Gemstone producer Richland Resources has lamented a “significant” increase in illegal underground mining at its Tanzania-based joint venture (JV) tanzanite operation with the State Mining Corporation of Tanzania (Stamico), claiming that illegal miners were entering underground areas from neighbouring blocks and presenting a danger to its employees.
“While 2013 saw the beginning of action by the Tanzanian government against illegal tanzanite miners, ultimately, a comprehensive solution failed to be implemented and one of our employees was tragically shot dead by armed attackers,” CEO Bernard Oliviersaid in the company’s year-end results statement on Wednesday.
According to the company, “very substantial" damage had also been made to mining infrastructure at its Bravo, Delta, Investor and CT shafts, accompanied by the “considerable” theft of gemstones, especially the high-quality gemstones.
Owing to the aggressive nature of the incursions, which saw the illegal miners carrying firearms and homemade explosive devices, and the moratorium placed on the group by the government to protect its workforce, production was again scaled back in the 2013 fiscal period.
Olivier noted that, following the issue of the mining licence, the government coordinated an initial effort to clear illegal miners from Block C, which later resulted in the removal of illegal miners from the northern area of the block.
“Since that time, however, no further physical action has been taken by the government to clear illegal miners from the other areas of Block C. Safe and productive mining cannot be carried out by the company in any of the uncleared areas,” he commented.
The board said it had understood that, following the formalisation of the JV with Stamico in December, the illegal miners in Block C would be removed, allowing reinvestment in the mining infrastructure and therefore boosting production.
This had impacted on Richland’s financial position, with the company reporting revenue for the year ended December 31, of $11.6-million, 29% lower than the prior year’s $16.4-million.
Cost of sales, selling and distribution, and administrative expenses was $12.2-million for the year, representing a decrease of 37% on the prior year, primarily owing to the group's cost cutting measures, and the JV, which halved TML’s mine costs.
Other operating expenses for the year of $4.6-million were 54% lower than the prior year, predominantly owing to lower impairment charges and lower taxes and penalties.
The company posted a net loss for the year of $4.5-million, ending the year with a net cash position of $500 000.
Despite its challenges over the period, Richland again achieved a record volume production of tanzanite in 2013, with 3.45-million carats of tanzanite produced from processing 30 906 t of ore, with an average grade recovered of 112 ct/t.
“However, owing to government inaction, we continue to be unable to operate in most of the undersigned mining areas in the mining licence area, said the company.
In addition, following the JV agreement between Richland subsidiary TanzaniteOne Mining (TML) and Stamico, TML revenues for the second half of the year had been reduced to account for Stamico's 50% share of mine revenue.
This came as the company achieved a significant upgrade of its tanzanite resource at its Merelani mine, announcing a Joint Ore Reserves Committee- (Jorc-) compliant indicated resource of 30.6-million carats and a Jorc-compliant inferred resource of 74.4-million carats, totalling a combined resource of 105-million.
The on-mine cash cost at Merelani for the period fell 22% to $3.47/ct and was attributed to increased attention to efficiencies and the recycling of used equipment.
The mine’s dense media separation plant processed 30 906 t in 2013.