MUS started mining from their alpha deposit and found rubies. They also found some 'special stones' and announced that they were going to seek out a world class gem cutter, Meg Berry. They shouted to the globe that their sales strategy was to mine rough, and cut and polish in-house to be sold, directly cutting out the middlemen. Our MD also would post regularly on twitter about the price of other big rubies to build hype, and also said there would not be a CR as many thought there would be due to a sharp rise in SP.
Time passes beyond what the MD said it would take for the rubies to be cut and graded, with no further news which let the SP linger around 8-9c after a peak at 11c. MUS announces a CR at 7.7c to acquire a lease from Regius despite telling someone over social media there would be no CR. Announcements made it seem that the area had profitable rubies to be mined, so people were generally ok with it. After the CR, MUS announced that their original strategy was not feasible and there was a change in strategy to sell roughs. MUS plummeted to circa 3.5c.
Eventually there were small updates to inventory, but the SP did not move much, until MUS announced that they had set auction dates, and were in talks with international buyers. They also started to update their inventory regularly as well, and also held multiple interviews and presentation/roadshows around some countries. The MD mentioned we could reasonably expect north of $100/ct of rubies, and that their inventory has exceeded their initially planned 200k carats.
However, MUS was running low on cash, and sought financial aid from Arena, under a convertible notes issue over 4 tranches would lend MUS a hand (10mil) to push them onwards to their maiden auction, to generate significant cashflow for future operations. Shortly a break-in from their plant was announced with a local losing their life to protect their rubies. MUS announced that 19,000 low quality rubies were stolen.
MUS kept up their enthusiasm, the share price pushed through 10c and on it went to 20c, even with Arena converting the notes to shares and dumping them on to the market. It was absorbed well, considering Arena had a total of ~130mil shares. Ruby fever was in the air, with first sales expected to be 20mil + based on past gemfields figures, and MUS' number of carats.
The auction date draws near, and the hype continues with plans of scaling up production to 1-2MTPA. Then over the auction weekend, a 'hit piece' from diamond world entered the HC forums, and coupled with the comments from Vincent's Instagram, put traders in a shaky position. Rumours of a poor auction was in the air, and on open on the monday, MUS dropped to ~10c. It was in trading for about 1.5hours, and was then suspended.
MUS announces that their auction pulled in ~700k aud and was a disappointment due to bad grading/sorting with buyers not meeting reserve price on 15/23 schedules. They state that they will scale back upgrades for the time being and state they have 4.3mil cash on hand, plus the proceeds from the auction. They will primarily mine for the grades that the buyers wanted based on auction feedback. They also answered to ASX' suspension, saying they lodged a request for a trading halt on the monday. MUS was back to trading on the thursday.
And we arrive at this very point in time at 3.9c close on the friday. Can MUS make it to their next auction with their current finances? What happened to the original cut stones? If they were not of a high grade, why did they seek out a GIA world class cutter to cut MUS' rubies? Why weren't they at the auction? Why were our stones not graded in proper lots to be sold? Apparently grading was a mixed bag (quite literally) in grades. Where did our MD get the figure of 'north of $100/carat' for our rubies from? Why didn't we announce a final inventory way before the auction deadline so grading was not rushed? Why was grading not standardised with strict criteria? Was it not properly supervised? Why did they not hire professions to grade it? How much is our current inventory worth? What were the offers for the remaining 15 schedules? There are so many questions now, that need to be answered. There will be an AGM on 24th of Nov in Sydney I believe.
With confidence being shattered twice in the past 6 months, it is no wonder there is negative sentiment all over the forums. Where you see the company in the near future is up to you.
MUS Price at posting:
3.9¢ Sentiment: None Disclosure: Held
