Mustang Resources has halted its haemorrhaging stock price in the wake of last weekend’s horror ruby auction with a bumper maiden resource at a Mozambique graphite project known as “Caula”.

“The results firmly establish Caula as one of the highest grade graphite deposits in the world,” Mustang told investors today.

Mustang (ASX: MUS) surged as much as 36 per cent to an intraday high of 5.3c before dropping back to 4.4c, up 13 per cent, in late Monday trade.

Mustang’s shares lost two-thirds of their value last week after a ruby auction in Mauritius netted a disappointing $713,456 when only 7 per cent (or 29,463 carats) of the total 405,000 carats on offer were sold.

Mustang's share price over the past month. Source:
Mustang’s share price over the past month. Source:

Caula features an “inferred” resource of 5.4 million tonnes at 13 per cent “total graphitic carbon”  for 702,600 tonnes of contained graphite at a 6 per cent cut-off grade.

Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.

The Caula deposit – which is 80 per cent owned by Mustang – is located close to the Syrah Resources (ASX:SYR) world-class Balama graphite project.

More than 55 per cent of the fresh graphite is classed as jumbo or large flake, Mustang says.

Graphite flakes are rated by size as small, medium, large or jumbo. Bigger flakes tend to be higher in purity and attract higher prices. Battery grade is the most expensive at 99.9 per cent purity.

Mustang believes there are more potential graphite discoveries within an 18km geophysical anomaly within Mustang’s tenements.

“This result is based on just a small portion of the total target area,” Mustang managing director Christiaan Jordaan said.

“Mineralisation remains open in all directions and there is excellent potential to grow the deposit significantly with a third round of drilling, particularly along the large-scale geophysical anomaly which has been defined,” Mr Jordaan said.

Exploration drilling is scheduled to resume later this month.