Mustang Resources (ASX:MUS) has made a high-grade graphite discovery at its 80% owned Caula Project located in Mozambique.
Results from the first five diamond drill holes have returned grades of up to 26% total graphitic carbon (TGC).
Caula is along geological strike from the Syrah Resources (ASX:SYR) world-class Balama graphite project.
Christiaan Jordaan, managing director, commented: “It is already clear that Caula will be one of the highest-grade graphite deposits in the world.
“This high grade will enable us to generate a top-quality product at a relatively low cost, maximising margins and providing protection against any price volatility.”
Drill result details
A total of five diamond drill holes have been completed to date on the Caula Project.
Results include:
- 40 metres at 15.9%TGC average with multiple intersections of 24-25% TGC;
- 14 metres at 12.9%TGC average with multiple intersections of 21-23% TGC;
- 87 metres at 15.2% TGC average with multiple intersections of 25-26% TGC;
- 63 metres at 12.1% TGC average with multiple intersections of 22-25% TGC; and
- 63 metres at 11.1% TGC average with multiple intersections of 21-22% TGC.
The Caula drill core is now on its way to a Perth lab which will assess its metallurgical characteristics.
These results, combined with the assays, will be used to calculate a maiden JORC resource estimate.
Mustang expects to publish this estimate in the current June quarter followed by an initial scoping study.
Mustang also intends to undertake a comprehensive analysis of flake size distribution and preliminary flowsheets for high-quality graphite concentrate products.
This is aimed at confirming field observations which suggest the Caula graphite deposit contains large flake-sizes.
Background
The Caula project sits within Mustang’s Balama Project licence areas in Mozambique – not to be confused with Syrah’s Balama Project nearby.
Due to the successful results at Caula, Mustang has decided to name this project in its own right and the licence areas which do not form part of Caula will continue to be referred to as the Balama Project.
Mustang’s flagship project is the Montepuez Ruby Project in Mozambique, where it is currently conducting extensive bulk sampling and exploration.
Montepuez neighbours the Gemfields’ PLC (LON:GEM) ruby concessions, the largest ruby mine globally.
Mustang’s initial bulk sampling has been successful, confirming gem quality rubies, including a number of significantly high carat stones.
An aggressive auger drilling program is underway aimed at delineating a JORC ruby resource in the second half of 2017.
Mustang also holds interests in the Save River Diamond graphite project.
Analysis
Diamond drill results from Caula represent a significant discovery of high-grade graphite over extensive widths.
Grades of up to 26% TGC demonstrate potential for Caula to become a low-cost supplier to the lithium battery industry.
These results will underpin a maiden JORC resource for Mustang which will help investors better understand the value of the emerging graphite asset.
Given the project sits along strike from Syrah’s world-class project, this bodes well for the pending metallurgical results and for future development options given the infrastructure required by Syrah.
Syrah’s project is forecast to produce flake graphite at a cost of circa US$300 per tonne to be sold into a market priced at US$600-1,200 per tonne.
Evidence already suggests that Caula is both a large and high-grade deposit with graphite mineralisation starting at shallow depth in the oxidised zone near surface.
Further updates regarding the drill core analysis will be highly anticipated by the market.
Mustang shares have climbed four-fold in 2017 and last traded at $0.095 per share.