Richland Resources Limited (LON:RLD) generated sales of US$640,000 in the first half of the year to June 30 from sapphire mining in Queensland.
The company’s Capricorn mine is still ramping up production but is expected to produce at a rate of 800,000 carats from the current quarter onwards, with a short-term spike to over 1.2 mln carats per quarter during 2017.
Chairman Ed Nealon expressed his satisfaction with progress so far.
“Our team has been able to make a series of adjustments to the mining and processing method in order to enhance recoveries and minimise costs,” he said.
“Whilst we have seen excellent levels of production so far, the ramp-up phase at a mine is critical, with mining methods and equipment needing to be closely analysed to achieve a robust production system to efficiently support the eventual high levels of feedstock running through the mining operation.”
Overall, the company is still loss-making, but it’s worthy of note and a reminder that the mining bear market is not yet fully behind us that directors are taking payment in the form of shares, rather than cash.
Accordingly, 5.4 mln new shares were issued during the period. Even so, the company is minded to keep dilution to a minimum, and rather than undertake new equity fundraisings to carry it over into a cashflow positive position, has instead secured a US$500,000 loan facility provided by certain company directors and a long-term significant shareholder.
By the end of the period, Richland had US$400,000 in the bank.
However, broker Shore Capital argued that the financial figures were essentially “academic” as the company is still in ramp-up mode.
Shore noted that the second quarter production number of just under 620,000 carats has taken Richland closer to its target and that a recently unveiled resource update underpins the production target.