Mustang Resources (ASX: MUS) has released a maiden vanadium resource for its Caula graphite-vanadium project in Mozambique just days after reporting it was merging its ruby interests with Fura Gems (TSXV: FURA).
The maiden vanadium resource totals 22 million tonnes at 0.37% vanadium pentoxide for 81,600 contained tonnes of the mineral.
According to Mustang, the entire resource has been classified as measured, with 27,400t of vanadium found in the oxidised zone and 54,200t calculated in the fresh zone.
Mustang claims there is “substantial scope” to increase the vanadium resource through exploration.
“This is an exceptional result with over 81,000t contained vanadium pentoxide, particularly given that the entire JORC resource is in the measured category,” Mustang managing director Dr Bernard Olivier said.
The vanadium resource adds to the project’s existing graphite resource of 5Mt at 13% total graphitic carbon, with an update due soon.
“Furthermore, the potential of the project is even greater as our vanadium is mica-hosted and associated with the graphite mineralisation and potentially far cheaper to extract and recover through two simple processing steps, compared with most vanadium projects, where the vanadium is located in a complex titaniferous magnetite ore body,” Dr Olivier noted.
With the added vanadium credit to Caula, Mustang is targeting the rising demand for the material in global markets.
Vanadium currently commands around US$18.50 per pound (US$40,500/t) in 98% vanadium pentoxide form.
Mustang reported that Chinese vanadium demand surged 15% in May 2018 on the previous month as a result of steel mills preparing to manufacture higher-strength steel.
Meanwhile, 3,000t of vanadium consumption was in the vanadium redox flow batteries in 2017, which is twice as much used in 2016.
“With vanadium pentoxide prices running at more than US$40,000/t, the Caula resource translates into a highly valuable resource,” Dr Olivier said.
Moving away from rubies
Previously focused on ruby mining, Mustang has backed away from its Montepuex ruby operation to focus on its battery minerals.
As part of that strategy, Mustang agreed to a ruby asset merger with Fura earlier this week.
Under the agreement, Mustang will merge Montepuez with Fura in return for A$10 million in Fura shares.
The deal will give Mustang an 8% stake in Fura and afford Mustang exposure to the ruby market, while enabling it to focus on advancing Caula where it is targeting pilot plant production within the next 12 months.
“Both Montepuez and Caula are outstanding assets in their own rights with substantial growth prospects,” Dr Olivier said.
“But, the reality is that they don’t sit together comfortably in a publicly-listed company, where investors tend to have an interest in one or the other of these very different businesses.”
Dr Olivier pointed out the deal would still provide Mustang investors exposure to the ruby market, via an experienced and cashed up entity, with Fura owning gem assets in Montepuez and an emerald mine in Colombia.
Fura has also committed to spending A$25 million on exploration and resource definition across its expanded Montepuez asset over three years.
“The transaction will allow Mustang to focus solely on exploring and developing its Caula graphite-vanadium project, which continues to go from strength to strength on the back of strong drilling and metallurgical results,” Dr Olivier said.
Investors reacted positively to today’s maiden vanadium resource, pushing Mustang’s share price up more than 13% to reach A$0.017 in late morning trade.