The Australian mining company Mustang Resources on Thursday announced that it has raised a loan of 8.5 million Australian dollars (about 6.7 million US dollars, at current exchange rates) to help cover the expense of developing its ruby mine in Montepuez, in the northern Mozambican province of Cabo Delgado.

According to the company’s managing director, Christiaan Jordaan, the funding arrangement marks another key step in Mustang’s growth as it ‘continues to recover high-quality rubies from its recently upgraded processing plant and ongoing artisanal development programme at Montepuez, where its total ruby inventory now stands at around 132,000 carats”.

He added, “this facility ensures we are fully funded until the first closed bid tender of our rubies in October this year and provides us with the ability to maximise the number of rubies tendered for sale in October”.

Mustang’s Montepuez Ruby Project consists of four licenses covering 19,300 hectares directly adjacent to the world’s largest ruby deposit which is mined by the London-based company Gemfields. So far, Gemfields has held eight auctions of Montepuez rubies which have generated more than 280 million US dollars between 2014 and 2017. The stockbroking firm Hartleys on 17 July released a research note which speculated that at least an equal amount of informal production may have come out of Montepuez during the same period.

Hartleys reported that since Mustang Resources established the presence of ruby bearing gravels on its licences in 2016, it has undertaken bulk sampling which has produced 8,400 carats of rubies. The research note adds that the best bulk sampling grades were found in June this year in a shallow gravel pit within a newly acquired licence. The report adds that most of Mustang’s rubies were acquired from contracted local prospectors at a cost of between two and ten US dollars a carat.

Mustang is now looking to hold its first ruby auction in October 2017, when it expects to put 200,000 carats on sale. Hartleys estimates that the auction could raise ten million US dollars.

In its conclusion, Hartleys recommends shares in Mustang Resources as a speculative buy to risk tolerant and patient investors.(Source: AIM)