TIDMRLD
RNS Number : 9329Y
Richland Resources Ltd
11 December 2017
11 December 2017
Richland Resources Ltd
("Richland" or the "Company")
Temporary Mining Halt, Next Scheduled Sales Event and
Exploration Programme at Capricorn Sapphire Mine
Richland (AIM: RLD), the gemstones producer and developer,
announces that due, inter alia, to extreme weather conditions and a
weak market environment, the Board has decided to temporarily halt
mining operations at the Company's Capricorn Sapphire mine located
in Queensland, Australia.
As previously announced, the Company has stockpiled gemstones
from Q3's production in order to pursue larger-scale, more
strategic, sales events at more attractive prices, with the next
such event planned for later this month, and, whilst production is
suspended, the Company will commence an exploration programme
seeking to further develop and identify additional resources on its
Capricorn mine's licence area.
Key points
-- Total rainfall during Q4 to date at the Capricorn mine site
of 271mm which is significantly higher than the equivalent period
last year of 35.6mm and which has severely hampered production
efficiency
-- Decision made to temporarily halt mining operations in light
of the adverse weather conditions in order to conserve cash
resources and in anticipation of a recovery in the current weak
sapphire pricing levels and market demand
-- Mining and earth moving machinery is either directly owned by
the Company or on a hourly dry hire system such that usage can be
cost effectively scaled up or down without incurring any idle time
charges
-- December sales event will involve both rough and cut stones,
with the result dependent on then prevailing market prices and
demand and whether minimum reserve prices are met
-- Exploration programme to commence on the Capricorn mine's
licence area targeting potential resource expansion
Mining operations at the Capricorn Sapphire site have been
severely affected during Q4 to date by significantly higher than
usual rainfall totalling approximately 271mm compared to 35.6mm in
the equivalent period last year. Continued operational
interruptions caused by the far higher than normal rainfall,
coupled with weak market demand and pricing conditions, have led
the Board to decide to temporarily halt mining operations and
instead focus on further mine resource identification work.
The Company's mining and earth moving machinery is either
directly owned by the Company or on an hourly dry hire system such
that usage can be cost effectively scaled up or down without
incurring any idle time charges. Furthermore, the Capricorn
Sapphire mine is a comparatively small, modular operation with
consequently low re-start costs, and unlike most mining operations
production levels can relatively easily be varied to meet market
demand and in response to variations in the price of sapphires.
This flexible mining model should ultimately lead to enhanced
margins as the Company continues to build a long-term customer base
for its gemstones. Accordingly, all of the mine's operational costs
will be immediately reduced as a result of the temporary halt in
production, and Richland will use the down-time to conduct further
exploration on the mine's licence area seeking to expand the
existing resource base, ahead of the planned re-commencement of
production operations in Q1 2018.
The sapphire market for our range of sapphires has suffered in
H2 2017, due, inter alia, to a large influx of similar sapphires
illegally mined in Madagascar within one of the country's
designated wild life parks. As announced previously, Richland has
therefore been stockpiling sapphires, especially its cut stones, to
await a price recovery whilst securing channels for retailing the
ethical provenance of Capricorn Sapphire's products. Accordingly,
as set out above, the Company will now seek to conserve its
existing cash resources during the production halt and leverage
pricing to maximum advantage by targeting more strategic,
larger-scale, sales events for its rough and cut stones.
The temporary suspension of mining activities will also allow
the Company's Queensland based team to evaluate further potential
project opportunities in the region. As previously announced, due
to its existing presence, operational activities and relationships
in Queensland, the Company has been, and continues to be, shown
such opportunities. It is currently assessing two natural resources
projects in Queensland which would allow the Company to utilise its
well established knowledge base, relationships, infrastructure,
equipment and core team and deploy its exploration and mining
expertise.
Bernard Olivier, CEO of Richland, today commented:
"Due to the nature and flexibility of our mining model at
Capricorn Sapphire and its limited non-production related costs,
operations can be cost-effectively contracted or expanded as
required.
"In light of the interuptions to production from the adverse
weather conditions encountered in Q4 to date and uncertainty
surrounding current pricing and demand conditions, our objective
must now be to seek to maximise our revenue without being compelled
to accept low prices just to meet ongoing operational expenditure.
Accordingly, by temporarily halting mining operations, we can
conserve our existing cash and pursue more strategic sales events
with our stockpiled products pending an improvement in the market
environment.
"Illegal mining activities in Madagascar are diametrically
opposed to everything we are doing at Capricorn Sapphire where we
are focussed on building an ethical gemstone source for jewellery
suppliers into the US and the wider global market place, where
provenance and environmental best practice are key concerns for
consumers.
"We have also embarked on further exploration to target resource
expansion and continue to identify and assess potential additional
project opportunities, including in other commodities such as gold
and lithium in Queensland, with a view to potentially leveraging
the Company's well established central infrastructure and
exploration expertise. The decisions to undertake exploration and
halt mining activities will also allow the Company and its
Queensland based team to further explore such other opportunities
that have been presented to the Company."
For further information, please contact:
Bernard Olivier Edward Nealon Mike Allardice
Chief Executive Chairman Group Company Secretary
Officer +61 409 969 955 +852 91 864 854
+61 4089 48182
Laurence Read Nominated Adviser Broker
Corporate Development Strand Hanson Shore Capital Stockbrokers
and Communications Limited Ltd
Officer James Harris Jerry Keen (corporate
+44 (0) 20 3289 Matthew Chandler broking)
9923 James Dance Toby Gibbs / Mark
+44 (0) 20 7409 Percy (corporate
3494 finance)
+44 (0) 20 7408
4090
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014.
Further information is available on the Company's website:
www.richlandresourcesltd.com. Neither the contents of the Company's
website nor the contents of any website accessible from hyperlinks
on the Company's website (or any other website) is incorporated
into, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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