Mustang Resources (ASX:MUS) exploration strategy from its Montepuez Project in Mozambique continues to pay dividends, as the company has grown its ruby inventory to 120,397 cts.
Mustang is therefore comfortably on schedule to meet its target of 200,000cts in time for its first closed bid tender in October this year.
Worth noting, rubies are the most expensive gem stone after diamonds - with fine rubies +5cts being extremely rare.
Before the 2009 discovery of the Montepuez field, supply was highly fragmented and unreliable, and was sourced from countries such as Myanmar, Afghanistan and Madagascar.
Mustang holds 193 square kilometres of highly prospective ground in the ruby field, providing the potential for a long mine life, and more discoveries.
Mining in the field can provide low-cost and high-margin operations, with Montepuez ruby deposits typically <15 metres from surface, free-digging and simple to process with potential for good in-situ grades.
Growing inventory
Mustang's growing inventory reflects in part the successful commissioning of the upgraded processing plant, as well as the discovery of a shallow secondary ruby deposit 3 kilometres south-east of the plant.
Christiaan Jordaan, managing director, commented:
"The successful commissioning of our upgraded plant and the growth in our ruby inventory should ensure we achieve a 200,000-carat inventory before October.
"This will underpin our first closed bid tender and enable Mustang to demonstrate the cashflow potential of Montepuez.
"Work is now underway to select a safe-house facility and tender location. These sites are expected to be finalised within two months."
New discovery
The latest discovery is yielding high-quality secondary rubies, and to date 8,823 tonnes have been processed for 4,445.3 cts.
This includes consistent recovery of high quality stones larger than 3cts, which are classified as "Special/Premium Stones".
Furthermore, manual test pitting along strike from the LM01 bulk sample pit has confirmed that gravel-hosted secondary ruby mineralisation is extensive with ruby-bearing gravels.
Analysis
The consistency of supply from Montepuez provides Mustang with the opportunity to deliver product into the rapidly growing ruby market.
Ruby demand is being driven from the U.S., Europe, India, Thailand and China, with prices up by over 60% in the past eight years.
The coloured gemstone market, which includes rubies, sapphires and emeralds, increased 13% in 2015.
Now as Mustang continues to swell its inventory, investors will look forward to the company's first closed bid tender in October this year.
Highlighting the pathway to market, next door neighbour Gemfields (LON:GEM) generated US$225 million in ruby sales up to December 2016 - which was all during the exploration period.