Mustang Resources : Caula Confirmed as Tier-1 Project -Graphite Assayed as Jumbo

X

27 July 2017

Mustang Resources Ltd ABN 34 090 074 785 ASX Code: MUS

Current Shares on Issue: 565,618,436

Market Capitalisation:

$28.28M as at 26 July 2017

Ian Daymond Chairman

Christiaan Jordaan Managing Director

Cobus van Wyk Director

Peter Spiers Director

• Metallurgical tests have produced high-grade concentrates (>95% TGC) and exceptional recoveries (96% recovery from fresh rock composite sample) from the Caula Graphite Project
• More than 55% of the fresh graphite assayed has been classed as Jumbo and Large Flake (46% classed as Jumbo and Large Flake for fresh and oxide composites combined)
• Tests were conducted using a simple, conventional flowsheet processing samples with ~13% Total Graphitic Carbon (TGC) head grade
• Previously announced diamond drilling at Caula has returned outstanding results with intersections of up to 26% TGC
• Results demonstrate Caula's potential to be a low-cost supplier to the expandable graphite and lithium ion battery industries
• Results will underpin maiden JORC Resource scheduled for release in late August 2017; scoping study to commence immediately thereafter

  Mustang Resources Ltd (ASX: MUS) is pleased to announce that it has received strong results from initial beneficiation testwork conducted on both oxide and fresh samples taken from its 80 per cent owned Caula Graphite Project (Licence 6678L).

  The Caula project is located along strike from Syrah Resources' (ASX:SYR) world-class Balama graphite project in Mozambique.

  These results are based on non-optimised process testwork with scope for further optimisation through a coarser initial grind size and increased preservation of large and jumbo flakes in the intermediate processing stages.

  Samples were compiled from quarter diamond drill core samples collected during the recent resource drilling campaign.

  The testwork flowsheet utilised on the fresh sample comprised an initial coarse grind to 0.71 mm, followed by a series of flotation and regrind stages, and achieved an excellent TGC recovery of 96%. The oxide sample achieved a TGC recovery of 87%.

  The TGC recoveries of both samples are expected to improve with:

• Further flowsheet optimisation.

• Recycling of intermediate tailings streams during locked cycle testing. Current testwork was carried out under open circuit conditions with reported recoveries excluding graphite from intermediate tailings streams.

  High recovery of jumbo and large flake (>180 µm or +80 mesh) was achieved for both the fresh (56%) and oxide (38%) material. Concentrate results for premium flake products are presented in Table 1. Fresh and oxide overall concentrate grades were 95.7% and 95.9% respectively.

  Mustang Managing Director Christiaan Jordaan said the latest results confirmed that Caula was a Tier 1 graphite project. "Not only does Caula host extensive high-grade graphite mineralisation, but preliminary metallurgical testing demonstrates that it also has more than 55% large and jumbo Flakes in the fresh ore." Mr Jordaan said. "These results highlight the potential for Caula to be a low-cost graphite supplier to the fast- growing lithium battery and expandable graphite industries." Table 1: Concentrates from Fresh and Oxide Grade Composites

  Graphite Product	Size Fraction	Fresh Composite			Oxide Composite
  		Mass	TGC	TC	Mass	TGC	TC
  	µm	%	%	%	%	%	%
  Jumbo Flake	300	23.8%	97.90	98.00	13.2%	97.20	97.50
  Large Flake	180	31.2%	97.26	97.46	24.6%	96.19	96.69
  Medium Flake	150	9.9%	97.30	97.60	7.6%	95.90	96.50
  Fine Flake	75	22.5%	96.07	96.41	43.2%	94.85	95.62

  1: -106 µm product from >150 µm concentrate is all assumed to be -106+75 µm

  The head grades of the samples tested (which are representative of the zones in which they were drilled) are well above the average of other premium flake deposits in the East Africa region. This puts the Caula project in a unique position of hosting both high grade, shallow graphite as well as exceptional flake size distribution, recoveries and concentrate grades.

• Oxide Sample Head Grade = 12.7% TGC

• Fresh Sample Head Grade = 13.3% TGC

The drill hole intervals sampled to create the oxide and fresh composites are shown in Table 2

All TGC concentrate assays quoted were determined using the double LOI method. All TGC head assays quoted were determined using a combination of acid leach and ELTRA total combustion furnace. All TGC calculated head assays from combined metallurgical test products were within experimental limitations of the assayed head grade.

Mustang is excited by the prospect of developing a low cost high grade graphite product. The high head grade bodes well for the upcoming scoping study as it indicates that a smaller process plant (lower CAPEX) will be required to generate a similar final product output than other lower grade deposits in the region.

Table 3 below highlights the advantages of the Caula Project against other East African Peers. To have the deposit located in the mining friendly country of Mozambique improves the prospect of developing this deposit into a mining operation.

JORC Resource & Scoping Study

MUS is currently completing its maiden JORC resource statement which it expects to release by September 2017.

The maiden JORC resource statement will underpin a scoping study for the development of the Caula Graphite Project, to be prepared by Wave International Pty Ltd ("Wave") in collaboration with Independent Metallurgical Operations Pty Ltd ("IMO"). Wave is a highly-experienced resource development consultant working extensively in the battery storage sector across commodities such as Lithium, Graphite, Cobalt and Vanadium, and with specific expertise in the development and delivery of projects throughout Africa. IMO is a specialist metallurgical consultant with significant processing experience and expertise in graphite, having developed graphite flowsheets for numerous other African graphite projects.

The scoping study is expected to commence in August 2017.

For and behalf of the Company. Christiaan Jordaan

Managing Director

FOR FURTHER INFORMATION, PLEASE CONTACT:

FORWARD-LOOKING STATEMENTS:

This document may include forward-looking statements. Forward-looking statements include, but are not necessarily limited to the Company's planned exploration program and other statements that are not historic facts. When used in this document, words such as "could", "plan", "estimate", "expect", "intend", "may", "potential", "should" and similar expressions are forward-looking statements. Although the Company considers that its expectations reflected in these statements are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements.

COMPETENT PERSON'S STATEMENT:

Information in this report that relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Johan Erasmus, a Competent Person who is a registered member of the South African Council for Natural Scientific Professions (SACNASP) which is a Recognised Professional Organisation (RPO) included in a list posted on the ASX website. Mr Erasmus is a consultant to Sumsare Consulting, Witbank, South Africa which was engaged to undertake this work. Mr Erasmus has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined by the 2012 Edition of the Australasian Code for Reporting of Exploration Results. Mr Erasmus consents to the inclusion of the data in the form and context in which it appears.

The information in this release that relates to metallurgical test work is based on information compiled and / or reviewed by Mr Peter Adamini who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Adamini