A buyer inspecting rubies at Mustang's inaugural rough ruby tender. Pic: Mustang

Mustang Resources is offloading its ruby project in Mozambique so it can focus on its graphite and vanadium project.

Mustang (ASX:MUS) was the world’s only listed ruby miner — but it hasn’t had a great deal of luck. A maiden auction in October last year was disappointing and knocked nearly 70 per cent from the shares.

The company subsequently moved its sales office to Thailand from Mauritius in the hopes it would do better there.

Now Mustang has decided the ruby project — in the northern city of Montepuez — would be better off with Canadian-listed Fura Gems.

The project will be merged into Fura Gems earning Mustang $10 million worth of Fura shares over 20 months.

The deal will give Mustang an 8 per cent stake in Fura.

Mustang plans to give the Fura shares to its own shareholders via an in-specie distribution following an escrow period.

But shares didn’t budge on the news.

Mustang Resources (ASX:MUS) shares over the past 12 months.
Mustang Resources (ASX:MUS) shares over the past 12 months.

Managing director Dr Bernard Olivier said the transaction was aimed at unlocking the value of the company’s ruby assets while enabling the development of its graphite and vanadium project.

“Both Montepuez and Caula are outstanding assets in their own rights with substantial growth prospects,” he 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.”

Toronto-based Fura is a gemstone mining and marketing company listed on the TSX Venture Exchange.

Fura has committed to injecting $25 million into the Montepuez project to undertake exploration and the definition of a resource over the next three years.

Mustang, meanwhile, plans to focus solely on its Caula project and expects to deliver a maiden vanadium resource and improved graphite resource in a matter of days.