Mustang Resources eyes first cash flow from world-class vanadium-graphite project in 2019
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12:33 17 Sep 2018
One of the highest-grade graphite deposits in the world with grades up to 28% total graphitic carbon.
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INVESTMENTOVERVIEW: MUSTHE BIGPICTURE
Graphite drill core samples at Caula Vanadium-Graphite Project
Mustang Resources Ltd (
ASX:MUS) is fast-tracking its world-class Caula Vanadium-Graphite Project in Mozambique, with the first cash flows targeted for H2 of 2019 from trial mining operations.
Caula represents a unique opportunity for the supply of two critical raw materials (graphite & vanadium) which are needed for the storage of energy (lithium-ion batteries & vanadium redox flow batteries), next-generation building materials (expandable graphite) and earthquake-resistant steel-rebar (vanadium as alloy).
The Caula project hosts a resource of 22 million tonnes at 0.37% vanadium pentoxide (V2O5) and 13.4% TGC (total graphitic carbon) for 81,600 tonnes of V2O5 and 2.93 million tonnes of contained graphite.
READ: Mustang Resources drilling extends graphite vanadium resource
Mustang recently completed its feasibility study drilling program on the Caula Vanadium-Graphite Project.
Mineralisation was intersected in all 34 holes and visible graphite and vanadium were visually encountered outside the current JORC resource boundaries to the east, west and south.
The strike has increased to over 850 metres from 540 metres, and the true width has nearly doubled to 430 metres, from 230 metres.
On track for cash flow in December half of 2019
A two-phased development for Caula is being modelled, based on the measured resource for both graphite and vanadium.
Mustang is on track to generate its first cash flow from Caula in the December half of 2019 through the implementation of a phase I trial mining and processing operation.
The scale and economics of this operation will be defined in the scoping study, which is due by October 5, 2018.
Graphite for an electric future
Graphite is a critical commodity for electric vehicles, used in the anodes of lithium batteries, with companies like Tesla preferring natural graphite due to lower carbon footprint and cost.
Bloomberg estimates electric vehicles would account for 28% of global new car sales by 2030, and 55% by 2040.
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Electric buses are expected to dominate the market even more decisively, reaching 84% global share by 2030.
Major car manufacturers (Renault, Volvo, GM etc) have committed to go all electric & hybrid by around 2023.
Vanadium redox flow batteries
Vanadium redox flow batteries (VRFBs) are the most efficient battery tech for utility-scale renewable energy storage.
At present only <5% of vanadium supply is used for VRFBs, which is set to grow rapidly.
It is worth noting that 3,000 tonnes of vanadium was used in batteries in 2017, twice as much reported in 2016.
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By 2025, the VRFB industry is forecasted to demand between 25,000 and 30,000 tonnes of vanadium (up to 10X more than 2017).
VRFBs require high purity (99%+ V2O5) vanadium pentoxide which very few projects can supply at scale.
Mustang has the goal for Caula to become one of a handful of global primary vanadium supply sources of high purity, battery grade vanadium pentoxide.
+500% vanadium price increase over the last two years
Vanadium’s current main use is as a steel-strengthening alloy.
China announced new policies in January 2018 requiring higher % vanadium in steel rebar from November 1, 2018 onwards.
The new policy is expected to add between 10,000 to 15,000 tonnes of vanadium demand in the short term.
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Steel rebar
Notably, vanadium demand is conservatively forecast to grow at a compound annual growth rate (CAGR) of 5.6%, reaching 133,000 tonnes in 2025.
However, forecast supply, including all idle capacity and expansion of existing primary mines, is predicted to grow at a slower CAGR of 3.7% to 111,000 tonnes in 2025.
98% purity V2O5 currently trades at US$41,690/tonne (US$18.95/pound).
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Mozambique is one of the top-rated African resource investment destinations with multi-billion-dollar oil and gas investments (Exxon, ENI, Mitsui, CNPC etc) and mining projects (Vale, Syrah, Kenmare, BHP).
The Mozambique government is highly supportive of new mining projects with no local shareholder requirements imposed on foreign investors.
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Mustang is developing an integrated vanadium-graphite flowsheet utilising simple flotation and WHIMS (wet high-intensity magnetic separation) to extract vanadium and graphite concentrates.
Metallurgical test work has confirmed exceptional quality graphite with more than 63% of cumulative proportion in large to super jumbo flakes sizes (>180 micrometres) and excellent concentrate grades of up to 98% TGC.
Furthermore, the Caula vanadium resource is hosted in a unique mica-mineral making it potentially simpler and cheaper to extract
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Share price catalysts for 2018 and 2019
Mustang is changing its name to New Energy Minerals Ltd (ASX:NXE), subject to shareholder approval at the extraordinary general meeting (EGM) to be held on October 2, 2018.
