RLD.L Regulatory News (RLD)

5 May 2009 09:00



5 May 2009

TanzaniteOne Limited

Operational Update and Improved Sight Sales of US$ 4.64 million Sales

TanzaniteOne Limited ("TanzaniteOne" or "the Company") (AIM: TNZ), the premium coloured gemstones producer and developer is pleased to provide an operational update and advise shareholders on recent sales revenues.

Highlights 

US$ 4.64 million tanzanite sales in the four months up to until 30th April 2009.

US$ 2.85 million in sales from the first sight of the year in April 

US$1.79 million of tanzanite sales to date in 2009, sold outside of formal sights

Seven sight parcels sold at the April 2009 sight compared to one parcel sold at the December 2008 sight. 

Bernard Olivier takes on executive position as Head of Development

520,000 carats mined to end April 2009 in line with 2007 figures prior to planned production ramp-up through stope mining strategy

3 million carat production ramp up plans postponed until 2012

Efficiency and margin enhancement programme continues to provide positive results

TanzaniteOne Limited today announces an operational update governing production information and recent sales revenues. 

Commenting on the operational update, Zane Swanepoel, Managing Director, said: "The current economic climate is difficult for any company involved with gemstones or luxury goods, but TanzaniteOne has the expertise and technology to continue to successfully manage its operations. We have undergone a full operational review to ensure that we are operating the mine as efficiently as possible. I am encouraged by the recent pick-up in both the sales volumes and prices for tanzanite and hope that the difficult months towards the end of 2008 are now behind us. I am also pleased to welcome Bernard to the Executive Team in his role as Head of Development. Bernard will focus on the Company's sales, growth and investor strategy"

Sales

The first 2009 sight was successfully conducted in April 2009 in Johannesburg. All seven parcels comprising a total 15,126 carats of high quality material were sold, resulting in total sales revenue of US$2.85 million. This represents a significant improvement from the previous December 2008 sight. The Company anticipates further improvements in sales and pricing during through the remainder of 2009.

Encouragingly, favourable sales of US$1.79 million were also achieved outside of the usual sight process. The Company is actively exploring complimentary sales avenues to the traditional sight system, affording the opportunity to move particular stone types at particular points in the market cycle.

The next sight is to be held in either June or July in Dubai. With the Dubai office soon open, it is envisaged that there will be increased participation and demand at sights and sales outside of sights. Until now sights have only been held in Johannesburg. Dubai is more attractive because of its central global position, which allows TanzaniteOne to more easily service its existing markets and also access other new markets.

Management

Dr Bernard Olivier has been appointed with immediate effect to the new position of executive position of Head of Development. Dr Olivier is one of the world's leading experts on coloured Gemstones. He rejoined TanzaniteOne last year as a non-executive board member to work alongside the Managing Director Zane Swanepoel. Mr Swanepoel will continue to oversee the optimisation and development programme at the tanzanite mine. Dr Olivier will focus on developing the commercial aspects of the business, notably the Company's sales, growth and investor strategy.

Production

During the first quarter of 2009, production totalled 390,000 carats and 520,000 until end April 2009. The Company is on track to achieve a revised target of 1.7 million carats for the year. This revised target is in line with the pre-stoping production figures in 2007. Given the downturn in demand experienced for tanzanite, along with other gemstones and luxury goods, it has been decided to defer production ramp-up to 3 million carats per annum to 2012 to ensure that the Company's production is in line with the reduced levels of demand being experienced and consequently conserve cash.

TanzaniteOne benefits from advanced coloured gemstone extraction operations. In particular through the use of the state-of-the-art optical sorter and technologically advanced processing and sorting methods. This is enabling operations to maintain positive margins despite the downturn in tanzanite prices. Currently, only selective areas are being mined for tanzanite and the Company has taken steps to scale back the workforce whilst reviewing all areas of expenditure.

Personnel numbers are being reduced across the Group and as part of the process, numbers of Arusha based expatriate personnel have been reduced by a third. Negotiations with Tanzanian trade unions are currently underway to reduce Tanzanian personnel by 28%.

Reduction in personnel numbers, plus other cost cutting measures, notably reduction in tonnes mined, has resulted in a 40% decrease in operating costs over the last quarter.

Outlook

Demand and prices for gemstones have declined significantly, however the improvements in volumes and revenue experienced at the April 2009 sight compared to the December 2008 sight gives the Directors optimism for an improved outlook. Recognising that sales prices and demand may remain depressed, a revised strategy to defer the production expansion and manage costs down is delivering results and mining operations are currently delivering positive margins.

END

For more information, please visit www.tanzaniteone.com or contact: