Ann: Results of Meeting, page-4

My report from the GM - @captamazing, @Davisite, @Larkin, @The Prince also in attendance (gents please cover any key points that I missed).

Great to meet other MUS supporters for the first time (@Larkin, @The Prince). Numerous other investors were there that I have met before but don't post on hotcopper. Many read with interest though and great to meet them too.

The significant news is that the financier cannot convert notes until 21 September.

Key points from the post-vote brief:

• Transforming the company into a significant ruby supplier in a global context.
• Significant entry into global market as part of a duopoly alongside Gemfields.
• A good team of motivated individuals.
• Mauritus is most suitable location due to location adjacent to major markets - India, Sri Lanka, Asia (Hong Kong, Thailand). Looking for a zero-tax environement which is provided by free-tax zone in Mauritius. The facility has very good natural lighting which is very important for buyers viewing rubies.
• CJ going to Thailand and Hong Kong in the coming weeks to talk to buyers.
• Daily interest from buyers in Japan, Hong Kong, Thailand. Getting good industry support.
• Aggressively pursuing growth in the years to come.
• The sale in October will reduce the capital requirements (read that as self-funding from income).
• JORC resource will follow but focused on first sale and establishing presence in market. Very strong demand for consistent supply of rubies.
• There is no rough price guide or index for price guidance. Reliant on competitive tension to establish best result. If sold direct would get 60 to 70% less.
• Zero-trade zone has strict security, strict protocols for signing out parcels. Top line security measures with head of security has experience in Angola and other hotspots. Security force of 20 for run of mine production and electrified fencing around mine site.
• Focused on establishing strongest buyer group.

Questions and Answers:

1. When can the financier start converting notes?

Convertibility no earlier than 21 September. No limit on number converted. Depends on 20-trading day minimum VWAP for the day.

2. How many people do you have on the ground now and how many in the coming years?

150 people on the ground. Hypothetically with additional shifts would need up to 300 people. This includes the 49 artisinals and 2 gemologists.

Gemfields have 1000 employees.

Zero-trade zone has strict security, strict protocols for signing out parcels. Top line security measures with head of security has experience in Angola and other hotspots.

Security force of 20 for run of mine production and electrified fencing around mine site.

Additional insurance being organised for Africa.

3. Further explain the amounts of the loans to the mining operation? How are these offset against Mustang's royalty costs to Regius?

Preferential return of capital prior to minority equity holders.

Mozambique government is 6% gross royalty.

4. What proportions of gems recovered from LM01 are High Quality and Commercial? Is stockpiled material for March also from this location?

Heavily skewed to high quality. Vast majority.

5. Provide more explanation of the grading and sorting process pre-auction in terms of timeframes for activity at mine site and activity at the auction location.

Rubies are pre-graded into High Quality and Commercial Rubies at the mine. Final grading of inventory and reserve prices will be set in the final 2 weeks in Mauritius.

6. What is the production target for the April auction?

Don’t have any shutdown period anticipated. No specific date for auction other than Q2. Materials from the same deposits as the area currently being processed ( much of it will be from existing stockpile ). Board have not established a figure yet.

Note - I am assuming 150,000 carats in my analysis.

7. Behaviour of Gemfields

Busy sorting out internal issues. Moving head office from London to South Africa.

Far more demand than there is supply. Better for industry to have a duopoly.

Other:

Geologists assist and support artisinals. The artisinal operations guide exploration.

Primary deposits have been weathered and distributed. Over many kms there are many likely primary sources. Downslope and in-situ weathering creates the high quality secondary deposits that Mustang are focusing on.

Plan for JORC is to determine life on mine on the secondary deposits.

Conservatively 6 months lead time for additional equipment. Looking at 2 shifts post auction once de-risked

Medium-term plan being discussed by the board in the coming weeks.

Mining concessions are 25 years tenure renewable.

Board is generally aware of shareholder desire for simpler corporate structure …

Post-session Chat / Discussion with the group:

• Plans of 4 quarterly auctions in FY 2018/19.
• Anticipate that dividends could be paid from FY 2018/19. CJ personal view (not company view) that a payout ratio as high as 50% would be feasible.
• There was a discussion indicating that indicative cost ratio for this financial year and going forward is 50% of total revenue. @Davisite, @captamazing, @The Prince, @Larkin - Someone please clarify if this was your understanding and my interpretation is correct. If this is the case then actual costs are much lower than my estimates ( although not clear if cost ration we were given includes royalties to Regius).