London — The Australian mining company Mustang Resources on Monday announced that it has changed its sales strategy for rubies from its mine in Montepuez, in the northern Mozambican province of Cabo Delgado.
This follows a hugely disappointing ruby auction that the company held last November. The company had hoped to raise over seven million US dollars, yet only managed to sell 713,456 dollars worth of stones.
Prior to the sale, Mustang had confidently announced record production at its mine and strong results from its artisanal miner development programme (where the company buys gems from local miners). However, buyers attending the auction in Mauritius expressed disappointment at the poor quality of the stones.
As a result, Mustang has decided to close its sales office in Mauritius and open a sales and marketing office in Thailand.
According to the company, this is intended to generate a regular flow of cash from its bulk sampling activities in Mozambique.
The company's managing director, Bernard Olivier, explained that “this approach will allow us to place an accurate value on our existing inventory and enable us to assess the project's longer term economic outlook”.
The office in Mauritius was designed to enable the company to undertake large scale auctions as are carried out by its very successful neighbours in Cabo Delgado, Gemfields. However, it is clear that the stones found by Mustang were nowhere near the quality found at Gemfield's Montepuez Ruby Project.
Mustang's announcement makes clear that “the new initiative is very much about right sizing the company's business structure to fit with the group's existing early stage smaller production”. Thus, the facility in Thailand is markedly smaller and lower cost and more in line with the company's emphasis on project and ruby market development and research.
Mustang's Montepuez Ruby Project consists of four licenses covering 19,300 hectares directly adjacent to the world's largest ruby deposit, mined by Montepuez Ruby Mining Ltd, which is 75 per cent owned by Gemfields.