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Another perspective, page-52

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12,455 Posts.

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14/11/17

16:09

Post #: 28781468
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Originally posted by Davisite ↑

Maybe it would help if I say what we do know.

1. CJ is not an idiot nor incompetent and is highly knowledgable about the ruby market. He has spent years talking to everyone in the industry and understands exactly what the buyers want.

2. No more specials (large high quality stones) were taken to the auction despite the overall inventory rising 20 fold over the last 6 months. This is despite the new lease being described by CJ as generating significant numbers of specials.

3. The cut specials were not taken to auction despite this being announced earlier in the year that this is what would occur.

4. The MUS graders were able to accurately grade the stones before the auction (as shown in photos of graded lots in various ASX announcements and presentations), but somehow lost the ability by the time they got to the auction. The shown lots pre-auction were high quality and red, not the pink sapphire shown at the auction.

5. The buyers were told by CJ that the auction was a ruby auction, not a pink sapphire auction with the odd small ruby thrown in. They were very disappointed.

6. The wider market was told to expect a result “north of US$100/ct” and large numbers of high quality rubies were shown in various ASX announcements.

7. Arena lent MUS $8.5 million after having Vincent check the inventory. They would not have lent this amount of money against the near worthless "pink and small” inventory taken to auction.

8. CJ spent the Arena money like a drunken sailor leaving MUS in a very precarious position financial if the auction failed.

9. MUS can not legally sell the rubies until such time as it is granted a mining lease over the new lease where the majority of the inventory came from. Rather than apply for a mining lease over the new lease (where the major of stones were extracted and the majority of sampling was performed), a mining lease was applied and granted over the old alpha site lease.

10. MUS can not convert the new lease to a mining lease unless they pay Regius US$1.5 million first. If MUS fails to pay Regius (and no doubt another large sum to the Mozambique government too) the lease returns to Regius for 2c and all debts are written off.

11. Diamond World knew the outcome of the auction 2 days in advance (to the dollar) despite it being a closed tender. Not even a conspiracy between the buyers (impossible in practice) could have resulted in this being known since the buyers could not know what bids would be accepted by MUS or not. Only a party able to accurately predict the true value of the inventory and set the reserves on each of the lots could know the outcome. Either that or those quoted in the diamond world article had access to a crystal ball.

12. CJ resigning now put the new MD in the very difficult position of having to spend significant money on a ruby leases which has “proven” to be worthless. It would be a very foolhardy MD that would commit to spending the significant money needed (and which MUS does not have) on ruby leases that have yielded such “poor” results. I doubt any would do so.

There a few ways to square all this information, but incompetence appears a very unlikely reason.

Expand

Davisite, not saying I disagree with your hypotheses, but some of your points are questionable:
1] to 8] True

9] Not correct. Non-mining concession holders can sell their rubies [whatever] after obtaining an appropriate licence. We know that MUS applied for these for the batches sent to the US & Thailand. But they would also have needed to have it for the rest, because without the license, they rubies cannot leave the country

10] They dont Pay Regius anything! The $1.5 mill is payable to the Mozambican owner SLR Mining Lda upon default. Now Regius might be "in bed" with them on this, but that is some huge extrapolation! The leases all have different local owners.

11] What would be the purpose of leaking the poor, if not accurate, info to Diamond World. I cant see any gain whatsoever!

Besides that, I cant disagree that something is just not right!! Enough smart minds spent a lot of time looking into this outfit. The final outcome just does not tally at all!

MUS Price at posting: 3.3¢ Sentiment: Hold Disclosure: Held
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