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Sidney-based gemstone miner Mustang Resources’ share price on the ASX surged on Monday morning, after the company announced it had made a high-grade graphite discovery at its Caula project, in Mozambique.
“This high-grade graphite will enable us to generate a top-quality product at a relatively low cost, increasing margins and providing protection against any price volatility,” MD Christiaan Jordaan said in a statement.
Results from the first five diamond drill holes have returned grades of up to 26% total graphitic carbon (TGC).
The recent diamond holes drilled on the project have an average of 15.9% TGC within the mineralised graphitic mineralisation zone from 10 m from surface to 65.68 m from surface.
The graphite mineralisation is shallow with high grades close to the surface, including 23.2% TGC at 11 m from surface, 23.6% TGC at 12 m from surface and 22.8%TGC at 13 m from surface.
The highest TGC value recorded for this hole is 24.9% TGC at 24.44 m from surface.
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 Joint Ore Reserves Committee-compliant resource estimate.
Mustang expects to publish this estimate in the June quarter followed by an initial scoping study in August.
The company also intends to undertake a comprehensive analysis of flake size distribution and preliminary flow sheets for high-quality graphite concentrate products, aimed at confirming field observations which suggest the Caula graphite deposit contains large flake sizes.
The company’s shares closed the day up 9.64%.
One of highest-grade graphite deposits in the world
“It is already clear that Caula will be one of the highest-grade graphite deposits in the world”, said MUS managing director Christiaan Jordaan. “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”, he added. The Caula project (80 percent owned by MUS) is surrounded by Syrah Resources owned largest graphite reserve in the world. Currently, MUS is mining for diamonds near the same.
Mustang expects full metallurgical analysis by early Q2 2017. The results of which will be included in the JORC resource estimate to be released by the end Q2, which will be followed by a scoping study in August. JORC code, named after the Joint Ore Reserves Committee, is the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Resources that provides minimum standards for public reporting, involving geological, technical and economic factors.
Good news continues
MUS calls itself an “emerging gem developer” that is currently focused on the development of a “highly prospective” gem-project in northern Mozambique — Montepuez Ruby Project. The company has acquired three licenses, covering an area of 15,800 hectares, in close vicinity to the world’s largest ruby deposit, discovered in 2012 by Gemfields PLC.
High-grade graphite discovery is another positive news for company shareholders, who have experienced a nearly 300% upside on their holdings since Jan. 20, when MUS announced completion of the plant commissioning process at Montepuez and production ramp up to achieve threefold increase in output following the relocation of the plant in late-2016. In addition, the company sold its first commercial parcel of rubies and corundum to the US and expects to record first sales revenue in the first-half of 2017.
MUS is a small-cap company that now has two high quality assets (Ruby and Graphite) with multi-billion end markets. The company could be worth way more than $40 million given the quality of its reserves — its ruby and graphite projects are surrounded by the largest known reserves of those resources. However, the company is still trying to figure out the market value for its rubies, while estimating the production capacity of its reserves, so its potential is yet unclear. But it’s surely the one to keep an eye on, while waiting for the JORC resource due in a few months.
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