LONDON (Alliance News) - Richland Resources Ltd said Monday that its directors will be taking a 50% pay cut and it will be undertaking a strategic review of its operations, as profit at its Merelani tanzanite mine at Block C in Tanzania continues to be hit by illegal mining and smuggling operations.
Richland's directors will be taking a 50% reduction in their board fees and executive director salaries and fees as of March 31, until it is able to trade profitably or the subsidiary that operates the mine TanzaniteOne Mining Ltd is able to operate profitably.
The company said it will not be providing any funds to TanzaniteOne Mining Ltd until the review has been completed and the security of its employees has been ensured. It will not be investing further in Tanzania until the review is finished, and will also be placing its Tsavorite project in Tanzania on hold during the review.
Richland currently had cash of around USD3 million as at March 31.
Operations at the mine have been plagued by incursions by illegal miners for years, as large areas of the block have been occupied and held through force. The government at the time of the original incursions instructed security employees not to attempt taking back the areas, and await assistance.
After the company signed an agreement for a new mining licence for the block with STAMICO, the State Mining Corporation of Tanzania, the government agreed to help curb the tanzanite smuggling and illegal mining at the block. An attempt was made to clear the block which successfully cleared the northern area of the block, although a TML employee was killed by the illegal miners.
After this incident no further action has been taken to clear the block, and Richland said that the other areas continue to be in danger of being occupied by illegal miners.
TML signed a formal joint venture with STAMICO last December under which STAMICO attempted to work with the government to end the smuggling and illegal mining in the block.
Although Richland had hoped that the illegal occupiers would be removed, no further government action has been taken. TML has said that until worker safety can be assured it cannot continue to operate under its current cost structure and will not attempt to restart mining due to safety concerns.
Shares in Richland Resources were trading down 30% at 1.4 pence Monday morning, the biggest faller on the AIM market.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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