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Richland Resources seeing improvements in Tanzania

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Richland Resources (LON:RLD) has revealed quarterly sales totalling US$3.4mln as its operations in Tanzania continued to improve.

The production of Tanzanite, a purple gemstone unique to Tanzania, increased to just over 1mln carats in the second quarter – up around a third from the corresponding period of last year.

At the same time grades averaged 156 carats per tonne, up from 88 carats in the second quarter of 2013.

A partnership between Richland’s subsidiary TanzaniteOne Mining and government-backed STAMICO achieved sales of US$2.8mln in the quarter. While the company realised additional sales of US$600,000 from other operations.

Work in Tanzania had been hampered due to illegal mining though government intervention has seen a stabilisation of the mining operations. 

Today, Richland said it is still working with the government to reclaim a southern portion of the licence area which has not been available for mining due to illegal occupation. It also revealed that an armed robbery took place last week with 15kg of unsorted tanzanite (worth less than US$75,000) stolen. Richland said security still remains a concern.

The company has also, in the second quarter, moved to diversify with the acquisition of interests in the currently inactive Nardoo sapphire project in Australia, exercising an option by paying A$1.18mln and issuing shares in the company.

Mining is expected to restart during the first quarter of 2015 at the Nardoo project, which has 109mln carats of JORC-compliant sapphire resources, with an average grade of 20 carats per tonne.

Richland shares have enjoyed something of a relief rally in recent weeks, rising 300% in July, after a weak start to the year. The share price has now returned to levels last seen in December.

The company also recently launched a group-wide strategic review which aims to optimise costs and revenues - this has included the halving of director salaries. 

Commenting on the second quarter, chief executive Bernard Olivier said: “The period was an important time for Richland as we diversified our operations by acquiring the Nardoo Sapphire project, which provides us with a quality gemstone project in Australia. 

“We are fully committed to bringing Nardoo Sapphire back into production in Q1 2015. Following our decision to restrict investment into our tanzanite-mining subsidiary TML we are seeing performance improvements and the Tanzanian Government now working to remove the remainder of illegal miners from our licence. 

“Our objective for Richland shareholders is to build revenues from efficiently mining and recovering gemstones. The remainder of 2014 shall be an important time for Richland as we move Nardoo Sapphire towards commissioning."

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