--ADDS BROKER COMMENT--
Tanzanite miner Richland Resources’ (LON:RLD) production was again hampered in its latest quarter by lack of access to high grade areas due to illegal mining.
The group produced 1.3mln carats in the three months to March, against 788,000 a year earlier, with an average grade of 199 carats per tonne.
Richland said the quality produced remained low due to the continuing lack of access to high-quality areas.
Sales in the quarter were US$2.55mln, comprising US$1.8mln from the TML joint venture and US$0.77mln from online retail arm the Tanzanite Experience.
Richland launched a strategic review of its tanzanite operation recently and said it would not put any more money into TML until the illegal miners are removed.
Bernard Olivier, Richland’s chief executive, said: “Richland is working with its Tanzanian operating company TML, to alleviate significant costs at the Merelani tanzanite mine as illegal mining activities are still severely hampering operations and financial performance. “
Away from tanzanite, Richland and Aussie-firm Kibaran have agreed an extension until 5 August for the potential consolidation of the two companies’ graphite deposits in the Merelani region in Tanzania.
Broker RFC Ambrian said that in light of the current issues facing Richland, it’s understandable that its pipeline projects are taking a back seat.
The tanzanite and graphite projects remain brownfield developments that could generate considerable growth in cash flows with minimal capital expenditure due to the potential use of existing mine and processing infrastructure.
The memorandum of understanding with Kibaran to develop the graphite mine makes this a real possibility in the near term.
The broker added that an option to acquire an advanced sapphire project remains in place and may be the subject of increased interest if the tanzanite mine remains unprofitable. ‘Hold’ is its rating.