8 Oct 2012 16:01
8 October 2012
Richland Resources Limited
("Richland" or "the Company") (AIM: RLD)
Retrospective additional royalty assertion for period 2004 to 2008, from Tanzanian Government,
Update on Mining Licence
and
Suspension from trading on AIM
Richland Resources Ltd, the London Stock Exchange, AIM quoted gemstones producer and developer, announces that it has received a communication on Friday 5 October from a representative at the Ministry of Energy and Minerals (the "Ministry") in Tanzania with regards to an additional, retrospective royalties claim relating to the period from 2004 to 2008 and which amount to a further US$1.73m.
In addition, the Ministry has also informed the Company that it will not provide any further support to the mining activities of the Company's subsidiary, TanzaniteOne Mining Limited ("TML"), until its claim for unpaid royalties has been paid. This action by the Ministry of Energy and Minerals effectively prohibits TML from the export of gemstones produced and/or beneficiated in Tanzania and therefore disrupts sales to its sightholders.
The Company is urgently seeking clarification from the Ministry and the Minister of Energy and Minerals as to the enforceability of this prohibition on exports. The Company is also investigating measures it can take to continue sales and exports via its other Tanzanian subsidiaries although it is not certain if this will be possible and any alternative arrangements may be at significantly reduced margins. However, it is not expected that the Company will be in a position to clarify these matters until later this week.
The Company strongly disputes the validity of the claims for unpaid royalties. The Government of Tanzania is claiming royalties on revenue the group generated during the period from 2004 to 2008 through subsidiaries outside and independent of Tanzania. This historic revenue includes, for example, sales of finished jewellery (incorporating other precious metals and gemstones) from its South African and Mauritian registered subsidiaries.
The Company will request a third party review of its legal case and of the evidence prior to paying any claim for unpaid royalties, as per the procedure stipulated by the Mining Act of Tanzania with regards to royalty disputes. The Company believes that it has a strong legal case and will accept the ruling of a legal tribunal where all the evidence is reviewed.
However, due to the de facto implementation of a prohibition on export of gemstones on TML, the Company is potentially severely restricted in its revenue generating capability. The Company will be liaising with the Ministry in respect of the constraints being placed on the Company's trading. However, depending on the outcome of these negotiations and on the duration of the review proceedings outlined, there is significant uncertainty as to the impact on Richland's financial position.
The same letter received on Friday 5 October 2012 also makes reference to a previous instruction to the Company to submit an application for a Mining Licence for Gemstones to replace its current Special Mining Licence (SML), for which an application for renewal had previously been submitted. The Company has submitted a new application as requested (reference no. HQ-P26114) in compliance with the 2010 Mining Act and awaits feedback from the Ministry. The 2010 Mining Act provides the Company with the ability to continue operating while its renewal and/or new application is under review and also provides the applicant, if it is in default, with reasonable time to remedy the default.
Richland's shares will remain suspended from trading on AIM pending clarification of these matters and the Company will provide further updates on these matters in due course.
For more information please contact:
Bernard Olivier
Chief Executive Officer
+61(0) 4089 48182
Willi Boehm
Company Secretary
+61(0) 409 969 955
Nominated Advisor & Broker (AIM)
RFC Ambrian Limited
Samantha Harrison/Jen Boorer
+44 (0) 20 3440 6800
Joint Broker XCAP Securities PLC
John Grant/Jon Belliss/David Newton
+44 (0) 20 7101 7070
Newgate Threadneedle Communications
Beth Harris
+44 (0)20 7653 9855
+44 (0)7979 955 923
Notes to the Editor:
TanzaniteOne Mining Limited has been one of the largest mining contributors to the Tanzania tax base and has invested over $100million through the mine acquisition, mine development and the Company's ongoing mining activities over the last 8 years. The Company has already contributed in excess of $23.4million to the United Republic of Tanzania though corporate taxes, royalties and payroll related taxes
Tanzanite mining is currently operating at down dip depths of over 900 metres and requires large capital investment, high operating costs, sophisticated mining equipment, world-class mining experience, and best practice safety measures and environmental care in order to safely excavate material, all being fundamental prerequisites that characterise the Company's current operations at Merelani.
In addition to being a direct employer of over 650 people in Tanzania, TanzaniteOne Mining Limited also has dedicated programmes for the improvement of local communities through numerous and successful community projects. A complete list
of the Company's numerous community projects can be viewed on its website, and includes;
·; Construction of the Nasinyai Secondary School
·; Construction of a 400m2 Community Centre
·; Renovation of the Nasinyai Med-Clinic Dispensary
·; Expansion of the Nasinyai Primary School
·; Providing water to around 5,000 cattle and 2,000 villagers
·; Granting of bursaries
·; Maintaining the 14km access road into the entire tanzanite mining area
·; Providing ongoing geological, mining, surveying safety and logistical assistance and other guidance to small-scale miners, through its Small Miners Assistance Programme (SMAP)