Ann: Baker Young Updated Research Report, page-4

Mr. Allan noted that the source of the higher quality secondary rubies over the Gemfields licences remains to be discovered and that encouragingly the MUS licences occur along the same geological strike as the Gemfields ruby occurrence. We interpret this to mean that MUS has an excellent chance of increasing the ct/ton grade on its operations as Gemfields has done on its Mugloto project bulk sample where grades started off at 0.11ct/ton and ranged up to 5.64ct/ton with final grades said to be closer to 1ct to 2ct/ton .

We maintain our view that from a Capex until first substantial revenues position there are not many mining projects in the world with the same short timeline, low upfront capex and low ongoing Opex that can yield the potentially high revenues that Management are confident the Montepuez project can achieve. This means that there is scope for some very strong revenues to be achieved off a very small Capex base if Mustang can successfully continue to ramp up operations and achieve Management’s target levels of production and grade.

Now that Mustang have proven their tenements contain gem quality rubies the next milestone to be achieved is producing large enough quantities economically and achieving the desired price per carat. This combined with the direct sales of cut and polished special stones indicate the potential to generate revenues in the 10’s of millions of dollars, ultimately yield and price per carat having the biggest influence on cashflows. Taking into account dilution from the recent capital raise and on the basis that bulk sampling ramps up as expected and the company continues to find large special stones we maintain our BUY recommendation and value Mustang at $0.16 per share using a weighted DCF of bulk sampling/future mining operations.