(An item published at 0933 BST misstated Richland's current share price and therefore the value of new shares being issued. The correct version follows.)
LONDON (Alliance News) - Richland Resources Ltd said Wednesday it has exercised its option to fully acquire the Nardoo Sapphire project in Queensland, Australia for AUD1.2 million, plus 18 million new shares to issued after a three-month escrow period.
Shares in Richland Resources were trading up 17% at 2.20 pence Wednesday morning, making the share portion of the deal worth GBP396,000. The new shares are approximately 8.3% of Richland's enlarged share capital.
Richland said the acquisition will allow it to establish a major sapphire hub in Australia. First production at the project is planned within nine months.
The mine was previously worked by Australis Mining Corp Ltd up until 2006, and Richland plans to use its existing cash resources and working capital facilities to move the project to production. In 2004, the mine's measured Joint Ore Reserves Committee resource was 109 million carats, with an average grade of 20 carats per tonne.
An existing plant, with a capability of treating 200 loose cubic metres per hour, and a yearly production of 4 million grams of sapphire, will be refurbished by Richland.
"Nardoo presents Richland with an opportunity to start producing high quality sapphires within a relatively short timeframe," said Chief Executive Bernard Olivier in a statement.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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