Ruby miner Mustang Resources has put on hold a planned upgrade for its Montepuez project after netting a disappointing $713,456 from its maiden auction in Mauritius.

As reported yesterday by Stockhead, Mustang (ASX:MUS) sold only eight bid schedules — comprising multiple lots — from a total of 21 schedules offered at the auction, which took place over the weekend in Port Louis, the capital of Mauritius.

Mustang’s shares plummeted by almost a third on Monday before they were suspended from trading pending a response to an ASX share price and volume query.

Mustang last traded at 10.5c, down from 15c on Friday. The shares have lost 47.5 per cent from their 52-week high of 20c on October 16.

The eight bid schedules consisted of 29,463 carats and were sold at prices ranging from $6 a carat to $1944 a carat.

The sold carats represent only 7 per cent of the total 405,000 carats Mustang had on offer at the auction.

Mustang’s inaugural rough ruby tender in Port Louis, Mauritius

Total sales proceeds received by Mustang from the sale was $713,456 at an average price of $24.21 per carat.

As Stockhead reported yesterday, the remaining 13 bid schedules offered for sale did not reach reserve prices and will be held over for the next tender scheduled for mid-next year.

The lacklustre result has forced Mustang to delay timing around an upgrade to a processing plant at Montepuez to increase the available processing capacity of the project from 432,000 tonnes a year to 2 million.

The new plant and upgrades to the existing plant were expected to be installed and commissioned by July 2018, however this has been pushed back.

No new timing for the upgrade has been provided by Mustang.

Mustang’s shares dropped by a third after the auction. Source:

Mustang believes the delay will reduce costs and allow the company to focus on accumulating more rubies in each of the most desired categories ahead of its next tender targeted for mid-2018.

Mustang’s shares dropped by a third after the auction. Source: Investing.comMustang’s managing director Christiaan Jordaan said while the tender results were disappointing, the company had gathered valuable market intelligence for future tenders.

“The feedback from buyers and the results make it very clear that we need to offer increased quantities of rubies in each category,” he said.

“This is because buyers and their jewellery customers need to be certain that there are enough similar rubies available to enable them to produce the required number of any particular jewellery item.

“The tender process has also enabled us to identify those categories which are in high demand.”

A buyer inspecting rubies at Mustang’s inaugural rough ruby tender. Pic: Mustang

Mr Jordaan said Mustang would now focus on building the inventory required by the market.

Mustang would process 96,000 tonnes of existing surface stockpiles of ruby-bearing gravels in the coming months.

Pitting and exploration activities would now focus on areas identified to host the most sought-after rubies.

Mustang believes there is considerable potential to identify additional high value rubies within its 193 sq km project area, which lies within the Montepuez ruby field.

Mustang had an estimated $4.3 million cash on hand at the end of October. This excludes the $713,456 gross ruby sales.