Ruby + Graphite, page-6

When we acquired ruby asset, the company quoted,

- Average price: 350$/ct as realistic and conservative
- Average grade for secondary deposits: 1.91ct/ton

ASX announcement on 22 October 2015.

a. Ruby Value ($/Ct).
The first important factor to note is the very large value per carat difference between the primary ruby
and the much higher value secondary (alluvial) ruby. This is clearly seen in the actual results
published by Gemfields for its auctions to date (see Table 1) and varies from approximately 4 $/Ct
for the lower quality primary ruby/pink corundum/pink sapphire to between 617 and 689 $/Ct for
secondary derived high quality ruby. This quality discrepancy between the primary (amphibolite
hosted) ruby and secondary (alluvial hosted ruby) is also clearly seen in Figures 5 and 7. The current
high potential economic ruby targets are thus alluvial hosted which is also the primary exploration
and bulk sampling targets of the MM team.
The value of 350 $/Ct used in the proposed bulk sampling/exploration potential forecast by MM is
therefore realistic and conservative in comparison to the higher value alluvial rubies auctioned to
date by Gemfields.

b. Grade
For the calculation of the MM licences’ exploration targets a value of 35 Carats per 100 cubic metres
for their targeted bulk sampling production has been forecasted. For comparative purposes and
assuming a specific gravity of 1.91 (Gemfield’s average for Secondary Material) this equates to
7g/191 tons (7 grams for every 191 tons) or 0.036 g/ton. This is highly conservative in comparison to
Gemfield’s proven 3.1 g/ton for alluvial material or 15.3 cts/ton, (see SRK Gemfields CP Report,
2015 reflected in Table 2 below.