Christiaan Jordaan: Presenting at the 121 Conference in New York on the 6th and 7th of June, Diggers and Dealers in August, and Smallcap Investment Conference in Melbourne in October. The top three messages for investors are: 1) Operations are much stronger than they were at the start of the year with the installation and commissioning of the upgraded 250 tonnes per hour processing plant — processing rates are up 580%; 2) Exploration fieldwork has defined widespread mineralisation and multiple ruby deposits including in newly acquired licence 8245L where ruby deposits are very near surface; and 3) Our market understanding is much more advanced and we have defined a clear, proven sales strategy of selling stones at rough tender with the first one scheduled for October 2017.

RS: Fellow Montepuez ruby producer Gemfields is marketing gem stones from its operations in Singapore next month. The company’s CEO [Ian Harebottle] has said recent gem auctions generally have reinforced a belief that global demand for coloured gemstones continues to rise, particularly for those sourced from acceptable locations and via the right channels. What positives signs are you seeing in coloured gemstone markets, and the market for rubies in particular, and what effects on pricing are you seeing?

CJ: We share Gemfields’ optimism and are seeing very strong demand from our rough customers based in Thailand, India and Hong Kong. From our market engagements we see strong and fast growing demand for consistent ruby supply, especially for China and broader Asia but also from the USA. Pricing for wholesale cut Mozambique rubies – according to the Gemguide published prices – is up quarter after quarter and we expect to see continued growth in prices for rough rubies this calendar year.

RS: What expectations do you have around the Singapore marketing/sales activity?

CJ: I cannot really comment on this question as we don’t have any Singapore marketing activity— Gemfields host their auctions there but no buyers are actually based in Singapore. We have not decided where to host our tenders/auctions but it should be noted that most rough buyers are from India, Thailand and Hong Kong.

RS: Mustang is building its Montepuez ruby stocks to an anticipated 200,000 carats or so for auction/tender sales in October this year. What are the indications at this stage of the potential value of the 75,000cts currently in your inventory, and the projected 200,000cts later in the year?

CJ: It’s too early to comment on this as we are still developing our rough grading system. It should be noted, however, that Mustang focuses its bulk sampling on secondary deposits which host a much higher percentage of gem-quality rubies than primary deposits which have a high percentage of commercial rubies. 

RS: What has/did your US market research tell you about competing in the market for cut/polished gems, versus rough?

CJ: Our research went wider than just the USA and taught us that it’s not a good idea to compete with our bulk rough buyers and customers with the sales of cut gems and also very importantly that the cashflow model for rough sales through competitive tenders/auctions matches with our profile of a mining company— cash on receipt for rough as opposed to 6-to-12 months payment terms for cut stones.

RS: You were expecting to ship about 40,000cts of rubies from Montepuez to Thailand in the middle of May. Did that shipment go ahead/what is the significance of that parcel of stones recovered via the artisanal miner development program?

CJ: Stones in the parcel come from both the artisanal miner development program and the bulk sampling.

RS: Mustang’s upgraded process plant – taking steady-state throughput to about 1,500t/day (380,000tpa) - has been recommissioned?

CJ: Yes. The upgraded plant is designed to achieve a feed and throughput rate of 250 tonnes per hour and we intend to initially operate the plant for one seven-hour shift a day. This enables the company to achieve or exceed its daily total processing target, which represents a 580% increase in the throughput rates recorded before the $1 million plant upgrade was undertaken. It also means there is scope for further substantial increases in processing rates by operating additional shifts in the future.

RS: At full commercial production rates what impact does this work have on production costs/recovery levels?

CJ: Recovery rates are expected to increase significantly due to marked increase in efficiency and processing rates.

RS: What is the latest on resource exploration/development, upcoming reporting?

CJ: Our first-phase auger drilling program has been completed using a 400m-by-200m spacing drill grid over several key areas. The main objective of the phase 1 drilling was to assess the distribution, depth and thickness of gravel horizons within high priority target areas to enable continued evaluation of the near-surface gravels utilising Bushman Jigs and the ongoing bulk sampling program. The auger drilling has demonstrated that licences 4143L and 5030L host extensive gravel deposits that have the potential to generate significant new ruby discoveries. High-priority areas have had additional manual pitting completed within them.

Work is ongoing to build out on this and the company will report on progress periodically including inventory growth. 

RS: You’ve talked about gaining the environmental permitting for licence 8245L and the potential for material sourced from the area to favourably impact production, etc. What can you say about the area and its ongoing development potential?

CJ: This area hosts a large number of high priority and high quality targets where shallow high grade ruby mineralisation has been proven by artisanals actively recovering gems. Environmental permitting has been completed and bulk sampling work starts in the next weeks.