Illegal Mining Affects Richland’s Results

(IDEX Online News) – Gemstone producer Richland Resources posted revenues of $8.4 million for its first half, ended June 30, 2012. This was down from the $10.4 million achieved in the first half of 2011.

The company said an increase in illegal underground mining activities at neighboring mines had a significant negative impact on operations and financial results.

“The illegal mining activities have resulted in significant danger to our employees and substantial damage to the mining infrastructure in Bravo and CTShaft as well as theft and damage of underground equipment and stones,” said Richland.

“The company is working with the Zonal Mines Office (part of the Tanzanian Ministry of Energy and Minerals), police and other government officials in an effort to counteract the illegal underground mining into its licensed areas and several police cases have been filed.”

Richland produced 1.21 million carats during the six months, down from the 1.25 million carats mined in the first half of 2011. However, the average recovered tanzanite grade was up 6 percent over last year at 66 carats per ton.

Tanzanite sales increased 29 percent to $0.99 million, up from $0.77 million in the first six months of 2011.

CEO Bernard Olivier said that while the company was disappointed with its 2012 interim financial results, he wanted to reassure shareholders that it was working hard to resolve these issues in Tanzania and to ensure it generates a profit, despite the challenges.

As part of the effort to maintain profitability, Richland said it had decided to further reduce its expenditure on the Tsavorite Exploration Project.