Mustang Resources (ASX:MUS) is set to export a second commercial parcel of gem-quality rubies from its Montepuez Project in Mozambique.
The parcel, which comprises 25,000 carats, including four special stones of 5+ carats is expected to significantly increase the company’s sales revenue in 2017.
This stems from the continued positive results of the bulk sampling and prospecting program at Montepuez.
The success of the bulk sampling program has seen the total inventory on hand increase to 37,291 carats from 14,952 carats at the start of February 2017.
Christiaan Jordaan, managing director, commented: “The processing rates are exceeding our targets and we are delighted with the ruby recoveries.
“This has enabled us to prepare another major parcel for export, which will in turn increase our
2017 cash flow substantially.”
First parcel preparing for sale
Mustang shipped its first commercial parcel of rubies, totalling 6,221 carats, to the U.S. earlier this year which included five special stones larger than 5 carats including two 24 carats rubies.
These stones are now being prepared for sale by internationally-renowned gemstone cutter and polisher Meg Berry.
The cutting and certification of the five special-stones delivered to the U.S. at the end of January 2017 is well advanced, with at least three of the five stones to be completed and submitted with GIA for certification by the end of March.
The remainder of the stones are scheduled for completion during April, after which they will be sold to select customers in the U.S.
Background
Mustang’s flagship project is the Montepuez Ruby Project, where it is currently conducting extensive bulk sampling and exploration.
Montepuez neighbours the Gemfields’ PLC (LON:GEM) ruby concessions, the largest ruby mine globally.
Mustang’s initial bulk sampling has been successful, confirming gem quality rubies, including a number of significantly high carat stones.
An aggressive auger drilling program is underway aimed at delineating a JORC ruby resource in the second half of 2017.
Mustang also holds interests in the Save River Diamond and Balama Graphite projects, where a high-grade discovery was recently made.
Results from the first five diamond drill holes returned grades of up to 26% total graphitic carbon (TGC) at the Balama Graphite project.
Drilling and plant upgrade updates
Auger drilling is progressing ahead of schedule with 578 metres completed in the past month and a further 1,200 metres planned in the coming three months.
This will help delineate the extent and volume of prospective ruby-bearing gravels at the Montepuez Project.
Work on the installation of a new front-end (scrubber and dewatering screen) for the bulk sampling plant is well advanced, with delivery and commissioning scheduled for mid-April.
These improvements will result in the company having the potential for significant increases in processing rates.
Analysis
The second shipment has been made possible by the continued success of the bulk sampling together with the ongoing prospecting program which has seen the total inventory rise to 37,291 carats.
Most importantly, Mustang is approaching a stage where it can make evident that the bulk sampling operation success can be translated into cash flow through ruby sales.
Mustang recently achieved its target of tripling the throughput rate on its bulk sampling and it now beats that target regularly.
With plant upgrades scheduled for mid-April 2017, further potential exists for further increases in processing rates.
Mustang’s ability to go straight into large scale bulk sampling allows for early cash flows to be generated whereas most other mining jurisdictions require mining approvals which often take years to receive.
Near-term sales will enable Mustang to value its rubies and are a key input into the feasibility study.
The global market for rubies is growing rapidly and Mozambique stones are in particularly strong demand, as shown by Gemfields’ success.
Mustang shares are up 315% year to date, currently priced at $0.082.