Bernard Olivier has led something of a revival at Richland Resources (LON:RLD) over the past 12 months.
Shares hit an all-time low of 1.3p in April last year as the firm battled with illegal miners on its blocks in Tanzania.
Irked by ongoing troubles, Olivier convinced shareholders to approve a US$5.1mln sale of the business to Sky Associates.
The exit, wrapped up in March this year, was praised as a shrewd move by analysts for two reasons.
Firstly, Richland’s established retail operation means it can still profit from tanzanite sales, yet without all the hassle and cost of mining in the country.
More importantly, the sale meant Richland could move forward with a debt-free balance sheet and fully-switch its focus to rich blue sapphires in Queensland, Australia.
Now the company is concentrating on its 100% owned Capricorn mine, which lies in a region that has historically been one of the biggest sapphire fields in the world.
Work on the site has been rapid but orderly and after only eight months since re-development work began, Richland expects first sapphire sales in June.
It’s a quick-fire turnaround which has seen shares in the company climb over 150% to 4.4p since the start of the year.
“We have been impressed with the time frame within which the company has managed to bring this project to the pre-production mining stage,” said broker RFC Ambrian.
Clearly, Olivier decided it was better to focus on a project that he believed would return the business to profitability quickly.
Richland’s annual results, which bear the cost of the Tanzania withdrawal, showed a net loss of US$15.3mln in 2014 on revenues of US$7.4mln.
Losses from ongoing operations narrowed to US$1.4mln compared with US$1.7mln in 2013.
Expenses for the Capricorn project stood at only US$1.7mln in 2014, including project costs and Richland’s corporate expenses.
This, according to RFC Ambrian, shows the budgetary discipline the company has been able to show in bringing Capricorn to production.
Looking ahead, the 490 hectare site in Queensland has huge potential.
Based on previous exploration conducted on the licences, there’s a resource of 109mln carats of sapphires.
As well as blue-coloured stones, it’s also produced yellow and green material, sought after in the growing fancy colour industry.
While the Capricorn resource does contain large stones, Olivier believes that the strength of the project is in supplying sapphires of verifiable origin in terms of sizes, grades and colours used by the international jewellery market.
The firm has already turned its attentions to marketing.
Back in March, it launched the new Capricorn Sapphire brand that ensures that only fully certificated sapphire from Australia will be sold.
This, it says, will provide customers with a guaranteed proof of origin.
At the same time the www.tanzaniteoneonline.com website has been migrated to an improved platform www.RichlandGemstones.com, which will be able to host sales of a range of different gemstones.
“Our objective is to build a consistent reputation for the ethical mining and sale of coloured gemstone,” said Olivier at the time.
Charlie Long, equity analyst at Sanlam Securities, reckons Richland is entering a transformational period.
“The Capricorn mine is potentially the largest sapphire mine globally,” he said.
“Previous owners did not brand the mine’s product, so Richland will be the first company to promote Australian sapphires in a significant way."
Richland has the experience and, in Capricorn, a high quality asset in a more stable jurisdiction, according to Long.
“Although not without risk, we are very positive about the outlook for Richland this year,” he added.
Further clarity on anticipated cash-flow and margins is expected to arrive soon, as revenues from sapphire sales start to be realised over the coming months.
Meanwhile, Olivier is bullish on Richland’s prospects: “Going forward we are a clean, new vehicle with an exciting project in Queensland.
“We have no liabilities, no debts, so it really is a new beginning for the company.”