Richland on target to achieve operational profitability at Capricorn

Richland Resources, the Australian sapphire producer and gemstones developer, announced on Monday that it had ramped-up production at its Capricorn sapphire mine on-schedule and that it remains on schedule to achieve operational profitability at that Australian mine from July 2017 - as previously guided.

The company highlighted how operational ramp-up had allowed it to mine more efficiently - through greater scale - while its sales initiatives had enabled it to fetch better prices for its stones.

"Operational ramp-up and sales initiatives have combined to enable us to mine both more efficiently and achieve higher revenue for our product as we seek to develop our brand. The quarterly comparisons within the period serve to demonstrate that we can maximise margins from a steady run of mine rate at Capricorn Sapphire," said the company's boss, Bernard Olivier.

As regards those sales initiatives, the company inked a sightholder agreement and exclusive supply agreement for the project's green sapphires with Royal Touch LLC and a sightholder agreement with China Stone Co. Ltd..

During the second quarter, Richland sold 163,000 carats of mid-to-higher grade quality sapphires at a price of $3.89 per carat and another 231,000 carats of lower-quality rough, untreated corundrum and sapphires for 23 cents a carat.

Those amounts marked a sharp improvement on the $1.73 and $0.05 per carat obtained in the first quarter.

In turn, revenues for the half year ended 30 June 2017 were up 69% to $1.08m versus $0.64m in the first half of 2016, with the bulk of that, $1.03m, coming from the sale of sapphires and corundrum.

Oliver also pointed out how the firm's second quarter revenues had met more than 95% of its production and operating costs over those same three months.

Further revenue came from the $50,000 made from online sales, $38,000 from an Australian export marketing development grant and $60,000 as fuel rebates from the Australian fuel tax scheme.

Net unrestricted cash available at period-end stood at $0.3m, in comparison to $0.4m-worth at the comparable point of 2016.

However, analysts at house broker ShoreCap noted how cash and receivables reached $0.59m at the end of the quarter versus current liabilities of $1.0m, whereas at the end of the prior quarter they were at $0.55m and $1.47m, respectively.

In a separate announcement, Richland announced a maiden independent JORC resource estimate for its EPM 25973 licence at Capricorn Sapphire of 5m loose cubic metres of sapphire bearing gravel at an estimated average grade of 3.5 grammes per lcm (17.5 carats per lcm).

The company's shares were up 9.38% to 0.88p by 12:25 BST.