Kennedy Senelwa

5 August 2010

Nairobi — Base Iron Ltd (BIL) of Australia has completed acquisition of the Kwale mineral sands project in Kenya from Vaaldiam Resources Inc of Canada (Tiomin).

The company said project progression for titanium mining has started, after it carried out an extensive due diligence exercise, raised capital of about Sh640 million and secured government consent.

Mr Tim Carstens, the managing director, said the firm has also been given the option of acquiring three additional exploration projects in Mambrui, Kilifi and Vipingo.

"It represents an outstanding opportunity for Base shareholders to acquire an advanced and highly-competitive project, in a sector that has been forecast to have a significant shortfall emerging in the medium-term," he said.

The option to acquire the exploration projects provides BIL with an extensive development pipeline with the potential for more than 25 years of operations in Kenya.

Mr Carstens said the company has engaged Ausenco Ltd to provide a capital cost estimate update and BIL's technical team is evaluating opportunities for improvement on the earlier study that was done by Vaaldiam.

"A 7,000 metre drilling programme has been initiated to better define lithology, grade and assemblage within dunes for mine planning and process design enhancement. On-ground activity is scheduled to commence in September."

The original project time-line expected construction to begin in the second half of 2006, with first production in mid 2008.

But in late 2006, disputes with affected farmers over land titles and resettlement compensation triggered delays.