Source: East African Business Week
Author: Elisha Mayallah, Sunday, December 07th, 2014
ARUSHA, Tanzania – Richland Resources, a mining company operating in a joint venture company to mine tanzanite, has decided to sell its shares in Tanzanite One Limited.
Richland Resources, the gemstone producer and developer, following a comprehensive review of the strategic options available, would shed its tanzanite mining, exploration and cutting and beneficiation operations and its licence interests in Tanzania to focus on its Australian assets.
According to a recent statement, Richland Resources has agreed to sell the embattled TanzaniteOne Mining Limited (TML) to Sky Associates for $5.1 million.
The sale was conditional on approval from shareholders, the Tanzaian Minister of Energy and Minerals and South Africa Reserve Bank.
The TML is a consortium entrusted by State Mining Company (STAMICO) a Tanzania government institution and Tanzanite One Limited (a company owned by Richland Resources) to run the mining areas in Mererani, north of Tanzania near Arusha.
TML has in the recent years been preoccupied by illegal mining activity and, has not been able to secure a great deal of help from the Tanzania government authorities.
Following an increase in illegal mining activities, which threatened the safety of the company’s mineworkers, in addition to liabilities and changes in legislation relating to gemstone production, tanzanite mining had become ‘extremely challenging’ in Tanzania, the statement adds.
Richland Resources CEO, Bernard Olivier said: “Given the continuing operational uncertainties in relation to the Tanzanite mining operations of TML, including the sustained period that it has not been possible to operate profitability and the need for funding to be provided, the board of directors strongly believes that this deal is in the best interest of the company’s shareholders.”
One boom and bust later, the plan now is to focus on a sapphire mine in Australia, from whence production should start in the first quarter of next year.
Richland’s long-standing chief executive Bernard Olivier was struck a resigned tone. “The proposed sale allows Richland to focus on sapphire production in Queensland and use our mining and marketing experience to rapidly build revenues and profits,” he said.
In addition, he said: “In Tanzania the safety situation, liabilities and changes in legislation relating to gemstone production have made Tanzanite mining extremely challenging for a public company such as ourselves. I look forward to developing new coloured gemstone lines for Richland and its shareholders.”
Broker RFC Ambrian offered the following pithy analysis of the developments: “We believe that the company’s net current liabilities of US$4.4m at the end of June this year and its ongoing losses in Tanzania have forced the issue.
Assuming that the transaction is completed as described, the company will emerge with a clean balance sheet, almost $7 million in cash and a focus on bringing its recently-acquired Capricorn Sapphire Project in central Queensland into production.”