--ADDS BROKER COMMENTS--
Richland Resources (LON:RLD) chief executive Bernard Olivier says he’s proud of what the team achieved in Australia on what he calls an “extremely tight” budget during the first half of 2015.
He highlights that Richland achieved first production and established an online sales channel whilst spending just US$1.5mln.
Having sold out of Tanzania, in a deal worth US$4.6mln, the company has since focused on the development of the Capricorn sapphire project, in Queensland’s central highlands, and a group-wide rebranding.
It has, as part of this effort, created a new online gemstone sales platform (richlandgemstones.com).
At Capricorn, meanwhile, the company has so far delineated its first production area through an initial phase of infill drilling. This programme, of 57 holes, has outlined an area that will be mined during the second half of the year.
Pre-production mining is already underway, having begun in April with the removal of topsoil and overburden. Some 100,000 tonnes were removed in the first six months of the year.
At the same time, the plant commissioning and testing continued, and the company says significant modifications and improvements were made.
Some 3,000 carats were produced through the start-up and plant commissioning during the six month period. Sapphire sales began in the third quarter, Richland added, and it says a sales update to investors will be released in October.
Olivier, in today’s financial results statement, said: "The period saw Richland undertake an intense period of mine redevelopment at the new Capricorn Sapphire project in Queensland Australia.
“Pre-production and ramp-up began within months of our team getting on the ground at site with first sapphires now recovered.
“I am extremely proud of my team for what we achieved during the first half of 2015 on an extremely tight budget as evident from today's interim financial results.”
“As ramp-up continues our marketing and sales teams have also commenced our sales process and the establishment of our sapphire brand as a reliable source of gemstones with full provenance in terms of both quality and source."
Continuing operations had revenues of US$0.28mln in the six months to June 30, while gross margin was reported at 28%.
The company said it ended the period with US$3.4mln of cash and equivalents, and it had US$7.5mln of total assets (of which US$4.1mln were current assets).
It reported a US$3.4mln net loss from discontinued operations, and the group net loss for the six month period amounted to US$4.3mln.
Broker Sanlam says Richland is in a better position that most other junior miners.
“It has a strong balance sheet and an operating mine which should be profitable before the end of FY15. Longer term the mine is also scaleable,” said analyst Charlie Long.
Long added that, whilst it is difficult to come up with precise estimates about Capricorn at the time, it believes the company can grow profits in future years.
“Accurate estimates are difficult given uncertainty regarding monthly tonnage and stone value. However conversations with management give us confidence that Capricorn should be a profitable business,” he said.