Base Resources is evaluating new funding options after reporting a 14 per cent cost increase on its Kwale mineral sands project in Kenya.
The West Perth-based company said today it had completed a review of its capital cost estimates, with detailed design nearing completion and procurement 70 per cent complete.
This resulted in a revised capital cost estimate of $US275 million plus contingencies of US$23 million.
The total project forecast of $US298 million is 14 per cent above the original budget.
While much of the increase in capital cost can be attributed to design improvements and scope changes during the design phase, a significant proportion of the cost increase is related to labour costs in construction, the company said in a statement.
This is a result of the direct experience gained in the implementation of project to date, particularly in relation to the manning levels and supervisory input required to achieve schedule, it added.
The company said it is evaluating a number of debt and equity funding sources to accommodate the increased cost.
Base is required to make its equity funding contribution to the project as a prerequisite to the drawdown on a $US170 million project finance facility.
The company's share price dropped 4.5 cents to 46.5 cents today. It had been trading as low as 27 cents in July.