Illegal Mining Still Plaguing Richland’s Bottom Line

(IDEX Online News) – Tanzanite miner Richland Resources is still dealing with the fallout from illegal mining at its Tanzania property. The miner saw a net loss of $4.5 million for the full year ended December 31, 2013, which included an impairment charge of $2.1 million primarily as a result of the severe impact of the illegal mining on mining infrastructure and production quality.

While these losses are much healthier than those for 2012, in which the company saw a net loss of $13.6 million and a $4.4 million impairment charge, due primarily to increased production levels to counter the illegal mining, Richland said that restrictions on mining areas imposed by the effects of illegal mining on the safety of its workforce meant a resulting decrease in quality distribution.  

Consequently, Richland announced revenues of $11.6 million for 2013, compared to $16.4 million in 2012.

Gross production levels were increased by 700,000 carats in 2013 up 26 percent from 2.7 million to 3.4 million carats.

In addition, sales at the Tanzanite Experience, Richland’s retail arm, were up 21 percent to $2.9 million compared to $2.4 million the previous year.

This increase notwithstanding, Richland said the quality of the tanzanite available during 2013 was low due to the lack of high-production areas available for mining due to the presence of illegal miners.

This meant that the marketing focus shifted to “lighter materials and sell-through of included material.” The company also worked to bring non-blue color tanzanite into the retail consciousness, especially in the US.

“While 2013 saw the beginning of action by the Tanzania Government against illegal tanzanite miners, ultimately a comprehensive solution failed to be implemented and one of our employees was tragically shot dead by armed attackers,” said CEO Bernard Olivier.

“Since the year end we have made significant steps to move the company forward and focus on what we excel at: efficient production of colored gemstones and developing secure sales channels.”

As previously announced, Richland is to begin mining the Nardoo sapphire mine in Queensland, Australia. The company said the acquisition allows it to build a new gemstone production hub in a “politically stable and effectively policed region for mining.”