Richland Resources (LON:RLD) expects sapphire production from its Capricorn mine in Australia settle at around 800,000 carats a quarter by the end of 2016.
The miner produced 900,000 carats in total in 2015, which included 720,000 carats in the final quarter, which was three times more than forecast.
Richland said it had taken advantage of this extra output to scale back production and test and improve the mining, processing and sorting capacities at the operation in Queensland.
Revenue in 2015 from the ongoing operations was US$0.7mln (2014:US$1mln) while the net loss increased by 57% to US$ 2.2mln (US$1.4mln), although these figures included the remnants of the now sold tanzanite business prior to the acquisition of Capricorn.
Richland added that the entire pre-production development process at Capricorn, including the refurbishing of the processing plant, phase one exploration work, mine development and land rehabilitation had been achieved in around 12 months for US$2.3mln.
“This is a unique achievement in an industry characterised by long development delays and budget blowouts and enables us to now optimise the operations, including our sales, marketing and the restructuring of our online sales, while continuing to produce significant revenue,” it added.
Following the initial first sales, Shore Capital expects a batch of higher quality stones to be sold in the second quarter of 2016.
The broker expects expect prices to at least match the US$14.30/ct achieved in September 2015’s inaugural ‘customer specific’ parcel of ‘eye clean’ stones.
Shore also notes that Richland’s balance remain healthy with current assets four times more than liabilities and no debt.
-- updates for broker comment--