Illegal underground mining from mines located nearby hit tanzanite producer Richland Resources’ (LON:RLD) first half.
Mining costs also rose due to higher prices for diesel, explosives and electrical components, reducing Richland to break-even in the half year to June (US$3.4 mln profit).
Revenues fell to US$8.4 mln from US$10.4 mln.
Bernard Olivier, chief executive, said Richland was working extremely hard to resolve the issues in Tanzania and to ensure it generates a profit despite these challenges.
The encroachment from neighbouring mines on its Block C licence had resulted in significant danger to employees and substantial damage to the mining infrastructure in Bravo and CT-Shaft as well as theft and damage of underground equipment and stones, he added.
"The company is working with the Zonal Mines Office (part of the Tanzanian Ministry of Energy and Minerals), police and other government officials in an effort to counteract the illegal underground mining into its licenced areas and several police cases have been filed," he added.
Olivier added Richland had maintained a strong financial position despite the difficult period but due to the situation in Tanzania and to conserve cash and operate profitably it will further reduce its expenditure on the Tsavorite exploration project.
The current in-house bulk sampling has been deferred pending an improved operating environment, but the option remains of re-starting it at any stage, it added.
In the first half, Richland produced 1,205,219 carats from the processing of 18,170 tonnes of material at an average recovery grade of 66c/t.
That represented a 3% decrease in the carats produced in the same period the previous year, a 14.5% decrease in the tonnes processed and a 6% increase in the recovery rate.
Net cash at end June was US$1.5 mln.