ASX-listed emerging miner, Mustang Resources, is developing two projects – the Montepuez ruby and Caula graphite and vanadium projects in northern Mozambique.
While Montepuez steadily moves from exploration into production, it is the high-grade Caula project that has become an exciting focus for the company as it fast-tracks its development into production by mid-2019 says CEO, Dr Bernard Olivier.
This article first appeared in Mining Review Africa Issue 7 2018
Thanks to revenue-generating Montepuez project, which shares a tenement boundary with the Caula project in the pro-mining jurisdiction of Mozambique, Mustang Resources is able to fast-track the development of Caula owing to the project’s location, already established infrastructure and the company’s proven ability to operate in northern Mozambique.
While the development of Caula is the company’s main focus, bringing the Montepuez project into full commercial production will be carried out simultaneously.
The 143 km2 Montepuez ruby project lies adjacent to the world’s largest ruby deposit, held by AIM-listed coloured gemstones miner Gemfields.
Since the start of project development in early 2016, Mustang Resources has made significant progress in exploration, bulk sampling and ruby recovery - and the project is in an advanced exploration stage.
Mustang Resources’ near term strategy at Montepuez is to systematically build a resource base and generate revenue whilst doing so.
The company is under way with significant capacity upgrades at its ruby processing plant, which started in June 2018.
The upgrades will double the plant’s processing capacity and are expected to significantly reduce processing costs per carat through the installation of an additional rotary pan and additional plant optimisation work.
The company has also commenced geological and resource modelling based on the comprehensive exploration and bulk sampling to date, with the aim of establishing a maiden JORC resource for the Montepuez project by the end of the year, followed by commercial-scale mining in the first half of 2019.
As a means to generate revenue, Mustang Resources will continue sell the rubies it has produced from its bulk sampling process, of which it currently holds 329 309 carats of inventory, via its sales and marketing office which it opened in Chantaburi, Thailand in March 2018.
This sales process will also serve as an opportunity for the company to undertake market research and establish strong relationships with major local and international ruby customers.
“It is our intention to generate regular revenue by selling rubies in volumes corresponding to the project’s initial limited production, explains Olivier, noting that it will only resume the auctioning of its rubies once it has entered commercial production and once it has a better understanding of the quality distribution within the resource as well as the price per carat within each ruby quality category being produced – namely the higher, medium and lower quality ruby categories.
Caula takes centre stage
The Caula graphite and vanadium project, which hosts a maiden JORC inferred resource of 5.4 Mt at 13% TGC (total graphite content) and associated high grade vanadium up to 1.9% vanadium oxide, is located along strike from ASX-listed graphite peer Syrah Resources’ Balama graphite project in Mozambique.
Olivier, who joined Mustang Resources as MD in January 2018, was immediately intrigued by the potential of Caula, having worked on a Tanzanite operation in Tanzania (which was borne out of an old graphite mine).
“While graphite is a relatively common commodity, quality graphite with a high TGC and a good flake size distribution that is larger than 180 micron is more difficult to find. The Caula graphite project has both of these aspects – a high TGC of +13% at a 6% cut-off,” says Olivier, noting that this is almost identical to the Balama project, which suggests that it may be an extension of Syrah Resources’ graphite resource.
What’s more is over 60% of the Caula resource contains a graphite flake size of over 180 microns (larger than that of Syrah Resources) and can be classed into the large, jumbo and super jumbo categories.
With potential to supply half of its product into the lithium ion battery market, and the other half into the fire retardant market – both of which have massive future growth potential, Olivier believes it is this graphite basket that sets Caula apart from many other projects that contain mainly finer graphite content.
A scoping study of the Caula project is currently under way by Johannesburg-based engineering consultancy Bara Consulting to consider the merits of a full commercial-scale graphite and vanadium project with production levels reflective of an increase in mineral resources.
Mustang Resources is also underway with a number of metallurgical test work programmes on both the graphite and the vanadium.
Unique yet compelling economics
Initial test results have highlighted the potential for Caula to be a low-cost graphite supplier to the fast-growing expandable graphite and lithium battery markets while the high grade of Caula graphite will enable Mustang to generate a top-quality product.
Additionally, results indicate that the project also has a strong potential to concurrently produce high-value vanadium products given the structural shift in the vanadium market.
What makes the project most attractive from a processing standpoint is the ease of processing which allows for both graphite and vanadium to be extracted simultaneously via a floatation process.
Olivier explains that predominantly mica-hosted vanadium, unlike magnetite-hosted vanadium, can be extracted via floatation with far less upfront crushing and grinding and can therefore be extracted in the same floatation-based process as the graphite.
“The other upside of mica-hosted vanadium is that the vanadium doesn’t have to be roasted at as high a temperature as titaniferous magnetite-hosted vanadium, which tends to be more impure and requires higher roasting temperatures.
“The benefit of all of this is that we can extract the vanadium together with the graphite at a much cheaper cost than typical titaniferous magnetite-hosted vanadium,” Olivier notes.
Mustang Resources will be processing the graphite and vanadium using a unique in-house designed process flow sheet, developed by Dr Evan Kirby – a metallurgist and consultant with over 40 years’ experience in the mining sector in both graphite and vanadium – who recently joined Mustang Resources as a non-executive director.
The process will entail crushing of the ore, which contains both graphite and vanadium, a WHIMS process will be used to extract the paramagnetic vanadium, cross flotation and hydro flotation is used to float off the graphite while the remainder of vanadium is floated off using mica floatation circuit delivering two final product streams of graphite and vanadium respectively.
Once the scoping has been completed, Mustang Resources will subsequently begin a definitive feasibility study (DFS), which will build on the metallurgical testing conducted in mid-December 2017 and March/April 2018, and will serve as a basis for project development and financing.
Trial mining to help determine full-scale project design
Following a strategic review in March 2018, Mustang Resources took a decision to begin trial mining and processing at Caula by mid-2019, as a means to generate detailed technical information for use in formal feasibility studies of full-scale project development.
It will also provide product samples for the evaluation by off-take partners, the evaluation of marketing arrangements and the generation of revenue from the sale of the graphite and vanadium products.
The trial mining development strategy is based on a robust, low-cost mining operation and construction of a processing plant capable of handling an approximately feed of 100 000 tpa of ore producing high-grade graphite concentrates as well as vanadium concentrate.
“Our dual strategy to initially build a small trial plant followed by a full-scale plant will result in a fast-track path to production and revenue generation, while also proving that we can successfully extract our graphite and vanadium, which sets us in a league of our own when it comes to taking our product to market,” says Olivier.