28 days to auction (20 trading days)

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We are now just 20 trading days to the commencement of the auction on 27 October in Port Louis Mauritius. The auction will conclude October 30 with last sealed bids submitted at 10am Mauritius time. I'm expecting auction results to be announced to the ASX on Tuesday 31 October.

My expectations for the next few weeks are:

• an inventory update early next week ( they tend to announce them monthly )
• confirmation of final inventory in 2 weeks ( Mustang will have shifted all inventory to Mauritius to complete final grading, parcelling and setting of reserve prices )
• we may go into a trading halt on the 27th of October ( although auction viewing won't commence until after close of ASX trading )

Read the following to get up to speed very quickly:

• Corporate Presentation from 21 September ( inventory to exceed 300,000 carats )
• 5 weeks to auction
• Company announcement 12 September ( mustang on target to offer more than 300,000 carats )
• My cashflow projections
• My estimates of inventory value
• My analysis of hypothetical scenario involving dividends

It also also very important that you understand Mustang are focusing on the secondary deposits where the high-quality rubies collect in a survival of the fitest scenario. See also this thread.

Videos

The following videos are recommended watching:

• Managing Director (Chritiaan Jordaan - CJ) video interview 27 September
• CJ expectations of inventory value ( July ) - anywhere north of USD $100/ct
• Vincent Pardieu on the ground in Mozambique ( Vincent is from the Geological Institute of America and was a consultant for Mustang in developing the grading system they will use at auction. He also conducted due diligence on behalf of Mustang's financier )

Mustang’s 18-month Strategic Plans

In their latest corporate presentation Mustang have announced their 18-month strategic plans. Some significant points that will support re-rating of the share price in the next 1 to 12 months:

• 27-30 October 2017 - maiden rough ruby auction in Port Louis, Mauritius
• Scale-up of the plant from 1 Mtpa to 2 Mtpa capacity
• CY 2018 - hold a minimum 2 rough ruby auctions
• CY 2019 - hold a minimum 3 rough ruby auctions
• Establish a minimum 10-year JORC to support a minimum 10 year life of mine
• Double the landholdings (through access to tenements held in related companies)
• Implication (i.e. not confirmed) of delivering dividends to shareholders (see below and my hypothetical analysis here)

Graphite

A JORC for the Graphite is due today, however this will be without a scoping study so I am not expecting a significant change to the share price on this announcement. It's the rubies that have the true value for Mustang in the short to lontg-term due to the high profit margins involved. The graphite project will take a minimum of 3 years to develop. Let's see what eventuates today. JORC was due this month ...