 50 kilometres by truck
from Kwale along this route to
Base Resources own purpose-
built Likoni port facility and
Mombasa container
port respectively.
During the reporting period, 455,870 tonnes
of ilmenite, 85,654 tonnes of rutile and
31,389 tonnes of zircon was produced
The fully owned and operated
Likoni port facility includes a
storage shed capable of holding
in excess of 90,000 tonnes and
a ship loader rated at 1,000
tonnes per hour. During the
year, more than half a million
tonnes of bulk ilmenite and
rutile were loaded at this facility
and dispatched to customers
around the globe.
compared with 100% in prior
years. The south coast of Kenya
enjoys two wet seasons annually
and the ‘short rains’ starting
in October should provide a
further opportunity to replenish
water levels. In addition, a
borefield accessing a local
aquifer provides supplementary
supply of up to 30% of current
water requirements.
Water is a key input for mineral
sands projects, and water supply
for the Kwale Operations comes
from the Company’s dedicated
8.6 gigalitre Mukurumudzi Dam.
Following lower than average
rainfall in the recent ‘long rains’,
the dam was approximately
80% of capacity at year end,
Power for Kwale Operations
is supplied from the Kenyan
grid via a 132kVA power line
from the Galu substation just
16 kilometres from the mine.
The reliability of supply has
proved to be excellent with
negligible downtime from
outages or voltage dips.
* With some altered ilmenite species, that are not defined as either ilmenite or rutile in the resource, being recovered in the production of both, calculated recoveries
(or yields) of over 100% are achievable for both ilmenite and rutile. With some altered ilmenite species, that are not defined as either ilmenite or rutile in the resource,
being recovered in the production of both, calculated recoveries (or yields) of over 100% are achievable for both ilmenite and rutile.
Positioned for growth
10 Sustainability
in practice
Base Resources Limited Annual Report 2016 11
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From project conception through to full-scale production,
Base Resources has adopted world-class, sustainable
business practices seeking to minimise any negative impacts
and maximise positive impacts of its operations for its
employees, its host community and more broadly, Kenya.
Base Resources is committed
to complying with Kenyan
legislation and international
best practice, specifically
the International Finance
Corporation’s Performance
Standards, the Equator
Principles, World Bank Group’s
Environmental, Health and
Safety Guidelines, International
Labour Organisation’s core
labour standards and the United
Nations Voluntary Principles on
Human Rights.
With this approach, Base
Resources is helping to set
sound benchmarks for effective
and responsible development in
Kenya’s emerging mining sector.
Local Employment
Base is committed to
prioritising employment for
Kenyans. Our employment
system is specifically designed
to maximise employment
opportunities and project
benefits to local communities by
giving preference to project-
affected applicants and those
residing in the immediate
environs of the mine and assign
progressively lower priorities
to those living further away
through a “fencing” system
established in consultation
with the Government of Kenya
and local community leaders.
This system has proved highly
effective and of the 922
people directly employed in
Kenya, including 667 by Base
and 255 by Kenyan service
providers contracted to Base in
security, transport, catering and
analytical laboratory services,
96% are Kenyan, with 63%
drawn from Kwale County. We
consider the early achievement
of local workforce participation
to this extent, in concert with
the operational and safety
performance demonstrated, in
a country with limited mining
precedents, to be a significant
success of which we are
particularly proud.
While expatriates represent just
4% of the total in employment,
Base is committed to further
reducing its expatriate
workforce over the coming
years, with a succession
programme to ensure the
transfer of specialist skills to
Kenyan nationals.
56
Number of Kenyan interns, graduate
trainees and apprentices currently in the
Company’s training programmes
Skills Transfer
Base Resources has structured
training and skills transfer
programmes covering on-the-
job training for permanent
employees, and also extending
to tailored programmes for
graduates, interns, apprentices
and high school students,
providing a platform for
systematic and rapid transfer
of knowledge and skills to
Kenyans. There are 56 Kenyan
interns, graduate trainees
and apprentices currently
in the Company’s training
programmes.
The programmes focus not
only on employees, but also
on building skills capacity in
the broader community. To
complement classroom learning,
Base Resources has partnered
with the Technical University
of Mombasa to provide
opportunities for technical
trades apprentices to gain the
necessary practical experience
in the workplace.
EMPLOYMENT DISTRIBUTION
1 Dot = 2 Employees
Special Mining Lease
Fence 1
Fence 2
Fence 3
SHIMBA HILLS
MRIMA
10km
MTONGWE
MOMBASA
CHANGAMWE
LIKONI
NGOMBENI
KWALE
TIWI
UKUNDA
MWABUNGU
GAZI
MSAMBWENI
RAMISI
KIDIMU
Positioned for growthINDIAN OCEAN
12
Base Resources Limited Annual Report 2016 13
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Kenya’s National Industrial
Training Authority has
recognised the value of Base
Resources programmes and has
partnered with the Company
to assist in the design of co-
operative workplace training
and development programmes.
In the past two years, Base
Resources has committed a
considerable budget of $1.8
million in workforce training and
development. This investment
reflects the Company’s
commitment to skills transfer
and development of Kenyan
staff, for the benefit of not only
Base Resources, but also to
help build national capacity to
underpin the development of
Kenya’s emerging mining sector.
Employee
Engagement
Base Resources places
significant emphasis on
establishing and developing a
highly engaged, satisfied and
motivated workforce, with
the operational performance
achieved to date, across
production, safety and cost
management, reflective of
our success in developing our
human capital.
An integral component of
this focus is an independently
run annual survey, open to
all employees. The objective
of the survey is to establish a
workplace cultural baseline
represented by current worker
behaviours and perceptions
and identify key areas for
improvement and action
towards our desired workplace
“Base Way” culture described.
The two surveys conducted
since the commencement
of operations have seen
response rates of 82% and
72%, a pleasing response rate
for voluntary surveys of this
type and indicative of our
workforce’s engagement and
desire to contribute.
In addition to productivity
and safety performance,
absenteeism, staff turnover
and industrial action are
key indicators of employee
satisfaction and motivation
as well as sources of
competitive cost advantage. An
absenteeism rate of 2.3% was
recorded for the year under
review, up from the prior year’s
1.0%, in part due to some long
term illnesses for which Base
Resources does not apply a sick
leave limit, but still well below
the Australian average of 3.3%.
The voluntary staff turnover
rate for the year in review was
also very low at 1.7%, increased
slightly from the prior year’s
0.9%. The Kwale Operations
have not recorded any industrial
action since commencement
of operations.
Safety
Throughout the construction,
commissioning and operation
of Kwale, Base Resources has
entrenched a first-world, best-
practice safety culture. With
no serious injuries occurring
during past 12 months,
Kwale Operations’ LTIFR has
remained at zero throughout
the reporting period. Base
Resources employees and
contractors have now worked
6.5 million man-hours LTI free,
with the last LTI recorded in
February 2014.
After a rise in minor medical
treatment injuries during the
first half of the year under
review, a number of fresh
initiatives were successfully
implemented and the TRIFR is
now trending downward.
The Kwale Operations’ safety
performance continues to be
an outstanding achievement
by first-world mining operation
standards, let alone for an
emerging mining jurisdiction.
Community
Engagement &
Development
Base Resources understands
that achieving its long-term
goals is predicated on building
beneficial relationships with
the communities in which it
operates and establishing a
balanced flow of mutual benefit.
As communities affected by
the Kwale Operations play an
integral role in the Company’s
overall success, Base Resources
engages with its local
communities in a structured
and inclusive manner. In this
way, the community benefits
from a series of sustainable
development and livelihood
improvement programmes in
exchange for a social license,
practically manifested in the
provision of proud, motivated
employees, security, support
and a positive reference for
future projects.
In accordance with Base
Resources’ Stakeholder
Engagement Plan, the
Company has established
a number of committees to
act as an interface between
the business and affected
communities. This is an
important tool for managing
expectations, addressing
grievances or concerns, and
establishes a mechanism for
achieving more participatory
and inclusive solutions. These
committees also play a major
role in identifying community
development priorities.
The committees are made
up of affected stakeholders,
community leaders
representing women, youth
and the disabled, Members of
the County Assembly, religious
leaders, government and
county level lead agencies and
administrators. These forums
are further supported by several
special interest sub-committees,
including one representing the
host resettlement site at
Mrima Bwiti.
Through close collaboration
with the liaison committees,
community priorities have
been identified as capacity
building, meeting basic needs
such as health and education,
and establishing physical
infrastructure to improve
standards of living.
In targeting these priorities,
Base Resources continues to
engage in constructing social
infrastructure, improving
community health, providing
educational opportunities,
and an increasing emphasis on
leading livelihood improvement
programmes through the
introduction of commercial
agriculture. These programmes
are aligned with, and integrated
into, the Kwale County
Government’s integrated
development plan.
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Lost time injury (LTIFR) and total recordable injury (TRIFR) frequency rates
Western Australia all mines
LTIR 2014/15
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Positioned for growth
14
Base Resources Limited Annual Report 2016 Community Health:
Providing training for
community health workers,
equipping medical facilities
and supporting vaccination
and general health
campaigns.
Community Groups
Training: Base Resources
provided maritime studies
training for the Likoni
Beach Management
Unit. Together with the
Dzarino Community Based
Training Organisation,
Base Resources runs
economic empowerment
training programmes for
community groups to equip
them with basic economic
skills to assist in initiating
business start-ups and
entrepreneurial activities.
Scholarships: During
the year, Base Resources
initiated its own scholarship
programme with 320
secondary school awards
given and 125 tertiary
placements supported. In
addition, partnerships with
educational NGOs continue
with support for a further
350 students provided at
both secondary and
tertiary levels.
The Base approach to, and
investment in, community
development is having real and
felt impacts, and a consequence,
Base Resources enjoys strong
community support.
Environment
Our community development
program is being matched
by our high standards of
environmental management
and performance. The Company
operates a comprehensive
environmental management
system, and has had no
environmental incidents during
the year under review.
Work progressed on a
number of Base Resources
programs aimed at
rehabilitating impacted areas,
improving local biodiversity,
and promoting conservation
and sustainability, with some
notable examples being:
Agricultural livelihood
programmes, run in conjunction
with partners Business for
Development, DEG and Kenya
Red Cross continue to develop
with encouraging support
from both national and county
Kenyan governments. These
programmes, covering cotton,
potato and poultry, now involve
around 400 farmers and
community groups with the
ultimate aim being to establish
new large scale agricultural
industries that will provide
economic opportunities well
beyond the life of mining
activities. Additional financial
support has been secured with
a number of new organisations,
including FMO, reflecting the
quality, scope and potential of
these agricultural programmes
to drive regional socio-
economic development.
In addition to the agricultural
livelihood programmes, to date,
over 120 individual projects
have been completed, including:
Schools: 28 educational
infrastructure projects
have been undertaken,
including construction of
six new institutions and
refurbishment or upgrading
of the balance.
Medical Facilities:
Constructed and equipped
the Bwiti Dispensary and
Magaoni Health Centre,
and work is underway on
a joint project to build a
local hospital-based blood
bank facility, expected to
begin operations in the
first quarter of 2017. In
addition, Base Resources
provided a four-wheel-drive
ambulance to Kwale County
health authorities to service
hard to reach communities.
Water Supply:
13 boreholes sunk and
fully equipped.
School Sports
Programmes: In
collaboration with an
NGO, Base Resources
aims to improve pupils’
performance through
building and enhancing life
skills and environmental
awareness using the
medium of sport and
enjoyment. The programme
is running in 25 schools and
engaging 16,000 students
on a weekly basis.
15
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Our Community development program
is being matched by our high standards
of environmental management and
performance
REHABILITATION TRIALS
WETLAND
RESTORATION
The tailings storage facility
(“TSF”) sand walls are expected
to reach full height in the second
half of 2017, and rehabilitation
and stabilisation of external
walls will commence shortly
thereafter. Trials to determine
which indigenous soil binding
grasses will perform best in
different combinations of sand,
clay and topsoil commenced
during the year. These trials will
continue over the coming year,
in conjunction with ongoing soil
fertility monitoring.
ESTABLISHMENT
OF A BIODIVERSITY
CORRIDOR
Base Resources, commitment
to operating in a sustainable and
environmentally responsible
manner includes improving
biodiversity and promoting
conservation and sustainability
in the region. During the
year, work continued on the
development of a corridor to
bridge several remnant patches
of indigenous forest within
the mining lease to the nearby
Gongoni Forest. Over 38,000
of the trees propagated in Base
Resources’ indigenous tree
nursery, including almost 7,000
of species classified as being of
conservation significance, have
been planted in the designated
corridor. This program aims to
restore threatened indigenous
tree species otherwise lost to
Kwale Operations TSF and mine
footprints.
A former ephemeral wetland
that had remained dry for a
number of years prior to the
commencement of operations
has been successfully restored.
After locating project
infrastructure so as to avoid
encroachment into the area,
drainage from the TSF was
directed to flow into the
former wetland and indigenous
sedges and other aquatic
vegetation planted.
The wetland now provides an
ideal habitat for both floral and
faunal species of significant
conservation importance.
Amphibian and reptile
monitoring found that the
numbers of endangered Shimba
Hills Reed Frog (Hyperolius
rubrovermiculatus) and Forest
Leaf-folding Frog (Afrixalus
sylvaticus) are growing.
Furthermore, monitoring shows
that a number of key insect
populations continue to thrive
in various wetland areas around
the mine site. These insects are
a key component in maintaining
healthy aquatic environments.
RECYCLING
PROGRAMME
Recycling wood, metal and
plastic from various applications
at the mine site is used by Base
Resources recycling team to
construct furniture, water
tanks, bee hives and children’s
school knapsacks. These have
been donated to nearby schools,
community organisations,
orphanages and institutions for
the disabled.
Positioned for growth
Base Resources Limited Annual Report 2016
16
Business
development
Two significant initiatives have been
commenced with the objective of
further enhancing the value of the
Kwale Operations.
Extensional
exploration
Kwale Phase 2
Project
Base Resources initiated
the Kwale Phase 2 project in
2015, with its focus being an
optimised combination of the
Central and South dune mining
tonnage and methodology
and increased mining rates in
lower grade zones. The Pre-
Feasibility Study was completed
in July 2016 and a Definitive
Feasibility Study commenced
in August 2016 and is expected
to be completed in the second
quarter of 2017.
A successful airborne
geophysics program, conducted
in 2015, covering the south
coast region of Kenya from
Mombasa to the Tanzanian
border, identified a series
of exploration targets that
were subsequently confirmed
through ground reconnaissance.
To capitalise on the targets
identified, the Company
has significantly expanded
its exploration land area
surrounding the Kwale
Operations, through the
extension of its Special
Prospecting License 173
(“SPL173”), which now covers
an area of 177km2. In addition,
the Company has also applied
for an additional SPL covering
an area of 136km2 extending
south west from SPL 173
towards the Tanzanian border.
This license application has now
passed through all the approval
stages and now awaits issuance
by the Kenyan Ministry of
Mining. Up to an 18,000 metre
aircore drill program is planned
over both these licenses and is
expected to be completed over
the coming year.
Corporate
and finance
17
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Kwale Project
Debt Facility
In December 2015, the Kwale
Project Debt Facility (“Debt
Facility”) was rescheduled
in order to establish a
repayment profile more
appropriate to the commodity
price environment. Under
the terms of the reschedule,
US$14 million of the Debt
Facility was paid down on
execution, with a further
US$9.5 million scheduled
repayment made in
June 2016, reducing
the outstanding debt to
US$180.5 million.
Base Resources was also
pleased to introduce a new
lender, Societe Generale
Corporate & Investment
Banking, to the Debt Facility
as part of the reschedule.
Subsequent to year end, in
July 2016, and in accordance
with the terms of the Debt
Facility, US$10.8 million of
surplus cash was ‘swept’ from
the Kwale Operations.
Half of the cash sweep
(US$5.4 million) was
applied towards mandatory
repayment of the Debt
Facility, reducing the
outstanding debt to
US$175.1 million, with the
other half distributed up to
the Australian parent entity,
Base Resources Limited.
$10 million
Renounceable
Entitlement Offer
Kenyan VAT
Receivable
In March 2016, Base
Resources completed a
pro rata renounceable
entitlement offer to existing
shareholders, raising gross
proceeds of $10 million. The
proceeds provided continuity
and certainty of corporate
funding, to progress execution
of Base Resources’ strategic
plan and capitalise on
achievements to date.
Base Resources has refund
claims for VAT paid in
Kenya, relating to both the
construction of the Kwale
Project and the period since
operations commenced,
totalling approximately
US$19 million at 30 June
2016. These claims are
proceeding through the
Kenya Revenue Authority
process, with a number of
operational period claims,
totalling approximately US$9
million, settled during the
year under review. Base
Resources is continuing to
engage with the Kenyan
Treasury and the Kenya
Revenue Authority, seeking
to expedite the remainder
of the refund.
Positioned for growth
18 Marketing, sales
and outlook
Marketing
and sales
Base Resources has a number
of off-take agreements
across each of its three
product streams spanning
between one and six years
of production of the Kwale
Operations. The agreements
are with some of the world’s
largest consumers of
titanium dioxide minerals and
zircon products, including a
cornerstone agreement with
Chemours (formerly DuPont
Titanium Technologies).
The agreements provide
off-take security for the Kwale
Operations, and contain firm
minimum annual offtake
volumes subject to annual
Base Resources’ production
forecasts. Pricing is derived
from prevailing market prices,
based on agreed price indices
or periodic price negotiations,
with some agreements
offering downside protection
in the form of floor prices.
In the year under review,
Base Resources sold almost
600,000 tonnes of product
from the Kwale Operations,
with shipments being
made to a combination of
customers with existing
offtake agreements, regular
customers buying on a spot
basis and some new spot
customers buying Base
Resources’ products for
the first time.
The appointment of a Chinese
distributor for ilmenite in
early 2015 has assisted Base
Resources in continuing to
build its market presence in
China – the world’s largest
ilmenite market – through
the 2016 financial year.
During the reporting period,
Base Resources became
the largest importer of
ilmenite into China, having
sold almost 450,000 tonnes
in the 2016 financial year.
Solid relationships have
been established with major
Chinese ilmenite consumers
who now comprise a mix
of shorter term contracts
(one to three-year duration)
and regular spot customers.
Base Resources maintains a
strong focus on servicing the
Chinese market and continues
to expand its customer base
with further trial lots of
ilmenite being evaluated by
new customers.
Despite challenging market
conditions for much of
the reporting period,
sales volumes increased
significantly over the
comparable period to match
production growth. A solid
improvement in the global
titanium dioxide pigment
market through the first
half of the 2016 calendar
year led to a high level of
demand for Base Resources
ilmenite and rutile in the June
2016 quarter. This has kept
stocks at minimal levels and
provided a solid base for price
improvement during the 2017
financial year.
During the March quarter
of 2016, Base Resources
received a force majeure
notice from an ilmenite
customer and a volume
reduction notice from a rutile
customer. In both cases,
the impact was to defer or
cancel a significant portion
of previously agreed sales
volumes for the remainder of
calendar 2016. Alternative
sales have been secured to
fully cover the shortfall arising
from these notices, aided by
the strengthening demand for
titanium dioxide feedstocks
experienced towards the end
of the reporting period.
Unlike the titanium dioxide
feedstock markets, conditions
for zircon remained subdued
through the reporting
period. Despite the ongoing
over-supplied market, Base
Resources has had sustained
solid demand for zircon
from its small, but loyal,
customer base.
Base Resources Limited Annual Report 2016 19
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Mineral sands
market outlook
ILMENITE AND RUTILE
Ilmenite and rutile are
primarily used as feed stock
for the production of titanium
dioxide pigment, with a small
percentage also used in the
production of titanium metal
and fluxes for welding rods
and wire. Pigment makes up
over 90% of titanium minerals
demand and is the main driver
of pricing. Titanium dioxide
is the most widely used
white pigment because of its
non-toxicity, brightness and
very high refractive index. It
is an essential component of
consumer products such as
paint, plastics and paper.
Global consumption of pigment
has maintained a long term
average growth rate closely
correlated to global GDP, or
approximately 3% per annum.
However, volatility in the global
economy in recent years has
created significant fluctuations
in this growth rate, manifesting
in big swings in inventory levels
throughout the entire pigment
supply chain. A growing supply
deficit, compared with demand,
over the past year appears to
have resulted in global pigment
inventories falling below
normal levels for the first time
in several years. Growth in
pigment consumption, together
with re-stocking activity, has
resulted in pigment demand
surging by more than 7% year-
on-year, and substantial price
improvements being reported
in the first half of calendar year
2016. This has percolated
through the supply chain and
translated into strengthening
feedstock demand by the end
of the reporting period. As a
consequence, feedstock levels
have been drawn down at a
more rapid pace than expected
and tightness has emerged in
feedstock markets for the first
time since the Kwale Operations
commenced production in
late 2013.
Base Resources has locked in substantial
ilmenite price increases for shipments in
the September quarter
brilliant opacity, whiteness and
brightness in their products.
Zircon’s unique properties
include heat and wear
resistance, stability, opacity,
hardness and strength. These
properties mean it is also sought
after for other applications such
as refractories, foundries and
specialty chemicals.
Demand growth for zircon is
closely linked to growth in global
construction and increasing
urbanisation in the developing
world. After a sharp downturn
in 2012, major zircon suppliers
have attempted to match their
supply to demand since 2013,
keeping prices relatively stable
until early 2016. However, with
demand remaining sluggish
and supply growing from new
sources, one major zircon
supplier reduced prices by
approximately US$100 per
tonne in March 2016, forcing
others to follow. Despite
attempts to subsequently
increase pricing, subdued
demand and excess inventories
are expected to keep prices flat
at current levels throughout the
2017 financial year.
Any potential uplift in zircon
prices remains dependent on
firmer than expected economic
growth in the major markets
of China, USA and Europe, and
on a more controlled response
from major zircon producers
in managing their production
and stocks.
The ilmenite feedstock market
has become particularly
constrained owing to the
further constrictions in supply
and growth in ilmenite-intensive
Chinese sulphate pigment
production that has occurred
over the reporting period. As
a result, ilmenite prices are
responding positively, allowing
Base Resources to lock in
substantial price increases for
shipments in the September
2016 quarter.
Conditions for rutile also
tightened by year end,
although current supply and
stocks appear adequate
to meet demand in the
immediate future.
Current analysis suggests that
excess global inventories of
titanium dioxide feedstocks,
which have weighed heavily on
prices over the past couple of
years, should return to normal
levels by the end of calendar
year 2016. In the absence
of substantial new feedstock
supply coming online, the
titanium dioxide feedstock
market is expected to begin
a period of structural supply
deficit, providing an opportunity
for price growth in both ilmenite
and rutile over the next
few years.
ZIRCON
Zircon has a range of end-
uses, the largest of which is
ceramic tiles, which accounts
for more than 50% of global
zircon consumption. Milled
zircon enables ceramic tile
manufacturers to achieve
Positioned for growth
20 Resources
and reserves
Mineral Resources
The 2016 Kwale Mineral
Resources as at 30 June 2016,
are estimated to be 134.6Mt
at an average HM grade of 4.2%
and 26% slimes containing
5.62Mt HM, based on a 1%
HM cut-off grade.
The 2016 Kwale Mineral
Resources estimate is the
product of revised geological
interpretations following the
mineralogical assessment of
1,718 individual drill samples,
observation of 5 test pits in
the South Dune deposit and
knowledge gained from mining,
resulting in the inclusion
of inferred resources not
previously reported.
The 2016 Kwale Mineral
Resources estimate represents
a small increase of 1% for total
material tonnes and 2% for
contained HM tonnes over
the previously reported 2015
Kwale Mineral Resources
estimate, after allowing for
depletion by mining of the
Central Dune deposit during the
year. The total Kwale Mineral
Resources estimate at 30 June
2016 has decreased by 8.4Mt
of material containing 0.79Mt
of in situ HM, when compared
with the Minerals Resources
estimate reported at 30 June
2015, due to mining depletion
during the year of 10.1Mt
of material containing 0.89Mt
of in situ HM, with the
difference due to the revised
geological interpretations
discussed above.
Table 1: 1% HM cut-off Mineral Resources estimate for the Kwale Operations at 30 June 2016 compared with 2015 Mineral
Resources estimate.
CATEGORY
ORE
(MT)
IN SITU
HM
(MT)
Measured
Indicated
Total
35.4
10.7
46.1
2.13
0.42
2.55
Measured
Indicated
Inferred
42.9
40.8
4.8
1.66
1.25
0.16
Total
88.5
3.07
Measured
Indicated
Inferred
78.3
51.5
4.8
3.79
1.67
0.16
Total
134.6
5.62
2016
2015
HM (%)
SL (%)
OS (%)
ILM (%) RUT (%) ZIR (%)
HM ASSEMBLAGE
ORE
(MT)
IN SITU
HM
(MT)
HM (%)
SL (%)
OS (%)
ILM (%) RUT (%) ZIR (%)
HM ASSEMBLAGE
6.0
3.9
5.5
3.9
3.1
3.2
3.5
4.8
3.2
3.2
4.2
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26
24
27
26
23
26
26
26
23
26
CENTRAL DUNE
13
14
13
6
6
6
54.5
15.0
3.37
0.41
69.4
3.78
SOUTH DUNE
14
13
14
13
6
6
6
6
60.3
13.3
0
2.18
0.45
0
73.6
2.63
59
59
59
59
52
57
56
TOTAL MINERAL RESOURCES
59
54
57
57
13
13
14
13
6 114.8
28.3
6
0
6
5.55
0.86
0
6 143.0
6.41
0
2
1
2
5
2
3
1
4
2
2
6.2
2.7
5.4
3.6
3.4
0
3.6
4.9
3.0
0
4.4
25
29
26
28
26
0
27
26
27
0
26
0
2
1
4
4
0
4
2
3
0
3
55
52
54
46
47
0
46
51
50
0
51
14
13
13
13
13
0
13
13
13
0
13
6
6
6
6
6
0
6
6
6
0
6
Ore Reserves
The 2016 Kwale Ore Reserves
as at 30 June 2016, are
estimated to be 102.5Mt at an
average HM grade of 4.6% and
26% slimes containing 4.68Mt
of HM.
The 2016 Kwale Ore
Reserves estimate is based
on the updated 2016 Kwale
Mineral Resources model and
knowledge gained from mining.
The 2016 Kwale Ore Reserves
estimate represents a small
increase of 2% in total ore
tonnes and negligible change
in contained HM tonnes over
the previously reported 2015
Kwale Ore Reserves estimate,
after allowing for depletion by
mining of the Central Dune
deposit during the year. The
total Kwale Ore Reserves
estimate at 30 June 2016 has
decreased by 7.9Mt of ore
containing 0.86Mt of in situ
HM, when compared with the
Ore Reserve estimate reported
at 30 June 2015, due to mining
depletion of 10.0Mt of ore
containing 0.88Mt of in situ HM,
offset by gains from the other
changes as discussed above.
Base Resources Limited Annual Report 2016 21
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Table 2: Ore Reserves estimate for the Kwale Operations at 30 June 2016 compared with 2015 Ore Reserves estimate.
2016
2015
CATEGORY
ORE
(MT)
IN SITU
HM
(MT)
HM (%)
SL (%)
OS (%)
ILM (%) RUT (%) ZIR (%)
HM ASSEMBLAGE
ORE
(MT)
IN SITU
HM
(MT)
HM (%)
SL (%)
OS (%)
ILM (%) RUT (%) ZIR (%)
HM ASSEMBLAGE
Proved
Probable
Total
Proved
Probable
Total
32.5
8.4
40.9
38.9
22.7
61.6
2.03
0.35
2.37
1.56
0.75
2.31
6.2
4.1
5.8
4.0
3.3
3.8
Proved
Probable
71.4
31.1
3.58
1.10
Total
102.5
4.68
5.0
3.5
4.6
24
26
24
27
26
27
26
26
26
CENTRAL DUNE
13
13
13
6
6
6
48.3
5.8
3.21
0.18
54.2
3.39
SOUTH DUNE
14
13
13
6
6
6
46.7
9.5
1.80
0.35
56.2
2.15
TOTAL ORE RESERVES
13
13
13
6
6
95.0
15.4
5.01
0.54
6 110.4
5.54
59
59
59
59
53
57
59
55
58
0
1
1
1
5
3
1
4
2
6.6
3.2
6.2
3.9
3.7
3.8
5.3
3.4
5.0
24
28
25
28
25
27
26
26
26
0
2
1
3
3
3
2
3
2
56
52
56
49
49
49
54
50
54
13
13
13
14
13
14
13
13
13
6
6
6
6
6
6
6
6
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Mineral Resources
& Ore Reserves
Governance
A summary of the governance
and internal controls applicable
to Base Resources Mineral
Resources and Ore Reserves
processes are as follows:
MINERAL RESOURCES
Review and validation
of drilling and sampling
methodology and data
spacing, geological logging,
data collection and storage,
sampling and analytical
quality control
Geological interpretation
– review of known and
interpreted structure,
lithology and weathering
controls
Estimation methodology –
relevant to mineralisation
style and proposed mining
methodology
Comparison of estimation
results with previous
Mineral Resources
models, and with results
using alternate modelling
methodologies
Visual validation of
block model against raw
composite data
Use of external Competent
Persons to assist in the
preparation of JORC
Mineral Resourcess
ORE RESERVES
Review of potential mining
methodology to suit
deposit and mineralisation
characteristics
Review of potential
Modifying Factors,
including cost assumptions
and commodity prices to be
utilised in mining evaluation
Ore Reserves updates
intimated with material
changes in the above
assumptions
Optimisation using
appropriate software
packages for open pit
evaluation
Design based on
optimisation results
Use of external Competent
Persons to assist in the
preparation of JORC Ore
Reserves updates
Competent Persons
Statements
MINERAL RESOURCES
The information in this
report that relates to Mineral
Resources is based on
information compiled by
Mr. Scott Carruthers who is a
Member of The Australasian
Institute of Mining and
Metallurgy. Mr. Carruthers is
employed by Base Resources,
owns 147,171 Base Resources
shares and has sufficient
experience that is relevant
to the style of mineralisation
and type of deposits under
consideration and to the activity
which he is undertaking to
qualify as a Competent Person
as defined in the 2012 Edition
of the Australasian Code for
Reporting of Exploration
Results, Mineral Resources and
Ore Reserves (JORC Code).
Mr. Carruthers consents to
the inclusion in this report
of the matters based on his
information in the form and
context in which it appears.
ORE RESERVES
The information in this report
that relates to Ore Reserves is
based on information compiled
by Mr. Per Scrimshaw and
Mr. Scott Carruthers.
Mr. Scrimshaw and
Mr. Carruthers are both
Members of The Australasian
Institute of Mining and
Metallurgy. Mr. Scrimshaw is
employed by Entech, a mining
consultancy engaged by Base
Resources to prepare Ore
Reserves estimation for the
Kwale Operations.
Mr. Carruthers is employed
by Base Resources and owns
147,171 Base Resources
shares. Mr. Scrimshaw and
Mr. Carruthers have sufficient
experience that is relevant
to the style of mineralisation
and type of deposits under
consideration and to the activity
which they are undertaking to
qualify as Competent Persons
as defined in the 2012 Edition
of the Australasian Code for
Reporting of Exploration
Results, Mineral Resources and
Ore Reserves (JORC Code).
Mr. Scrimshaw and
Mr. Carruthers consent to
the inclusion in this report of
the matters based on their
information in the form and
context in which it appears.
Positioned for growth
22 Corporate
directory
DIRECTORS
Mr Keith Spence
NON-EXECUTIVE CHAIRMAN
Mr Tim Carstens
MANAGING DIRECTOR
Mr Colin Bwye
EXECUTIVE DIRECTOR
Mr Samuel Willis
NON-EXECUTIVE DIRECTOR
Mr Michael Anderson
NON-EXECUTIVE DIRECTOR
Mr Malcolm Macpherson
Non-Executive Director
Mr Mike Stirzaker
NON-EXECUTIVE DIRECTOR
COMPANY SECRETARY
Mr Chadwick Poletti
PRINCIPAL PLACE OF BUSINESS AND
REGISTERED OFFICE
Level 1
50 Kings Park Road
West Perth WA 6005
CONTACT DETAILS
Website www.baseresources.com.au
info@baseresources.com.au
Email
+ 61 (8) 9413 7400
Phone
+ 61 (8) 9322 8912
Fax
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Ashurst
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Base Resources Limited Annual Report 2016
Consolidated
financial statements
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Directors report
Remuneration
report
Corporate
governance
54
55
56
Lead Auditor’s
Independence
Declaration
Consolidated
statement
of profit or loss
Consolidated
statement of
financial position
57
58
59
Consolidated
statement of
changes in equity
Consolidated
statement
of cash flows
Notes to
consolidated
financial statements
79
Directors’
Declaration
80
Independent
auditor’s report
82
Additional
shareholder
information
Positioned for growth
24
Base Resources Limited Annual Report 2016 Directors
report
Your directors present their report, together
with the financial statements of the Group, being
the Company, Base Resources Limited, and its
controlled entities for the financial year ended
30 June 2016.
OPERATING RESULTS
The Group recorded a loss
after tax of $20,918,682 for
the reporting period
(2015: $16,038,746).
Dividends paid or
recommended
There were no dividends paid or
declared for payment during the
reporting period.
Review of operations
Base Resources operates the
100% owned Kwale Operation
in Kenya, which commenced
production in late 2013. The
Kwale Operation is located
10 kilometres inland from the
Kenyan coast and 50 kilometres
south of Mombasa, the principal
port facility for East Africa.
SUMMARY PHYSICAL DATA
Ore mined (tonnes)
Heavy mineral (HM) %
Directors
The names of the directors in
office at any time during or since
the end of the year are:
Mr Keith Spence
Mr Tim Carstens
Mr Colin Bwye
Mr Samuel Willis
Mr Michael Anderson
Mr Malcolm Macpherson
Mr Mike Stirzaker
Directors have been in office
since the start of the financial
year to the date of this report
unless otherwise indicated.
Company Secretary
The following person held the
position of company secretary
at the end of the financial year:
Mr Chadwick Poletti
Principal activities
and significant
changes in nature
of activities
The principal activity of the
Group during the financial year
was the operation of the 100%
owned Kwale Mineral Sands
Operation (“Kwale Operation”)
in Kenya.
There were no significant
changes in the nature of the
Group’s principal activities
during the reporting period.
WCP Heavy mineral concentrate production (tonnes)
MSP Heavy mineral concentrate consumption (tonnes)
Production (tonnes)
Ilmenite
Rutile
Zircon
Sales (tonnes)
Ilmenite
Rutile
Zircon
During the reporting period,
mining activity continued in
the high grade regions of the
Central Dune, close to the
processing plant, except for
three months mining lower
grade perimeter blocks. The
average ore grade mined was
8.3% heavy mineral (“HM”) for
the year. Mining activities will
remain focused on the
Central Dune deposit for the
next four years of the operation,
before transitioning to the
South Dune for the remainder
of the mine life.
The coming year will see the
introduction of a second mining
unit, a 400tph hydraulic mining
unit (“HMU”). Operating
dual mining units will enable
concurrent mining of high grade
ore with the existing dozer-
trap mining unit (“DMU”) and
allow access to lower grade
perimeter blocks more cost
effectively utilising the HMU.
This is expected to produce
a blended average ore grade
lower than achieved this year
and result in a higher mining
volume to maintain heavy
mineral concentrate (“HMC”)
production.
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The Kwale Operation is
designed to process ore
to recover three separate
products – rutile, ilmenite
and zircon. Ore is received at
the wet concentrator plant
(“WCP”) from the mining
units via a slurry pipeline. The
WCP removes slimes at a
particle size less than 45μm,
concentrates the valuable
heavy minerals (rutile, ilmenite
and zircon) and rejects most
of the non-valuable, lighter
gangue minerals. The WCP
incorporates a number of
gravity separation steps using
spiral concentrators. The HMC,
containing 90% heavy minerals,
is then processed in the mineral
separation plant (“MSP”). The
MSP cleans and separates
the rutile, ilmenite and zircon
minerals and removes any
remaining gangue.
With the consistent
achievement of design
availabilities and throughputs
in the WCP, and the high
average grade of ore mined,
HMC production of 734,431
tonnes was achieved in the
reporting period. HMC
production exceeded MSP
2016
2015
9,202,554
9,146,102
8.31%
734,431
709,443
455,870
85,654
31,389
480,538
85,536
33,062
8.61%
752,063
658,816
427,655
71,537
22,416
373,046
76,801
21,287
Positioned for growth
Directors
report
26
consumption, allowing the
continued building of a HMC
stockpile to mitigate risk and
optimise future production.
At year end, the HMC stockpile
was 139,364 tonnes.
During the reporting period,
709,443 tonnes of HMC was
fed into the MSP to produce
455,870 tonnes of ilmenite,
85,654 tonnes of rutile and
31,389 tonnes of zircon.
The successful completion
of a number of MSP upgrade
projects, together with
ongoing process optimisation,
has yielded benefits in both
throughput and downstream
recoveries of rutile and zircon
during the reporting period.
Having achieved design
recovery levels for all products,
ongoing MSP optimisation is
expected to yield sustained
increases in feed rates above
90tph in the 2017 financial year.
Ilmenite production continued
at above design capacity
due to the combination of
increased MSP feed rates and
high recoveries. Following the
installation of an additional MSP
magnet stage in November
2015, ilmenite recovery
reduced from a pre-upgrade
average of 110% to an average
of 102% for the remainder
of the year, still exceeding
design. The additional magnet
stage had the effect of
removing rutile from ilmenite
product and creating a high
chrome stream, which is now
rejected to enhance product
quality. Ilmenite production
continues to benefit from the
proportionally higher ilmenite
content (but lower rutile
content) of the high grade ore in
the Central Dune, a feature of
the Kwale deposit.
Rutile production exceeded
the 80,000 tonnes per annum
design target for the first time
in the reporting period, thanks
to the higher MSP feed rates
and ongoing optimisation of
recoveries, aided by the MSP
upgrade projects. Average rutile
recovery for the reporting
period was 99%, surpassing
design expectations.
With some altered ilmenite
species, that are not defined as
either ilmenite or rutile in the
resource, being recovered in the
production of both, calculated
recoveries (or yields) of over
100% are achievable for both
ilmenite and rutile.
Zircon production continued
its steady improvement
throughout the reporting
period, in line with the planned
ramp-up schedule, and
ultimately exceeded the 30,000
tonne design target, driven by
the combination of achieving
design recovery (77.8%) and the
increased MSP feed rate. Zircon
recoveries averaged 78% in the
last quarter and reached as high
as 80% in June.
Marketing & Sales
Base Resources has a number
of off-take agreements across
each of its three product
streams spanning between
one and six years of production
of the Kwale Operation. The
agreements are with some of
the world’s largest consumers
of titanium dioxide minerals
and zircon products, including
a cornerstone agreement with
Chemours (formerly DuPont
Titanium Technologies).
The agreements provide
off-take security for the Kwale
Operation, and contain firm
minimum annual offtake
volumes subject to annual
Base Resources’ production
forecasts. Pricing is derived
from prevailing market prices,
based on agreed price indices
or periodic price negotiations,
with some agreements offering
downside protection in the form
of floor prices.
provided a solid base for price
improvement during the 2017
financial year.
In the reporting period,
Base Resources sold almost
600,000 tonnes of product
from the Kwale Operation,
with shipments being made to a
combination of customers with
existing offtake agreements,
regular customers buying on
a spot basis and some new
spot customers buying Base
Resources’ products for the
first time.
The appointment of a Chinese
distributor for ilmenite in
early 2015 has assisted Base
Resources in continuing to
build its market presence in
China – the world’s largest
ilmenite market – through the
2016 financial year. During
the reporting period, Base
Resources became the largest
importer of ilmenite into China,
having sold almost 450,000
tonnes in the 2016 financial
year. Solid relationships have
been established with major
Chinese ilmenite consumers
who now comprise a mix of
shorter term contracts (one to
three-year duration) and regular
spot customers. Base Resources
maintains a strong focus on
servicing the Chinese market
and continues to expand its
customer base with further trial
lots of ilmenite being evaluated
by new customers.
Despite challenging market
conditions for much of the
reporting period, sales volumes
increased significantly over the
comparable period to match
production growth. A solid
improvement in the global
titanium dioxide pigment
market through the first half of
the 2016 calendar year led to
a high level of demand for Base
Resources ilmenite and rutile in
the June 2016 quarter. This has
kept stocks at minimal levels and
During the March quarter of
2016, Base Resources received
a force majeure notice from
an ilmenite customer and a
volume reduction notice from
a rutile customer. In both
cases the impact was to defer
or cancel a significant portion
of previously agreed sales
volumes for the remainder of
calendar 2016. Alternative
sales have been secured to
fully cover the shortfall arising
from these notices, aided by
the strengthening demand for
titanium dioxide feedstocks
experienced towards the end of
the reporting period.
Unlike the titanium dioxide
feedstock markets, conditions
for zircon remained subdued
through the reporting
period. Despite the ongoing
over-supplied market, Base
Resources has had sustained
solid demand for zircon from its
small, but loyal, customer base.
Market Outlook
Ilmenite and rutile are
primarily used as feed stock
for the production of titanium
dioxide pigment, with a small
percentage also used in the
production of titanium metal
and fluxes for welding rods
and wire. Pigment makes up
over 90% of titanium minerals
demand and is the main driver
of pricing. Titanium dioxide
is the most widely used
white pigment because of its
non-toxicity, brightness and
very high refractive index. It
is an essential component of
consumer products such as
paint, plastics and paper.
Global consumption of pigment
has maintained a long term
average growth rate closely
Base Resources Limited Annual Report 2016 27
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correlated to global GDP, or
approximately 3% per annum.
However, volatility in the global
economy in recent years has
created significant fluctuations
in this growth rate, manifesting
in big swings in inventory levels
throughout the entire pigment
supply chain. A growing supply
deficit, compared with demand,
over the past year appears to
have resulted in global pigment
inventories falling below
normal levels for the first time
in several years. Growth in
pigment consumption, together
with re-stocking activity, has
resulted in pigment demand
surging by more than 7% year-
on-year, and substantial price
improvements being reported
in the first half of calendar
year 2016. This has percolated
through the supply chain and
translated into strengthening
feedstock demand by the end
of the reporting period. As a
consequence, feedstock levels
have been drawn down at a
more rapid pace than expected
and tightness has emerged in
feedstock markets for the first
time since the Kwale Operation
commenced production.
The ilmenite feedstock market
has become particularly
constrained owing to the
further constrictions in supply
and growth in ilmenite-intensive
Chinese sulphate pigment
production that has occurred
over the reporting period. As
a result, ilmenite prices are
responding positively, allowing
Base Resources to lock in
substantial price increases for
shipments in the September
2016 quarter.
Conditions for rutile also
tightened by year end, although
current supply and stocks
appear adequate to meet
demand in the immediate
future.
Current analysis suggests that
excess global inventories of
titanium dioxide feedstocks,
which have weighed heavily on
prices over the past couple of
years, should return to normal
levels by the end of calendar
year 2016. In the absence of
substantial new feedstock
supply coming online, the
titanium dioxide feedstock
market is expected to begin
a period of structural supply
deficit, providing an opportunity
for price growth in both ilmenite
and rutile over the next
few years.
Zircon has a range of end-
uses, the largest of which is
ceramic tiles, which accounts
for more than 50% of global
zircon consumption. Milled
zircon enables ceramic tile
manufacturers to achieve
brilliant opacity, whiteness and
brightness in their products.
Zircon’s unique properties
include heat and wear
resistance, stability, opacity,
hardness and strength. These
properties mean it is also sought
after for other applications such
as refractories, foundries and
specialty chemicals.
Demand growth for zircon is
closely linked to growth in global
construction and increasing
urbanisation in the developing
world. After a sharp downturn
in 2012, major zircon suppliers
have attempted to match their
supply to demand since 2013,
keeping prices relatively stable
until early 2016. However, with
demand remaining sluggish
and supply growing from new
sources, one major zircon
supplier reduced prices by
approximately US$100 per
tonne in March 2016, forcing
others to follow. Despite
attempts to subsequently
increase pricing, subdued
demand and excess inventories
are expected to keep prices flat
at current levels throughout the
2017 financial year.
Any potential uplift in zircon
prices remains dependent on
firmer than expected economic
growth in the major markets
of China, USA and Europe, and
on a more controlled response
from major zircon producers in
managing their production
and stocks.
Review of financial
performance
Base Resources recorded a loss
after tax of $20.9 million for
the year ended 30 June 2016,
compared with $16.0 million
in 2015. Sales revenue was
$169.0 million for 2016 (2015:
$145.5 million), achieving an
average price of product sold
(rutile, ilmenite and zircon) of
$282 per tonne or US$205 per
tonne (2015: $309 per tonne or
US$256 per tonne). Total cost
of goods sold was $86.6 million
for 2016 (2015: $73.3 million),
at an average cost of $144 per
tonne (US$105 per tonne) of
product sold (2015: $155 per
tonne or US$130 per tonne).
Operating costs
2016
2015
KWALE
OPERATION
OTHER
OPERATIONS
TOTAL
$000s
KWALE
OPERATION
OTHER
OPERATIONS
$000s
$000s
169,039
145,501
Sales Revenue
$000s
169,039
Cost of goods sold excluding depreciation & amortisation:
Operating costs
Changes in inventories of
concentrate and finished product
Royalties expense
Total cost of goods sold (i)
Corporate & external affairs
Community development
Selling & distribution costs
Other income / (expenses)
EBITDA (i)
Depreciation & amortisation
EBIT (i)
Net financing expenses
Income tax expense
NPAT (i)
(69,647)
(5,066)
(11,845)
(86,558)
(4,309)
(3,921)
(4,114)
(2,151)
67,986
(47,062)
20,924
(27,247)
(40)
(6,363)
$000s
-
-
-
-
-
(69,647)
(5,066)
(11,845)
(86,558)
(6,840)
(11,149)
-
-
(580)
(7,420)
(127)
(7,547)
(3,921)
(4,114)
(2,731)
60,566
(47,189)
13,377
(7,009)
(34,256)
-
(40)
(14,556)
(20,919)
(64,684)
1,903
(10,470)
(73,251)
(4,052)
(3,945)
(2,391)
488
62,350
(41,474)
20,876
(26,825)
(80)
(6,029)
TOTAL
$000s
145,501
(64,684)
1,903
(10,470)
(73,251)
-
-
-
-
-
(6,636)
(10,688)
-
-
(750)
(7,386)
(144)
(7,530)
(3,945)
(2,391)
(262)
54,964
(41,618)
13,346
(2,480)
(29,305)
-
(80)
(10,010)
(16,039)
(i) Base Resources’ financial results are reported under International Financial Reporting Standards (IFRS). These Financial Statements include certain non-IFRS measures
including EBITDA, EBIT and NPAT. These measures are presented to enable understanding of the underlying performance of the Group and have not been audited.
Positioned for growth
Directors
report
28
per tonne produced for 2016
was $121 per tonne or US$88
per tonne (2015: $124 per
tonne or US$103 per tonne).
With an achieved revenue
to cost of sales ratio of 2:1,
the Kwale Operation is well
positioned in the upper
quarter of mineral sands
producers. Having reached
design recoveries for rutile and
zircon in 2016, it is expected
that, when combined with
higher MSP throughput rates,
production of these high value
products will increase in 2017,
further improving the revenue
to cost ratio.
Despite lower commodity
prices, increased production
and sales volumes and a sharp
focus on cost management has
delivered a Kwale Operation
EBITDA of $68.0 million
(2015: $62.4 million) and a
Group EBITDA of $60.6 million
for 2016 (2015: $55.0 million).
A net loss after tax of
$6.4 million (2015: $6.0 million)
was recorded by the Kwale
Operation and $20.9 million
(2015: $16.0 million) for the
Group. Loss per share for the
Group was 3.41 cents
(2015: 2.85 cents).
Cash flow from operations
was $78.6 million for 2016
(2015: $38.2 million),
higher than Group EBITDA
predominately driven by a
decrease in receivables of
$10.9 million during the
reporting period, associated
with $10.3 million of Kenyan
operational VAT refunds and
timing of sales receipts.
In December 2015, the Kwale
Project Debt Facility (“Debt
Facility”) was rescheduled in
order to establish a repayment
profile more appropriate to the
commodity price environment.
Under the terms of the
reschedule, US$14 million of
the Debt Facility was paid down
on execution, with a further
US$9.5 million scheduled
repayment made in June 2016,
reducing the outstanding debt
to US$180.5 million. Total
debt outstanding, inclusive of
the Taurus Debt Facility, at 30
June 2016 was $270.3 million
(US$201 million) compared
with $292.6 million (US$224
million) at 30 June 2015.
SIGNIFICANT CHANGES IN
STATE OF AFFAIRS
The significant changes in the
state of affairs of the Group
during the year and to the date
of this report were:
a. Reschedule of the Debt
Facility in December 2015;
and
b. Completion of a pro
rata renounceable
entitlement offer to
existing shareholders
in March 2016, raising
gross proceeds of $10
million. The proceeds
will be used to provide
continuity and certainty
of corporate funding,
and allow progression of
Base Resources’ strategic
plan and capitalise on
achievements to date.
There were no other significant
changes in the state of affairs of
the Group during the financial
period.
AFTER BALANCE DATE
EVENTS
Subsequent to year end, in July
2016, and in accordance with
the terms of the Debt Facility,
US$10.8 million of surplus cash
was ‘swept’ from the Kwale
Operation. Half of the cash
sweep (US$5.4 million) went
towards mandatory repayment
of the Debt Facility, with the
other half distributed up to the
Australian parent entity, Base
Resources Limited. From the
cash sweep portion received
by Base Resources Limited,
a mandatory fifty percent
(US$2.7 million) was applied to
repayment of the Taurus Debt
Facility, as required under the
facility agreement, with the
balance available for general
corporate funding.
There have been no other
significant after balance date
events at the date of this report.
FUTURE DEVELOPMENTS,
PROSPECTS AND BUSINESS
STRATEGIES
Base Resources strategy is to
continue to optimise the Kwale
Operation whilst pursuing
growth from internal and
external opportunities.
Information
on Directors
Mr Keith Spence
Non-Executive Chairman
Qualifications BSc
(Geophysics) (Hons)
Appointed 20 February 2015
(Appointed as Non-Executive
Chairman on 19 May 2015)
Experience Mr Spence has
over 30 years of experience
in the oil & gas industry with
Shell and Woodside. He
retired from Woodside in
2008 after 14 years in senior
executive roles including Chief
Operating Officer and acting
Chief Executive. Mr Spence
is currently Non-Executive
Chairman of Geodynamics
Limited as well as a Non-
Executive Director of Oil Search
Limited, Independence Group
NL and Murray & Roberts
Holdings Ltd (listed on JSX).
Mr Spence was also Chairman
of Clough Limited before its
acquisition in late 2013.
Special Responsibilities
Chairman of the Board;
Chairman of the Remuneration
& Nominations Committee;
Chairman of the Risk
Committee; member of the
Audit Committee; member of
Taurus Refinancing Committee.
Other current public company
directorships Geodynamics
Limited (since 2008),
Independence Group NL (since
2014), Oil Search Limited (since
2012) and Murray and Roberts
Holdings Ltd (since 2015).
Past public company
directorships held over the
last three years Clough
Limited (resigned 2013).
Mr Tim Carstens
Managing Director
Qualifications BCom, ACA
Appointed 5 May 2008
Experience Mr Carstens brings
a diverse and substantial skill
set to the development of Base
Resources, having previously
held senior executive roles with
Perilya Limited, North Limited,
Robe River Iron Associates,
Iron Ore Company of Canada
and St Barbara Mines Limited in
operations, strategy, corporate
development and finance,
both in Australia and overseas.
A chartered accountant by
profession, he has successfully
managed all aspects of business
strategy development and
implementation, acquisitions
and divestments, debt and
equity financing, organisational
development and operational
performance.
Special Responsibilities
Managing Director; member of
Taurus Refinancing Committee.
Past public company
directorships held over the
last three years None.
Base Resources Limited Annual Report 2016 29
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Mr Colin Bwye
Executive Director –
Operations & Development
Qualifications BEng (Hons)
Appointed 12 July 2010
Experience Mr Bwye has over
25 years’ experience in the
mineral sands sector, having
commenced his professional
career with RGC Mineral
Sands (since consolidated
into Iluka Resources) as a
plant metallurgist in 1988.
He undertook a number of
technical, production and
mining roles within RGC and
then, after a period of time
consulting to the industry,
joined Doral Mineral Industries,
a subsidiary of Iwatani
Corporation of Japan. Here he
was a leader in the development
and operation of the Dardanup
mineral sands mine in Western
Australia before taking on the
role of managing director and
becoming accountable for the
fused materials (zirconia and
alumina) processing facilities
as well as the mineral sands
operation. In 2010 Mr Bwye
joined Base Resources as
Executive Director – Operations
and Development. Mr Bwye
has an extensive knowledge of
all aspects of the mineral sands
industry, including downstream
processing and marketing of
mineral sands products. He was
born in Kenya and lived there
prior to migrating to Australia
in 1987 and so brings a deep
understanding of the country
and its culture.
Special Responsibilities
Executive Director –
Operations & Development.
Past public company
directorships held over the
last three years None.
Mr Samuel Willis
Non-Executive Director
Qualifications BCom
Appointed 23 May 2007
Experience Mr Willis is an
experienced company director
in the resources and energy
sectors and is currently a
director of Checkside (a
consulting firm that specialises
in Strategic HR, Recruitment
and Leadership), as well as
non-executive director of oil and
gas explorer Elixir Petroleum
Limited. Mr Willis provides Base
Resources with in excess of 15
years’ experience and expertise
in capital markets, corporate
finance and executive board
involvement with emerging
small and mid-cap companies.
Special Responsibilities
Chairman of the Audit
Committee; member of the
Remuneration & Nominations
Committee; member of the Risk
Committee; member of Taurus
Refinancing Committee.
Other current public company
directorships Elixir Petroleum
Limited (since 2013).
Past public company
directorships held over the
last three years New Standard
Energy Limited (retired 2016).
Mr Michael Anderson
Non-Executive Director
Qualifications BSc (Hons), PhD
Appointed 28 November 2011
Experience Mr Anderson
has over 20 years’ industry
experience, largely in southern
Africa and Australia. His career
commenced as a geologist with
Anglo American, followed by
roles in the metallurgical and
engineering industries with
Mintek, Bateman and Kellogg
Brown & Root. He subsequently
held senior management
positions including Corporate
Development Manager at
Gallery Gold Limited, and
Managing Director at Exco
Resources Limited, where
he oversaw the successful
development of the White Dam
Gold Project, and the sale of the
Company’s Cloncurry Copper
Project to Xstrata. He joined
Taurus Funds Management as a
Director in August 2011. Taurus
is a major shareholder of Base
Resources, with Mr Anderson
appointed as Taurus’ nominee
on the Base Resources Board.
Special Responsibilities
Member of the Audit
Committee.
Other current public company
directorships Hot Chili Limited
(since 2011).
Past public company
directorships held over the
last three years Ampella Mining
Limited (resigned 2014) and
PMI Gold Limited
(resigned 2014).
Mr Michael Stirzaker
Non-Executive Director
Qualifications BCom, ACA
Appointed 19 November
2014 (previously acting as
an alternate since
November 2011)
Experience Mr Stirzaker has
over 30 years’ commercial
experience, mainly in mining
finance and mining investment.
He began his career in Sydney
as a Chartered Accountant
with KPMG, having obtained
a Bachelor of Commerce from
the University of Cape Town. He
moved into investment banking
with Wardley James Capel (part
of the HSBC Group) and then
Kleinwort Benson Limited in
London. From 1993 to 2007 he
was part of the natural resource
advisory and investment firm,
RFC Group Limited, where
he became Joint Managing
Director. He has also been a
shareholder and Director of
Tennant Metals Pty. Limited,
a privately owned physical
metal trader and investor, and
was the Finance Director of
Finders Resources Limited, an
ASX listed company with copper
& gold projects in Indonesia.
In 2010, Mr Stirzaker joined
the private equity mining fund
manager, Pacific Road Capital
Management Pty Limited as an
Executive Director. Pacific Road
Capital is a major shareholder
of Base Resources, with
Mr Stirzaker appointed as
Pacific Road Capital’s nominee
on the Base Resources Board.
Special Responsibilities
Member of the Remuneration
& Nominations Committee;
member of the Risk Committee.
Past public company
directorships held over the
last three years Nil.
Mr Malcolm Macpherson
Non-Executive Director
Qualifications
B.Sc. FAusIMM, FTSE
Appointed 25 July 2013
Experience Mr Macpherson
is an accomplished business
leader, with decades of
experience in the global
mining industry at executive
management and board
level. Mr Macpherson spent
25 years from 1974 at Iluka
Resources Limited, the world’s
largest mineral sands company,
rising from mine manager to
Managing Director and Chief
Executive Officer. He has
previously held the position
of Chairman with Azumah
Resources Limited and Western
Power Corporation and been
a director of Portman Mining
Limited and Minara Resources
Limited. Mr Macpherson has
also been the Senior Vice
President of the Minerals
Council of Australia, President
of the Western Australian
Chamber of Minerals & Energy,
and a member of the Senate at
Murdoch University.
Special Responsibilities
Member of the Remuneration
& Nominations Committee;
member of the Audit
Committee.
Other current public company
directorships Nil.
Past public company
directorships held over
the last three years Pluton
Resources Limited (Chairman)
(resigned 2013), Titanium
Corporation Inc. (resigned
2014), and Bathurst Resources
(New Zealand) Limited
(resigned 2015).
Company Secretary
Mr Chadwick Poletti
Qualifications
LLB (Hons), BCom
Appointed 19 May 2015
Experience Mr Poletti is a
practising lawyer and holds
a Bachelor of Commerce
majoring in Finance and
Accounting. Mr Poletti has
broad experience in providing
advice to directors of listed
and unlisted public companies
in relation to directors’ duties,
the Corporations Act, the ASX
Listing Rules, the AIM Rules
for Companies and corporate
governance.
Prior to joining Base Resources,
Mr Poletti was a senior
associate at the international
law firm, Ashurst, where he
specialised in both domestic
and cross-border regulated
and unregulated mergers and
acquisitions, including takeovers
and schemes of arrangement,
capital raisings and corporate
advisory and governance.
Positioned for growth
Directors
report
30
MEETINGS OF DIRECTORS
The number of meetings of Directors (including meetings of committees of Directors) held during the year and the number of meetings
attended by each Director was as shown in the table below:
DIRECTORS’
MEETINGS
AUDIT
COMMITTEE
REMUNERATION
& NOMINATIONS
COMMITTEE
RISK
COMMITTEE
TAURUS REFINANCING
COMMITTEE
MEETINGS
HELD WHILE
A DIRECTOR
MEETINGS
ATTENDED
MEETINGS
HELD
WHILE A
COMMITTEE
MEMBER
MEETINGS
ATTENDED
MEETINGS
HELD
WHILE A
COMMITTEE
MEMBER
MEETINGS
ATTENDED
MEETINGS
HELD
WHILE A
COMMITTEE
MEMBER
MEETINGS
ATTENDED
MEETINGS
HELD
WHILE A
COMMITTEE
MEMBER
MEETINGS
ATTENDED
Keith Spence
Tim Carstens
Colin Bwye
Samuel Willis
Michael Anderson
Malcolm Macpherson
Michael Stirzaker
16
16
16
16
16
16
16
16
16
16
15
15
16
16
INDEMNIFYING OFFICERS
4
-
-
4
4
4
-
4
-
-
4
4
3
-
5
-
-
5
-
5
5
5
-
-
5
-
5
5
3
-
-
3
-
-
3
3
-
-
3
-
-
3
1
1
-
1
-
-
-
1
1
-
1
-
-
-
During or since the end of the financial year, Base Resources has given an indemnity or entered into an agreement to indemnify, or paid or
agreed to pay insurance premiums to insure its directors and officers against certain liabilities incurred while acting in that capacity. The
contracts of insurance prohibit disclosure of details of the policies or the premiums paid.
The Company’s Constitution provides that, subject to and so far as permitted by applicable law, the Company must indemnify every officer of
the Company and its wholly owned subsidiaries against a liability incurred as such an officer to a person (other than the Company or a related
body corporate) including a liability incurred as a result of appointment or nomination by the Company or subsidiary as a trustee or as an
officer of another corporation, unless the liability arises out of conduct involving a lack of good faith.
Consistent with the rules of the Company’s Constitution, the Company or its subsidiary companies (as applicable) has also granted indemnities
under the terms of deeds of indemnity with current and former Directors and current officers of the Company and its subsidiaries. Each deed
provides that the relevant Director or officer is to the maximum extent permitted by law, indemnified out of the property of the Company
against any liability (other than a liability for costs and expenses) the Director or officer incurs to another person (other than the Company or
a related body corporate of the Company) as a Director or officer of Company or a related body corporate, unless the liability arises out
of conduct involving a lack of good faith by the Director or officer.
No indemnity has been granted to an auditor of the Group in their capacity as auditors of the Group.
OPTIONS
At the date of this report, the unissued ordinary shares of Base Resources Limited under option are as follows:
GRANT DATE
DATE OF EXPIRY
EXERCISE PRICE
NUMBER UNDER OPTION
23 December 2014
19 June 2015
31 December 2018
31 December 2018
$0.40
$0.40
30,712,531
30,712,530
61,425,061
In accordance with the terms of the Taurus Debt Facility, 61,425,061 options were issued to Taurus Funds Management, with half issued on
execution and half on facility drawdown in June 2015. Refer to note 21 for further details.
Option holders do not have any rights to participate in any issues of shares or other interests in the Group or any other entity.
Base Resources Limited Annual Report 2016 SHARES ISSUED SINCE THE END OF THE FINANCIAL YEAR
No shares in Base Resources Limited have been issued since year end and no amounts are unpaid on any of the issued shares.
PROCEEDINGS ON BEHALF OF GROUP
No person has applied for leave of a Court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group
is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party
to any such proceedings during the year.
NON-AUDIT SERVICES
The Board of Directors is satisfied that the provision of non-audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001. The Directors are satisfied that the services disclosed below did not
compromise the external auditor’s independence for the following reasons:
The nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES
110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.
The following fees were paid or payable to external auditors for non-audit services provided during the year ended 30 June 2016:
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Taxation services
Other services
AUDITOR’S INDEPENDENCE DECLARATION
2016
$
267,243
10,000
2015
$
282,030
10,000
The lead auditor’s independence declaration for the year ended 30 June 2016 has been received and can be found on page 54 of the
Annual Report.
ROUNDING
The Group is of a kind referred to in ASIC Class Instrument 2016/191 and in accordance with that Class Order, amounts in the financial
report and directors’ report have been rounded to the nearest thousand dollars, unless otherwise stated.
Positioned for growth
Remuneration report -
audited
32
This remuneration report sets out the remuneration arrangements for Base Resources Limited for year ended 30 June 2016.
This Remuneration Report forms part of the Directors’ Report and has been audited in accordance with the Corporations Act 2001.
DETAILS OF KEY MANAGEMENT PERSONNEL
The remuneration report details the remuneration arrangements for key management personnel (“KMP”) who are defined as those persons
having authority and responsibility for planning, directing and controlling the major activities of the Group, and comprise the Directors
(whether executive or otherwise) of the Group and other executive management as detailed in the table below. The Executive Directors and
executive management listed in the table below are collectively defined as the Senior Executives for the purposes of this report.
NAME
Senior Executives
T Carstens
C Bwye
K Balloch
C Forbes
A Greyling
S Hay
J Schwarz
D Vickers
POSITION
CHANGES DURING THE YEAR
Managing Director
Executive Director - Operations & Development
Chief Financial Officer
General Manager - Environment & Community Affairs
General Manager – Project Development
General Manager - Marketing
General Manager - External Affairs & Development
General Manager - Operations
Appointed 1 August 2015
Non-Executive Directors
K Spence
S Willis
M Anderson
M Macpherson
M Stirzaker
Chairman
Director
Director
Director
Director
CHANGES SINCE THE END
OF THE REPORTING DATE
None.
ROLE OF THE
REMUNERATION
& NOMINATIONS
COMMITTEE
The Remuneration &
Nominations Committee is
responsible for oversight of
the remuneration system and
policies. It is also responsible
for evaluating the performance
of the Executive Directors
and monitoring performance
of the executive management
team. The Board, upon
recommendation of the
Remuneration Committee,
determines the remuneration
of the Executive Directors and
approves the remuneration
of the executive
management team.
The objective of the
Remuneration & Nominations
Committee is to ensure that
remuneration system and
policies attract and retain
executives and directors
who will create value for
shareholders.
SERVICES FROM
REMUNERATION
CONSULTANTS
The Remuneration Committee
engaged Godfrey Remuneration
Group (“Godfrey”) to review the
market competitiveness of the
Group’s remuneration practices
for the Senior Executives
in 2016.
The Committee is satisfied the
advice received from Godfrey
is free from undue influence
from the Senior Executives
to whom the remuneration
recommendations apply.
The Godfrey remuneration
review was provided to the
Committee as an input into
decision making only. The
Remuneration Committee
considered the review, along
with other factors, in making its
remuneration decisions.
In addition to the Senior
Executive remuneration review,
Godfrey provided advice on the
remuneration of the Group’s
non-executive directors, and
various other advisory services.
Total fees paid to Godfrey for
these services were $30,200.
REMUNERATION POLICY
Base Resources is committed
to the close alignment of
remuneration to shareholder
return, particularly that of the
Senior Executives. To this end,
the Group’s remuneration
system is designed to attract,
motivate and retain people by
identifying and rewarding high
performers and recognising
their contribution to the
continued growth and success
of the Group.
Key objectives of the Group’s
remuneration policy are to
ensure that remuneration
practices:
Facilitate the achievement of
the Group’s objectives;
Provide strong linkage
between executive incentive
rewards and creation of value
for shareholders;
Are simple to understand
and implement, openly
communicated and are
equitable across the Group;
Attract, retain and motivate
employees of the required
capabilities; and
Comply with applicable
legal requirements and
appropriate standards of
governance.
Base Resources Limited Annual Report 2016
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KEY PRINCIPLES OF SENIOR EXECUTIVE REMUNERATION
Remuneration comprises fixed remuneration, and variable (or “at-risk”) remuneration, which is determined by individual and Group
performance. The Group targets total fixed remuneration (“TFR”) at the 50th market percentile and total remuneration package (“TRP”),
including at-target variable remuneration, at the 75th market percentile, for Senior Executives. As a consequence, the Group’s Senior
Executives have a higher proportion of remuneration at-risk than industry averages.
Questions and answers about Senior Executive remuneration:
REMUNERATION MIX
What is the balance
between fixed and at-risk
remuneration?
FIXED REMUNERATION
What is included in fixed
remuneration?
When and how is fixed
remuneration reviewed?
SHORT TERM INCENTIVE PLAN (“STIP”)
What is the STIP?
Why does the Board
consider the STIP is
appropriate?
Does the STIP take into
account different levels of
performance compared to
objectives?
The mix of fixed and at-risk remuneration varies depending on the organisational level of executives, and
also depends on the performance of the Group and individual executives. More senior positions have a
greater proportion of their remuneration at-risk.
If overall Group performance fails to meet a minimum standard, no executives will be entitled to receive any
at-risk remuneration. For all executives, it is therefore possible that no at-risk remuneration will be earned
and that fixed remuneration will represent 100 per cent of total remuneration.
If target at-risk remuneration is earned, the proportion of total remuneration represented by fixed and
at-risk remuneration would be:
Executive Directors (includes Managing Director): 36% fixed and 64% at-risk.
Other Senior Executives: 53% fixed and 47% at-risk.
TFR includes a base salary plus superannuation. Allowances and other benefits may be provided and are
as agreed, including leased motor vehicles and additional superannuation, provided that no extra cost is
incurred by the Group.
In order to attract and retain people of the requisite capability to key roles located in Kenya, an additional
market allowance may be paid. The market allowance, while fixed in nature, does not form part of TFR for
the purposes of calculating at-risk remuneration entitlements.
TFR is reviewed annually. Any adjustments to the TFR for the Executive Directors must be approved by the
Board after recommendation by the Remuneration Committee. The Executive Directors determine the TFR
of other Senior Executives within specified guidelines approved by the Board. The Group seeks to position
the fixed remuneration at the 50th market percentile of salaries for comparable companies within the
mining industry, utilising datasets and specific advice provided by independent remuneration consultants.
The STIP is the cash component of the at-risk remuneration, payable based on a mix of Group and individual
annual performance standards.
At-risk remuneration strengthens the link between pay and performance. The purpose of these programs is
to reward executives for annual performance relative to expectations of their role accountabilities, required
behaviours and KPI’s as well as the delivery of annual business plans. A reward structure that provides
at-risk remuneration is also necessary as a competitive remuneration package in the Australian and global
marketplace for executives.
The size of any payment is linked to the extent of achievement. Levels of performance required for target
levels of STIP are set such that they are challenging but achievable.
Required performance levels for each performance criteria are set at three levels being:
Threshold - A performance level that is below optimal but nevertheless acceptable. It is the minimum for
which a small STIP award would be payable. The STIP is designed such that there is an 80% probability
the executive will achieve or exceed this level of achievement.
Target - A performance level that represents a challenging but achievable level of performance. The STIP
is designed such that there is a 50% to 60% probability the executive will achieve or exceed this level of
achievement.
Stretch - A performance level that is clearly at the upper limit of what may be achievable. The STIP is
designed such that there is a 10% to 20% probability the executive will achieve or exceed this level
of achievement.
The probabilities of achievement are set at these levels such that, over time, awards approximately equal
to the target level would become payable, assuming performance to role. The achievement of this target
level of award would support the 75th market percentile total remuneration package policy objective
for executives.
Positioned for growth
Remuneration report -
audited
34
What are the performance
criteria?
Is there an overriding
financial performance or
other conditions?
What is the value of the
STIP award opportunity?
How is STIP assessed?
Performance criteria are assigned for both individual and Group performance. Performance criteria may
change from year to year.
For Senior Executives, 50% of the STIP is attached to individual performance criteria and 50% to corporate
performance criteria.
Reflecting the importance attached to role clarity within Base Resources, individual performance criteria
are drawn directly from the role accountabilities in the participant’s role description. Each performance
criteria is allocated a weighting that reflects the relative importance of that performance criteria for
the year.
Corporate performance criteria are set at the commencement of each financial year and are derived from
the annual operating plan and may vary from time to time to include other aspects of performance for which
there is shared accountability and which the Group wishes to emphasise.
The target corporate performance (50% STIP component) criteria for Senior Executives for the 2016
financial year comprised:
5% above budgeted group EBITDA, assuming fixed AUD:USD exchange rate and variances in actual sales
prices against budgeted prices limited to +/- 25%.
For each year, a gate or gates may be determined by the Board. The gate may be a minimum level of earnings
for the Group or a safety performance threshold that must be achieved for any awards to become payable
under the STIP.
Irrespective of whether a gate is achieved, the Board retains discretion to increase or decrease awards in
its absolute discretion. It is intended that the exercise of this discretion is used sparingly to take account of
significant events and/or factors that were not anticipated when the year commenced and the performance
criteria were set.
The following gates were in place for the 2016 financial year:
No workplace fatalities.
No major reputational or environmental events.
Executive Directors have a target STIP opportunity of 60% of TFR, with a minimum opportunity (if only
threshold level is met) of 20% and a maximum opportunity (if the stretch targets are achieved) of 100%
of TFR.
Other Senior Executives have a target STIP opportunity of 30% of TFR, with a minimum opportunity
(if only threshold level is met) of 15% and a maximum opportunity (if the stretch targets are achieved) of
60% of TFR.
These percentages are set based on external advice to achieve the remuneration policy intent of 75th
market percentile total remuneration package market positioning.
Individual performance criteria - are assessed using a performance rating scale. In making the assessment
in respect of a particular area of accountability, consideration is given to the extent to which the behaviours
and performance indicators identified in the role description have been modelled and observed. This
assessment is undertaken by the participant’s manager and then signed-off by the manager-once-removed.
In the case of the Executive Directors, the assessment is undertaken by the Remuneration Committee and
approved by the Board.
Corporate performance criteria – the Board determines the extent to which each corporate performance
criteria has been achieved.
LONG TERM INCENTIVE PLAN (“LTIP”)
What is the LTIP?
How often are LTIP
awards made?
The LTIP is the equity component of at-risk remuneration and is linked to the Group’s Total Shareholder
Return (“TSR”) performance over a 3 year period.
The LTIP aims to reward participants for Base Resources TSR performance, both relative to its peer group
and in absolute terms.
The LTIP operates on the basis of a series of cycles. Each cycle commences on 1 October and is followed by
a 3 year performance period, with a test date on the 3rd anniversary of the commencement of the cycle. The
first cycle of the LTIP began on 1 October 2011.
Base Resources Limited Annual Report 2016 Why does the Board
consider an LTIP is
appropriate?
What types of equity may be
granted under the LTIP?
Was a grant made in 2016?
What are the LTIP
performance conditions?
35
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The Group believes that a well designed LTIP can:
Attract executives with the required capability;
Retain key talent;
Maintain a stable leadership team; and
Explicitly align and link the interests of Base Resources leadership team and shareholders.
Performance rights are granted under the Base Resources LTIP. Performance rights are a right granted to
acquire one share in Base Resources, subject to satisfying the performance criteria outlined below.
A participant is not entitled to participate in or receive any dividends or other shareholder benefits until the
performance right has vested and a share has been allocated and transferred to the participant.
Performance Rights were granted to eligible participants in the LTIP for the cycle commencing 1 October
2015. The number of performance rights granted for each executive was calculated by reference to the
volume weighted average share price (“VWAP”) on the twenty trading days up to the start of the cycle,
being $0.0575 per share.
The Group uses two LTIP performance criteria to determine the proportion of performance rights which
vest, as follows:
Half of the performance rights are subject to a relative TSR criteria (the relative TSR performance rights);
and
Half of the performance rights are subject to an absolute TSR criteria (the absolute TSR performance rights).
The Board considers that TSR is an appropriate performance hurdle because it ensures that a proportion of
each participant’s remuneration is explicitly linked to shareholder value and ensures that participants only
receive a benefit where there is a corresponding direct benefit to shareholders.
Relative TSR performance rights
The proportion of relative TSR performance rights which vest will be determined on the basis of Base
Resources’ TSR relative to the TSR of the comparator group over the performance period, as set out below:
BASE RESOURCES RELATIVE TSR PERFORMANCE
PERCENTAGE OF RELATIVE TSR PERFORMANCE RIGHTS THAT VEST
Less than 50th percentile
50th percentile
Between 50th and 75th percentile
75th percentile and above
Nil
50%
Pro rata between 50% and 100%
100%
Notwithstanding the above, the Board has the absolute discretion to determine that no relative TSR
performance rights vest if Base Resources TSR is negative (despite its relative placing within the TSR
comparator group).
Absolute TSR performance rights
The proportion of absolute TSR performance rights which vest will be determined on the basis of Base
Resources’ TSR on the following scale:
BASE RESOURCES 3-YEAR TSR
Less than 40.5%
40.5%
Between 40.5% and 60%
Between 60% and 100%
100% or greater
PERCENTAGE OF ABSOLUTE TSR PERFORMANCE RIGHTS THAT VEST
Nil
25%
Pro rata between 25% and 50%
Pro rata between 50% and 100%
100%
The number of performance rights granted for the cycle commencing 1 October 2015 is by reference to
the 20 day VWAP of $0.0575 per share, subject to a small scaleback to ensure compliance with applicable
ASIC relief ($0.2905 for cycle commencing 1 October 2014 and $0.3697 for cycle commencing 1 October
2013). In order to achieve 100% vesting a share price of $0.1150 or greater would be required ($0.5810
for cycle commencing 1 October 2014 and $0.7394 for cycle commencing 1 October 2013) at the
conclusion of the 3 year performance period.
Positioned for growth
Remuneration report -
audited
36
What is the comparator
group?
The TSR comparator group is comprised of the 26th to 75th ranked companies, from the top 150 ASX listed
resource companies (excluding oil and gas) by market capitalisation, at the time of the offer. The comparator
group for each of the performance rights cycles is comprised of the following companies:
COMPANIES
ABM Resources NL
Aditya Birla Minerals Limited
Alkane Resources Limited
Altona Mining Limited
Aquarius Platinum Limited
Arrium Limited
Astron Corporation Limited
Atlas Iron Limited
Atrum Coal NL
Aurelia Metals Limited
Austral Gold Limited
Avanco Resources Limited
Axiom Mining Limited
Bandanna Energy Limited
Bathurst Resources Limited
BC Iron Limited
Beadell Resources Limited
Blackgold International Holdings Ltd
Bougainville Copper Limited
CI Resources Limited
Coalspur Mines Limited
CuDeco Limited
Dome Gold Mines Limited
Doray Minerals Limited
Elemental Minerals Limited
Endeavour Mining Corporation
Finders Resources Limited
Focus Minerals Limited
Gindalbie Metals Limited
Gold One International Limited
Gold Road Resources Limited
Grange Resources Limited
Greenland Minerals and Energy Ltd
Gujarat NRE Coking Coal Limited
Highfield Resources Limited
Highlands Pacific Limited
Hot Chili Limited
Indophil Resources NL
Inova Resources Limited
Intrepid Mines Limited
Iron Ore Holdings Limited
Iron Road Limited
Jupiter Mines Limited
Kazakhstan Potash Corp. Ltd
Kingsgate Consolidated Ltd
Kingsrose Mining Limited
Lucapa Diamond Company Limited
Lynas Corporation Limited
LTIP CYCLE
COMMENCING 1 OCTOBER
2015
2014
2013
COMPANIES
LTIP CYCLE
COMMENCING 1 OCTOBER
2015
2014
2013
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
Medusa Mining Limited
Metals X Limited
Mincor Resources NL
Mineral Deposits Limited
Mirabela Nickel Limited
Mount Gibson Iron Limited
Newfield Resources Limited
Nkwe Platinum Limited
Northern Minerals Limited
Northern Star Resources Ltd
Norton Gold Fields Limited
OM Holdings Limited
Orocobre Limited
Paladin Energy Limited
Panoramic Resources Limited
Papillion Resources Limited
Perilya Limited
Perseus Mining Limited
Pilbara Minerals Limited
Poseidon Nickel Limited
Ramelius Resources Limited
Rand Mining Limited
Resolute Mining Limited
Reward Minerals Limited
ü
RTG Mining Inc
Saracen Mineral Holdings Ltd
Sheffield Resources Limited
Silver Lake Resources Ltd
St Barbara Limited
Stonewall Resources Limited
Summit Resources Limited
Sundance Resources Limited
Syrah Resources Limited
Tanami Gold NL
Teranga Gold Corporation
Terramin Australia Limited
Tiger Resources Limited
Tigers Realm Coal Limited
TNG Limited
Tribune Resources Limited
Triton Minerals Limited
Troy Resources NL
Valence Industries Limited
Western Areas NL
Western Desert Resource Ltd
Wolf Minerals Limited
Wollongong Coal Limited
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
Base Resources Limited Annual Report 2016 37
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What happens to
performance rights
granted under the LTIP
when a participant ceases
employment?
What happens in the event
of a change of control?
Do shares granted upon
vesting of performance
rights granted under the LTIP
dilute existing shareholders’
equity?
Does the Group have a policy
in relation to hedging at-risk
remuneration?
Did any performance rights
vest in 2016?
Where a participant ceases to be employed by a Group member (and is not immediately employed by
another Group member) for any reason other than a qualifying reason, all unvested performance rights of
that participant are automatically forfeited.
Where a participant ceases to be employed by a Group member because of a qualifying reason, then
the Board must determine, in its absolute discretion, the number of unvested performance rights of a
participant (if any) that will remain on foot and become capable of vesting in accordance with LTIP rules.
The Board will generally exercise its discretion in the following manner:
Performance rights granted in the cycle beginning on the 1 October immediately prior to the participant
ceasing to be employed by a Group member are automatically forfeited; and
All other performance rights that are not forfeited on the participant ceasing to be employed by a Group
member will continue to be held by the participant and will be tested for vesting on the test date for the
relevant performance right.
Qualifying reasons include but are not limited to death, total and permanent disablement, retirement or
redundancy.
Subject to the Board determining otherwise, if a change of control event occurs then a test date arises on
the date that the change of control event occurs with the Board to test the extent to which the performance
criteria have been satisfied:
On the basis of the offer price of the relevant transaction; and
In the case of absolute TSR performance rights, reducing the percentage TSR performance hurdle pro
rata to the unexpired portion of the performance period as at the date the change in control event occurs.
Shares allocated to the participants in the LTIP upon vesting of performance rights may be satisfied by the
Group issuing shares to the plan trustee or purchases by the plan trustee on market. In the event the Group
issues shares to the plan trustee to satisfy the vesting of performance rights then shareholders’ pre-existing
equity will be diluted.
A participant in the LTIP must not enter into an arrangement if the arrangement would have the effect of
limiting the exposure of the participant to risk relating to performance rights that have not vested.
The 4,870,331 performance rights granted under the LTIP for the cycle commencing
1 October 2012, completed the three year performance period on 30 September 2015 and vested as
follows:
Relative TSR performance rights
Base Resources TSR over the performance period placed it in 38th position relative to the TSR of the
50 comparator group companies, a TSR performance in the 26th percentile, resulting in none of the
2,435,166 relative performance rights vesting.
Absolute TSR performance rights
Base Resources TSR over the performance period, by reference to a final VWAP of $0.06, equated to a
TSR of -75%, resulting in none of the 2,435,165 absolute performance rights vesting.
No shares were issued to the participants in the LTIP.
GROUP PERFORMANCE AND ITS LINK TO SHAREHOLDER RETURN
The following graph compares the yearly change in the cumulative TSR of Base Resources Limited shares during the period 1 July 2011 to
30 June 2016, against the cumulative total return of the ASX 200 Resources Index over the same period. The graph illustrates the cumulative
return from Base Resources over the past five years, assuming $100 was invested. No dividends have been declared during this period.
Cumulative Total Shareholder Return 1 July 2011 through 30 June 2016
$120
$100
$80
$60
$40
$20
$0
$67
$62
$79
$56
$66
$23
$58
$23
ASX 200 Reources Index
Base Resources Limited
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Positioned for growth
Remuneration report -
audited
38
EXECUTIVE REMUNERATION OUTCOMES FOR 2016
Short Term Incentives
At the end of the 2016 financial year, a review of the performance of each Senior Executive was undertaken against each of their 2016
individual performance measures as explained above. The 2016 financial year corporate performance achieved was between target and
stretch performance levels, and incentives are payable in relation to this component commensurate with the performance level achieved. STIP
entitlements earned for 2016 performance are paid in the 2017 financial year.
The following table outlines the STI that was earned in comparison with the target STI for the 2016 financial year:
NAME
T Carstens
C Bwye
K Balloch
C Forbes
A Greyling
S Hay
J Schwarz
D Vickers
TARGET STI
STI AWARDED
INDIVIDUAL PERFORMANCE
CORPORATE PERFORMANCE
INDIVIDUAL PERFORMANCE
CORPORATE PERFORMANCE
30%
30%
15%
15%
15%
15%
15%
15%
30%
30%
15%
15%
15%
15%
15%
15%
41%
39%
24%
17%
19%
21%
20%
21%
34%
34%
18%
18%
18%
18%
18%
18%
LTIP Performance Rights
The LTIP, introduced in 2012, operates on the basis of a series of 3 year performance cycles commencing on 1 October each year. Accordingly,
LTIP performance rights issued in the year ending 30 June 2016 are subject to a 3 year performance period ending on 30 September 2018.
Performance rights issued under the plan in the 2013 financial year, totalling 4,870,331, completed their 3 year performance period on 30
September 2015, with no performance rights vesting.
The table below outlines the historical performance of performance rights cycles under the LTIP programme:
GRANT DATE
VESTING DATE
NUMBER OF
PERFORMANCE
RIGHTS GRANTED
RELATIVE PERFORMANCE RIGHTS
ABSOLUTE PERFORMANCE RIGHTS
NUMBER VESTED
% VESTED
NUMBER VESTED
% VESTED
30 June 2012
1 October 2012
30 September 2014
30 September 2015
4,125,484
4,870,331
2,062,742
-
100%
0%
-
-
0%
0%
Base Resources Limited Annual Report 2016
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TAKE HOME PAY FOR 2016
The remuneration detailed in this table represents the Senior Executives’ “take home pay” and is aligned to the current reporting period,
and therefore is particularly useful in understanding actual remuneration received during the year. The table excludes adjustments made for
accounting purposes, and included in Statutory Remuneration (refer page 40), specifically the probability and value of an employee obtaining
long service leave and the fair value of performance rights under three outstanding LTIP cycles expensed during the 2016 financial year. The
remuneration packages for all Senior Executives are shown in the following table in their employment currency and remain unchanged from
2015, excluding changes in STIP bonus and vested performance rights.
KEY MANAGEMENT PERSON
CURRENCY
SALARY
STIP BONUS SUPERANNUATION
VESTED
PERFORMANCE
RIGHTS(II)
TAKE HOME PAY(I)
(BEFORE TAX)
2016
Executive Directors
T Carstens
C Bwye
Other Key Management Personnel
K Balloch
C Forbes
A Greyling (iii)
S Hay
J Schwarz
D Vickers
2015
Executive Directors
T Carstens
C Bwye
Other Key Management Personnel
K Balloch
C Forbes
S Hay
J Schwarz
D Vickers
AUD
AUD
AUD
GBP
AUD
AUD
USD
USD
AUD
AUD
AUD
GBP
AUD
USD
USD
406,800
401,800
320,000
235,320
256,667
360,000
327,600
430,816
406,800
401,800
320,000
235,320
360,000
327,600
430,816
326,618
317,882
146,410
82,554
106,651
151,442
122,297
132,163
337,796
346,532
168,877
94,130
182,328
150,698
156,564
30,000
35,000
30,000
-
32,082
30,000
-
-
30,000
35,000
30,000
-
30,000
-
-
-
-
-
-
-
-
-
-
170,380
170,380
24,332
15,657
-
55,541
48,088
763,418
754,682
496,410
317,874
395,400
541,442
449,897
562,979
944,976
953,712
543,209
345,107
572,328
533,839
635,468
(i) Base Resources’ financial results are reported under International Financial Reporting Standards (IFRS). The above table includes certain non-IFRS measures including
vested performance rights and take home pay. These measures are presented to enable understanding of the underlying remuneration of KMPs.
(ii) Vested performance rights are valued at the share price upon vesting (2016: nil vested; 2015: $0.29) and converted to employment currency using prevailing FX rate
on the day of vesting (2016: nil vested, 2015: USD 0.8693; GBP 0.5366).
(iii) Appointed 1 August 2015.
Positioned for growth
Remuneration report -
audited
40
STATUTORY REMUNERATION DISCLOSURES FOR THE YEAR ENDED 30 JUNE 2016
The statutory remuneration disclosures for the year ended 30 June 2016 are detailed below and are prepared in accordance with Australian
Accounting Standards and differ from the take home pay summary on page 39. These differences arise due to the accounting treatment of
share-based payments (such as the STIP and LTIP). The remuneration packages for all Senior Executive’s remain unchanged from 2015, in
their base currency. Any changes in remuneration in the following table, excluding STIP bonus, are the result of foreign exchange movements
only, as detailed below. The remuneration for each Senior Executive of the Group for the years ending 30 June 2016 and 2015 was as follows:
KEY MANAGEMENT
PERSON
SHORT TERM EMPLOYMENT
BENEFITS
POST-
EMPLOYMENT
BENEFITS
OTHER LONG
TERM
SHARE BASED
PAYMENTS
TOTAL
PROPORTION
PERFORMANCE
RELATED
SALARY
STIP BONUS(I)
SUPERANNUATION
LONG SERVICE
LEAVE(II)
PERFORMANCE
RIGHTS(III)
$
$
$
$
$
$
%
406,800
401,800
2016
Executive Directors
T Carstens
C Bwye
Other Key Management Personnel
K Balloch
C Forbes (v)
A Greyling (iv)
S Hay
J Schwarz (vi)
D Vickers (vi)
320,000
479,853
256,667
360,000
449,815
591,536
326,618
317,882
146,410
149,093
106,651
151,442
164,869
178,169
30,000
35,000
30,000
-
32,082
30,000
-
-
(19,735)
6,698
271,181
271,181
1,014,864
1,032,561
4,178
-
216
2,138
-
-
105,987
136,353
30,298
119,800
119,265
123,835
606,575
765,299
425,914
663,380
733,949
893,540
Total
3,266,471
1,541,134
157,082
(6,505)
1,177,900
6,136,082
406,800
401,800
2015
Executive Directors
T Carstens
C Bwye
Other Key Management Personnel
K Balloch
C Forbes (v)
S Hay
J Schwarz (vi)
D Vickers (vi)
320,000
443,665
360,000
391,445
514,776
337,796
346,532
168,877
193,285
182,328
196,857
204,520
30,000
35,000
30,000
-
30,000
-
-
57,165
21,092
221,953
221,953
1,053,714
1,026,377
6,413
-
3,881
-
-
84,614
102,076
94,034
88,946
92,123
609,904
739,026
670,243
677,248
811,419
Total
2,838,486
1,630,195
125,000
88,551
905,699
5,587,931
58.9
57.0
41.6
37.3
32.2
40.9
38.7
33.8
-
53.1
55.4
41.6
40.0
41.2
42.2
36.6
-
(i) Current year STI bonuses are accrued in the financial year to which the performance relates.
(ii) Long service leave entitlement represents the movement in the provision. Due to a change in calculation methodology a reduction in the provision occurred during
the year, impacting some employees.
(iii) The fair value of performance rights is calculated at the date of grant using a Monte Carlo Simulation model and recognised over the period in which the minimum
service conditions are fulfilled (the vesting period). The value disclosed is the portion of the fair value of the performance rights recognised in the reporting period.
The amount included as remuneration is not necessarily the benefit (if any) that individual Senior Executive may ultimately receive.
(iv) Appointed 1 August 2015
(v) Total remuneration package denominated in Pounds sterling (GBP) and converted to Australian dollars (A$) for reporting purposes using the average exchange rate
for the 2016 financial year of 0.4904 (2015: 0.5304).
(vi) Total remuneration package denominated in US dollars (US$) and converted to Australian dollars (A$) for reporting purposes using the average exchange rate
for the 2016 financial year of 0.7283 (2015: 0.8369).
Base Resources Limited Annual Report 2016 RECONCILIATION OF TAKE HOME PAY TO STATUTORY REMUNERATION
A reconciliation of the Managing Director’s take home pay to statutory remuneration is detailed below as an example:
2016
$
2015
$
41
Take home pay for the Managing Director
Treatment of Long Service Leave:
Add: accounting provision for long service leave entitlements
Treatment of performance rights:
Add: accounting fair value (non-cash) of performance rights recognised in the period
Less: valuation of performance rights vested at date of vesting
Statutory pay for the Managing Director
NON-EXECUTIVE DIRECTOR REMUNERATION
763,418
944,976
(19,735)
57,165
271,181
-
221,953
(170,380)
1,014,864
1,053,714
Shareholders approve the maximum aggregate remuneration for non-executive directors. Fees paid to non-executive directors are
recommended by the Remuneration Committee and the Board is responsible for ratifying any recommendations, if appropriate. As approved
at the Annual General Meeting on 28 November 2011, the aggregate limit of fees payable per annum is $750,000 in total. Non-executive
director remuneration has remained unchanged since 2011.
The Group’s policy is that non-executive director’s remuneration is structured to exclude equity-based remuneration and reviewed annually.
However, historically the Group was small and the full Board, including the non-executive directors, were included in the operations of the
Group more closely than may be the case with larger companies and the non-executive directors were entitled to participate in equity based
remuneration schemes.
All directors have their indemnity insurance paid by the Group.
Non-executive directors receive a fixed fee remuneration consisting of a cash fee and statutory superannuation contributions made by the
Group and additional fees for committee roles as set out below:
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Chairman
Other non-executive directors
Remuneration & Nominations Committee
Chair
Committee member
Audit Committee
Chair
Committee member
Risk Committee
Chair
Committee member
2016
$
2015
$
110,000
70,000
110,000
70,000
10,500
5,250
14,000
7,000
5,925
2,925
10,500
5,250
14,000
7,000
-
-
Positioned for growth
Remuneration report -
audited
42
Non-Executive remuneration for the year ended 30 June 2016 and comparative 2015 remuneration:
BASE FEES
AUDIT COMMITTEE
REMUNERATION
& NOMINATIONS
COMMITTEE
RISK COMMITTEE
TOTAL
$
$
$
$
$
110,000
70,000
70,000
70,000
70,000
390,000
97,644
21,781
70,000
70,000
70,000
27,425
42,959
399,809
7,000
14,000
7,000
7,000
-
35,000
6,214
384
14,000
7,000
7,000
-
-
34,598
10,500
5,250
-
5,250
5,250
26,250
9,320
575
5,250
-
5,250
-
3,222
23,617
5,925
2,925
-
-
2,925
11,775
-
-
-
-
-
-
-
-
133,425
92,175
77,000
82,250
78,175
463,025
113,178
22,740
89,250
77,000
82,250
27,425
46,181
458,024
2016
K Spence
S Willis
M Anderson
M Macpherson
M Stirzaker
Total
2015
A King (i)
K Spence (ii)
S Willis
M Anderson
M Macpherson
T Schultz (iii)
M Stirzaker (iv)
Total
(i) Mr King retired on 19 May 2015
(ii) Mr Spence was appointed on 20 February 2015 and appointed Chairman on 19 May 2015
(iii) Mr Schultz retired on 19 November 2014
(iv) Mr Stirzaker was appointed on 19 November 2014
Base Resources Limited Annual Report 2016 EQUITY INSTRUMENTS
Options
Historically options have been issued to directors as part of their remuneration to provide a market linked incentive package. Options are
exercisable on a one-for-one basis.
In July 2015, a General Meeting of the Group extended the expiry date of the vested options granted to directors by 6 months to 9 January
2016. In January 2016, all options granted to directors, lapsed unexercised following their expiry.
The table below outlines movements in options during 2016 and the balance held by each director at 30 June 2016:
NAME
GRANT DATE
NUMBER
GRANTED
FAIR VALUE
PER OPTION
AT GRANT
DATE
EXERCISE
PRICE PER
OPTION
EXPIRY DATE
BALANCE
1 JULY
2015
NUMBER
VESTED
DURING
YEAR
NUMBER
EXERCISED
DURING
YEAR
NUMBER
LAPSED
DURING YEAR
BALANCE
30 JUNE
2016
A King
30 June 2010
30 June 2010
T Carstens
30 June 2010
30 June 2010
30 June 2010
30 June 2010
30 June 2010
30 June 2010
C Bwye
S Willis
Total
400,000
400,000
800,000
2,500,000
2,500,000
5,000,000
5,000,000
5,000,000
10,000,000
300,000
300,000
600,000
16,400,000
$0.07
$0.06
$0.09 9 Jan 2016
$0.25 9 Jan 2016
$0.07
$0.06
$0.09 9 Jan 2016
$0.25 9 Jan 2016
$0.07
$0.06
$0.09 9 Jan 2016
$0.25 9 Jan 2016
$0.07
$0.06
$0.09 9 Jan 2016
$0.25 9 Jan 2016
400,000
400,000
800,000
2,500,000
2,500,000
5,000,000
3,600,000
5,000,000
8,600,000
300,000
300,000
600,000
15,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
400,000
400,000
800,000
2,500,000
2,500,000
5,000,000
3,600,000
5,000,000
8,600,000
300,000
300,000
600,000
- 15,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
Performance Rights
The LTIP was introduced during the 2012 financial year with effect from 1 October 2011. Under the plan, the Board may offer performance
rights to eligible employees. During the 2016 financial year, performance rights were granted to Senior Executives as part of their 2016
remuneration packages.
The LTIP operates on the basis of a series of cycles. Each cycle commences on 1 October and will be followed by a 3 year performance period,
with a test date on the 3rd anniversary of the commencement of the Cycle. The first Cycle of the LTIP began on 1 October 2011, with award
formalised on 30 June 2012.
43
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Positioned for growth
Remuneration report -
audited
44
The table below outlines movements in performance rights during 2016 and the balance held by each Senior Executive at 30 June 2016:
NAME
GRANT DATE(I)
NUMBER OF
PERFORMANCE
RIGHTS
FAIR VALUE OF EACH
PERFORMANCE
RIGHT
VESTING DATE(II)
NUMBER
VESTED
DURING YEAR
NUMBER
LAPSED DURING
YEAR
BALANCE AT
END OF YEAR
T Carstens
C Bwye
K Balloch
C Forbes
A Greyling
S Hay
J Schwarz
D Vickers
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 August 2015
1 October 2015
14 January 2013
1 October 2013
1 October 2014
1 October 2015
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1 October 2012
1 October 2013
1 October 2014
1 October 2015
1,018,273
1,413,914
1,799,394
6,964,806
11,196,387
1,018,273
1,413,914
1,799,394
6,964,806
11,196,387
363,669
538,958
720,912
2,790,387
4,413,926
400,488
660,763
900,761
4,072,275
6,034,287
108,731
2,511,348
2,620,079
323,456
631,212
803,301
3,109,289
4,867,258
368,051
569,026
772,582
3,685,863
5,395,522
376,648
591,172
802,650
3,829,314
5,599,784
51,323,630
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1400
$0.0380
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
$0.1490
$0.2300
$0.1400
$0.0380
30 September 2015
30 September 2016
30 September 2017
30 September 2018
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,018,273
-
-
-
1,018,273
1,018,273
-
-
-
1,018,273
363,669
-
-
-
363,669
400,488
-
-
-
400,488
-
-
-
323,456
-
-
-
323,456
368,051
-
-
-
368,051
376,648
-
-
-
-
1,413,914
1,799,394
6,964,806
10,178,114
-
1,413,914
1,799,394
6,964,806
10,178,114
-
538,958
720,912
2,790,387
4,050,257
-
660,763
900,761
4,072,275
5,633,799
108,731
2,511,348
2,620,079
-
631,212
803,301
3,109,289
4,543,802
-
569,026
772,582
3,685,863
5,027,471
-
591,172
802,650
3,829,314
376,648
5,223,136
3,868,858
47,454,772
(i) The amount expensed per the remuneration table reflects the period since commencement of services when the Group and the Senior Executive had a shared
understanding of the award.
(ii) On the vesting date, performance rights are tested against the performance criteria, only those performance rights that satisfy the performance criteria vest.
Base Resources Limited Annual Report 2016 KEY MANAGEMENT PERSONNEL PERFORMANCE RIGHTS MOVEMENTS
2016
T Carstens
C Bwye
K Balloch
C Forbes
A Greyling (i)
S Hay
J Schwarz
D Vickers
BALANCE
1 JULY
4,231,581
4,231,581
1,623,539
1,962,012
-
1,757,969
1,709,659
1,770,470
6,964,806
6,964,806
2,790,387
4,072,275
2,620,079
3,109,289
3,685,863
3,829,314
GRANTED
VESTED
LAPSED
BALANCE
30 JUNE
10,178,114
10,178,114
4,050,257
5,633,799
2,620,079
4,543,802
5,027,471
5,223,136
1,018,273
1,018,273
363,669
400,488
-
323,456
368,051
376,648
-
-
-
-
-
-
-
-
-
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(i) Mr Greyling was appointed on 1 August 2015
17,286,811
34,036,819
3,868,858
47,454,772
KEY MANAGEMENT PERSONNEL SHAREHOLDINGS
The number of ordinary shares in Base Resources Limited held by each KMP of the Group during the financial year is as follows:
BALANCE
1 JULY
OPTIONS EXERCISED
VESTING OF
PERFORMANCE
RIGHTS
PURCHASED
SOLD
2016
K Spence
T Carstens
C Bwye
S Willis
M Anderson
M Macpherson
M Stirzaker
K Balloch
C Forbes
A Greyling (i)
S Hay
J Schwarz
D Vickers
-
1,228,522
1,838,739
200,000
-
-
-
83,903
100,613
-
-
220,319
190,752
3,862,848
(i) Mr Greyling was appointed on 1 August 2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,045
30,033
1,411,154
-
65,766
-
1,531,998
-
-
-
-
-
-
-
-
-
-
-
-
-
-
BALANCE
30 JUNE
-
1,228,522
1,838,739
200,000
-
-
-
108,948
130,646
1,411,154
-
286,085
190,752
5,394,846
Positioned for growth
Remuneration report -
audited
46
EXECUTIVE KEY MANAGEMENT PERSONNEL EMPLOYMENT ARRANGEMENTS
The employment arrangements of the executive KMPs are formalised in standard employment agreements. Details of the termination
provisions contained in the agreements are provided below.
NAME
TERM OF CONTRACT
NOTICE PERIOD BY EITHER PARTY
TERMINATION BENEFIT
T Carstens
Permanent – ongoing until notice has
been given by either party
3 month’s notice by the employee
1 month’s notice for termination by
12 months fixed remuneration in the
case of termination by the Company
Permanent – ongoing until notice has
been given by either party
C Bwye
K Balloch
C Forbes
A Greyling
S Hay
J Schwarz
D Vickers
Company if unable to perform duties
by reason of illness
No notice required for termination by
Company for cause
3 month’s notice by the employee
1 month’s notice for termination
by Company for serious breach
of employment agreement,
incompetence, gross misconduct
or refusing to comply with lawful
direction given by the Company
No notice required for termination
by Company if convicted of any major
criminal offence
Company may elect to make payment
in lieu of notice
6 months fixed remuneration in the case
of termination by the Company
(3 month’s remuneration for C Forbes
and A Greyling)
This Report of Directors, incorporating the Remuneration Report is signed in accordance with a resolution of the Board of Directors.
Keith Spence,
Chairman
Dated: 30 August 2016
Base Resources Limited Annual Report 2016 Corporate
governance
The Company is committed to implementing the
highest standards of corporate governance to
create and deliver value for shareholders.
As an ASX listed entity, the
Company must comply with
the ASX Listing Rules and is
required to report against the
ASX Corporate Governance
Council’s Corporate
Governance Principles
and Recommendations
(ASX Recommendations).
The Board considers that
throughout the financial year
ended 30 June 2016 the
Company complied with the
ASX Recommendations, except
in the limited circumstances
noted in this statement.
This statement is current as
at 30 June 2016 and has been
approved by the Board. Where
appropriate, the statement
also highlights relevant events
that have occurred since
30 June 2016 with respect to
the governance practices of
the Company.
Board of directors
ROLE OF THE BOARD
The Board Charter sets out the
Board’s role, powers and duties
and establishes the functions
and responsibilities reserved
for the Board and those
which are delegated to EXCO
(comprising the Managing
Director and the Executive
Director – Operations &
Development) and the executive
management team. Among
other things, the Board reserves
responsibility for overseeing
the business and affairs of the
Company, including its control
and accountability systems,
setting the strategic direction
of the Company, reviewing
and ratifying systems of risk
management and internal
compliance and control, codes
of conduct and legal compliance
and ensuring a high standard of
corporate governance practice
and regulatory compliance
and promoting ethical and
responsible decision making.
The Board delegates
responsibility for the day-to-day
operations, management and
administration of the Company
to EXCO in accordance with the
strategy approved by the Board.
EXCO’s joint responsibilities
include effective leadership of
the Company, preparation, and
implementation of, development
and operational plans, policies
and procedures to achieve
the strategic, operational
and financial objectives of
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A Director’s independence is
assessed in accordance with
the Definition of Independence
set out in the Board Charter.
The Chairman is considered
independent, along with fellow
non-executive Directors
Mr Willis and Mr Macpherson.
Two of the Board’s non-
executive Directors,
Mr Anderson and Mr Stirzaker
are not considered independent
as a consequence of their
respective relationships with
two of the Company’s
substantial shareholders. Due
to the current composition
of the Board, the Company
does not comply with ASX
Recommendation 2.4 that a
majority of the Board should be
independent. While the Board
recognises the importance
of having appropriate
independence on the Board,
the Board is satisfied that its
current composition does not
impact the Board’s ability to
act in accordance with the best
interests of the Company and its
shareholders generally.
the Company, management
of the day to day affairs of
the Company, identifying and
managing business risks and
managing the Company’s
financial and other reporting
mechanisms.
A full list of those matters
reserved to the Board and
those matters delegated to
management is set out in
the Board Charter. These
delegations are further
documented by way of the
Delegation of Authority
Standard which is reviewed and
approved by the Board annually.
The Company Secretary is
appointed by the Board and
is accountable to the Board,
through the Chairman, on all
matters to do with the proper
functioning of the Board. The
Company Secretary’s role
includes providing advice to the
Board on corporate governance
matters, with all Directors
having access to the advice
and services provided by the
Company Secretary.
COMPOSITION OF
THE BOARD
The Board consists of five
non-executive Directors and
two executive Directors (being
the Managing Director and the
Executive Director – Operations
& Development).
The Chairman, Mr Spence, is
responsible for leadership and
effective performance of the
Board and for the maintenance
of relations between Directors
and management that are
open, cordial and conducive to
productive cooperation.
Positioned for growth
Corporate
governance
48
SKILLS AND EXPERIENCE
The Directors on the Board collectively have a combination of skills and experience in the competencies set out in the table below.
The Board has established this set of competencies to assist in assessing the skills and experience of each Director and the combined
capabilities of the Board.
AREA
COMPETENCY
Resources industry experience
Experi ence in the resources industry, including broad knowledge of exploration, operations, project
development, markets, shipping and competitors.
Mineral sands industry
experience
Specific experience in the mineral sands industry, including an in depth knowledge of exploration,
operations, project development, markets, shipping, competitors and relevant technology.
Strategy
Identifying and critically assessing strategic opportunities and threats to an organisation and developing
and implementing successful strategies in context to the organisation’s policies and business objectives.
Mergers & acquisitions
Experience managing, directing or advising on mergers, acquisitions, divestments and portfolio
optimisations.
Finance
Risk management
Senior executive or other relevant experience in financial accounting and reporting, internal financial and
risk controls, corporate finance and, restructuring corporate transactions.
Experience working with and applying broad risk management frameworks in various country, regulatory
or business environments, identifying key risks to an organisation, monitoring risks and compliance and
knowledge of legal and regulatory requirements.
Government relations
Senior management or equivalent experience working in diverse international political, cultural,
regulatory and business environments.
Capital projects; financing/
project management
Experience with projects involving contractual negotiations, project management, significant capital
outlays and long investment horizons.
Sustainable development
Senior management or equivalent experience in workplace health and safety, environmental and social
responsibility, and community.
Previous board experience
Serving on boards of varying size and composition, in varying industries and for a range of organisations.
An awareness of global practices and benchmarking and some internal experience.
Governance
Policy
Executive leadership
Remuneration
Implementing the high standards of governance in a major organisation that is subject to rigorous
governance standards, and assessing the effectiveness of senior management.
Identifying key issues for an organisation and developing appropriate policy parameters within which the
organisation should operate.
Experience in evaluating the performance of senior management, overseeing strategic human capital
planning, industrial relations, organisational change management and sustainable success in business at
a senior level.
Remuneration and/or nomination committee membership or management experience in relation
to succession planning, remuneration, talent management (including incentive programmes,
superannuation), and the legislative and contractual framework governing remuneration.
Base Resources Limited Annual Report 2016 49
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Details of the skills, experiences,
expertise and period of service
of each Director is set out on
pages 25 to 31 of the Annual
Report. The Board considers
that collectively the Directors
have the range of skills,
knowledge, experience and
competencies necessary to
effectively direct the Company.
DIRECTOR APPOINTMENT,
INDUCTION, TRAINING
AND CONTINUING
EDUCATION
All new non-executive Directors
are required to execute a
letter of appointment which
sets out the key terms and
conditions of their appointment,
including duties, rights and
responsibilities, envisioned
time commitments and the
Board’s expectations with
respect to committee work.
Executive directors and all
senior executives enter into
employment agreements
which govern the terms of
their employment.
An induction plan is tailored
for the specific needs of any
new appointee to the Board.
The induction process typically
includes a comprehensive
overview of the Company’s
governance policies and
procedures, discussions with
each member of EXCO and
the executive management
team and a site visit to the
Company’s key operating asset
in Kwale, Kenya. The induction
materials provided to new
appointees include information
on the Company’s culture,
including the “Base Way” (the
set of core beliefs and principles
that permeate every aspect
of the Company’s business
and describes the Company’s
desired culture).
Directors are expected to
maintain the skills necessary
to discharge their obligations
to the Company and its
shareholders. The Company
provides the Board with regular
information on industry-related
matters and new developments
with the potential to affect the
Company. When a particular
need is identified (for example,
arising from a Board function
review), the Company will
organise specific structured
professional development
opportunities for Directors.
The Board manages succession
planning with the assistance
of the Remuneration &
Nomination Committee.
No new appointments were
made to the Board during
the financial year ended 30
June 2016. Should a vacancy
exist or should it otherwise
become appropriate for Board
changes to be implemented,
it is the responsibility of the
Remuneration & Nomination
Committee (among other
things) to identify and
recommend to the Board
candidates for the Board after
considering the necessary
and desirable competencies
of new Board members to
ensure the appropriate mix of
skills, experience, expertise and
diversity, and after assessment
of how the candidate can
contribute to the strategic
direction of the Company.
The Board may engage an
independent recruitment firm to
undertake a search for suitable
candidates. The Company
undertakes appropriate
background and screening
checks prior to nominating
an individual for election as
a Director by shareholders,
and provides shareholders
all material information in
its possession concerning a
Director standing for election
or re-election in the explanatory
memorandum accompanying
the relevant notice of meeting.
BOARD PERFORMANCE
EVALUATION
It is the Company’s policy that
once a year, the Board will
review and critically evaluate
the performance of the Board,
the Board Committees and
individual Directors. The
method and scope of this
performance evaluation will
be set by the Board each year,
but typically would include
self-assessments designed
to effectively review the
performance of the Board
and each of its Committees
against the requirements of
their specific charters and
the individual performance of
each Director. In appropriate
circumstances, the Board
performance evaluation may
involve engagement of a third
party Board advisor. The
process for this annual review
is set out in further detail in the
Board Charter.
A performance evaluation of
the Board, its Committees
and individual Directors
was undertaken during the
reporting period ending
30 June 2016. This review
comprised of a questionnaire
process completed by each
Director designed to assess
performance of the Board, the
Chairman, each Committee and
its Chairman and each individual
Director. The key outcomes
of the questionnaire process
were analysed and considered
at the subsequent Board or
Committee meeting, with the
Chairman undertaking separate
review discussions with each
individual Director. Overall, the
results of the review process
were pleasing, demonstrating
that the Board, its Committees
and individual Directors were
considered to be performing
their respective roles
effectively. The review process
also identified a small number of
opportunities for improvement
that will be addressed.
DIRECTOR RETIREMENT
AND RE-ELECTION
With the exception of the
Managing Director, directors
must retire at the third AGM
following their last election
or re-election. At least one
Director must stand for election
at each AGM. Any director
appointed to fill a casual vacancy
since the date of the previous
AGM retires at the next AGM
and is eligible for election.
Board support for a Director’s
re-election is not automatic
and is subject to satisfactory
Director performance. It is
the role of the Remuneration
& Nomination Committee to
consider and recommend to the
Board candidates for election or
re-election to the Board.
COMMITTEES OF
THE BOARD
The Board has the power under
the Company’s Constitution
to delegate its powers as it
considers appropriate. The
Board has established an Audit
Committee, Remuneration &
Nomination Committee and
Risk Committee. In addition to
these standing Committees,
in June 2016 the Board
established an ad hoc Taurus
Refinancing Committee to
assist the Board in assessing the
available options for repayment
or refinancing of the Company’s
US$20 million facility from
Taurus Funds Management.
The Committees generally
operate in a review or advisory
capacity, except in limited
circumstances where the
Board’s powers are specifically
delegated to a Committee.
Each Committee has a charter
detailing its role, duties and
membership requirements.
These charters are reviewed
regularly, and at least annually,
and are updated as required.
Details of the skills, experiences
and expertise of each member
of the respective Committees
of the Board is set out on pages
28 to 29 of the Annual Report.
Details of the Committee
meetings held during the year
and attendances of members
at those meetings is set out on
page 30 of the Annual Report.
Audit Committee
The role of the Audit
Committee is to assist the
Board to meet its oversight
responsibilities in relation to the
Company’s financial reporting,
compliance with legal and
regulatory requirements and
external audit function.
The Audit Committee has four
members, which during the year
were Mr Willis, Mr Spence, Mr
Anderson and Mr Macpherson
all of whom are non-executive
Directors and a majority
of whom are independent.
Mr Willis, an independent
non-executive Director, is
Committee Chairman.
Remuneration &
Nomination Committee
The role of the Remuneration
& Nomination Committee
with respect to remuneration
matters is to assist the Board
in fulfilling its oversight
responsibilities in relation to the
overall remuneration strategy
of the Company, and its specific
application to EXCO and the
senior management team, and
reviewing and approving any
equity based plans and other
incentive schemes. This role is
designed to assist in ensuring
that the executive remuneration
policy demonstrates a clear
relationship between executive
performance and remuneration.
The role of the Committee
with respect to nomination
matters is to support the Board
in fulfilling its responsibilities
by maintaining a Board that
has an appropriate mix of skills
and experience, developing
the processes for evaluation
of performance of the Board
and its Committees, ensuring
the Company’s Diversity Policy
is implemented in respect of
the Board and managing the
Positioned for growth
Corporate
governance
50
process for identifying and
selecting new Directors.
The Remuneration &
Nomination Committee has
four members, all of whom
are non-executive Directors
and a majority of whom are
independent. Members of the
Committee were Mr Spence,
Mr Willis, Mr Macpherson and
Mr Stirzaker. Mr Spence, an
independent non-executive
Director, is Committee
Chairman.
Risk Committee
In July 2015, the Board
established a Risk Committee
which has the role of assisting
the Board with the identification
and management of business
and operational risks faced by
the Company to a standard
that takes into account the
reasonable expectations of
the Company’s shareholders,
employees, customers,
suppliers, creditors and the
broader community in which the
Company operates.
The Risk Committee conducts
a full review and update of
the Company’s material
business risk register and risk
management framework every
four months, or as required (and
at least annually).
The Risk Committee has
three members, all of whom
are non-executive Directors
and a majority of whom are
independent. Members of the
Committee are Mr Spence,
Mr Willis and Mr Stirzaker.
Mr Spence, an independent
non-executive Director, is
Committee Chairman.
Taurus Refinancing
Committee
In June 2016, the Board
established the ad hoc Taurus
Refinancing Committee which
has the primary purpose of
assisting the Board in assessing
the available options for
repayment or refinancing of
the Company’s US$20 million
facility from Taurus Funds
Management. The Taurus
Refinancing Committee is not
a separately remunerated
committee. Members of the
Committee are Mr Willis, Mr
Spence, Mr Carstens and the
Company’s Chief Financial
Officer whom has been
seconded to the Committee.
Mr Willis, an independent
non-executive Director, is
Committee Chairman. Subject
to being dissolved earlier by
the Board, the Committee
is intended to operate until
the Taurus facility is repaid or
refinanced.
Shareholder
communication
GENERAL
The Board recognises the
importance of regular and
proactive interaction with
the market to ensure the
Company’s investors and key
stakeholders remain informed
about the Company’s activities.
The Company has an investor
relations program designed
to facilitate effective two-
way communication with
shareholders.
The Company’s Continuous
Disclosure and Market
Communications Policy sets out
the Company’s commitment to:
communicating effectively
with shareholders through
releases to the market via
ASX and AIM, information
mailed to shareholders
(e.g. notices of meetings
and explanatory material
and periodic disclosure,
such as annual, half yearly
and quarterly reporting of
exploration, production and
corporate activities) and
the general meetings of
the Company;
giving shareholders ready
access to balanced and
understandable information
about the Company and
corporate proposals; and
making it easy for
shareholders to participate
in general meetings of the
Company.
The Board further recognises
the rights of shareholders
and encourages the effective
exercise of those rights through
the following means:
notices of meeting and
other meeting materials
are drafted in concise and
clear language and are
distributed in accordance
with the provisions of the
Corporations Act;
shareholders are encouraged
to use their attendance at
meetings to ask questions on
relevant matters, with time
being specifically set aside at
each meeting for shareholder
questions;
shareholders are encouraged
to participate in voting on
proposed resolutions by
either attending the meeting
or by way of lodgement of
proxies, if shareholders are
unable to attend the meeting;
it is general practice for
a presentation on the
Company’s recent activities
to be made to shareholders at
each annual general meeting;
and
at annual general meetings,
it is both the Company’s
policy and the policy of the
Company’s auditor for the
lead engagement partner
to be present at the annual
general meeting and to
answer any questions
regarding the conduct of
the audit and the preparation
and content of the
auditor’s report.
The Company’s website
(www.baseresources.com.au)
provides information about
the Company generally for
the benefit of its shareholders,
market participants and key
stakeholders. The Company’s
website is promptly updated
with material released to ASX
and AIM after confirmation of
release by ASX. All information
available on the Company’s
website is regularly reviewed
and updated to ensure
that information is current,
or appropriately dated
and archived. Of note, the
Company’s website includes
the following sections which
contain relevant information for
shareholders:
a governance section, which
contains the Company’s
Constitution, relevant
governance policies and
practices, Board and Board
Committee Charters;
a Board and management
section, which contains the
names and brief biographical
information for each of
the Directors and senior
executives;
a reports section, which
contains copies of annual, half
yearly and quarterly reports;
and
a market releases
section containing ASX
announcements (including
full text of notices of meeting
and explanatory material)
and a presentations section
containing power point
presentations.
Further information about
operations at the Kwale Project
are made available from the
website of the Company’s
wholly-owned operating
subsidiary, Base Titanium
(www.basetitanium.com).
The Company provides the
opportunity for shareholders to
receive communications from,
Base Resources Limited Annual Report 2016 51
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and send communications to,
the Company and its securities
registry electronically. The
Company makes available
telephone, fax and email
contact details on its website
through which shareholders
are welcomed to contact the
Company. Further, shareholders
are provided the option and
are encouraged to receive
communications from the
Company’s securities registry
electronically.
CONTINUOUS
DISCLOSURE AND MARKET
COMMUNICATIONS
The Company is committed
to ensuring that shareholders
and the market are provided
with full and timely information
about the Company and its
activities and that all investors
have equal opportunity to
receive externally available
information issued by
the Company.
The Company’s Continuous
Disclosure and Market
Communications Policy
provides that the Managing
Director and the Company
Secretary are primarily
responsible for ensuring that
the Company complies with its
disclosure obligations and for
overseeing and co-ordinating
the disclosure of information
to relevant stock exchanges,
shareholders and applicable
regulatory authorities. To
assist in this process, it is the
responsibility of every Director
and employee to report to the
Company Secretary any price
sensitive information which
that person has obtained. To
the full extent practical (having
regard to the requirement for
immediate disclosure in certain
circumstances), the Board is
given the opportunity to review
and comment on material
announcements prior to
their release.
Promoting responsible
and ethical behaviours
THE “BASE WAY”,
CODE OF CONDUCT AND
INTEGRITY SYSTEM
The “Base Way” sets out the
unifying set of beliefs and
behavioural expectations for the
Company and its employees,
including the Company’s
absolute commitment to
conducting its business in a
legal, honest and ethical manner.
The Company’s Code of
Conduct provides an overview
of the framework for decision
making and actions in
relation to ethical conduct in
employment at the Company
and its subsidiaries. The Code
of Conduct summarises the key
business systems (including
relevant Policies and Standards)
adopted by the Company that
apply to the Company and its
subsidiaries and their respective
employees which underpin the
Company’s commitment to
integrity and fair dealing in its
business affairs and to its duty
of care to employees, customers
and stakeholders. Breaches
of the Code of Conduct may
lead to disciplinary action, as
outlined in the Company’s
Unacceptable Performance and
Misconduct System.
The Company’s Integrity Policy
expands on the Company’s
commitment to conducting its
business in a legal, honest and
ethical manner by:
Prohibiting bribery and
corruption in all forms.
Employees must not
commit, or be a party to,
or be involved in bribery
or corruption.
Ensuring that gifts,
entertainment, travel and
per diem reimbursements
are not given or received as a
reward or encouragement for
preferential treatment.
The Company not
participating in party politics.
The Company does not make
payments to political parties
or individual politicians.
Not making charitable
donations or sponsorships
that could be perceived as
bribes or payments to gain an
improper business advantage.
Employees ensuring their
personal activities and
interests do not conflict
with their responsibilities to
the Company.
Requiring third parties
who act on the Company’s
behalf to comply with the
Integrity Policy and the
Integrity Standard.
Requiring all employees
to confront inappropriate
behaviour in others.
Including demonstrating
the “Base Way” as a specific
accountability in every
role description.
The Integrity Standard further
sets out the responsibilities
and limits of discretion of
the Company’s personnel
in observing and upholding
the absolute prohibition on
bribery, corruption and related
improper conduct and provides
information and guidance on
how to recognise and deal with
instances of potential bribery
and corruption. A breach of
the Integrity Standard by a
member of the Company’s
personnel will be regarded
as serious misconduct, and
will lead to disciplinary action
which may include termination
of employment. The Company
also has a Whistle-blower
System to provide a confidential
mechanism for employees
to hold their leaders and
co-workers accountable
if not behaving with
absolute integrity.
The Company is a signatory
to the Extractive Industries
Transparency Initiative (EITI),
which was launched in 2002
at the World Summit for
Sustainable Development.
The EITI has put in place a
reporting system to encourage
transparency and accountability
in the receipt and use by
Governments of revenues
from extractive industries.
EITI supports good governance
through the verification and
full publication of payments
by companies and use of
government revenues derived
from oil, gas and mining.
The Company provides these
publications via the
governance section of the
Base Titanium website
(www.basetitanium.com).
SECURITIES OWNERSHIP
AND DEALING
The Company’s Securities
Trading Policy (which was
updated with effect from 1
September 2016) applies to
Directors and employees of the
Company and its subsidiaries.
This policy provides a brief
summary of the law on insider
trading and sets out the policy
requirements for the sale,
purchase and conversion/
exercise of the Company’s
securities by Directors and
employees. The purpose of the
policy is to:
assist Directors and
employees to avoid conduct
known as “insider trading”;
explain the type of conduct
in relation to dealings in
securities of the Company
that is prohibited under the
Corporations Act and the
European Union’s Market
Abuse Regulation; and
establish a best practice
procedure relating to dealing
in the Company’s securities
that provides protection to
the Company, its Directors
and employees against
the misuse of unpublished
information which could
materially affect the price
or value of the Company’s
securities.
Any dealing in the Company’s
securities by Directors is
notified to ASX, and any dealing
by directors or other persons
discharging management
responsibility is notified to
AIM and the United Kingdom’s
Financial Conduct Authority,
without delay. Directors and
employees participating in
equity based incentive plans
are also prohibited from
entering into any transaction
which would have the effect
of hedging or otherwise
transferring to any other
person the risk of any
fluctuation in the value of any
unvested entitlement in the
Company’s securities.
Strict compliance with the
Securities Trading Policy is
mandatory for all Directors and
employees of the Company and
its subsidiaries. Any breach of
this policy is taken seriously and
is subject to disciplinary action,
including possible termination
of a person’s employment
or appointment.
Risk management and
internal controls
APPROACH TO RISK
MANAGEMENT INTERNAL
CONTROLS
The Company recognises
that risk is an integral and
unavoidable component of its
business and is characterised
by both risk and opportunity.
The effective management
of risk enables the Company
to enhance opportunities,
reduce threats and in so
doing represent a source of
competitive advantage. The
Company is committed to
managing risk in a proactive
manner that is integrated
throughout the business and
informs all decision making as
part of day to day management.
Positioned for growth
Corporate
governance
52
RISK MANAGEMENT ROLES
AND RESPONSIBILITIES
As discussed above, the
Company established a Risk
Committee of the Board
in July 2015. The Risk
Committee’s role is to assist
the Board in monitoring risk,
with a full review and update
of the Company’s material
business risk register and risk
management framework every
four months, or as required (and
at least annually).
While the Company does
not have a formal internal
audit function, it has a well-
established Risk Management
Framework and the Audit
Committee annually reviews the
need for a formal internal audit
function. The Risk Committee
is responsible for reviewing and
approving the Company’s Risk
Management Framework, Risk
Policy and key risk parameters
at least annually, with the
Committee having reviewed the
Company’s Risk Management
Framework during the year. The
Risk Committee is responsible
for (amongst other things):
ensuring that management
designs and implements a risk
management and internal
control system to manage the
Company’s material business
risks;
reviewing at least annually
the Company’s risk
management and internal
control system and reporting
to the Board on its efficiency
and effectiveness;
reviewing the risk reports
produced by management
and reviewing the efficiency
and effectiveness of that risk
management and internal
control system;
developing and maintaining a
risk register which identifies
the material business
risks to the Company and
its operations (including
economic, environmental and
social sustainability risks) and
assessing the likelihood of
their occurrence;
periodically reviewing the
scope and adequacy of the
Company’s insurance, having
regard to the Company’s
business and its associated
insurable risks;
overseeing the
Company’s operational
and environmental
risk management and
occupational health and
safety processes; and
overseeing procedures for
whistle-blower protection.
Management is responsible
for promoting and applying
the Risk Policy, which involves
establishing a risk-aware
culture, identifying and
assessing business and
operational risks, developing
and implementing appropriate
risk strategies, systems
and controls, monitoring
the effectiveness of risk
controls and reporting on risk
management and performance.
Management also maintains the
Material Business Risk Register,
which is considered by the Risk
Committee on a regular basis.
The Company is exposed to
a number of risks across its
business, which it seeks to
manage in a manner consistent
with its Risk Management
Framework. These risks are
categorised by the Company as
strategic (e.g. the Company’s
ability to execute its growth
strategy), financial (e.g. funding
continuity), regulatory (e.g.
political, mining and fiscal policy)
or operational (e.g. community,
safety, security, human
resources and production).
The Company has identified
that it has a material exposure
to certain environmental
and social sustainability risks
associated with its operation of
the Kwale Project. Communities
affected by the Kwale Project
play an integral role in the
Company’s overall success,
which the Company seeks to
achieve through a structured
and integrated community
engagement approach. The
Company strives to build lasting
and beneficial relationships with
its communities. By supporting
equitable development, the
Company seeks to establish a
model for future development
opportunities in other parts of
Kenya and beyond, in a manner
that emphasises the value of
local community participation
and recognises their cultural
heritage. The Company’s
Communities Policy is based on
working together in a way that
allows broad participation of
affected people through mutual
respect and demonstrates
the Company’s long-term
commitment to deliver real,
tangible and sustainable
benefits. The Company’s social
management systems have
been prepared to the highest
international standards to
guide the Company in achieving
this objective.
The Company is also committed
to undertaking its activities in
a way that minimises impact
on the environment. The
Company’s Environmental
Policy and the “Base Way”
drive the Company’s
commitment to preventing
pollution, minimising impacts,
contributing to protecting
and conserving biodiversity
and driving environmentally
responsible behaviour.
The Company believes
that good environmental
performance contributes to
business success. The Company
empowers its employees to
work in an environmentally
responsible manner and
encourages everyone to take
responsibility in this regard. The
Company works in partnership
with its host communities,
conservation groups and
environmental experts to realise
its objectives and regularly
reviews environmental
performance to achieve
continuous improvement. A
comprehensive understanding
of the environmental impacts
during design, construction,
operations and ultimately
closure of the Kwale Project
direct the Company’s
environmental programmes. A
dedicated and professional team
manages the Kwale Project’s
environmental function
based on an environmental
management system guided by
the Environmental Policy.
CEO AND CFO ASSURANCE
The Board receives monthly
reports on the group’s financial
and operational results. Before
adoption by the Board of the
31 December 2015 half-year
and 30 June 2016 full-year
financial statements, the Audit
Committee and the Board
received written declarations
from the Managing Director
and the Chief Financial
Officer that, in their opinion,
the financial records of the
Company had been properly
maintained and the financial
statements comply with
the appropriate accounting
standards and give a true
and fair view of the financial
position and performance of
the Company and that their
opinion had been formed on
the basis of a sound system
of risk management and
internal control which was
operating effectively.
Base Resources Limited Annual Report 2016 Diversity
The Company values and
encourages a diverse
workforce and provides a
work environment in which
everyone is treated fairly, with
respect and can realise their
full potential. As set out further
in the Company’s Employment
Policy, the Company seeks to
achieve this by:
Employing on the basis of
job requirements and merit
without discriminating on
the grounds of age, ethnic
or social origin, gender,
sexual orientation, politics or
religion.
Ensuring its people are
trained to work, and then
working, in safe, healthy and
environmentally responsible
ways.
Requiring managers to
be models of the highest
standards of behaviour
and to demonstrate visible
leadership. The Company’s
OBJECTIVE
employees must treat each
other and those they deal
with externally with dignity,
fairness and respect. The
Company’s employees must
guard against harassment in
the workplace.
Maintaining codes of
conduct and performance
standards that establish
sound conditions of work and
disciplinary procedures in
compliance with all applicable
laws and which uphold
human rights principles.
Remuneration and incentive
systems are equitable and
transparent.
Establishing and developing
integrated employment
management systems that
seek to elevate employee
engagement within the
Company to a recognised
competitive advantage.
Including demonstrating
the “Base Way” as a specific
accountability in every
role description.
A key focus of the
Company since before the
commencement of operations
in late 2013, has been the
establishment of an operational
workforce that delivers on
commitments to maximise
employment opportunities
for local communities, whilst
achieving the highest standards
of operational and safety
performance. As at 30 June
2016, the Company is pleased
to report that it employed
94.5% Kenyan national
employees at Kwale, which
represents 92% for the group.
The Company has systems
in place to drive a structured
transfer of skills that will see this
proportion increase over time.
While the primary focus to
date has been on maximising
Kenyan participation, workforce
establishment and performance
enhancement, in July 2015 the
Company’s Diversity Standard
was revised to require that
the Board set measurable
objectives for achieving
gender diversity, for those
objectives to be reviewed
annually and for the Board to
assess annually progress in
achieving those objectives.
The Board set the following
measurable objectives which
applied for the financial year
ending 30 June 2016:
Increase the overall
percentage of women
employed by the group.
Increase female
representation in graduate
and apprentice programmes.
Increase the percentage of
women in executive roles
(Stratum III and above).
Subject to vacancies, to
consider diversity when
reviewing Board succession
plans with the aim to have
gender representation and
greater diversity.
The Board is pleased to report
positive progress in achieving
the objectives set for the
financial year ending 30 June
2016, as shown below.
53
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30 JUNE 2015
(% WOMEN)
30 JUNE 2016
(%WOMEN)
CHANGE
(% WOMEN)
Increase the overall percentage of women
Increase female representation in graduate and apprentice programmes
Increase the percentage of women in executive roles (Stratum III and above)
Board gender diversity
15.5
18
15
0
16.5
50
18
0
1
32
3
0
Continuous Disclosure and
Market Communications
Policy
Risk Management Policy
Environment Policy
Communities Policy
Employment Policy
Diversity Standard
Health and Safety Policy
The modified objectives are
considered appropriate for
the Company given positive
progress made during the year
ended 30 June 2016 and its
current state of operations, in
particular reflecting the relative
stability of the Company’s
workforce which will naturally
reduce the opportunities to
increase gender diversity as
rapidly going forward.
The Board will report the
Company’s progress in
achieving the above modified
objectives in next year’s
corporate governance
statement.
Availability of key
corporate governance
documents
The following suite of the
Company’s key corporate
governance policies and
procedures are available from
the Company’s website at
http://www.baseresources.
com.au/company-profile/
governance/.
Constitution
Board Governance Plan
(including all Board
Committee Charters)
Code of Conduct
Securities Trading Policy
Following review after the
2016 financial year end,
the Board has modified the
measurable objectives and has
set the following objectives for
the financial year ending
30 June 2017:
Increase the overall
percentage of women
employed by the Base group.
Maintain female
representation in graduate
and apprentice programmes
at or above one third.
Subject to vacancies, increase
the percentage of women in
executive roles (Stratum III
and above).
Subject to vacancies, to
consider diversity when
reviewing Board succession
plans with the aim to have
gender representation and
greater diversity.
Positioned for growth
Lead Auditor’s
Independence Declaration
54
under Section 307C of the Corporations Act 2001
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the directors of Base Resources Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2016
there have been:
(i)
(ii)
no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in
relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Rob Gambitta
Partner
Perth
30 August 2016
34
Base Resources Limited Annual Report 2016
Consolidated statement
of profit or loss and other
comprehensive income
For the year ended 30 June 2016
Sales revenue
Cost of sales
Profit from operations
Corporate and external affairs
Community development costs
Selling and distribution costs
Other expenses
Profit before financing income and income tax
Financing costs
Loss before income tax
Income tax expense
Net loss for the year
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation differences - foreign operations
Total other comprehensive income / (loss) for the year
Total comprehensive (loss) / income for the year
Net (Loss) / earnings per share
Basic (loss) / earnings per share (cents per share)
Diluted (loss) / earnings per share (cents per share)
The accompanying notes form part of these consolidated financial statements.
NOTE
2016
$000s
2015
$000s
169,039
(133,620)
35,419
145,501
(114,725)
30,776
(11,276)
(3,921)
(4,114)
(2,731)
13,377
(34,256)
(20,879)
(40)
(20,919)
5,336
5,336
(15,583)
Cents
(3.41)
(3.41)
(10,832)
(3,945)
(2,391)
(262)
13,346
(29,305)
(15,959)
(80)
(16,039)
29,336
29,336
13,297
Cents
(2.85)
(2.85)
2
3
6
5
5
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Positioned for growth
Consolidated statement
of financial position
56
For the year ended 30 June 2016
Current assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Inventories
Other current assets
Total current assets
Non-current assets
Capitalised exploration and evaluation
Property, plant and equipment
Restricted cash
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Provisions
Deferred revenue
Other liabilities
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Deferred revenue
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
The accompanying notes form part of these consolidated financial statements.
30 JUNE 2016
30 JUNE 2015
NOTE
$000s
$000s
7
8
9
10
11
8
12
13
14
15
13
14
15
16
36,295
29,761
43,544
27,962
5,826
40,906
-
54,481
31,584
5,853
143,388
132,824
1,487
390,304
-
391,791
535,179
24,953
61,816
1,173
1,123
887
89,952
196,291
28,973
3,089
228,353
318,305
216,874
223,548
54,780
(61,454)
216,874
1,432
420,983
6,532
428,947
561,771
21,866
70,057
1,239
3,248
636
97,046
211,812
27,313
4,082
243,207
340,253
221,518
214,131
49,706
(42,319)
221,518
Base Resources Limited Annual Report 2016 Consolidated statement
of changes in equity
For the year ended 30 June 2016
ISSUED CAPITAL
ACCUMULATED
LOSSES
SHARE BASED
PAYMENT
RESERVE
FOREIGN
CURRENCY
TRANSLATION
RESERVE
TOTAL
$000s
$000s
$000s
$000s
$000s
Balance at 1 July 2014
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recognised directly in equity
Share based payments
Balance at 30 June 2015
Balance at 1 July 2015
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners, recognised directly in equity
Shares issued during the year, net of costs
Share based payments
Balance at 30 June 2016
The accompanying notes form part of these consolidated financial statements.
213,669
-
-
-
(26,742)
(16,039)
-
(16,039)
462
462
214,131
(42,319)
214,131
-
-
-
(42,319)
(20,919)
-
(20,919)
9,417
-
-
1,784
223,548
(61,454)
2,752
-
-
-
4,285
7,037
7,037
-
-
-
-
(262)
6,775
13,333
-
29,336
29,336
203,012
(16,039)
29,336
13,297
-
5,209
42,669
221,518
42,669
-
5,336
5,336
221,518
(20,919)
5,336
(15,583)
-
-
9,417
1,522
48,005
216,874
57
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Positioned for growth
Consolidated statement
of cash flows
58
For the year ended 30 June 2016
Cash flows from operating activities
Receipts from customers
Payments in the course of operations
Other
Net cash from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Other
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Payment of share issue costs
Proceeds from debt financing
Repayment of borrowings
Net payments to restricted cash (debt service reserve account)
Payments for debt service costs and re-scheduling fees
Net cash used in financing activities
Net (decrease) / increase in cash held
Cash at beginning of year
Effect of exchange fluctuations on cash held
Cash at end of year
The accompanying notes form part of these consolidated financial statements.
NOTE
2016
$000s
2015
$000s
170,765
(92,061)
(96)
78,608
(4,884)
(187)
(5,071)
10,100
(683)
-
(31,680)
(23,230)
(34,632)
(80,125)
(6,588)
40,906
1,977
36,295
132,443
(94,131)
(98)
38,214
(9,129)
64
(9,065)
-
-
26,126
(14,369)
-
(25,210)
(13,453)
15,696
20,945
4,265
40,906
17
7
Base Resources Limited Annual Report 2016 59
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Notes to the consolidated
financial statements
Note 1: Statement
of Significant
Accounting Policies
REPORTING ENTITY
Base Resources Limited is a
company domiciled in Australia.
The registered address is
located at Level 1, 50 Kings Park
Road, West Perth, WA, 6005.
The consolidated financial
statements of the Company as
at and for the year ended
30 June 2016 comprises the
Company and its wholly owned
subsidiaries (together referred
to as the Group). The Group is
a for-profit entity and primarily
involved in the operation of the
Kwale Mineral Sands Mine
in Kenya.
BASIS OF PREPARATION
Statement of compliance
The consolidated financial
statements is a general purpose
financial report prepared in
accordance with Australian
Accounting Standards (AASBs)
adopted by the Australian
Accounting Standards Board
(AASB) and the Corporations
Act 2001. The consolidated
financial statements comply
with International Financial
Reporting Standards (IFRSs)
and interpretations adopted by
the International Accounting
Standards Board.
The consolidated financial
statements were approved by
the Board of Directors on
30th August 2016.
Basis of measurement
The financial report has
been prepared on an accruals
basis and is based on historical
costs, modified, where
applicable, by the measurement
at fair value of selected non-
current assets, financial assets
and financial liabilities.
Financial position
The consolidated financial
report has been prepared on
a going concern basis, which
contemplates the continuity of
normal business activity and
the realisation of assets and the
settlement of liabilities in the
normal course of business.
The Group held cash on hand
and restricted cash (debt
service reserve account) as
at 30 June 2016 of $66.1
million, net assets of $216.9
million and had a net working
capital surplus of $53.4 million,
inclusive of $62.8 million of
scheduled debt repayments for
the Kwale Project Debt Facility
and Taurus Debt Facility due
in the 2017 financial year. Net
cash inflows from operating and
investing activities for the year
ended 30 June 2016 was
$73.5 million.
The parent entity has a working
capital deficit of approximately
$19.3 million largely due
to the Taurus Debt Facility
which is due at 31 December
2016, totalling $27.0 million
(US$20 million), reduced to
$22.7 million (US$17.3 million)
subsequent year end, refer to
note 13. The positive working
capital position at the subsidiary
level is not freely transferable
to the parent entity due to
restrictions under the Kwale
Project Debt Facility and as a
result, the Group will require
additional funding by
31 December 2016.
The Directors consider
the going concern basis of
preparation to be appropriate
based on forecast cash flows.
The achievement of the cash
flow forecast is dependent upon
mineral sands prices, meeting
production output and cost
forecasts, the receipt of VAT
refunds as expected and the
successful refinancing or
replacement of the Taurus
Debt Facility at the parent
entity level.
The Group is currently
assessing its options to address
the outstanding balance of
the Taurus Facility at maturity,
which include seeking an
extension of the facility maturity
date, refinancing the facility
with another party, raising
equity or a combination of these
options. However, the Directors
have a reasonable expectation
that a suitable funding solution
can be secured in the required
timeframe in light of current
market conditions for mineral
sands, current operating
performance of the project and
the past capacity of the Group
to obtain funding as required.
Should the Group not secure
a suitable funding solution
for the Taurus Debt Facility in
the required timeframe, there
is material uncertainty as to
whether the Group will be able
to continue as a going concern
and realise its assets and
extinguish its liabilities in the
normal course of business at the
amounts stated in the financial
report. The financial report does
not include adjustments relating
to the recoverability and
classification of recorded asset
amounts nor to the amount and
classification of liabilities that
might be necessary should
the Group not continue as a
going concern.
Functional and presentation
currency
These consolidated financial
statements are presented in
Australian dollars, which is the
Group’s functional currency
and all values are rounded to
the nearest thousand dollars
($000s) unless otherwise
stated. The functional currency
for the subsidiaries is United
States dollars.
Critical accounting estimates
and judgements
The directors make estimates
and judgements in the
preparation of the financial
report that affect the
application of accounting
policies and the reported
amounts of assets, liabilities,
income and expenses based on
historical knowledge and best
available current information.
Estimates assume a reasonable
expectation of future events
and are based on current trends
and economic data, obtained
both externally and within the
Group. Actual results may differ
from these estimates. Estimates
and underlying assumptions
are reviewed on an ongoing
basis. Revisions to accounting
estimates are recognised in the
period in which the estimates
are revised and in any future
periods affected.
Impairment of assets
At each reporting date, the
Group reviews the carrying
values of its tangible and
intangible assets to determine
whether there is any indication
that those assets have been
impaired. This requires an
estimation of the fair value of
the cash-generating unit to
which the assets are allocated.
Estimating the fair value
amount requires management
to make an estimate of the
expected future cash flows from
the cash-generating unit over
the forecast period and also to
determine a suitable discount
rate in order to calculate the
present value of those cash
flows. Key estimates supporting
the expected future cash
flows include mineral sands
prices, production output and
cost forecasts.
Positioned for growth
Notes to the consolidated
financial statements
60
Mine closure and
rehabilitation obligations
Provision is made for the
anticipated costs of future
closure and rehabilitation
of mining areas. These
future cost estimates are
discounted to their present
value. The calculation of these
provision estimates requires
assumptions such as application
of environmental legislation,
plant closure dates, available
technologies, engineering
cost estimates and discount
rates. A change in any of the
assumptions used may have a
material impact on the carrying
value of mine closure and
rehabilitation obligations.
Ore reserves and resources
estimates
The estimated quantities of
economically recoverable
reserves and resources are
based upon interpretations
of geological and geophysical
models and require assumptions
to be made regarding factors
such as estimates of short
and long-term exchange
rates, estimates of short and
long-term commodity prices,
future capital requirements and
future operating performance.
Changes in reported reserves
and resources estimates can
impact the carrying value of
property, plant and equipment,
intangible assets, provisions for
mine closure and rehabilitation
obligations, the recognition of
deferred tax assets, as well as
the amount of depreciation and
amortisation charged to the
Statement of Profit or Loss and
Other Comprehensive Income.
Share based payment
transactions
The Group measures the cost
of equity-settled transactions
with employees by reference
to the fair value of the equity
instruments at the date at which
they are granted. The fair value
is determined by a recognised
valuation model, using the
assumptions detailed in note 20.
Taxation
Balances related to taxation
disclosed in the financial
statements and the notes
thereto are based on the best
estimates of directors. These
estimates take into account
both the financial performance
and position of the Group as
they pertain to current income
taxation legislation, and the
directors understanding
thereof. No adjustment has
been made for pending or future
taxation legislation. The current
income tax position represents
the directors’ best estimate,
pending an assessment by the
tax authorities in Australia
and jurisdictions where it
has foreign operations. In
accordance with the Group’s
accounting policies for
deferred taxes (refer note
1c), a deferred tax asset is
recognised for unused tax
losses only if it is probable that
future taxable profits will be
available to utilise those losses.
Determination of future taxable
profits requires estimates
and assumptions as to future
events and circumstances, in
particular, whether successful
development and commercial
exploitation, or alternatively,
sale of the respective areas
of interest will be achieved.
This includes estimates and
judgements about commodity
prices, exchange rates, future
capital requirements, future
operational performance
and the timing of estimated
cash flows. Changes in these
estimates and assumptions
could impact on the amount and
probability of estimated taxable
profits and accordingly the
recoverability of deferred tax
assets. The carrying amount of
deferred tax assets are set out
in note 6.
Construction period VAT
receivable
Refer to note 22 for discussion
on judgements surrounding
recovery of construction period
VAT receivable.
SIGNIFICANT
ACCOUNTING POLICIES
(a) Principles of consolidation
The consolidated financial
statements incorporate the
assets, liabilities and results
of entities controlled by Base
Resources Limited at the end
of the reporting period. The
Group controls an entity when
it is exposed to, or has rights
to, variable returns from its
involvement with the entity
and has the ability to affect
those returns through its power
over the entity. The financial
statements of subsidiaries are
included in the consolidated
financial statements from
the date on which control
commences until the date on
which control ceases.
Where controlled entities
have entered or left the Group
during the year, the financial
performance of those entities
are included only for the period
of the year that they were
controlled. A list of controlled
entities is contained in note
19 to the financial statements.
In preparing the consolidated
financial statements, all inter-
group balances and transactions
between entities in the
consolidated Group have been
eliminated on consolidation.
Accounting policies of
subsidiaries have been changed
where necessary to ensure
consistency with those adopted
by the parent entity.
(b) Foreign currency
Foreign currency transactions
Transactions in foreign
currencies are translated to the
respective functional currencies
of Group entities at exchange
rates at the dates of the
transactions. Monetary assets
and liabilities denominated
in foreign currencies at the
reporting date are re-translated
to the functional currency at the
exchange rate at that date. Non-
monetary items in a foreign
currency that are measured at
historical cost are translated
using the exchange rate at the
date of the transaction. Foreign
currency differences arising on
re-translation are recognised in
Profit or Loss.
Foreign operations
The assets and liabilities
of foreign operations are
translated to the functional
currency at exchange rates
at the reporting date. The
income and expenses of foreign
operations, are translated to
Australian dollars at exchange
rates at the dates of the
transactions. Foreign currency
differences are recognised in
other comprehensive income,
and presented in the foreign
currency translation reserve
(translation reserve) in equity.
When the settlement of a
monetary item receivable
from or payable to a foreign
operation is neither planned
nor likely in the foreseeable
future, foreign exchange gains
and losses arising from such a
monetary item are considered
to form part of a net investment
in a foreign operation and
are recognised in other
comprehensive income, and
are presented in the translation
reserve in equity.
(c) Income tax
The income tax expense /
benefit for the year comprise
current income tax expense
/ benefit and deferred tax
expense / benefit.
Current income tax expense
charged to the Statement
of Profit or Loss and Other
Base Resources Limited Annual Report 2016 61
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Comprehensive Income is
the expected tax payable or
recoverable on the taxable
income or loss calculated
using applicable income tax
rates enacted, or substantially
enacted, as at reporting date,
and any adjustment to tax
payable in respect of previous
years. Current tax liabilities /
assets are therefore measured
at the amounts expected to be
paid to / recovered from the
relevant taxation authority.
Deferred income tax expense
reflects movements in deferred
tax asset and deferred tax
liability balances during the year
as well as unused tax losses.
Current and deferred income
tax expense / benefit is charged
or credited directly to equity
instead of the Statement
of Profit or Loss and Other
Comprehensive Income when
the tax relates to items that are
credited or charged directly
to equity.
Deferred tax assets and
liabilities are ascertained based
on temporary differences
arising between the tax bases
of assets and liabilities and their
carrying amounts in the financial
statements. Deferred tax assets
also result where amounts have
been fully expensed but future
tax deductions are available.
No deferred income tax will
be recognised from the initial
recognition of an asset or
liability, excluding a business
combination, where there is no
effect on accounting or taxable
profit or loss.
Deferred tax assets and
liabilities are calculated at the
tax rates that are expected
to apply to the period when
the asset is realised or the
liability is settled, based on tax
rates enacted or substantively
enacted at reporting date. Their
measurement also reflects the
manner in which management
expects to recover or settle the
carrying amount of the related
asset or liability.
Deferred tax assets relating
to temporary differences
and unused tax losses are
recognised only to the extent
that it is probable that future
taxable profit will be available
against which the benefits
of the deferred tax asset can
be utilised.
Current tax assets and liabilities
are offset where a legally
enforceable right of set-off
exists and it is intended that
net settlement or simultaneous
realisation and settlement of
the respective asset and liability
will occur. Deferred tax assets
and liabilities are offset where
a legally enforceable right of
set-off exists, the deferred
tax assets and liabilities relate
to income taxes levied by the
same taxation authority on
either the same taxable entity
or different taxable entities
where it is intended that net
settlement or simultaneous
realisation and settlement of
the respective asset and liability
will occur in future periods in
which significant amounts of
deferred tax assets or liabilities
are expected to be recovered
or settled.
(d) Property, plant and
equipment
Each class of property, plant
and equipment is carried at
cost less, where applicable, any
accumulated depreciation and
impairment losses.
Plant and equipment is
measured on the historical cost
basis. Costs include expenditure
that is directly attributable to
the acquisition of the asset.
Subsequent costs are included
in the asset’s carrying amount
or recognised as a separate
asset, as appropriate, only
when it is probable that future
economic benefits associated
with the item will flow to the
Group and the cost of the item
can be measured reliably. All
other repairs and maintenance
are recognised in the Statement
of Comprehensive Income
during the financial period in
which they are incurred.
The gain or loss on disposal of
an item of plant and equipment
is determined by comparing
the proceeds from disposal
with the carrying amount of
the property, plant and
equipment, and is recognised
net within other income / other
expenses in the Statement of
Profit or Loss and Other
Comprehensive Income.
Mine property and development
assets include costs transferred
from exploration and evaluation
assets once technical feasibility
and commercial viability
of an area of interest are
demonstrable, and also includes
subsequent costs to develop
the mine to the production
phase. Any ongoing costs
associated with mining which
are considered to benefit
mining operations in future
periods are capitalised.
Depreciation
The depreciable amount of all
buildings, plant and equipment,
but excluding freehold land, is
depreciated on a straight line
basis over the asset’s useful
life to the Group commencing
from the time the asset is held
ready for use. The depreciation
methods used for each class of
depreciable assets are:
CLASS OF
PLANT AND
EQUIPMENT
Buildings
Plant and
equipment
Mine
property and
development
DEPRECIATION
METHOD
Straight line at
5% per annum
Straight line at
10% to 30%
per annum
Straight
line over
remaining
mine life
The assets’ residual values
and useful lives are reviewed,
and adjusted prospectively if
appropriate, at each reporting
date. An asset’s carrying amount
is written down immediately
to its recoverable amount if
the asset’s carrying amount
is greater than its estimated
recoverable amount.
(e) Exploration and
evaluation expenditure
Exploration for and evaluation
of mineral resources is the
search for mineral resources
after the entity has obtained
legal rights to explore in a
specific area, as well as the
determination of the technical
feasibility and commercial
viability of extracting the
mineral resource. Accordingly,
exploration and evaluation
expenditure are those
expenditures incurred by the
Group in connection with the
exploration for and evaluation
of mineral resources before
the technical feasibility
and commercial viability of
extracting a mineral resource
are demonstrable.
Accounting for exploration
and evaluation expenditure is
assessed separately for each
‘area of interest’. An ‘area
of interest’ is an individual
geological area which is
considered to constitute a
favourable environment for
the presence of a mineral
deposit or has been proved to
contain such a deposit.
For each area of interest,
the expenditure is recognised
as an exploration and
evaluation asset when the
rights of tenure to that area of
interest are current and the
expenditure is expected to be
recouped through successful
development and exploitation
of an area of interest, or
alternatively by its sale, and
where activities in the area have
not yet reached a stage that
permits reasonable assessment
of the existence of economically
recoverable reserves.
General and administrative
costs are allocated to, and
included in, the cost of
exploration and evaluation
assets only to the extent that
those costs can be related
directly to operational activities
in the area of interest to which
the exploration and evaluation
assets relate. In all other
instances, these costs are
expensed as incurred.
Accumulated costs in relation to
an abandoned area are written
off in full to the Statement
of Profit or Loss and Other
Comprehensive Income in the
year in which the decision to
abandon the area is made.
Impairment testing of
exploration and evaluation
assets
Exploration and evaluation
assets are assessed for
impairment if sufficient data
exists to determine technical
feasibility and commercial
viability or facts and
circumstances suggest that the
carrying amount exceeds the
recoverable amount.
(f) Mine development assets
Mine development expenditure
relates to costs incurred to
access a mineral resource. It
represents those costs incurred
after the technical feasibility
and commercial viability of
extracting the mineral resource
has been demonstrated and
an identified mineral reserve
is being prepared for production
(but is not yet in production).
Exploration and evaluation
assets are assessed for
impairment prior to their
transfer to mine
development assets.
Significant factors considered
in determining the technical
feasibility and commercial
viability of the project are the
completion of a feasibility study,
the existence of sufficient
Positioned for growth
Notes to the consolidated
financial statements
62
proven and probable reserves
to proceed with development
and approval by the board
of directors to proceed with
development of the project.
Mine development expenditure
includes:
Reclassified exploration and
evaluation assets;
Direct costs of construction;
and
An appropriate allocation
of overhead and borrowing
costs incurred in the
construction phase.
Capitalisation of mine
development expenditure
ceases once the mining property
is capable of commercial
production, at which point it is
transferred to property, plant
and equipment, and depreciated
(refer note 1(d)).
Any mine development
expenditure incurred once a
mine property is in production
is immediately expensed to the
Statement of Comprehensive
Income except where it is
probable that future economic
benefits will flow to the entity,
in which case it is capitalised as
property, plant and equipment.
(g) Inventories
Inventories of heavy mineral
concentrate and finished
product are physically measured
or estimated and valued at the
lower of cost and net realisable
value. Cost represents weighted
average cost and includes
direct costs and an appropriate
portion of fixed and variable
overhead expenditure, including
depreciation and amortisation.
Inventories of consumable
supplies and spare parts to
be used in production are
valued at weighted average
cost. Obsolete or damaged
inventories are valued at net
realisable value. A regular and
ongoing review is undertaken to
establish the extent of surplus
items, and a provision is
made for any potential loss
on their disposal.
Net realisable value is the
net selling price less all costs
still to be incurred in converting
the relevant inventory to
saleable product.
(h) Mine closure and
rehabilitation obligations
Provisions are made for the
estimated cost of mine closure
and rehabilitation relating to
areas disturbed during the
mine’s operations up to the
reporting date but not yet
rehabilitated. Provision has
been made in full for all the
disturbed areas at the reporting
date based on current estimates
of costs to rehabilitate such
areas, discounted to their
present value based on
expected future cash flows.
The estimated costs include the
current cost of rehabilitation
necessary to meet legislative
requirements. Changes in
estimates are dealt with on a
prospective basis as they arise.
Uncertainty exists as to the
amount of rehabilitation
obligations which will be
incurred due to the impact
of changes in environmental
legislation, and many other
factors, including future
developments, changes in
technology, price increases
and changes in interest
rates. The amount of the
provision relating to mine
closure and rehabilitation
obligations is recognised at the
commencement of the mining
project and/or construction
of the assets where a legal or
constructive obligation exists at
that time.
The provision is recognised as a
liability, separated into current
(estimated costs arising within
twelve months) and non-current
components based on the
expected timing of these cash
flows. A corresponding asset is
included in mine property and
mine development assets, only
to the extent that it is probable
that future economic benefits
associated with the restoration
expenditure will flow to the
entity. The capitalised cost
of this asset is recognised in
property, plant and equipment
and is amortised over the life of
the mine.
At each reporting date the
rehabilitation liability is re-
measured in line with changes
in discount rates, and timing
or amounts of the costs to
be incurred. Mine closure
and rehabilitation provisions
are adjusted for changes in
estimates. Adjustments to
the estimated amount and
timing of future closure and
rehabilitation cash flows are a
normal occurrence in light of
the significant judgements and
estimates involved. Changes
in the liability relating to mine
closure and rehabilitation
obligations are added to or
deducted from the related
asset (where it is probable that
future economic benefits will
flow to the entity), other than
the unwinding of the discount
which is recognised as financing
expenses in the Statement
of Comprehensive Income.
Changes to capitalised cost
result in an adjustment to future
amortisation charges.
The provisions referred to
above do not include any
amounts related to remediation
costs associated with
unforeseen circumstances.
(i) Finance income and
expenses
Financing income includes:
Interest income on cash and
cash equivalents.
Interest income is recognised
as it accrues using the effective
interest rate method.
Financing expenses include:
Interest on short-term and
long-term borrowings;
Amortisation of ancillary
costs incurred in connection
with the arrangement of
borrowings;
Finance lease charges; and
The impact of the unwinding
of discount on provisions
for mine closure and
rehabilitation.
Financing expenses are
calculated using the effective
interest rate method. Finance
expenses incurred for the
construction of any qualifying
asset are capitalised during the
period of time that is required to
complete and prepare the asset
for its intended use or sale.
Other financing expenses are
expensed as incurred.
(j) Leases
Operating Leases
Lease payments for operating
leases, where substantially all
the risks and benefits remain
with the lessor, are charged as
expenses in the periods in which
they are incurred.
Leased assets
Assets held by the Group under
leases which transfer to the
Group substantially all the risks
and rewards of ownership are
classified as finance leases. On
initial recognition, the leased
asset is measured at an amount
equal to the lower of its fair
value and the present value of
the minimum lease payments.
Subsequent to initial
recognition, the asset is
accounted for in accordance
with the accounting policy
applicable to that asset.
Minimum lease payments
made under finance leases
are apportioned between
the finance expense and the
reduction of the outstanding
liability. The finance expense
is allocated to each period
Base Resources Limited Annual Report 2016 63
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during the lease term so as to
produce a constant periodic
rate of interest on the remaining
balance of the liability.
Determining whether an
arrangement contains a lease
At inception of an arrangement,
the Group determines whether
such an arrangement is or
contains a lease. This will be the
case if the following two criteria
are met:
the fulfilment of the
arrangement is dependent on
the use of a specific asset or
assets; and
the arrangement contains a
right to use the assets.
At inception or upon
reassessment of the
arrangement, the Group
separates payments and other
consideration required by such
an arrangement into those for
the lease and those for other
elements on the basis of their
relative fair values. If the Group
concludes for a finance lease that
it is impracticable to separate the
payments reliably, then an asset
and a liability are recognised
at an amount equal to the fair
value of the underlying asset.
Subsequently, the liability is
reduced as payments are made
and an imputed finance cost
on the liability is recognised
using the Group’s incremental
borrowing rate.
(k) Impairment of assets
At each reporting date, the
Group reviews the carrying
values of its tangible and
intangible assets to determine
whether there is any indication
that those assets have been
impaired. If such an indication
exists, the recoverable amount
of the asset, being the higher
of the asset’s fair value less
costs to sell and value in use,
is compared to the asset’s
carrying value. Any excess of the
asset’s carrying value over its
recoverable amount is expensed
to Profit or Loss.
(l) Revenue
The Group sells mineral sands
under a range of International
Commercial Terms (Incoterms).
Product sales are recognised as
revenue when the Group has
transferred both the significant
risks and rewards of ownership
and control of the products
sold and the amount of revenue
can be measured reliably. The
passing of risk to the customer
is usually realised at the point
that the physical control is
transferred and is no longer
under the physical control
of the Group. The Incoterms
set out the point at which the
transfer of risk to the customer
takes place and are the ultimate
determinant.
Contract terms for some of the
Group’s sales allow for a price
adjustment based on average
market prices in the quarter that
the product is shipped. Sales
revenue for these products is
recognised at the estimated fair
value of the total consideration
received or receivable, which
takes into account the latest
available market data at the
balance date and excludes taxes
or duty.
(m) Provisions
Provisions are recognised
when the Group has a legal or
constructive obligation, as a
result of past events, for which
it is probable that an outflow
of economic benefits will result
and that outflow can be reliably
measured (refer to note 1h for
provision for rehabilitation).
(n) Financial instruments
Non-derivative
financial assets
The Group initially recognises
loans, receivables and deposits
on the date that they are
originated. All other financial
assets are recognised initially
on the date at which the
Group becomes a party to
the contractual provisions
of the instrument.
The Group derecognises
a financial asset when the
contractual rights to the cash
flows from the asset expire,
or it transfers the rights to
receive the contractual cash
flows on the financial asset
in a transaction in which
substantially all the risks and
rewards of ownership of the
financial asset are transferred.
Any interest in transferred
financial assets that is created
or retained by the Group is
recognised as a separate asset
or liability.
Financial assets and liabilities
are offset and the net amount
presented in the Statement of
Financial Position when, and
only when, the Group has a
legal right to offset the amounts
and intends either to settle
on a net basis or to realise the
asset and settle the liability
simultaneously.
Loans and receivables
Loans and receivables are
financial assets with fixed or
determinable payments that
are not quoted in an active
market. Such assets are
recognised initially at fair value
plus any directly attributable
transaction costs. Subsequent
to initial recognition loans
and receivables are measured
at amortised cost using the
effective interest method, less
any impairment losses.
Cash and Cash Equivalents
Cash and cash equivalents
include cash on hand and
deposits held at call with banks.
Non derivative financial
liabilities
The Group initially recognises
financial liabilities on the date
at which the Group becomes
a party to the contractual
provisions of the instrument.
Such liabilities are recognised
initially at fair value plus any
directly attributable transaction
costs. Subsequent to initial
recognition they are measured
at amortised cost using the
effective interest rate method.
The Group derecognises a
financial liability when its
contractual obligations are
discharged or cancelled
or expire.
Other financial liabilities
comprise trade and other
payables.
(o) Share capital
Ordinary shares are classified
as equity. Incremental costs
directly attributable to the issue
of ordinary shares and share
options are recognised as a
deduction from equity, net of
any tax effects.
(p) Earnings per share
The Group presents basic and
diluted earnings per share
for its ordinary shares. Basic
earnings per share is calculated
by dividing the earnings
attributable to ordinary
shareholders of the Group by
the weighted average number
of shares outstanding during
the year. Diluted earnings per
share is determined by adjusting
the earnings attributable to
ordinary shareholders and the
weighted average number of
ordinary shares outstanding
for the effects of all dilutive
potential ordinary shares
which comprise of vested and
exercisable share options.
(q) Employee benefits
Short-term benefits payable
Short-term employee benefit
obligations are measured on
an undiscounted basis and
are expensed as the related
service is provided. A liability
is recognised for the amount
expected to be paid under the
short-term incentive plan if the
Group has a present legal or
constructive obligation to pay
this amount as a result of past
services by the employee,
and the obligation can be
estimated reliably.
Defined contribution plans
Contributions are made by the
Group to individual defined
contribution superannuation
plans for Australian directors
and employees and are charged
as an expense in the Statement
of Comprehensive Income
when incurred.
Equity-settled Compensation
The Group operates equity-
settled, share-based payment,
employee share schemes.
The fair value of the equity
to which employees become
entitled is measured at grant
date and recognised as an
expense over the vesting
period, with a corresponding
increase to an equity account.
The fair value of performance
rights is ascertained using a
recognised pricing model which
incorporates all market
vesting conditions.
(r) Goods and services tax
(GST), Value added tax (VAT)
and other indirect taxes
Revenues, expenses and assets
are recognised net of the
amount of indirect taxes, except
where the amount of indirect
tax incurred is not recoverable
from the tax authorities in the
relevant jurisdiction. In these
circumstances the indirect tax
is recognised as part of the cost
of acquisition of the asset or as
part of an item of the expense.
Receivables and payables in
the Statement of Financial
Position are shown inclusive
of indirect taxes.
Cash flows are presented in the
statement of cash flows on a
gross basis.
(s) Segment reporting
Determination and
presentation of operating
segments
Operating segments are
components of the Group
about which separate financial
information is available that
is evaluated regularly by the
Group’s senior executives
in deciding how to allocate
resources and in assessing
performance.
Positioned for growth
Notes to the consolidated
financial statements
64
Segment information that
is evaluated by the Group’s
senior executives is prepared in
conformity with the accounting
policies adopted for preparing
the consolidated financial
statements of the Group.
Segment results that are
reported to the Group’s senior
executives include items directly
attributable to a segment as well
as those that can be allocated
on a reasonable basis.
The division of the Groups
results into segments has been
ascertained by reference to
direct identification of revenue
/ cost centres and where
interrelated segment costs
exist, an allocation has been
calculated on a pro rata basis of
the identifiable costs.
Note 2: Cost Of Sales
(t) New accounting standards
adopted in the current period
A number of new standards
and amendments to standards
are effective for annual periods
beginning after 1 July 2016,
however, the Group has not
applied the new or amended
standards in preparing
these consolidated financial
statements. Those which may
be relevant to the Group are
set out below. The Group
does not plan to adopt these
standards early.
AASB 15 Revenue from Contracts
with Customers establishes a
comprehensive framework
for determining whether, how
much, and when revenue is
recognised. It replaces existing
revenue recognition guidance,
including IAS 18 Revenue, IAS
11 Construction contracts, and
IFRIC 13 Customer Loyalty
Programmes. AASB 15 is
effective for annual reporting
periods beginning on or after
1 January 2018, with early
adoption permitted. The Group
is assessing the potential impact
on its consolidated financial
statements resulting from the
application of AASB 15.
AASB 16 Leases removes the
classification of leases as either
operating or finance leases – for
the lessee – effectively treating
all leases as finance leases.
Short term leases (less than 12
months) and leases of low value
assets are exempt from the
lease accounting requirements.
Furthermore, there are changes
in accounting over the life of the
lease as a front-loaded pattern
of expense will be recognised
for most leases, even when a
constant annual rental is paid.
Lessor accounting remains
similar to current practice.
Base Resources has not yet
determined the extent of the
impact of this standard.
AASB 9 Financial Instruments,
published in July 2014, replaces
the existing guidance in IAS
39 Financial Instruments:
Recognition and Measurement.
AASB 9 includes revised
guidance on the classification
and measurement of financial
instruments, a new expected
credit loss model for calculating
impairment on financial
assets, and new general hedge
accounting requirements. It also
carries forward the guidance on
recognition and derecognition
of financial instruments from
IAS 39. AASB 9 is effective
for annual reporting periods
beginning on or after 1 January
2018, with early adoption
permitted. The Group is
assessing the potential impact
on its consolidated financial
statements resulting from the
application of AASB 9.
Operating costs
Changes in inventories of concentrate and finished goods
Royalties expense
Depreciation and amortisation
Note 3: Financing Costs
Loss on foreign exchange transactions
Interest income
Interest expense, inclusive of withholding tax
Unwinding of discount on provision for rehabilitation
Amortisation of capitalised borrowing costs
Financing expenses
2016
$000s
69,647
5,066
11,845
47,062
2015
$000s
64,684
(1,903)
10,470
41,474
133,620
114,725
2016
$000s
333
(136)
23,436
753
6,931
2,939
34,256
2015
$000s
2,366
(270)
18,926
2,117
3,306
2,860
29,305
Base Resources Limited Annual Report 2016 Note 4: Auditors’ Remuneration
Audit services
KPMG Australia
Audit of financial report
Overseas KPMG firms
Audit services
Other services
KPMG Australia
Tax compliance and advisory services
Other services
Overseas KPMG firms
Tax compliance and advisory services
Note 5: Earnings / (Loss) Per Share
Loss used to calculate basic / diluted loss per share
Weighted average number of ordinary shares on issue used in the calculation of basic earnings /
(loss) per share
Weighted average number of ordinary shares on issue used in the calculation of diluted earnings /
(loss) per share
2016
$
2015
$
65
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160,000
165,000
133,578
293,578
102,506
267,506
32,820
10,000
43,650
10,000
234,423
277,243
238,380
292,030
2016
$000s
2015
$000s
(20,926)
(16,039)
613,140,483 563,224,609
613,140,483 563,224,609
In 2016, 61,425,061 (2015: 78,025,062) additional weighted average shares were not included in the calculation of diluted earnings per
share as they are anti-dilutive.
Note 6: Income Tax
a. Major components of income tax / (benefit) for the year
Current income tax
Income tax (benefit) / expense
Income tax expense reported in comprehensive income
Items related to equity
Deferred income tax related to items charged or credited directly to equity
Share issue costs
Deferred tax asset not recognised
2016
$000s
40
40
173
(173)
-
2015
$000s
80
80
109
(109)
-
Positioned for growth
Notes to the consolidated
financial statements
66
b. Reconciliation of income tax expense to prima facie tax payable
The prima facie tax payable on loss from ordinary activities before tax is reconciled to the income tax expense as follows:
2016
$000s
2015
$000s
Accounting loss before tax
Prima facie tax on operating loss at 30% (2015: 30%)
Add / (less) tax effect of:
Non deductible items
Unders and overs from prior year
Share based payments
Tax losses not recognised
Other deferred tax assets not brought to account as realisation not considered probable
Tax losses utilised
Other changes in recognised deductible temporary differences
Recognition of tax effect of previously unrecognised losses
Effect of tax rates in foreign jurisdictions
Income tax attributable to operating loss
c. Deferred tax assets recognised
Tax losses Kenya
Other
Deferred tax liabilities recognised
Property, plant and equipment
Net deferred tax asset recognised
d. Deferred tax assets unrecognised
Deductible temporary differences
Tax losses Australia
Tax losses other
(20,879)
(6,264)
(15,959)
(4,788)
2,599
-
260
1,236
1,206
(4,308)
4,319
-
992
40
40,802
1,265
42,067
2,439
-
212
1,150
1,646
(5,267)
4,540
-
148
80
43,646
1,611
45,257
(42,067)
-
(45,257)
-
747
6,683
75
7,505
483
4,782
67
5,332
Potential deferred tax assets attributable to tax losses and exploration expenditure carried forward have not been brought to account at
30 June 2016 and 2015 because the directors do not believe it is appropriate to regard realisation of the deferred tax assets as probable at
this point in time. These benefits will only be obtained if:
i. The Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions for the loss
and exploration expenditure to be realised;
ii. The Group continues to comply with conditions for deductibility imposed by law; and
iii. No changes in tax legislation adversely affect the Group in realising the benefit from the deductions for the loss and exploration
expenditure.
Base Resources Limited Annual Report 2016 2016
$000s
2015
$000s
36,295
40,906
67
2016
$000s
29,761
2015
$000s
-
-
6,532
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Note 7: Cash and Cash Equivalents
Cash at bank and in hand
Note 8: Restricted Cash
Current
Restricted cash (a)
Non-current
Restricted cash (b)
A. CURRENT RESTRICTED CASH
Under the terms of the Kwale Project Debt Facility, sufficient funds are required to be held on account in order to meet the debt servicing
requirements of the next six months.
B. NON-CURRENT RESTRICTED CASH
Following the rescheduling of the Kwale Project Debt Facility (refer to note 13) the funds placed on deposit, representing a customer
performance guarantee, have been released.
Note 9: Trade and Other Receivables
Current
Trade receivables
VAT receivables
Other receivables
Note 10: Inventories
Current
Heavy mineral concentrate and other intermediate stockpiles – at cost
Finished goods stockpiles – at cost
Stores and consumables – at cost
2016
$000s
18,246
25,198
100
43,544
2016
$000s
9,054
6,982
11,926
27,962
2015
$000s
21,573
32,892
16
54,481
2015
$000s
8,359
11,860
11,365
31,584
Positioned for growth
Notes to the consolidated
financial statements
68
Note 11: Property, Plant and Equipment
Plant and equipment
At cost
Accumulated depreciation
Mine property and development
At cost
Accumulated depreciation
Buildings
At cost
Accumulated depreciation
Capital work in progress
At cost
Total Property, Plant and Equipment
Balance at 1 July 2014
Additions
Transfers
Disposals
Reduction in mine rehabilitation asset
Depreciation expense
Effects of movement in foreign exchange
Balance at 30 June 2015
Balance at 1 July 2015
Additions
Transfers
Disposals
Reduction in mine rehabilitation asset
Depreciation expense
Effects of movement in foreign exchange
Balance at 30 June 2016
2016
$000s
2015
$000s
289,626
(67,896)
221,730
199,259
(39,582)
159,677
8,596
(1,848)
6,748
277,745
(38,687)
239,058
195,139
(21,307)
173,832
7,800
(1,194)
6,606
2,149
1,487
390,304
420,983
PLANT &
EQUIPMENT
MINE PROPERTY
AND DEVELOPMENT
BUILDINGS
CAPITAL WORK IN
PROGRESS
$000s
215,375
3,441
2,306
(14)
-
(26,812)
44,762
239,058
239,058
1,587
1,480
(45)
-
(27,994)
7,644
221,730
$000s
162,427
6,644
707
-
(1,854)
(17,341)
23,249
173,832
173,832
655
-
-
(1,100)
(17,781)
4,071
159,677
$000s
5,856
122
-
-
-
(591)
1,219
6,606
6,606
526
21
-
-
(616)
211
6,748
$000s
2,495
1,486
(3,013)
-
-
-
519
1,487
1,487
2,115
(1,501)
-
-
-
48
2,149
TOTAL
$000s
386,153
11,693
-
(14)
(1,854)
(44,744)
69,749
420,983
420,983
4,883
-
(45)
(1,100)
(46,391)
11,974
390,304
Base Resources Limited Annual Report 2016 69
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Note 12: Trade And Other Payables
Trade payables and accruals
Provision for increase in Government of Kenya royalty (a)
A. GOVERNMENT OF KENYA (“GOK”) ROYALTY
2016
$000s
15,531
9,422
24,953
2015
$000s
16,625
4,964
21,866
The Group is in ongoing discussions with the GoK with respect to the royalty rate payable for the Kwale Operation in the context of resolution
of a number of outstanding issues, including receipt of $23.0 million (US$17.1 million) VAT receivables related to the construction of the
project. Royalty costs are provided for, and expensed, on the basis of a 5% royalty rate being payable to the GoK, whereas the royalty rate
applicable under the terms of the special mining lease is 2.5%.
Note 13: Borrowings
Current
Kwale Operation Debt Facility (a)
Taurus Debt Facility (b)
Capitalised borrowing costs (b)
Amortisation of capitalised borrowing costs (b)
Finance lease liabilities
Total current borrowings
Non-current
Kwale Operation Debt Facility (a)
Taurus Debt Facility (b)
Capitalised borrowing costs (a)
Amortisation of capitalised borrowing costs (a)
Finance lease liabilities
Total non-current borrowings
Total borrowings
A. KWALE OPERATION DEBT FACILITY
2016
$000s
35,859
26,962
(4,570)
3,111
454
61,816
207,473
-
(23,298)
11,526
590
196,291
258,107
2015
$000s
69,659
-
-
-
398
70,057
196,826
26,126
(19,838)
7,686
1,012
211,812
281,869
In November 2011, the Group entered into Kwale Operation Debt Facility (“Debt Facility”) for the development and construction of the
Kwale Operation. In December 2015, the Debt Facility was rescheduled in order to establish a repayment profile more appropriate to the
commodity price environment. Under the terms of the reschedule, US$14 million of the Debt Facility was paid down on execution, with a
further US$9.5 million paid down in June 2016, reducing the outstanding debt to US$180.5 million. All tranches of the Debt Facility carry
interest rates of LIBOR plus 630 basis points, inclusive of political risk insurance.
Security for the Debt Facility is a fixed and floating charge over all the assets of Base Titanium Limited (“BTL”) and the shares in BTL held
by Base Titanium (Mauritius) Limited (“BTML”) and Base Resources Limited (“BRL”) and the shares held in BTML by BRL. In addition, BRL
provides a parent guarantee which will remain in place until June 2017, subject to finalising a long term operating licence for the Group’s
port operations. An additional margin of 25 basis points was applicable until the completion of documentation to perfect the lender security
package, which was finalised in June 2016. The remaining tenor of all loan tranches is 4 years.
The weighted average effective interest rate on the facilities at 30 June 2016 is 6.78% (30 June 2015: 6.65%).
All transaction costs directly attributable to securing the project debt facility funding are capitalised and offset against drawn loan amounts.
Capitalised borrowing costs are amortised over the life of the loan using the effective interest rate method.
Subsequent to year end, in July 2016, in accordance with the terms of the Debt Facility, US$10.8 million of surplus cash was ‘swept’ from BTL.
Half of the cash sweep (US$5.4 million) went towards mandatory repayment of the Debt Facility, with the other half distributed up to the
Australian parent entity, BRL. The outstanding debt after this repayment was US$175.1 million.
Positioned for growth
Notes to the consolidated
financial statements
70
B. TAURUS DEBT FACILITY
In December 2014, the Company executed a US$20 million unsecured debt facility with one of its major shareholders, Taurus Funds
Management (“Taurus Facility”), to provide the funds to satisfy additional liquidity requirements from the Kwale Project Debt Facility
reschedule in 2014, and US$5 million in corporate funding. The Taurus Facility has been reclassified from non-current to current borrowings
due to the final repayment date of 31 December 2016. All transaction costs directly attributable to securing the project debt facility funding
are capitalised and offset against drawn loan amounts. Capitalised borrowing costs are amortised over the life of the loan using the effective
interest rate method.
Subsequent to year end, in July 2016, US$2.7 million of the Taurus Facility was repaid from permitted distributions from the Kwale Project,
reducing the outstanding debt to US$17.3 million.
Note 14: Provisions
Current
Employee benefits
Income tax liability
Non-current
Mine closure and rehabilitation
Employee benefits
MOVEMENT IN MINE CLOSURE AND REHABILITATION
Balance at 1 July
Effects of movement in foreign exchange
Increase / (decrease) in rehabilitation estimate
Unwinding of discount
Balance at 30 June
2016
$000s
1,173
-
1,173
28,914
59
28,973
2016
$000s
27,270
872
32
740
28,914
2015
$000s
1,212
27
1,239
27,270
43
27,313
2015
$000s
21,663
4,510
(1,132)
2,229
27,270
The mine closure and rehabilitation obligations have been recorded initially as a liability at fair value, assuming a risk-free discount
rate equivalent to the average of 10 year US Government bonds of 2.59% as at 30 June 2016 (2015: 2.81%) and an inflation factor of
2.13% (2015: 2.35%). Although the ultimate amount to be incurred is uncertain, management has, at 30 June 2016, estimated the asset
retirement cost of work completed to date using an expected remaining mine life of 9 years and a total undiscounted estimated cash flow of
US$22,168,415 (2015: US$21,389,489). Management’s estimate of the underlying asset retirement costs are independently reviewed by an
external consultant on a regular basis for completeness.
Base Resources Limited Annual Report 2016 Note 15: Deferred Revenue
Current
Deferred revenue
Fee paid on execution of product sales agreement
Non-current
Fee paid on execution of product sales agreement
Amortisation of deferred revenue
Note 16: Issued Capital
Ordinary share capital:
Issued and fully paid
DATE
1 July 2014
Performance rights vested under the Group’s LTIP
30 June 2015
1 July 2015
Renounceable entitlement offer
Share issue costs
30 June 2016
71
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2016
$000s
-
1,123
1,123
5,617
(2,528)
3,089
2015
$000s
2,159
1,089
3,248
5,443
(1,361)
4,082
2016
$000s
2015
$000s
223,548
214,131
NUMBER
$000S
561,840,029
2,062,742
563,902,771
563,902,771
168,329,185
-
732,231,956
213,669
462
214,131
214,131
10,100
(683)
223,548
All issued shares are fully paid. The Group does not have authorised capital or par value in respect of its issued shares. The holders of ordinary
shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Group.
In March 2016, the Group completed a partially underwritten accelerated pro rata renounceable entitlement offer to existing shareholders,
which raised gross proceeds of $10.1 million and resulted in the issue of 168,329,185 shares.
A. PERFORMANCE RIGHTS
For information relating to performance rights issued to key management personnel during the financial year, refer to note 21 share-based
payments.
Note 17: Reconciliation Of Loss After Income Tax To Cash Flow From Operations
Loss for the year
Depreciation and amortisation
Share based payments
Financing costs classified as financing activity
Amortisation of deferred revenue
Changes in assets and liabilities:
Decrease / (increase) in receivables and other assets
Decrease / (increase) in inventories
Increase in trade and other payables
(Decrease) / increase in provisions
Cash flow from operations
2016
$000s
(20,919)
47,062
1,520
34,256
(1,145)
11,310
3,622
2,990
(88)
78,608
2015
$000s
(16,039)
41,474
1,209
29,305
(1,002)
(23,769)
(10,428)
17,412
52
38,214
Positioned for growth
Notes to the consolidated
financial statements
72
Note 18: Segment Reporting
IDENTIFICATION OF REPORTABLE SEGMENTS
The Groups 100% owned Kwale Operation is located in Kenya, approximately 50 kilometres south from the port of Mombasa. The Kwale
Operation generates revenue from the sale of rutile, ilmenite and zircon.
Other operations include the Group head office (which includes all corporate expenses that cannot be directly attributed to the Kwale
Operation) and exploration activities not directly related to Kwale Operations.
REPORTABLE SEGMENT
KWALE
OPERATION
OTHER
OPERATIONS
TOTAL
KWALE
OPERATION
OTHER
OPERATIONS
TOTAL
2016
2015
Sales revenue
Depreciation and amortisation
Financing costs
Reportable loss
Capital Expenditure
Total assets
Total liabilities
Note 19: Related Parties
CONTROLLED ENTITY
Base Titanium (Mauritius) Limited
Base Titanium Limited
Base Exploration Tanzania Limited
KMP COMPENSATION:
Short-term employment benefits
Post-employment benefits
Share-based payments
Other long term
$000s
$000s
$000s
$000s
$000s
$000s
169,039
(47,062)
(27,247)
(6,363)
4,884
-
(127)
(7,009)
(14,556)
13
As at 30 June 2016
524,505
292,204
10,674
26,101
169,039
(47,189)
(34,256)
(20,919)
4,897
535,179
318,305
145,501
(41,474)
(26,825)
(6,029)
9,129
-
(144)
(2,480)
(10,010)
96
As at 30 June 2015
538,362
311,995
23,409
28,258
145,501
(41,618)
(29,305)
(16,039)
9,225
561,771
340,253
COUNTRY OF INCORPORATION
DATE OF INCORPORATION
Mauritius
Kenya
Tanzania
15 April 2010
23 April 2010
29 April 2016
2016
$
4,807,605
157,082
1,177,900
(6,505)
2015
$
4,468,681
125,000
905,699
88,551
6,136,082
5,587,931
The 2016 remuneration packages, excluding STIP bonus, for all KMP’s remain unchanged from 2015, in their base currency.
In December 2014, the Group executed a US$20 million unsecured debt facility with one of its major shareholders, Taurus Funds
Management (refer to note 13). Mr Anderson, non-executive director of the Group, is a director of Taurus Funds Management.
In March 2016, the Company completed a renounceable entitlement offer underwritten by RFC Ambrian Limited. One the Company’s major
shareholders, Pacific Road Capital Management Pty Limited (“Pacific Road”), was a sub-underwriter to RFC Ambrian Limited, and received a
fee of $245,000 for such services. Mr Stirzaker, non-executive director of the Group, is a director of Pacific Road.
Base Resources Limited Annual Report 2016 73
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Note 20: Share-Based Payments
A. SHARE OPTIONS
Granted options are as follows:
Taurus Funds Management
Taurus Funds Management
GRANT DATE
23 December 2014
19 June 2015
NUMBER
30,712,531
30,712,530
ISSUE DATE
23 December 2014
19 June 2015
Terms of granted options:
In December 2014, the Group executed the Taurus Debt Facility, which entitled Taurus to 61,425,061 unlisted share options over unissued
fully paid shares, for nil consideration and exercisable at $0.40, with half being issued at execution and half pro-rata on facility drawdown
above US$5 million, which occurred in June 2015.
The fair value of the 61,425,061 options granted during the 2015 financial year were estimated at the date of grant using a Black & Scholes
model using the following assumptions: risk-free interest rate of 3%; no dividend yield; volatility factor of the expected market price of the
Company’s shares of 67% and 91% for each issue respectively; and a contractual life of 4 years.
In July 2015, 1,000,000 options, granted to RFC Corporate Limited, with an exercise price of $0.25 lapsed unexercised following their expiry.
In January 2016, 8,500,000 options with an exercise price of $0.25 and 7,100,000 options with an exercise price of $0.09, granted to Key
Management Personnel, lapsed unexercised following their expiry.
Summary of shares under option are as follows:
Options outstanding as at 1 July 2014
Granted
Exercised
Options outstanding and exercisable as at 30 June 2015
Options outstanding as at 1 July 2015
Granted
Exercised
Lapsed
Options outstanding and exercisable as at 30 June 2016
B. PERFORMANCE RIGHTS
Granted performance rights are as follows:
PERFORMANCE CYCLE DATE
1 October 2013
1 October 2014
1 October 2015
Terms of granted performance rights
NUMBER
WEIGHTED
AVERAGE
EXERCISE PRICE
16,600,000
61,425,061
-
78,025,061
78,025,061
-
-
(16,600,000)
61,425,061
$0.18
$0.40
-
$0.35
$0.35
-
-
$0.18
$0.40
KMP
5,818,959
7,707,725
33,928,088
OTHER
EMPLOYEES
1,699,906
2,325,748
11,305,017
TOTAL
7,518,865
10,033,473
45,233,105
Performance rights were granted to Senior Executives and other eligible employees under the terms of the LTIP. The LTIP operates on the
basis of a series of cycles. Each cycle commences on 1 October and will be followed by a 3 year performance period, with a test date on the 3rd
anniversary of the commencement of the Cycle. The LTIP contains performance criteria related to total shareholder return (TSR) to determine
the proportion of performance rights which vest, as follows:
Half of the performance rights are subject to a relative TSR criteria (relative TSR performance rights); and
Half of the performance rights are subject to an absolute TSR criteria (absolute TSR performance rights).
For any relative TSR performance rights to vest, Base Resources TSR over the three year performance period must rank above the 50th
percentile of the TSR achieved by a defined comparator group of companies. If Base Resources TSR ranks at the 50th percentile of the
comparator group, 50% of the relative TSR performance rights vest. If Base Resources TSR is above the 75th percentile of the comparator
group, 100% of the relative TSR performance rights vest. For achievement between the 50th and 75th percentile, vesting is prorated between
50% and 100%.
For any absolute TSR performance rights to vest, the absolute TSR of Base Resources over the three year performance period must be greater
than or equal to 40.5%. If the TSR reaches 40.5%, 25% of the performance rights vest. TSR performance between 40.5% and 60% will result
in pro rata vesting between 25% and 50%. If the TSR performance is 100% or more over the period, 100% of the absolute TSR performance
rights vest. For TSR performance between 60% and 100%, vesting is prorated between 50% and 100%.
Positioned for growth
Notes to the consolidated
financial statements
74
All performance rights are granted for nil consideration.
The fair value of the performance rights granted during the 2016 financial year has been estimated at the date of grant using a Monte Carlo
Simulation model using the following assumptions: risk-free interest rate of 2.15%; no dividend yield; volatility factor of the expected market
price of the Company’s shares of 70%; and a remaining life of performance rights of 2.88 years. The fair value of the performance rights is
recognised over the service period, which commenced on the date of grant of 1 October 2015.
Note 21: Parent Entity Disclosures
As at, and throughout the financial year ended 30 June 2016, the parent entity of the consolidated group was Base Resources Limited.
FINANCIAL PERFORMANCE OF THE PARENT ENTITY
Loss for the year
Total comprehensive loss for the year
FINANCIAL PERFORMANCE OF THE PARENT ENTITY
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Share-based payment reserve
Accumulated losses
Total equity
2016
$000s
(9,182)
(9,182)
2016
$000s
9,530
217,225
226,755
28,760
59
28,819
2015
$000s
(9,372)
(9,372)
2015
$000s
23,074
197,001
220,075
2,075
21,820
23,895
197,936
196,180
223,548
6,775
(32,387)
197,936
214,131
7,037
(24,988)
196,180
PARENT ENTITY GUARANTEE IN RESPECT OF KWALE OPERATION DEBT FACILITY
Base Resources Limited has entered into a shareholder support agreement in relation to the Kwale Operation Debt Facility. Refer to note 13
for further details.
Base Resources Limited Annual Report 2016 75
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Note 22: Financial Risk Management
The Group’s activities expose it to a variety of financial risks such as:
Market risk consisting of commodity price risk, interest rate risk and currency exchange risk;
Credit risk; and
Liquidity risk.
This note presents information about the Group’s exposure to each of the above risks.
The Group’s financial instruments consist of deposits with banks, accounts receivable and payables. The totals for each category of financial
instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:
Financial assets
Cash and cash equivalents
Restricted cash
Trade and other receivables
Financial liabilities
Trade and other payables
Kwale Operation debt facility
Taurus debt facility
Finance lease liabilities
NOTE
7
8
9
12
13
13
13
2016
$000s
36,295
29,761
43,544
109,600
24,953
243,332
26,962
1,044
296,291
2015
$000s
40,906
-
54,481
95,387
21,866
266,485
26,126
1,410
315,887
FINANCIAL RISK MANAGEMENT POLICIES
The overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimising potential adverse effects on
financial performance. The senior executives of the Group meet on a regular basis to analyse treasury risks and evaluate treasury management
strategies in the context of the prevailing economic conditions and forecasts. Risk management policies are approved and reviewed by the
Board on a regular basis. Financial assets and liabilities of the Group are carried at amortised cost, which approximates fair value.
COMMODITY PRICE RISK
The Group is exposed to commodity price volatility on rutile sales made under contract terms which allow for a retrospective price adjustment
based on average market prices in the quarter the product is sold. Average market prices are derived from an independently published
quarterly dataset of all rutile trades, available 4 to 5 months after the end of each quarter. In accordance with the Group’s accounting policy,
sales made under these terms that have not yet been subject to a final price adjustment are recognised at the estimated fair value of the total
consideration received or receivable, which takes into account the latest available market data at the balance date.
Rutile sales revenue of $39.3 million is still subject to final market pricing at 30 June 2016 (2015: $35.4 million). An interim adjustment to
sales revenue has been recorded at the reporting date to align the estimated fair value of these sales with the latest available market data, in
accordance with the accounting policy. If commodity prices increased / decreased by 10%, with all other variables held constant, the Group’s
after tax loss would have decreased / increased by $3.6 million (2015: $3.3 million).
INTEREST RATE RISK
All tranches of the Debt Facility carry interest rates of LIBOR plus 630 basis points, inclusive of political risk insurance. The Group does not
mitigate its interest rate risk exposure to LIBOR through hedging or other means.
The weighted average effective interest rate on the facilities at 30 June 2016 is 6.78% (30 June 2015: 6.65%).
The Taurus Facility has a fixed interest rate of 10% and a loan maturity date of 31 December 2016.
The majority of the Group’s cash deposits and restricted cash are held in project accounts with Nedbank Limited at variable interest rates.
Fixed rate instruments
Financial assets
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities
CARRYING AMOUNT
REALISABLE / PAYABLE WITHIN SIX
MONTHS
2016
$000s
2015
$000s
2016
$000s
2015
$000s
-
(28,006)
(28,006)
-
(27,536)
(27,536)
-
-
-
-
-
-
66,056
(243,332)
40,906
(266,485)
(177,276)
(225,579)
39,895
(20,491)
19,404
40,906
(32,788)
8,118
Positioned for growth
Notes to the consolidated
financial statements
76
CASH FLOW SENSITIVITY ANALYSIS FOR VARIABLE RATE INSTRUMENTS
A change of 100 basis points in interest rates would have increased or decreased equity and profit or loss by the amounts shown below.
This analysis assumes that all other variables remain constant.
VARIABLE RATE INSTRUMENTS ($000S)
Profit or loss
Equity
CURRENCY RISK
2016
$000s
2016
$000s
2015
$000s
2015
$000s
100BP
INCREASE
100BP
INCREASE
100BP
INCREASE
100BP
INCREASE
(1,773)
1,773
1,773
(1,773)
(2,256)
2,256
2,256
(2,256)
The Group is exposed to currency risk from bank balances, payables and receivables that are denominated in a currency other than the
respective functional currencies of Group entities, being Australian dollar (AUD) and United States dollar (USD).
The Australian dollar carrying amount of the Group’s financial assets and liabilities by its currency risk exposure at the reporting date is
disclosed below:
30 June 2016
IN $000S:
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Borrowings
Net exposure
30 June 2015
IN $000S:
Cash and cash equivalents
Trade and other receivables
Other current assets
Trade and other payables
Borrowings
Net exposure
The following significant exchange rates applied during the year:
AUD:USD
AUD:KES
SENSITIVITY ANALYSIS
AUD
3
-
-
(977)
-
(974)
AUD
3
-
-
(1,719)
-
(1,716)
USD
KES
OTHER
TOTAL A$
177
-
-
(33)
(26,962)
(26,818)
318
25,198
218
(1,278)
-
24,456
6
-
-
(149)
-
(143)
504
25,198
218
(2,437)
(26,962)
(3,479)
USD
KES
OTHER
TOTAL A$
21,805
-
-
(33)
(26,126)
(4,354)
449
32,872
407
(3,768)
-
29,960
4
-
-
(201)
-
(197)
22,261
32,872
407
(5,721)
(26,126)
23,693
AVERAGE RATE
30 JUNE SPOT RATE
2016
2015
2016
2015
0.7283
74.3449
0.8369
75.0812
0.7418
75.1880
0.7655
74.4678
Based on the financial instruments held at reporting date, had the functional currencies weakened / strengthened by 10% and all other
variables held constant, the Group’s after-tax profit / (loss) for the year to date would have been $0.3 million lower / higher (2015: $2.4 million
higher / lower).
Base Resources Limited Annual Report 2016 CREDIT RISK
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. Credit risk
arises from cash and deposits with financial institutions as well as credit exposures to outstanding receivables.
The Group is exposed to counterparty credit risk through sales of mineral sands products under normal terms of trade. Total sales revenue
for the year ended 30 June 2016 was $169.0 million (2015: $145.5 million). Major customers who individually accounted for more than 10%
of sales revenue contributed approximately 37% (2015: 51%) of sales revenue. These customers represent 0% (2015: 48%) of the trade
receivables balance at 30 June 2016.
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Credit risk arising from sales to customers is managed by the Group’s policy to only trade with reputable companies, with whom a long
term offtake agreement is held, or where such an agreement is not in place, sales are backed by Letters of Credit held with internationally
recognised banks.
The Group is owed $25.2 million in VAT receivable by the Government of Kenya (Note 9). $23.0 million relates to the period of construction of
the Kwale Mineral Sands Project by the Government of Kenya and is overdue but not impaired. An estimation has been made as to the timing
of the receipt of this amount and forms the basis for its classification as a current asset.
At the reporting date the carrying amounts of financial assets are adjusted for any impairment and represent the Group’s maximum exposure
to credit risk, excluding the value of any collateral or other security, which was as follows:
Financial assets – cash flow realisable
Cash and cash equivalents
Restricted cash
Trade and other receivables
Total anticipated inflows
2016
$000s
36,295
29,761
43,544
109,600
There were no impairment losses in relation to financial assets during the current or the comparative financial year.
The maximum exposure to credit risk for financial assets at the reporting date by geographic region of the customer was:
Australia
Kenya
Mauritius
Total
LIQUIDITY RISK
2016
$000s
8,776
100,822
2
109,600
2015
$000s
40,906
6,532
54,481
95,387
2015
$000s
22,420
72,965
2
95,387
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with financial liabilities. The Group
manages liquidity risk by conducting regular reviews of the timing of cash outflows and the maturity profiles of term deposits in order to
ensure sufficient funds are available to meet its obligations.
Financial liability maturity analysis
30 June 2016
Trade and other payables
Kwale Operations Debt Facility
Taurus Debt Facility
Finance lease liabilities
30 June 2015
Trade and other payables
Kwale Operations Debt Facility
Taurus Debt Facility
Finance lease liabilities
CARRYING
AMOUNT
TOTAL
2 MONTHS
OR LESS
2 – 12 MONTHS
1 – 2 YEARS
2 – 5 YEARS
MORE THAN
5 YEARS
$000s
$000s
$000s
$000s
$000s
$000s
$000s
CONTRACTUAL CASH FLOWS
24,953
243,332
26,962
1,044
296,291
21,866
266,485
26,126
1,410
315,887
24,953
283,316
28,340
1,166
337,775
21,866
306,889
30,117
1,650
360,522
15,531
-
-
90
15,621
16,902
-
-
87
16,989
9,422
50,827
28,340
448
89,037
4,964
86,857
2,656
434
-
77,010
-
538
77,548
-
80,531
27,461
521
101,972
108,513
-
155,479
-
90
155,569
-
139,501
-
608
140,109
-
-
-
-
-
-
-
-
-
-
Positioned for growth
Notes to the consolidated
financial statements
78
CAPITAL MANAGEMENT
Management controls the capital of the Group in order to maintain an appropriate working capital position to ensure that the Group can fund
its operations and continue as a going concern. Capital is managed by assessing the Group’s financial risks and adjusting its capital structure in
response to changes in these risks and in the market.
Cash and cash equivalents
Restricted cash
Trade and other receivables
Inventories
Other current assets
Trade and other payables
Borrowings
Provisions
Deferred revenue
Other liabilities
Working capital position
2016
$000s
36,295
29,761
43,544
27,962
5,826
(24,953)
(61,816)
(1,173)
(1,123)
(887)
53,436
2015
$000s
40,906
-
54,481
31,584
5,853
(21,866)
(70,057)
(1,239)
(3,248)
(636)
35,778
Note 23: Events After The Reporting Date
Other than the July 2016 accelerated debt repayments made to the Debt Facility and Taurus Facility from surplus cash (refer Note 13), there
have been no significant after balance date events at the date of this report.
Note 24: Company Details
The principal place of business and registered office of the Company is:
Base Resources Limited (ASX & AIM: BSE)
Level 1
50 Kings Park Road
West Perth
Western Australia
Base Resources Limited Annual Report 2016 79
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Directors’
declaration
1
In the opinion of the directors of Base Resources:
(a) the consolidated financial statements and notes that are set out on pages 55 to 78 and the Remuneration Report in pages 32 to 46 in
the Directors’ report, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance, for the financial year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2 The directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the chief executive officer
and chief financial officer for the financial year ended 30 June 2016.
3 The directors draw attention to note 1 to the consolidated financial statements, which includes a statement of compliance with
International Financial Reporting Standards.
Signed in accordance with a resolution of the directors:
Keith Spence
Chairman
DATED at PERTH this 30th day of August 2016
Positioned for growth
80
Independent
auditor’s report
to the members of Base Resources Limited
Independent auditor’s report to the members of Base Resources Limited
Report on the financial report
We have audited the accompanying financial report of Base Resources Limited (the company), which comprises the
consolidated statement of financial position as at 30 June 2016, and consolidated statement of profit or loss and other
comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the
year ended on that date, notes 1 to 24 comprising a summary of significant accounting policies and other explanatory
information and the directors’ declaration of the Group comprising the company and the entities it controlled at the
year’s end or from time to time during the financial year.
Directors’ responsibility for the financial report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view
in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the
directors determine is necessary to enable the preparation of the financial report that is free from material
misstatement whether due to fraud or error. In note 1, the directors also state, in accordance with Australian
Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements of the Group
comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in
accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether
the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material
misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating
the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in
accordance with the Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is
consistent with our understanding of the Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
68
Base Resources Limited Annual Report 2016
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Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the Group’s financial position as at 30 June 2016 and of its performance
for the year ended on that date; and
complying with Australian Accounting Standards and the Corporations Regulations
2001.
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
Material uncertainty regarding continuation as a going concern
Without modification to our opinion expressed above, we draw attention to the following matter. As a result of the
matters set out in the Financial Position note in Note 1, there is a material uncertainty which may cast significant
doubt about the company’s ability to continue as a going concern and therefore, the company may be unable to
realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial
report.
Report on the remuneration report
We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2016. The
directors of the company are responsible for the preparation and presentation of the remuneration report in
accordance with Section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
remuneration report, based on our audit conducted in accordance with auditing standards.
Auditor’s opinion
In our opinion, the remuneration report of Base Resources Limited for the year ended 30 June 2016, complies with
Section 300A of the Corporations Act 2001.
KPMG
Rob Gambitta
Partner
Perth
30 August 2016
69
Positioned for growth
Additional shareholder
information
82
The following additional information required by the ASX Listing Rules is current as at 30 September 2016.
Ordinary shares
DISTRIBUTION OF SHARES
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
HOLDERS
UNITS
116
148
133
460
179
1,036
17,004
466,032
1,132,489
17,919,421
712,697,010
732,231,956
%
0.00
0.06
0.15
2.45
97.33
100.00
There were 184 holders of unmarketable parcels of shares (<$500) based on the closing share price of $0.17 as at 30 September 2016
comprising a total of 153,123 shares.
The voting rights attached to the ordinary shares are:
a) at a meeting of members or classes of members each member entitled to vote may vote in person or by proxy or by attorney; and
b) on a show of hands every person present who is a member has one vote, and on a poll every person present in person or by proxy or
attorney has one vote for each ordinary share held.
20 LARGEST REGISTERED HOLDERS OF SHARES
NUMBER OF SHARES
J P Morgan Nominees Australia Limited
1.
HSBC Custody Nominees
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