At 0.85p is this starting to become a Highly Speculative Buy? It appears a small business almost - $500,000 turnover. Surely it must be building-out towards something larger in scale, I can't see what though.
The reason my interest is aroused is that Nicholas Sibley (ex Jardine Fleming) is involved, I cannot conceive that he would be doing this for no-cash remuneration and payment only in Scrip. Has he, Mr Sibley, gone ga-ga in his old age or am I potentially onto something here?
Opinions gratefully received!
Disc. - I don't, yet, have a Penny invested in Richland........
If you take a look at the website you will see that a consignment of the larger more precious stones are to be sold in Q1 of 2016. Also targets for Q4 have already been exceeded by double Q3 results. Some precious stones are being sold via the retail outlet. The potential is vast.
if they are producing 1m carats p/a initially at $3 p/c and say they only sell them at $7 p/c (rather than the $12 customer specific order) then thats $1m profit p/q or $4m p/a or around £2.5m against a market cap of £7m.
If all goes relatively to plan appears rather cheap............
Very pleased with transparency, cost control, and overall progress.
Looking forward for October update, although the true sp potential will materialize in a year time I suppose.
Nice 3.4mil $ in cash and no debit should guaranty no share issuance or dilution.
A question mark on tonnage processing potential from 200LQM to 200 Tones max,
still at 20Crt x Tone, 12 hours per day and 300 days per years it makes, more than 14mil Crt, much more than the 8 mil Crt as from feasibility study.
I am happy.
Yes Luciano - RLD were initially selling off their remaining Tanzanite stock but appear to have made an arrangement to continue selling (presumably on behalf of Sky?). Tanzania changed the law a while back and any rough 1gm and upwards had to be cut and polished in Tanzania. As the legal guys RLD had to set up a cutting and polishing arm in Tanzania (called Urafiki) and this was sold to Sky. However the problem was the government failed to police the artisanal miners who simply smuggled their bigger rough out of the country contributing to downward pressure on Tanzanite prices. In time RLD will need to arrange for some of its own stones to be cut and polished to help boost profits. Presumably this will be done in an another country with skilled cutters like Sri Lanka, India or Thailand but where labour costs are lower.
Sure Relephant thanks. You are quite right in regard of the quality of gems, about cut and polishing if I am not wrong it appear that RLD was already selling those kind of gems with the old Tanzanian operation...?
Today RNS confirms that all is ok, that mining a commenced, and first sale is expected by end of June.
Beside price achieved it would be interesting to see if some good quality large gems are recovered from this firs production same as with previous production back in 2005.
Also they say that with current drilling JORC resources will be expanded.......
Luciano - while Bernard Olivier may be able to hazard a rough guess at what sort of range of average prices he hopes to get per ct;, this ultimately will depend upon the quality mix of stones the mine produces and we will have to await results of mining to know this. Looking at Gemfields it is the high quality stones that generate much of the revenue and that sell for very much more/ct than lower quality material (which forms to bulk of production). Whether or not 1,2,3, 4 or 5% of the production turns out to be high quality will have a huge bearing on profitability. We will only really get an idea once the first few results from mining and sales comes out. Also sales prices are just one part of the picture. I will be interested to learn in due course how much it costs to mine/ct produced. If Capricorn marketing succeeds then the company may also be able to make profits on sales of quality sapphires from other Australian mines. Would be interested to know whether Sky are going to be the sole supplier of Tanzanite for sale by RLD, or whether the company will purchase from other miners as well. Will RLD only be selling higher quality Tanzanites on its website or will it also be conducting sales to sightholders on behalf of Sky? In due course I presume the company will organise cutting and polishing of its own best quality sapphire rough to try to increase revenue and profits.
I too have made a small top up at 5.6.
Unfortunately can not make it for Proactive Investors presentation, but I wonder if it would be possible for anyone going there, to ask some questions and the report to this board, please.
It would be interesting to find out HOW MUCH Tanzanite gems will be sold via Capricorn website, just to have an idea on potentially how much Tanzanite will contribute to RLD profit in the future.
That's great Big Chef - many thanks. Granto from the LSE site will also try to attend (work permitting).
I (and I am sure others that cannot attend the One2One forum) would really appreciate any report back you can give us on the main points to come from the RLD presentation; and any clarifications to emerge from any discussions you may be able to have over wine and canapé's afterwards.
I wonder if we will get an operational update with some new information on how mining is progressing to whet potential new shareholder interest in advance of the forum.
Will be interesting to see what happens in the market the following day.
I've registered myself for the One2One investor forum this week with RLD (BO) being one of the key speakers - it's this Thursday 21st May (not 22nd) and you have to register your interest in advance to reserve a place, but it's easily done - so don't be put off. Lots of comments from more RLD PIs on the LSE site - look there too for details.
I just have to make sure I can get the afternoon off work Thursday, to get into London on time!
Hope Frogboy and other long termers are still in RLD and didn't give up at the last TNZ hurdle, now it's getting very interesting again.
Maximus, I too have build up a significant holding and share your bullish sentiments. Am delighted with getting out of Tanzania debt free and with a healthy balance sheet and the exciting prospects for the new mine and online trading. My last top up was at 2.5p and I also don't intend to top up any more for now.
The prospects do seem excellent as mining costs/ct recovered should hopefully be reasonable given this is an alluvial deposit. In addition with quality gem prices rising and supply apparently declining in other sapphire producing areas, the timing appears good. While anti-corruption moves in China may have temporarily dampened buying of gemstones there, China is still a huge potential market where population and disposable income/capita continue to increase every year and there is demand for quality blue gems. It appears RLD will be the first to seriously attempt to market and brand the best Australian sapphires. If this "Capricorn" marketing succeeds it should enhance prices achieved. While the potential seems tremendous; as has been said on a number of threads here (and on LSE), it will only really be possible to value the company (and its shares) once we have some idea of production levels possible (hopefully 8-12.5m cts/year?), the cost to mine/ct recovered, the quality mix of stones recovered as well as prices/ct achieved. The latter two will obviously be key to profitability. The potential for the mine to become the largest producer of sapphires is exciting as being able to supply the market on a regular basis has been shown to be key by Gemfields. The company can also in due course further boost returns by cutting and polishing too. Also wonderful to be in a position to generate some revenue from Tanzanite sales without having the cost and hassle of mining in Tanzania. Back of the envelope calculations based on a number of assumptions suggest there could be a major re-rating of the share price over the next couple of years. Things look promising unless as Maximus says negative news is forthcoming on Nardoo production potential, costs of mining/ct and prices achieved that suggest the mine will not be profitable. However if production, average prices and costs of mining/ct similar to Gemfields' operations can be achieved we will be smiling. This will especially be the case for long suffering long term RLD holders like Big Chef and myself; not to mention the hard working CEO Bernard Olivier and his team who appear on the brink of achieving a miraculous turnaround.
On another matter anyone on here going to the Proactive Investors evening when RLD will be presenting? One poster on LSE hopes to be able to attend (work permitting).
I am beginning to feel that this is now the right place and time for being in coloured gem miners and RLD.
There is positive newsflow and publicity on coloured gems and progress at gemfields mines.
Amid a battered mining industry, coloured gemstones stand out as a segment where there is opportunity. Nothing is priced into RLD at the moment with 10 million market cap being minimal.
Unless there is negative operaational news from start up at Nardoo, I see that we could well be at the start of a significant revaluation of RLD both as a result of general industry sentiment, limited opportunity elsewhere in mining and company specific developments.
I already have a large holding, do not intend to top up but also will not sell any time soon. I am looking for a multiple of today's value but we have to see how things develop as this is still very speculative
I've made another 'drip feed' buy at 4.6p after the last one at 2.6p - not large but, I didn't want to see it jump to 5p+ and before topping up - if it does go back to 3.5p first, then I'll add some more. If it moves above 5p soon, then I'll be glad I took this opportunity.
Happy to read posts here and LSE lately, from various interested investors, known and new on RLD boards. Thanks to those investigating - good to hear about some PR (investor show on May 22nd I think, with Bernard O. speaking) that should bring some additional profile to Richland's new start.
looking at GEM results, its astonishing how the price per Crt achieved can vary....
Assuming that their ruby/emerald are worth as much as Richland sapphire, in the last results they achieved from $/Crt 3,72 for low quality ruby to as much as $/Crt 688 for high quality rough ruby.
Other auctions for rough emerald fetched $65 per Carat.
Looking at total revenue for H2-2014 we got $ 104mil for some 18.4 mil Carats produced.
I know it is not exactly a like for like comparison, but I suppose is the closest you can get to guest Richland potential.
So supposing that GEM sold all of its production in H2/2014 (unlikely)
we end up with an average x Carat of $6.
Once Rld as established production and marketing channels, I would expect them to be able to achieve the same numbers if not better.
I have also found some more info, specific to Australian Sapphire production.
It seems that traditional Sapphire production from Thailand, Burma and Sri Lanka is running out and many gems for these markets are actually coming from other parts of the world including Australia.
Richland Res. Strategy is to market its gems directly, without going through the traditional Far East established markets.
I am very confident Rld will be successful in doing so for two main reasons:
One is having the ability, to supply large quantities of carats to the market.
This aspect is important because retailers would pay a premium to those suppliers that can guaranty steady large volume of gems. Beside the premium though, large supply can create an independent marketing channel, away from the established one and this should maximise prices achieved.
The second reason is the quality of gems that Australia is able to produce.
In the link below there are info on Australian Sapphire production and by clicking around, is possible to check some market prices.
One last thing to take in consideration, about the potential of Rld operation, is its Measured JORC Resources of 109 Million Carats or 20 Carats per m/t.
The positives here come from the fact that only 25% of existing license area, has been explored, resulting in the current Resource estimate, but even more positive is that previous miners Australis....
...had already achieved some 23 Carats per m/t average production, confirming the assumed JORC Resource grade to the highest level of probability possible. Once Rld will achieve a profit from Nardoo mine, the Jorc Resource could be classified into Reserve, and its Net Value be reflected in the share price.
You're right BC this share is either a top up share or do nothing share.
I am quite please with the large spread, because it will keep traders in the know, away for a while.
Admittedly I have jump on rld more by luck than by total knowledge, one of the factors that affected my decision most, was the self believe that the BoD has on their ability, to bring this company to success.
There are many other shares, which price is more easily predictable than Rld, but which potential gains are more limited.
I kind of expected this to happen - look at the sp chart, we always get bursts of excitement followed by periods without extra news where the price drifts back, sometimes significantly.
I'm pretty much expecting to see 3.5p again at which point I'll top-up quite a lot, as I reckon these prices will be temporary and the next sp hike will be more significant providing news continues to indicate this is RLDs "new dawn".
It's one that could have been traded, once we started seeing sells without buys, around 5p - but it's easier to call in hindsight - and RLD could have suddenly turned up with some sales channel news unrelated to Capricorn, and we wouldn't have wanted to be "caught short".
I am trying again to reassess the potential of RLD nardoo mine.
Two obvious starting points are profitability in terms of produces quantity and quality.
On quantity produced we already know that intended production from RLD, is some 12 mil Crt x year, we also know that nardoo mine is designed to produce up to 20 mil Crt.
Therefore on quantity produced there is plenty of scope for improvement, in order to reach profitability, but this is not RLD strategy.
The name of the game with nardoo profitability is quality and size of gem produced, and steady flow of supply aided by and already set up commercial network, called Capricorn Sapphire.
Now we come to the more interesting bit, Sapphire price.
From Proactive Investors I read an article mentioning a possible 7 million $ operating gross profit, for a price of 4-5$ per gram Sapphire, meaning some 1$/Crt.
The assumption been that 12 million Carats x year production, equate 12mil $ revenue,
or 7 mil $ gross profit.
In my opinion the price per Carat assumed by pi article, is ultra conservative for many reasons.
For start we have to consider that these were price achieved in 2005, also the company operating then (AUSTRALIS MINING CORPORATION LIMITED (AUV) Former Name ASX)
never had the experience and already set up network, to market Sapphire that RLD has.
Moreover we already know that once a market is set up, and production start to flow, prices can only improve
Another interesting bit is the quality of Australian Sapphire. I read that these are among the best Sapphire in the world, but even better that the nardoo mine is capable of producing, some large size top quality blue Sapphire, which once cut and polished could fetch higher prices.
Below are some new interesting links on Sapphire prices.
My final assumptions are that, 1$/Crt. achieved 10 years ago from nardoo, today has trebled.
This consideration regard only the rough low quality part of nardoo production, which unfortunately we don't know what percentage of total production account for.
On this metrics though, by adopting assumptions from pi article, we get three times 7mil $ gross profit per year and probably 50% net profit or 10.5 mil $.
This at a conservative PE of 10 gives RLD a market cap of 105mil $, but the potential of RLD operations is in the Board of Directors and their skill, knowledge and experience of gem market, in been able to maximise revenue, with the sale of quality large size sapphire, which as from the link on sapphire price provided, can reach exponential prices.
A tangible sign of this potential, is the fact that Sky new operator of Tanzanite mine have trusted in RLD, the marketing of their gem production.
One more interesting news flow is to come from the exploration front.
The positive here is that huge size of the unexplored licence, compared to the assessed estimated resources of some 100 mil Crt.
The sapphire used in consumer electronic displays is synthetically produced so won't affect demand for natural gem sapphire unless it helps boost the sapphire name as being associated with tough and strong (which sapphire is at 9 just being one down of the Moh scale of hardness of diamonds).
Would be good if the source of Tanzanites going forward is Sky. However this may signal a change in heart on Sky's part because original plan was for RLD to sell of its stock and close online tanzanite sales.
Presumably Richland Gemstones online will be selling quality stones and jewellery (as pre TanzaniteOneOnline). If Sky wants RLD to sell other material then presumably this would involve auctions with previous sightholders. However not sure what is to stop Sky contacting Richland's previous listed sightholders direct and inviting them to auctions. Look forward to getting more information on Tanzanite sales in due course.
We can really only guess, but have been involved in a number of acquisition transaction in my line of work
The sales channel for the product is extremely important. Sky did not buy any of TNZ sales channels so this could be a first indication that they may have an offtake agreement or similar set up with Richland
For them the WIN WIN scenarion would be to use "local contacts" to push out the illegal miners and obtain concessions for the mine, while sale of product is left to RLD so they do not have to spend on sales & marketing
I would see that we should know fairly soon if RLD starts to sell any significant Tanzanite through its channels.
Totally agree with your assessment below Big Chef. Can only be a speculative buy (albeit one with a reasonable chance of paying off) at this stage; and the higher the sp goes the lower the potential reward for risk taken. 2.5p was obviously a much better deal than the current 5p. Where the sp might level off prior to the all important hard news on mining and sales is anyone's guess. I agree that for the sp to really take off, and for institutional investors to come in will depend on hard news demonstrating good profitability of mining and marketing. Also going to be interesting to see what share of future profits and turnover will come from selling other gems the company hasn't mined (trading). Hopefully initial results will give a rough indication of potential profitability but we will only have results from a limited period of mining and sales in this year's interims, with the 2015 final year end report only due in about 15 months.
Perhaps we should start downplaying the "jam tomorrow" anticipatory excitement, in order to spook a few of the newer investors just long enough for another sizeable top-up!...
I'm sure Dr BO has enough confidence to have decided to go for a Nardoo solution to the problem of where to take RLD next, but there cannot be certainty as to the success of this until we start seeing the quality of the stones being extracted, the operational management at the new site, and the success of the business plan playing out re sales and marketing.
If any one of these factors are not as positive as we are hoping, then it will affect the viability of RLD and whether it can turn the profit it needs to be successful - I would have thought that Institutional Investors would steer clear of RLD until a few of these factors are beginning to work out favourably. PIs are getting in now, but this could still be all or nothing, despite the confidence on this iii BB and LSE.
Basically, I want to pay less than 5p am therefore resorting to a bit of de-ramping :-)
PS Yes TNZ did rise to around 273p at one point - I think it was a case of perfect market timing though, that I can't see happening again: the stock was quite new to the market, had been rising ever since, first gradually, and then it went "exponential" as their financials were doing really well, the market was reaching its peak prior to the GMC, some excellent quality finds were coming through, and the marketing and publicity about Tanzanite being so much rarer than diamond were causing people to bid up TNZ on 'sky high value potential'.
I don't think we'll get that with Sapphires, but if RLD can focus some good focussed marketing / publicity & branding that concentrates on "quality" & "ethical-sourcing", then as long as there are enough genuinely good quality stones, and RLD manage what they did before as TNZ then Dr BO may help build a stabler base for his enterprise (which we must still expect to be cyclical along with our world economy - unless he can do good business at the uber-luxury end with those who don't seem affected by "that sort of thing").
Agree that it is a substantial JORC resource at Nardoo (similar in cts to Merelani but potential production per year will be much higher).
Strategically seems sensible for RLD to once again start to trade and sell other gems. This should help establish the company as a major Gem seller like Gemfields rather it being seen as a one mine company. What a pleasure to be able to sell Tanzanites without all the costs and hassles of mining in Tanzania. Wonder where the Tanzanite will be sourced from - Will the company be selling some on behalf of Sky for a cut ?
Was interested to see ex Tanzanite One and current Gemfields CEO Ian Harebottle quoted in an article as saying they had thought a De Beers style market share was the key, but they had changed their view to recognise that the position their product holds in the mind of the consumer is the key driver of value today. He stressed that for Gemfields, much of this was achieved by advertising and he was quoted as saying Along with positioning our product at the forefront of the customers mind, there has to be a clear understanding of what Gemfields stands for : ethics, transparency, legacy, provenance, excellence and creativity. Richland appears to be seeking to do exactly that which is great. Also working to have a more consistent supply should also help. Thus maybe we have another Gemfields in the making here.
One advantage that RLD has over Gemfields' operations is there should be less pilferage in Australia compared to Gemfields' Zambia and Mozambican mines (which while doing better than RLD's past Tanzanian operation still appear to be losing a significant proportion of their gems to theft and smuggling). While it will be easier to mine alluvium in Australia hopefully this also will turn out to be cheaper/ct mined. If this is the case, and the quality mix of stones produced is anything like Gemfields' Zambian and Mozambican mines then the Nardoo mine could well be seriously profitable given increased demand for quality coloured gemstones.
Still I suppose first things first. Let's see whether the mining and sales results in the coming months confirm that Nardoo has the potential to be reasonably profitable.
Apologies for double posting. Pressed submit just as I recognised I had put can instead of can't in second sentence. I immediately tried to edit the post which got me back to post edit page. I thought the first post had therefore probably not gone through but it had.
Thanks for the links Luciano and Sniffer. I can't recall the company confirming it in an RNS; but on a bb I read that the plan for first year was to mine 8m cts. Certainly longer term projection was for 12.5m cts per year with supposedly 20m cts possible.
More shares outstanding today, but in the early days of Tanzanite One the share price reached as high as 273p in my memory serves me right. Going to be interesting to see how Nardoo pans out.
Thanks for the links Luciano and Sniffer. I can recall the company confirm it in an RNS; but on a bb I read that the plan for first year was to mine 8m cts. Certainly longer term projection was for 12.5m cts per year. More shares outstanding today but in the early days of Tanzanite One the share price reached I think 273p. . Going to be interesting to see how Nardoo pans out.
Indeed to predict profitability with RLD is not easy. The interesting link below states that more of a gem is produced and higher is the price buyer are willing to pay. http://www.bloomberg.com/news/articles/2015-04-16/ruby-riches-lure-no-1-emerald-miner-in-bet-on-rare-rocks-demand
Nardoo as the potential to produce 20 million Carats x year, although initial feasibility study are based on a production of 12 million Carats, I suppose to achieve profitability, the management could always increase production. Note that already 12 million Carats production, is a sizable supply and should command a higher price per carat, because it represent a steady and sizable supply to buyers.
I am happy with the sp performance so far, this was what I expected. We reached past 16p sp while Rld was operating in Tanzania and I can't see why it shouldn't happen again.
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