TIDMRLD
RNS Number : 0069J
Richland Resources Ltd
06 September 2016
6 September 2016
Richland Resources Ltd
("Richland" or the "Company")
Interim Results for the half-year ended 30 June 2016
(unaudited)
Richland (AIM: RLD), the gemstones producer and developer,
announces its interim results for the half year ended 30 June
2016.
Highlights:
Financial Summary
-- US$0.64 million in revenue from continuing operations (US$0.28 million in H1 2015)
-- Operating loss of US$1.5 million (H1 2015: US$1.0 million
loss) as result of ramp up of development and production
-- As at 30 June 2016
o US$0.4 million cash and cash equivalents
o Total assets of US$4.8 million of which current assets were
US$1.5 million
o Total non-current assets of US$3.3 million
Operational Summary
-- 1.03 million cts produced during H1 2016 comprising of:
o 411,172 cts produced during Q1 2016
o 617,750 cts produced during Q2 2016
-- Q2 2016 production target of 600,000 cts achieved
-- 80,491 tonnes of material processed during H1 2016
-- Average grade of 12.78 cts per tonne achieved for H1 2016
-- 438,696 cts sold during H1 2016 at an average price of
US$1.30 / ct resulting in total revenue for the period of
US$569,000 from sapphire sales
-- Significant improvements made to all aspects of the Company's
operations including, processing plant, tailings dam and water
retreatment infrastructure, mining operations and sorting facility
in order to allow production ramp-up beyond 800,000 cts per quarter
from Q3 2016
-- Re-launch of online sales division
o Selection of unique and exotic sapphires from mine production
available for sale via dedicated website
(www.richlandgemstones.com)
-- Updated Measured and Inferred Mineral Resource of 115.5
million cts of sapphire and corundum published in June 2016
comprising:
o original JORC Code (2004) compliant historical Measured
Resource of 107.5 million cts following the mining of 1.5 million
cts since July 2015
o additional JORC Code (2012) Inferred Resource of 8 million cts
at a grade of 10 cts per tonne
-- Expansion of the Capricorn Sapphire project's geological and mineralisation model
Corporate Summary
-- All outstanding directors' fees as at 31 March 2016 settled
via the issue of 5,400,709 common shares
-- Strand Hanson Limited appointed as Nominated Adviser
-- Entered into unsecured loan facility of US$500,000 with
certain of the Company's directors and a long term significant
shareholder
Outlook
-- Newly defined resources area will be the focus for mining
operations over the next 12 to 18 months
-- Production ramp up to over 800,000 cts in Q3 2016 remains on target
-- Short-term strategy to ramp up to a rate of 1.2 million cts per quarter during 2017
Commenting on the results, Chief Executive Officer, Bernard
Olivier said:
"The reporting period has seen us achieve a number of key
operational goals at our Capricorn Sapphire project including the
establishment of a new geological model and resource, in order to
guide future extraction, and the implementation of important
optimisation upgrades at the plant. Our commitment to low
shareholder dilution continues as we secured a debt facility to
underpin operations and implemented significant cuts to corporate
costs. A high production run-rate is now being maintained and I
look forward to further ramping up production and continuing to
build our sapphire sales and marketing channels to achieve
profitability."
For further information, please contact:
Bernard Olivier Edward Nealon Mike Allardice
Chief Executive Officer Chairman Group Company Secretary
+61 4089 48182 +61 409 969 955 +852 91 864 854
Laurence Read Nominated Adviser (AIM) Broker (AIM)
Corporate Development Strand Hanson Limited Shore Capital
and Communications James Harris Jerry Keen (corporate
Officer Matthew Chandler broking)
+44 (0)20 3289 9923 James Dance Toby Gibbs / Mark Percy
+44 (0) 20 7409 3494 (corporate finance)
+44 (0) 20 7408 4090
Notes to Editors:
Further information is available on the Company's website:
www.richlandresourcesltd.com. Neither the contents of the Company's
website nor the contents of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
Chairman's Statement
Dear Shareholder,
On behalf of the Board I am pleased to report our unaudited
results for the six months to 30 June 2016 and to update you on the
Company's developments.
The reporting period has seen Richland consistently meet its key
ramp-up targets at its Capricorn Sapphire mine in Queensland,
Australia and our team has been able to make a series of
adjustments to the mining and processing method in order to enhance
recoveries and minimise costs. Whilst we have seen excellent levels
of production so far, the ramp-up phase at a mine is critical, with
mining methods and equipment needing to be closely analysed in
order to achieve a robust production system to efficiently support
the eventual high levels of feedstock running through the mining
operation.
The re-defined and updated resource has now been concluded and
represents an extremely important piece of work that provides us
with a geological map to guide efficient production. Understanding
the feedstock variability is key for alluvial processing and we are
fortunate to retain the services of some highly experienced
gemstone geologists on our team leading our geological
programme.
The Capricorn Sapphire project is currently on target to ramp up
production, to 800,000 cts per quarter, from Q3 2016 onwards, with
a short-term goal to ramp up to over 1.2 million cts per quarter
during 2017.
During the period, following consultation with our major
shareholders, a loan facility was secured from a group of lenders,
that included certain board directors, in order to underpin the
financial stability of the Company without recourse to the equity
markets, thereby avoiding further dilution. All non-development
related costs, including Board salaries, have been deferred and we
are focusing our available resources on achieving profitability for
our Capricorn Sapphire project at the earliest opportunity.
In addition to work on the ground developing our recovery
operations, we have received significant interest in our gemstones
and are building a customer base through sales of our blue and
green sapphire production from our current, lower level,
production, ready to begin true parcel sales as production volumes
increase.
I am most pleased with the work undertaken during the period and
look forward to the further development of our sales channels and
delivering on our short-term aim to ramp up production to over 1.2
million cts per quarter during 2017.
Mr Edward Nealon
Non-Executive Chairman
6 September 2016
1. Financial Performance
Revenue for the period was US$639,000 compared to US$278,000 in
H1 2015, representing an increase of approximately 130%.
Operating loss for the period increased from US$973,000 in H1
2015 to US$1,455,000, as a result of the development and production
costs associated with the Capricorn Sapphire project. All
development expenditure during the period was expensed.
The Company had net cash available of US$0.4 million at the
period end compared to US$3.4 million as at H1 2015.
Total non-current assets were US$3.3 million at the period end,
which primarily reflects the acquisition costs and capital
expenditure associated with the Capricorn Sapphire project.
2. Operational Overview
2.1 Capricorn Sapphire Project
Production and Sales
Sapphire production totalling approximately 1,028,922 cts was
achieved in the first half of 2016 as part of the mine ramp-up
process. A total of 80,491 tonnes of sapphire-bearing alluvial
gravels were extracted and processed at an average grade of
approximately 12.8 cts per tonne. 411,172 cts were produced during
Q1 2016 whilst 617,750 cts were produced during Q2 2016.
During the period, 438,696 cts were sold at an average price of
US$1.30 per ct resulting in total revenue for the period of
US$569,000 from sapphire and corundum sales.
Infrastructure upgrade
During, the period, significant improvements were made to all
aspects of the Capricorn Sapphire projects operations, including
improvements to the processing plant, tailings dam and water
retreatment infrastructure, mining operations and a sorting
facility, in order to allow ramp-up in excess of 800,000 cts per
quarter from Q3 2016 onwards.
Key elements to the optimisation programme are as follows:
o Redesign of the tailings treatment and water recirculation
circuit and its infrastructure
o Infrastructure construction and modifications commenced and
were completed
o Processing plant changes were made to improve efficiencies and
reduce the double handling of material
o Modifications were made to the primary jigs, scrubber system
and feed-bin to improve processing efficiencies and their ability
to treat different gravel compositions
o A new pilot testing plant was constructed and commissioned to
allow run of mine testing as part of the ongoing mine planning and
mine development process
JORC Resource Estimate Update
On 22 June 2016, the Company announced a JORC resource estimate
update for the Capricorn Sapphire mine. One of the Company's core
objectives during the period was to update the geological model for
the group's Capricorn Sapphire mine and further expand the resource
estimate in compliance with the JORC Code (2012). The Capricorn
Sapphire project remains on schedule to meet its ramp-up targets in
2016, and our geological delineation programme will allow the
Company to improve and refine its mine programme and
scheduling.
The updated Measured and Inferred Mineral Resource of 115.5
million cts of sapphire and corundum comprised:
o original JORC Code (2004) compliant historical Measured
Resource of 107.5 million cts following the mining of 1.5 million
cts since July 2015
o additional JORC Code (2012) Inferred Resource of 8 million cts
at a grade of 10 cts per tonne
The newly defined JORC Code 2012 resources area will be the
focus for mining operations over the next 12 to 18 month
period.
2.2 Online sales
The online sales division was re-launched in June 2016, with a
selection of unique and exotic sapphires from our mine production
now available for sale at www.richlandgemstones.com. Due to the
disposal of our former mining operations in Tanzania in 2015, sales
from the online sales division dropped significantly in H1 2016
compared to H1 2015, from US$278,000 to US$70,000 due to the sale
of our former mining operations in Tanzania. The online division
continues to source and sell through www.richlandgemstones.com both
tanzanite and tanzanite jewellery from the Merelani tanzanite
deposit, which is available for sale on the website.
3. Corporate Activity
On 18 April 2016, the Company announced that certain directors
had opted to convert all accrued directors' fees, which had been
unpaid from 1 January 2014 to 31 March 2016, into shares, in order
to continue conserving the Company's cash reserves, as it continues
its ramp-up of mining at the Capricorn Sapphire project, located in
Queensland, Australia. The conversion occurred at the volume
weighted average ("VWAP") price of the Company's common shares over
the period the fees were outstanding. The VWAP over the period, of
3.4 pence, represented a premium of 60% to the Company's closing
share price of 2.125 pence on Friday, 15 April 2016. In total,
unpaid fees of US$260,625 were converted into 5,400,709 Shares.
On 3 June 2016, the Company announced the appointment of Strand
Hanson Limited as its Nominated Adviser.
On 27 June 2016, Richland entered into a US$500,000 unsecured
loan facility with certain of the Company's Directors and a
long-term significant shareholder, to satisfy its ongoing working
capital requirements. The facility, which was fully drawn down by
18 July 2016, provides working capital and financial flexibility
whilst the Company's sales channels are developed and expanded and
will assist in ensuring that the best prices for the Company's
gemstones are achieved.
4. Outlook
Newly defined resources area will be the focus for mining
operations over the next 12 to 18 month period.
The Company is on target is to ramp up production to over
800,000 cts from Q3 2016 onwards and aims further to ramp up, to
over 1.2 million cts per quarter, during 2017.
Glossary
ct carat JORC Australasian code for reporting
Code of Mineral Resources and Ore
Reserves
dollar or United States Dollar tonne 1 Metric tonne (1,000kg)
US$
g/t grammes per tonne, LCM loose cubic metre
measurement unit
of grade (1g/t =
1 part per m)
Financial Statements
Richland Resources Ltd
Condensed Consolidated Statement of Profit and Loss
For the Half Year ended 30 June 2016
(Unaudited)
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
========= ======== ========
CONTINUING OPERATIONS
Revenue 639 278 704
Cost of sales (1,341) (200) (997)
========= ======== ========
Gross loss/(profit) (702) 78 (293)
Gross margin % (110%) 28% (42%)
Other income 67 13 67
Operating expenses (820) (1,064) (1,961)
========= ======== ========
Operating loss (1,455) (973) (2,187)
Financing costs paid (6) (10) (14)
========= ======== ========
Loss before income tax (1,461) (983) (2,201)
Income tax credit/(charge) - - -
========= ======== ========
Loss after income tax from continuing
operations (1,461) (983) (2,201)
DISCONTINUED OPERATIONS
Loss from discontinued operations - (3,385) (3,312)
Net loss (1,461) (4,368) (5,513)
========= ======== ========
Non-controlling interest - - -
========= ======== ========
Loss attributable to equity holders
of parent (1,461) (4,368) (5,513)
========= ======== ========
Basic and diluted EPS from continuing
operations (cents per share) (0.67) (0.45) (1.01)
Basic and diluted EPS from discontinuing
operations (cents per share) - (1.54) (1.52)
Basic and diluted EPS per common
share from all operations (cents
per share) (0.67) (1.99) (2.53)
Richland Resources Ltd
Consolidated Statement of Financial Position
As at 30 June 2016 (Unaudited)
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
========= ========= =========
Non-current assets
Property, plant and equipment 3,248 3,412 3,306
Intangible assets 84 5 79
========= ========= =========
Total non-current assets 3,332 3,417 3,385
========= ========= =========
Current assets
Inventories 363 7 243
Trade and other receivables 254 126 202
Restricted cash and cash equivalents 396 408 389
Cash and cash equivalents 440 3,390 1,564
========= ========= =========
1,453 3,931 2,398
========= ========= =========
Non-current assets and Disposed
Group classified as held for sale 50 155 50
========= ========= =========
Total current assets 1,503 4,086 2,448
========= ========= =========
Total assets 4,835 7,503 5,833
========= ========= =========
Equity
Share capital 67 65 65
Share premium 51,875 51,711 51,711
Foreign currency translation reserve (94) 192 (144)
Accumulated loss (48,303) (45,655) (46,842)
========= ========= =========
Total equity attributable to parent
equity holders 3,545 6,313 4,790
Non-controlling interest - - -
========= ========= =========
Total equity 3,545 6,313 4,790
========= ========= =========
Non-current liabilities
Provision for environmental rehabilitation 354 344 337
Trade and other payables 30 62 58
========= ========= =========
Total non-current liabilities 384 406 395
========= ========= =========
Current liabilities
Trade and other payables 471 561 563
Interest-bearing borrowings 350 - -
821 561 563
========= ========= =========
Liabilities associated with Disposed
Group classified as held for sale 85 223 85
========= ========= =========
Total current liabilities 906 784 648
========= ========= =========
Total liabilities 1,290 1,190 1,043
========= ========= =========
Total equity and liabilities 4,835 7,503 5,833
========= ========= =========
Richland Resources Ltd
Condensed Consolidated Statement of Cash Flows
For the Half Year Ended 30 June 2016
(Unaudited)
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
========= ======== ========
Cash flows from operating activities
Cash absorbed by operations (1,371) (725) (2,632)
Financing cost received/(paid) 5 (4) 3
Net cash used in operating activities (1,366) (729) (2,629)
Cash flows from investing activities
Purchase of property, plant and
equipment (122) (588) (670)
Purchase of intangible assets (5) - (79)
Proceeds from disposal, net of
cash and overdraft disposed - 4,401 4,401
Minority shareholders' share of
proceeds from Sky Associates Group
Limited - (46) (46)
Purchase of interest in subsidiary - (2) (2)
Transfer to restricted cash - (181) (181)
Net cash (used in)/provided by
investing activities (127) 3,584 3,423
Cash flows from financing activities
Directors' loans converted to share - - -
capital
Proceeds from interest-bearing 350 - -
borrowings
Net cash generated from financing 350 - -
activities
Net (decrease)/increase in cash
and cash equivalents (1,143) 2,855 794
========= ======== ========
Movement in cash and cash equivalents
Exchange losses 19 (205) (75)
At the beginning of the period 1,597 878 878
Increase (1,143) 2,855 794
========= ======== ========
At the end of the period 473 3,528 1,597
========= ======== ========
Cash and cash equivalents - continuing
operations 440 3,390 1,564
========= ======== ========
Cash and cash equivalents net of
borrowings included in asset from
Disposed Group classified as held
for sale 33 138 33
========= ======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSWFMIFMSEEU
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