LONDON (Alliance News) - Richland Resources Ltd Wednesday said its second quarter tanzanite production and average grade achieved jumped, but it continues to be affected by illegal mining activities at its Block C operations at the Marelani mine in Tanzania.
The gemstone company said its tanzanite production increased 34% to 1.0 million carats for the three months ended June 30 from 754,585 carats the previous year.
The company said its Tanzanian joint venture operations brought it USD2.8 million in sales during the period, and its carats per tonne average grade achieved almost doubled to 156 carats from 88 carats.
However, the company noted that this rate remains low due to a continuing lack of high-quality production areas available to be mined as a direct result of illegal mining activities in its Block C licence area.
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 has helped clear part of the block, although an employee of Richland's Tanzanian subsidiary, TanzaniteOne Mining Ltd, was killed in the process.
Richland said that during the quarter it continued to appeal to the Tanzanian government to address the illegal mining which remains in its Block C licence area and, after the quarter, it initiated a programme for removing illegal miners on the southern part of licence area.
In June, the company said a cost reduction and restructuring programme at the Marelani tanzanite mine being carried out TanzaniteOne has already led to an increase in revenues and overheads.
The major efficiency drive was set up to compensate for the on-going occupation of key parts of its licence by illegal miners, with body scanner machines being approved by the government of Tanzania to be operational at the site during the fourth quarter.
Richland also has identified 229 out of its 670 employees that could be let go, depending on how current negotiations with the government move forward, and it also has suspended 41 employees for serious employment breaches.
Despite this, on Wednesday, the company said that security remains a major concern at its operations after an armed robbery which occured at Marelani on July 17 when night-shift production was being transported from the mine shaft to the secured sorting facility.
Richland Resources said no employees were injured but roughly 15 kilograms of unsorted tanzanite bearing material was stolen with an estimated value of less than USD75,000.
The company has taken steps to improve production, and recently completed the acquisition of an interest in the Nardoo Sapphire project in Australia. That has reduced the company's risk exposure to the illegal mining operations in Tanzania.
Richland Resources shares were up 2.1% to 4.21 pence on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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