Diamond drilling on Mustang’s 80%-owned Caula license returned grades up to 26% total graphitic carbon.

Assays included 40m at 15.9% TGC; 87m at 15.2% TGC; and 14m at 12.9% TGC, with results including multiple 1m intersections of more than 20% TGC.

The company said the width of the intersections suggests that Caula is a large and extremely high-grade deposit with mineralisation starting near surface.

The average mine feed grade for Syrah’s Balama is 16.2% TGC. The $US200 million project is currently under construction.

Core has been sent to SGS in Perth for metallurgical analysis and flowsheet development.

The results of this work will underpin a maiden resource to be released in the June quarter.

A scoping study will follow in August.

Mustang managing director Christiaan Jordaan said Caula was set to be a tier one graphite project.

“It is already clear that Caula will be one of the highest-grade graphite deposits in the world,” he said.

“The high grade will enable us to generate a top-quality product at a relatively low cost, maximising margins and providing protection against any price volatility.”

Caula’s 20% owner is a local partner which is free-carried only until the end of the exploration program.

Mustang’s primary focus has been ruby production from its Montepuez project in Mozambique, just 8km from Gemfields’ mine.

First ruby sales are expected in the June quarter.

Mustang has been a star market performer this year, its shares opening the year at just A2c and rising as high as 11c last month.

A recent research report from Adelaide’s Baker Young Stockbrokers gave Mustang a 16c price target.

The stock was up by 15% to 9.5c this morning.