Richland Resources (LON:RLD) cheered the market as it announced a major breakthrough in the removal of illegal miners from its licence area in Northern Tanzania.
The company said its interim results, covering the first half of 2013, had been very severely affected by illegal underground mining activities from neighbouring mines.
Since the end of the reporting period, however, the company has, with the assistance of the government, reclaimed control over the northern part of the licence area and mining is set to restart in this section in the final quarter of this year. Furthermore, the removal of illegal miners in the southern part of the licence area is due to commence shortly.
“Sub-surface tunnelling into some of Richland's most prospective mine areas and increasing violence, led us to a situation where the company's clear responsibility was to evacuate contested areas for workforce safety on and off the mine,” revealed chief executive officer, Bernard Olivier.
During the second quarter of the year the company entered into an agreement with the Tanzanian State Mining Corporation (STAMINCO) that was the catalyst for sorting out the illegal mining problems, though not without some tragic consequences.
“A Government initiative subsequently commenced post period to address illegal mining activities. Tragically during the process to secure underground areas within Block C mining area one of our employees was shot dead by illegal miners as he assisted police. The Government led operation cleared the majority of the northern side of the Block C licence area of illegal miners (including Investor and Bravo shaft) and we have now re-entered these areas and are preparing to restart mining," Olivier revealed.
Revenue in the first half of 2013 eased to US$7.5mln from US$8.4mln the year before, but underlying earnings (EBITDA) still doubled to US$0.2mln from the year before, the gemstones producer and developer said.
Production levels were increased to 1.54 million carats in the first half of 2013, up 28% from 1.21 million carats in the corresponding period of 2012.
The average recovered grade of 93 carats per tonne was a sharp improvement on the 61 carats per tonne achieved in the first half of last year.
As a result of depreciation, amortisation and impairment charges of US$750,000, Richland made a half-year loss before tax of US$551,000, though this was an improvement on the previous year’s pre-tax loss of US$719,000.
Cash and cash equivalent at the end of June stood at US$1.5mln. The directors are considering various financing options to address the current financial position and working capital requirements.
Shares shot up on the announcement and were up 25% to 3.90p in afternoon trading.