Tanzanite group Richland Resources’ (LON:RLD) cautioned today that illegal mining was still seriously affecting its operations in Tanzania.
The miner recently signed an agreement for state run mining company STAMICO to take a 50% stake in its licence in Tanzania and hopes the government now owning a stake will mean a crackdown on the illegal activities.
Bernard Oliver, Richland’s chief executive, said: “What we have needed is support from the Government to assist with our efforts to curtail illegal mining operations and other safety and security issues at the Tanzanite mine.
"The agreement we have negotiated with STAMICO ensures that Richland and the Government of Tanzania are committed to working together to achieve the corporate success of the Company going forward. “
Richland produced 788,000 carats in the three months to March up from 533,400 carats a year earlier but slightly lower than the previous quarter.
The average grade was 97 carats per tonne (51 carats per tonne a year earlier), but again was lower than the previous three months.
Total sales during the quarter to March were US$4mln, excluding the US$1.4mln insurance pay out for the theft at the tanzanite mine.
Richland said that to counteract the impact of the illegal mining activities on its operations, it had optimised its remaining work areas as much as possible.
In spite of this, operations were still severely impacted by the illegal mining activities, which predominantly focused on higher-quality areas.
This resulted in a significant decrease in the quality and value of the gemstones mined, it said.
Richland added that illegal mining had also had an adverse impact on the figures for 2012.
“The illegal mining activities, royalty and tax provisions as well as the sort house theft negatively impacted on the company's business during the year with a significant impact on the company's losses for the period,” Richland added.
Away from tanzanite, Richland said initial bulk sampling from its tsavorite project had been encouraging.
Tsavorite recovered to date was in the range of between 8mm and 2mm in size it said, with some bright, clear examples. Detailed work quantifying grade in gms/loose cubic is continuing.