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Richland Resources (LON:RLD) has started pre-production work at its Capricorn sapphire project in Queensland, with earth now being shifted at the first planned pit and stones being recovered.
Samples run through a pilot plant have recovered sapphires and work is underway to finalise the pit design, layout and mining plan.
The company expects commercial production to start next month with June to see first sales under the Capricorn brand.
Bernard Olivier, Richland Resources’ chief executive, said: "Mining has started and we are now readying Pit 1 for commercial production.
“This is a significant milestone for Richland as we bring our experience in gemstone mining to Australia. Richland is approaching full mine start in a structured manner and following reports submitted by independent mining consultants we are undertaking infill drilling to help us finalise pit design.”
Charlie Long, equity analyst at Sanlam Securities, said the Capricorn mine is potentially the largest sapphire mine globally.
“Previous owners did not brand the mine’s product, so Richland will be the first company to promote Australian sapphires in a significant way,” he said.
“Given the potential volumes of the mine, Richland is entering a transformational period.”
Richland has the experience and, in Capricorn, a high quality asset in a more stable jurisdiction, according to Long.
“Although not without risk, we are very positive about the outlook for Richland this year,” he added.
Richland shares climbed 25% higher to 3.75p.