The government earned royalties worth $7.1 million, a 14.3 percent increase, in the six months ended December from the Australian firm which is mining titanium in Kwale, the multinational disclosed in a trading update.
“Sales revenue increased 13 per cent for the reporting period, achieving an average price of product sold (rutile, ilmenite, zircon and zircon low grade) of $365 per tonne (comparative period: $317 per tonne), with averaged realised prices higher for rutile and zircon, offset by lower prices for ilmenite,” Base Resources said in the trading update.
The amount represents a 14.3 percent increase from 2017 proceeds when the government earned royalties worth $6.2 million (Sh622.9 million) from the Kwale operation.
The fat pay cheque were driven by better prices of the titanium minerals, including rutile and zircon, in the international markets.
Sales of the commodity stood at $102.1 million (Sh10.2 billion) in the review period, up 13.1 percent from $90.2 million (Sh9 billion) a year earlier.
Base Resources says it expects titanium prices in the international markets to remain stable or rise further this year, a move that will support revenue growth as production is also expected to rise.
The higher turnover helped the Kwale operation make a net profit of $22.6 million (Sh2.2 billion), a jump of nearly 10 per cent from $20.6 million (Sh2 billion) in the previous period.
Improved profitability also benefited the Kenya Revenue Authority (KRA) which collected more taxes.
The company’s income tax expense rose to $5.2 million (Sh520 million) from $4.4 million (Sh440 million).
Base Resources pays royalties at a rate of 2.5 percent but says it is ready to double this to five per cent if the government agrees to a deal it has proposed.