While on the fence thinking, not knowing what to do I've listened to the posters here about the Notes being converted and agree that one reason the notes have been converted would be due to the vwap parameters, and have been doing more thinking and research to try and work out why they have actually been selling them rather than holding them as they are a hedge fund and would want to maximise any possible return. So ive spent more effort trying to work out a realistic average price of the 400k ct's MUS wish to sell at the Auction. Theres lots of funny numbers getting thrown around here i believe.
As an average selling price for all the 400k Rubies i doubt it, however i know i don't fully understand the Ruby market so it's just my opinion, i'm still trying to work out a good estimate for the upcoming Auction, i don't think it's an easy thing to forecast, due to lack of detailed information that seems to be available or i can find, but i'll throw some things out there for people to think about and maybe some better researched individuals can help me again.
Firstly we don't seem to have a rated % breakdown of the quality of the 400k Rubies MUS are going to sell at Auction so i'm assuming there is corundum in that 400k. Secondly MUS will be selling all the Rubies as rough/untreated. Thirdly MUS in same area as GEM so I will assume MUS are likely to have a similar range of quality as GEM do, however and without researching GEM alot if GEM's Rubies come from the primary source (so to speak) then we may be able to assume MUS have slightly better % of higher quality stones because MUS Rubies come from secondary smaller sources.( Rough understanding of it from what ive read, im no Geo). Aparently theres a better % of higher quality gems in secondary sources.
So what have we got to go on......
High quality Gems sold for US$688.64/ct in the latest GEM Auction compared to US$617.42/ct in June '15 Singapore representing a 11.53% increase in price.
Latest GEM Auction sold 895,848 ct's at an average of US$61.13/ct. This latest Auction seems to be what most people on here are using to guesstimate what MUS will achieve for its 400k ct's. Until and unless i'm proven wrong i think this comparison could prove to be very hazardous to use for MUS current valuation because i understand MUS will be selling basically every ruby they have found or most of them rather than a selection. I hope the 400k contains a true sample of what they are digging up so we get a true average.
The 895,848 ct's that were sold by GEM did not contain any corundum, it is also stated by GEM that that the auction offered high and commercial grade rough rubies in untreated AND treated form. This makes me think and assume the US$61.13 could be way over the top as an estimate for MUS auction.
In the updated IIR research report they say : Since june '14 GEM has had 8 auctions with an average price of US$26.67 for ALL stones.
I can only find a summary of the last five GEM auctions but the december '16 one looks like the best one for investors in MUS to compare and guesstimate expected auction revenue IMO. This auction offered rough ruby and corundum (Higher, Medium and commercial quality) which i assume MUS is offering. GEM sold 1,094,406 cts out of 1,372,145 cts offered at an average sale price of US$27.79/ct which represents a 79.8% clearance rate.
So my expectation for the upcoming MUS ruby auction is 320,000 ct;s sold at an average price of US$28 which works out to US$25,522,829 worth of sales. I'm not sure what the Auctioneers charge. I think MUS will also have to pay tax of 10% on the sale figure.
Check my data with the attached links to see where i get the info from.
Otherwise some of my assumptions may not be correct and if so please point them out to me.
http://otp.investis.com/clients/uk/gemfields/rns/regulatory-story.aspx?cid=1227&newsid=882670
http://www.miningweekly.com/article/ruby-auction-nets-54m-in-revenue-gemfields-2017-06-15
http://www.mustangresources.com.au/irm/PDF/2452_0/UpdatedIIRResearchReportAug2017
Best Wishes
