Reposted with images.
DYOR. Not advice.
Don't MUS the train. Just 5 weeks to auction and significant maiden cashflow.
[New to Mustang? - then read this post - 6 weeks to auction ( or Mustang Resources 101), read on for my estimates of cashflow and inventory value]
On USD $200/ct, and based on current share price and Mustang forward plans, we have a potential 10-bagger from the end of 2017 and a 20-bagger from 2018! (see this post). This is supported by the announcement of strategic plans on 21 September. The anticipation of a minimum 2 auctions in 2018 and minimum 3 in 2019 may support a rapid and significant re-rate, subject to the maiden October auction outcome.
Company announcements have confirmed High Quality Ruby from Secondary Deposits which naturally trap Gem-quality Ruby in a "survival of the fittest" type of natural process.
Mustang Resources is now just under 5 weeks (only 33 days) to holding their inaugural tender that is anticipated to produce significant revenue and cashflow. There will be sales of in excess of 300,000 carats of quality Rough Ruby in Port Louis, Mauritius.
This invitation to the buyers is shown in the latest corporate presentation published to the ASX 21 September.
Mustang’s Significant Maiden Cashflow
Closed tender bids will close at 10am (MUT) on Monday, 30 October (or 5pm ADT).
This means we can anticipate an announcement of auction results to the ASX on Tuesday, 31 October, thus establishing significant maiden cashflow for the company. See slide from corporate presentation below.
For my projections of the possible cashflows see my post from 22 September. See also my post from 12 September with conservative/balanced estimates of inventory value for the first auction. The discussion within these and many other threads is worth a careful perusal to improve your knowledge of both the project and consensus on auction outcomes/cashflows.
As shown in the photo above, Mustang have commenced the process of sorting, grading and parceling the rubies.
The photo below from slide 12 of the 21 September corporate presentation shows predominately 500 carat (100 gram) parcels of rough ruby. Due to the huge growth in inventory, Mustang have hired additional gemologists to support both the exploration and mining efforts, as well as grading.
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:
- 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)
Mustang’s Market
Mustang Resources have targeted over 40 Rough Ruby buyers to attend the auction, representing key segments of the gem trade from locations including Thailand, India, Hong Kong, Sri Lanka & Europe.
Representation of major jewellery houses is also anticipated as teased by the company …
https://t.co/j2PXsnEc7i
It is also known that major jewellery houses are represented by specialist Thailand-based gem traders. Just one example:
Li Chongjie, founder and CEO of Thailand-based China Stone Co Ltd, said requests for Mozambique rubies are coming from international and US-based branded jewellery companies, with Mozambique rubies below 1 carat in size enjoying steady demand. (source).
@Amida, has been on the ground talking to Mustang’s buyers at a major Thailand Gem Fair (see this post), also extracted below:
I was fortunate enough to spent the whole last weekend at Impact Arena, spoke to as many traders as possible (who would chat to me) and learnt a great deal. In conclusion, I came away with much confidence that not only the first auction would be a success, but also the long term sustainability of this company.
They all had their opinions and particular insights but generally all were positive about Mustang, the process of this closed bid auction and the ruby trend in general.
Most of the ruby traders I spoke to will be going to the auction, and they are quietly optimistic, in that there will be plenty of suitable rubies available for their own needs. Of those that were going, all were past participants of Gemfields auctions so they know exactly what to expect, except the way Mustang grades will differ slightly from Gemfields. That matters not though as the buyers will still need to examine each parcel again regardless.
All those who are going have already had direct communication with either CJ or his marketing guy and the feedback I received was very consistent; that they all expects to bid at the auction and that they were assured there will be sufficient supply to meet the demands.
I tried to find out what their concerns were. Nothing to speak of except that they hope the sorting/grouping and grading would be accurate and consistent, which will make their examination more efficient, but also understand this is Mustang's first auction.
Mustang was only discovered recently by chance, referred to by an associate of mine. I had to learn a great deal in a very short period of time thanks to the contribution the posters here, a few very diligent ones as well. So thank you for your hard work.
This is a speculation that has a very high probability of making money that I have no doubt, just a question of how much. Peaceful weekend to you all.
Some “Smart” Money is already in …
@nevadadan, is a shareholder and Graduate Gemologist from the Geological Institute of America (see this post)
Re-rating / De-risking Activities
Next 5 weeks:
Next 3-6 months:
- Maiden JORC for the Tier-1 High Grade Caula Graphite Project expected this week and scoping study to commence immediately afterwards
- Inventory update expected approximately 2 October (based on company practice of issuing monthly updates)
- Final inventory for auction expected to be announced by 13 September (Mustang will complete the grading of auction parcels at the auction location in the 2 weeks prior to the auction)
- 27 to 30 October - Auction to be held in Mauritius ( inaugural rough ruby auction ) to generate significant maiden cashflow
Next 2-3 years:
- From slide 11 of the corporate presentation, Mustang have commenced the process of converting Ruby prospecting licenses to mining license. Given this is a somewhat bureaucratic process we can assume 3-6 months is a reasonable timeframe.
It's too early to say when further feasibility studies for the graphite will be commenced as that will depend on outcome of the scoping study.
- CY 2018
- H1 2018 - Ruby JORC ( confirm life of mine )
- Q2 CY 2018 - Second Rough Ruby Auction ( consistency and cashflow )
- H2 CY 2018 - Third Rough Ruby Auction ( consistency and cashflow )
- Completion of scoping studies for the Caula Graphite project ( I'd assume 6-9 months for this)
- CY 2019 - Minimum 3 rough Ruby Auctions ( consistency and cashflow )
Mustang - the low market-cap stock that is and will. Toot! Toot!
