TIDMRLD
RNS Number : 1608V
Richland Resources Ltd
01 November 2017
1 November 2017
Richland Resources Ltd
("Richland" or the "Company")
Quarterly Operational and Sales Update
Richland (AIM: RLD), the gemstones producer and developer,
announces its quarterly operational and sales update for Q3 2017.
All figures are unaudited.
Highlights:
-- Sapphire Production
o 1,063,803 carats produced during Q3 2017 at the Capricorn
Sapphire mine, Queensland, Australia, held by Capricorn Sapphire
Pty Ltd ("Capricorn" or "Capricorn Sapphire"), the Company's wholly
owned subsidiary
o Average grade of approximately 17.9 carats per tonne across
59,423 tonnes of mined and processed alluvial material
o Shortfall of approximately 0.14m carats versus quarterly
production target of 1.2m carats predominantly due to significant
rehabilitation of mine disturbance conducted during the period
o Total project-level production and operating costs of US$0.75
/ carat achieved during Q3 2017
-- Gemstone Sales & Marketing
o Next sapphire sales scheduled for early November 2017
o Sapphire prices remained depressed during quarter, partly due
to a continued influx of illegally mined sapphires from an
environmentally protected region in Madagascar. Accordingly, the
decision was made to carry over the majority of stock from Q3 into
Q4 sales such that only US$245,000 of sapphire sales were made
during Q3 2017
-- Corporate & Group
o GBP450,000 (before expenses) raised via an equity subscription
conducted at a premium to the then prevailing market share price -
director participation of GBP100,000 in the subscription
o Additional capital has enabled the Company's sales strategy to
evolve from being monthly to larger, more strategic, sales events
not restricted to quarterly time frames
o Results of such major sales events to be announced
individually going forwards
o Company's principal operations and office now centralised in
Emerald, Queensland
o US$109,000 received from various Australian government Tax
Rebates and Tax Incentive Schemes
o Maiden independent inferred JORC resource estimate of 5
million loose cubic metres ("lcm") of sapphire bearing gravel at an
estimated average grade of 3.5 grammes per lcm (17.5 carats per
lcm) for the Group's wholly owned EPM 25973 exploration licence,
located in Queensland, Australia
Commenting on the quarterly update, Bernard Olivier, CEO of
Richland, said:
"Although we are clearly disappointed that we just missed our
quarterly production target of 1.2m carats (1.06m actual carats
achieved) this was predominantly caused by significant
rehabilitation of mine disturbance that was conducted over the
quarter in preparation for the upcoming wet season.
"Sapphire prices remain under pressure from the influx of
sapphires from Madagascar mined in an environmentally protected
area by approximately 50,000 unlicensed, illegal, small-scale
miners (estimation by the Gemological Institute of America).
Capricorn Sapphire continues to focus on developing sales channels
for its ethically and socially responsibly mined product with an
equally socially aware customer base. The Capricorn Sapphire mine
is a sustainable source of ethically mined sapphire and our
modified sales structure, moving away from smaller monthly sales to
pursuing larger, more strategic, sales events, will enable us to
leverage pricing against the irregular influx of uncertificated
stones. Each Capricorn Sapphire gemstone ensures quality,
environmental best practice under Queensland and Australian mining
law and both safe and ethical operational practices. We strongly
believe that Richland is well placed with our gemstone supply chain
structures as consumers become increasingly selective regarding the
origin and ethical nature of consumer products."
For further information, please contact:
Bernard Olivier Edward Nealon Mike Allardice
Chief Executive Chairman Group Company Secretary
Officer +61 409 969 955 +852 91 864 854
+61 4089 48182
Laurence Read Nominated Adviser Broker
Corporate Development Strand Hanson Shore Capital Stockbrokers
and Communications Limited Ltd
Officer James Harris Jerry Keen (corporate
+44 (0) 20 3289 Matthew Chandler broking)
9923 James Dance Toby Gibbs / Mark
+44 (0) 20 7409 Percy (corporate
3494 finance)
+44 (0) 20 7408
4090
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
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.
Q3 2017 Operational and Sales Update
The key change during the quarter was the transitioning of the
sales function towards larger-scale, more strategic, sales events,
rather than selling smaller parcels of gemstones on a monthly
basis. Results from the first such major sales event are currently
expected to be released in early November 2017. This shift in sales
strategy is driven by the ongoing pressure on prices from illegal
mining operations in Madagascar. Please refer to the following
links to certain Cable News Network ("CNN") and Gemological
Institute of America ("GIA") articles
(http://edition.cnn.com/2017/04/06/africa/gallery/madagascar-sapphires/index.html
and
https://www.gia.edu/doc/Sapphires-Gem-Rush-Bemainty-area-Ambatondrazaka-Madagascar.pdf)
which provide further details of illegal gemstone recovery in
Madagascar for international sale under the following
conditions:
- Threat to primary forest and indigenous wildlife
- Unsafe working practices
- Topsoil erosion
- Child labour
- Operating in unlicensed areas without social or tax contribution
Richland believes it is well positioned to supply sapphires on a
consistent, high-volume basis with full ethical provenance. The
move by end consumers towards demanding supply chain transparency
and ethicacy in consumer goods has been a key trend over the last
five years, hence the Company's decision to operate in Queensland.
The purchase of a certificated Capricorn Sapphire gemstone or
parcel of gemstones comes with full assurances relating to
provenance.
The Company's current sapphire and corundum stock has been held
over for sale at the abovementioned larger sales events,
anticipated to commence in early November 2017, alongside gemstones
from ongoing production. Accordingly, the Company did not achieve
sustainable operational profitability in Q3 2017 predominantly due
to its decision to move away from its previous practice of monthly
sales of exisiting stock and to instead carry over the available
stock from Q3 into Q4 in order to better leverage prices from
pursuing more strategic, larger scale, sales events.
The total approximate revenue generated in Q3 of US$354,000
comprised:
o Sapphire sales of US$245,000 from the sale of 103,372 carats
at an average price of US$2.38 per carat; and
o US$109,000 received from various Australian government Tax
Rebates and Tax Incentive Schemes
Capricorn Sapphire's Production
During Q3 2017, a total of 1,063,803 carats of sapphires and
corundum were produced from the extraction and processing of 59,423
tonnes of sapphire-bearing alluvial gravels at an average grade of
approximately 17.9 carats per tonne. The Capricorn mine achieved
approximately 88.7 per cent. of its targeted quarterly production
of 1.2m carats during Q3 2017 reflecting a decision to undertake an
extended rehabilitation programme as part of our operations,
including seeding of the rehabilitated ground, in preparation for
the upcoming wet season in Central Queensland.
Corporate
The Company also initiated further Group-wide cost cutting and
mine optimisation reviews and introduced the following measures
during the quarter:
o The closure of the Perth office and relocation of appropriate
Group administrative functions to the project's site office in
Queensland
o Management and personnel restructuring post ramp-up in order
to reduce costs and improve efficiencies, including reducing mine
personnel by 20 per cent.
o Machinery and earth-moving equipment changes and reviews of
equipment hire contracts in order to increase efficiencies and
further reduce costs
The estimated total quarterly project-level costs for Capricorn
Sapphire were approximately US$798,000 with average total
production and operating costs of US$0.75 per carat for the
period.
In addition to receiving US$109,000 from various Australian
government Tax Rebates and Tax Incentive Schemes, the Company is
currently working closely with the Queensland Government on several
initiatives to develop the region's mining industry.
The Company's growing reputation in Queensland as a best
practice operator, including the presence of our office, mine and
associated infrastructure and principal activities in Queensland,
combined with our highly skilled team, has led to several
approaches being made to potentially become involved in other
mineral commodities and opportunities in the region. We are
actively assessing such opportunities, with a view to potentially
broadening our portfolio base going forwards.
On 5 September 2017, the Company announced that it had raised,
in aggregate, approximately GBP450,000 (before expenses) from
certain new and existing shareholders, including certain board
directors, through a subscription of 64,285,714 new common shares.
The subscription price of 0.7 pence represented a premium of
approximately 3.7 per cent. to the Company's closing middle market
share price of 0.675 pence on 4 September 2017.
In early August 2017, the Company announced a maiden independent
inferred JORC resource estimate of 5 million loose cubic metres
("lcm") of sapphire bearing gravel at an estimated average grade of
3.5 grammes per lcm (17.5 carats per lcm) for the Group's wholly
owned exploration licence EPM 25973. This Resource estimation
equates to approximately 87.5 million carats in the ground.
Exploration licence EPM 25973 has an exploration area of 39
sub-blocks (133 square kilometres) located within the Anakie
sapphire deposit in Central Queensland which is within 45km of the
Company's existing Capricorn Sapphire mining operations.
- ENDS -
This information is provided by RNS
The company news service from the London Stock Exchange
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