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Base Titanium pays dividend of Sh10.7bn to parent firm Base Resources

Base Titanium, the firm owns and manages Kwale Operation, a high grade mineral sands mine, located 50 kilometres south of Mombasa has paid a record dividend of Sh10.7 billion to its Australian parent firm Base Resources in the year ended June when its net income grew threefold.

The parent firm confirmed in its latest annual report that the new payout cemented Base Resources’ position as the recipient of the second-largest dividend income from Kenya after Vodacom Group Limited and Vodacom Group Plc are set to earn a combined Sh22.2 billion from Safaricom for the year ended March. The local subsidiary had paid the Perth-based multinational a dividend of Sh7.1 billion the year before.

“During the reporting period, the group’s Kenyan subsidiary and owner and operator of Kwale Operations, Base Titanium, distributed US $90M (Sh10.7 billion) of surplus cash, via dividend, to the group’s ultimate parent entity, Base Resources,” noted in the annual report.

The cash distribution came as the local subsidiary’s net profit rallied to $105 million (Sh12.5 billion) in the review period, up from US $28.8M (Sh3.4 billion) the year before. Among the major beneficiaries of the titanium sales boom include the government of Kenya, collecting a total of Sh6 billion in the form of taxes and royalties. The dividend attracted withholding tax of US $13.5M (Sh1.6 billion) in the review period, up from US $9M (Sh1 billion) that was deducted on the previous payout.

Royalty rate

Base Titanium also paid a corporate income tax of $19.6 million (Sh2.3 billion), significantly larger than the $9.2 million (Sh1.1 billion) paid in the prior year. Mining royalties paid to the government also increased to $18 million (Sh2.1 billion) from $13.8 million (Sh1.6 billion).

The royalty rate was doubled to five percent of titanium sales last year as part of an agreement that saw Base Titanium get a larger mining area while the government kept value-added tax (VAT) refunds that were due to the miner.

The deal announced in October 2021 gave the company the right to extend its mining operations beyond the original boundary drawn on its special mining licence, which covered 1,661 hectares. Base Titanium also surrendered its VAT claims of $16 million (Sh1.9 billion) that arose from the construction of its mining infrastructure.

Base Titanium Limited, operates the 100% owned Kwale Mineral Sands Operations in Kenya, which commenced production in late 2013. Kwale Operation is located 10 kilometres inland from the Kenyan coast and 50 kilometres south of Mombasa, the principal port facility for East Africa.

The Kwale Operation features a high grade ore body with a high value mineral assemblage, rich in rutile. Mining initially commenced on the Central Dune orebody before transitioning to the South Dune orebody in June 2019. The Kwale Operation currently accounts for approximately 65% of Kenya’s mining industry by mineral output value.

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