Upcoming Auction: Proof of concept only

I know many people here are getting excited about the upcoming auction (me too), but we should keep in mind that this first auction is just a "proof of concept” sale for Mustang. The true value of Mustang is not going to be determined by what they achieved at the first auction beyond establishing if they have a real resource or not. I think it would be helpful to divide the outcome into three possibilities.

1. Less than A$10 million - Dud. If Mustang achieves less than A$10 million at this auction then we can conclude that we have all been fooled and have lost most of our money. Based on all the information we have to date this result is unlikely, but it is certainly possible. Until the wining bids are added up on the 31st anything can happen. MUS might be able to recover from such an outcome, but it would be a huge grind.

2. A$10 to A$25 million - Huge success. If Mustang manages to sell anywhere between A$10 and A$25 million of rubies then it has a fantastic resource that can be scaled 10x or more over the next few years. They will have the cashflow to buy more plant and more ground and will quickly become the equal of Gemfields.

3. Greater than A$25 million -  Astronomical success! This would indicate that everyone in the world underestimated the demand for rubies and the true value of both Gemfields' and Mustang's ground except Brian Gilbertson. While I would never want to bet against Brian Gilbertson (or be between him and something he wanted), it is unlikely that this is the case.

While I like everyone else here (except maybe the non-holders) will be ecstatic if the outcome is greater than A$25 million, we should not feel disappointed with any result between A$1o and A$25 million. Any result in this range will provide MUS with the ability to scale out of cashflow and build a very valuable business over the coming years. MUS is about to take its first step, not cross the finish line.