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UPDATE - Richland Resources to start sapphire mining next month

UPDATE - Richland Resources to start sapphire mining next month

--  adds share price, broker comment --

Richland Resources (LON:RLD) has commissioned its refurbished sapphire process plant in Queensland with mining set to start next month and first revenues expected soon after.

The Queensland government has approved the mining plan and discussions with mining contractors are underway.

Stones produced at the mine will be branded Capricorn Sapphires, with marketing to begin this quarter.

Sapphires are its new focus as it has all but exited its tanzanite business with the government in Tanzania agreeing the sale of its mining operation there.

Historically, most sapphires produced from the mine have been blue but it also produces stones in other colours.

Bernard Olivier, chief executive, said: "Today's start of the commissioning process of our sapphire project in Queensland is an important milestone for Richland in developing gemstone operations in Australia.

“Our proven track record in gemstone mining has enabled us to redevelop the Capricorn Sapphire project on time and to budget.”

“The Capricorn Sapphire project is extremely exciting as it has the capability of yielding sapphires of varying colours, in addition to the dominant blues, and is located in a well-established mining region."

House broker RFC Ambrian added the alluvial process plant, built by previous owner Australis, is one of the largest of its type in the Southern Hemisphere with the capacity to treat 200 loose cubic metres per hour or 21 million carats (Mct) of annualised production.

Using the existing plant and infrastructure has minimised pre-production capex, enabling operations to be brought online using limited existing cash reserves.

First production from in March will represent a key milestone in the new strategy to operate in a low political risk, well-established mining jurisdiction, RFC added.

The brownfield project, which Richland acquired for US$1.7mln, has a JORC-compliant measured resource of 109Mct, grading on average 8g per loose cubic metre.

Shares jumped 23% to 2p.

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“We have a comprehensive development plan to increase production and I look forward to providing further updates as we progress,” executive chairman Mike Houston said.

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