LONDON (Alliance News) - Richland Resources Ltd Wednesday said its pretax loss narrowed in 2013, as lower revenues due to illegal mining activity were offset by reduced costs and lower depreciation, amortisation and impairment charges.
The gemstone producer and developer said its pretax loss narrowed to USD5.3 million, from USD13.2 million in 2012, even though revenue fell 29% to USD11.6 million, from USD16.4 million.
Its tanzanite production remained low as a direct result of illegal mining activities on its Block C licence area in Tanzania.
However, Richland cut sales costs and administrative costs. It also booked a net foreign exchange gain of GBP773,000, while its depreciation, amortisation and impairment charges fell to USD3.5 million, from USD6.1 million.
Richland Resources has taken steps to improve production, and recently completed the acquisition of an interest in the Nardoo Sapphire project in Australia. That hs reduced the company's risk exposure to the illegal mining operations in Tanzania.
Earlier in June, the company also said its cost reduction and restructuring programme at the Marelani tanzanite mine, being carried out by its Tanzanian operating company, TanzaniteOne Mining Ltd, to offset illegal mining, has already led to an increase in revenue.
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 to take back the areas and to await assistance.
After the company signed an agreement for a new mining licence for the block with STAMICO, 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 TanzaniteOne employee was killed by the illegal miners.
However, at the time TanzaniteOne 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. Richland said that it still isn't providing capital to the TanzaniteOne/STAMICO joint venture at Marelani while the situation continues.
Richland Resources shares were up 3.1% to 8.25 pence on Wednesday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright 2014 Alliance News Limited. All Rights Reserved.
