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Richland Resources Ltd

  • BY: Andrew Hore |
  • POSTED: 29/08/2011 |

Richland Resources recovered strongly in the first half of 2011 and it is in the process of diversifying into new areas.

Richland was formerly known as Tanzanite One but it changed its name to reflect its broader focus. Tanzanite remains the core of the business but the company intends to become a wider ranging gemstone producer. The first project is a tsavorite mine, which has a JORC-compliant indicated resource of 2.1m to 5.2m tonnes, within an inferred resource of 18.2m to 24.9m tonnes. This project is located 20km away from the tanzanite mine in Tanzania. Bulk sampling will be completed in the first quarter of 2012.

Richland has entered into an option over a sapphire project in Australia. That option cost A$120,000 and the total cost could be A$1.2m and 18m shares. There are plans for a Dar es Salaam Stock Exchange listing and the share issue will happen after this listing is obtained.

Revenues improved from $8.55m to $10.4m in the six months to June 2011. Tanzanite production increased 19% to 1.25m carats and sales to China are increasing. Reduced admin costs helped pre-tax profit to jump from $739,000 to $2.17m. This reflects an even stronger improvement on the second half of 2010 when Richland made a loss.

There was $1.75m in the bank at the end of June 2011. Net cash was $375,000. Strong sales at the end of the period meant that cash generation was poor in the first half. The increased debtors should be turned into cash in the second half.

At 9.5p a share, Richland is valued at 11m. The share price is well below the net asset value of $0.336 a share. Ambrian forecasts 2012 earnings of 3p a share. 

Download the August 2011 edition of AIM Journal at http://www.hubinvest.com/AIMPDFAugust2011_23.pdf

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