Gemstone producer and developer Richland Resources, has entered into a conditional sale agreement with Sky Associates Group Ltd, of its tanzanite mining and beneficiation business and also its tsavorite licence interests in Tanzania. Richland Resources is the largest and most scientifically advanced miner and supplier of tanzanite world wide

Reasons for the sale

There has been a sustained period of non – profitability, in part due to operational uncertainties, and with the need for increased funding, the Board believe the sale is in the best interests of the company Shareholders.

The proceeds of the sale, US$6.9million will be used to fund the development of the Capricorn Sapphire Project in Queensland Australia in addition to working capital needs. Refurbishment of the site and the plant remains on course with production planned to start in the first quarter of 2015.

Ministerial and Shareholder approval have yet to be given and should be given within 90 days of the agreement being signed.

Comment from the CEO of Richland

Bernard Olivier, CEO, of Richland Resources said:

“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. 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.”

Background

Tanzanite is 1000 times rarer than diamonds as it is mined from a single source near Mount Kilimanjaro. The area is only 2 kilometres wide and 4 kilometres long and is divided into 4 blocks marked A to D. The sale refers to block C. The remaining blocks are mined by artisanal miners. The current shaft depths for block C reach 900 meters and geological testing indicates that the layers of tanzanite exist to 2000 meters. At current mining rates that gives a 30 year lifespan.