Improved Mine Plan Increases Production Output ...

Improved Mine Plan Increases Production Output by 100% via staged ramp-up

Armadale Capital Plc

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Improved Mine Plan Increases Production Output by 100% via staged ramp-up

Armadale Capital plc, the AIM quoted investment group focused on natural resource projects in Africa, is pleased to provide positive results from an Improved Mine Plan produced by experienced graphite specialists BatteryLimits at the Mahenge Liandu graphite project (‘Mahenge’ or ‘the Project’) in south-east Tanzania, which is at the heart of the group’s transformation from explorer to emerging producer.

Improved Mine Study Highlights

• BatteryLimits has completed a detailed mine plan incorporating a ramp up to 500,000 tonnes of processed ore per annum after two years and to 1 million tonnes ore after four years has been completed
• The anticipated production profile has increased the average annual throughput significantly from the 49ktpa envisioned in the March 2018 scoping study, which originally delivered an NPV of $349m and an IRR of 122%
• Increased production profile is anticipated to significantly transform Definitive Feasibility Study (‘DFS’) economics currently being finalised
• The original Scoping Study was limited to just 25% of the Project’s Resource and this Improved Mine Plan continues to be based on less than 25% of the recently updated Resource over a mine life of 17 years, creating significant further upside potential
• Mine Plan results are only based upon resources in the Measured and Indicated category giving a high level of confidence
• Staged ramp up takes advantage of near surface high-grade mineralisation for the first four years and then scales up throughput in later years
• Production profile planned to take advantage of increasing demand for graphite as the Electric Vehicle market rapidly expands

Armadale Chairman, Nick Johansen, said: “We have long held confidence in the enormous commercial potential and economic value of our 100% owned Mahenge graphite project and as we near completion of the feasibility study the exceptional results received during the course of additional studies continue to reinforce this view. These results are expected to make a positive impact upon our DFS, which is nearing completion, and we look forward to updating further upon this in the near future.”

Updated Mine Production Schedule

The Improved Mine Plan brings production forward via a staged ramp-up that will initially focus on producing ore at a grade of 12-14% Total Graphitic Carbon (‘TGC’) for the first four years before averaging a grade of 9.5% TGC with a very low strip ratio as the plant ramps up to 1 million tpa. The mine plan utilises less than 25% of the Resource and includes only Measured and Indicated Resources leaving potential to expand production further. The results of a final round of metallurgical test-work are being completed at Bureau Veritas in Perth, Australia on high-grade composites of the diamond core with average grades of 14.9% and 15.6% TGC expected to be received later this month. These results will be used to confirm the flow sheet for the higher grade mineralisation. Table 1 shows the anticipated tonnes and grade as well as the annual output of the Project.

Year	Strip Ratio	Measured (Kt)	Indicated (Kt)	Ore Tonnes (kt)	TGC (%)	Con Produced (Kt)
1	3.2	237	163	400	12.8	50
2	2.8	268	132	400	13.8	53
3	3.1	500	0	500	13.4	65
4	1.7	500	0	500	12.6	61
5	1.1	262	738	1000	8.0	77
6	0.6	57	944	1000	8.4	81
7	0.8	367	633	1000	9.6	92
8	1	868	132	1000	10.3	100
9	0.6	964	36	1000	10.0	97
10	2	688	312	1000	8.6	83
11	1.2	476	524	1000	8.6	83
12	0.8	113	887	1000	9.0	87
13	0.7	263	737	1000	11.0	107
14	0.7	236	765	1000	9.8	95
15	0.7	185	815	1000	8.7	84
16	0.6	490	510	1000	9.9	96
17	0.1	434	66	501	10.3	50
	1.1	6,907	7,393	14,300	9.8	1,362

Table 1 Mine Production Profile

Further Information

Armadale’s Mahenge Project is one of the highest-grade graphite deposits in the Mahenge province, a world-class graphite province, with a high-grade JORC compliant indicated and inferred mineral resource estimate announced February 2018 of 59.5Mt at 9.8% TGC. This includes 11.5Mt @ 10.5% Measured 32.1Mt Indicted at 9.6% and 15.9Mt at 9.8% TGC.

Work to date has demonstrated the Project’s potential as a commercially viable deposit, with significant tonnage, high-grade coarse flake and near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body. A Scoping Study delivered in March 2018 has demonstrated positive project economics with significant capacity for improvement. The study was based on a throughput of 400,000tpa over a 32-year mine life and delivered a compelling NPV of US$349m and an outstanding IRR of 122% for production of a coarse flake, high-purity, high-grade graphite. Key Scoping Study findings included:

• Producing an average of 49,000tpa of high-quality graphite products for a 32-year mine life;
• The near surface nature of the deposit produced a low 1:1 strip ratio for the life of the mine;
• The Project has a low operating cost of US$408/t, based on an average 12.5% TGC life of mine grade;
• The Project has a pre-tax IRR of 122% and NPV of US$349m, with a low development capex of US$35m; and
• The maximum draw-down during the construction of the project is US$34.9m and the after-tax payback period is 1.2 years.

Since this time, incremental improvements have been successfully delivered and it is anticipated that the forthcoming DFS will have significantly uplifted economics.

Following completion of the Mahenge Mine Plan, the Company is pleased to announce that initial production start-up is planned to be considerably higher than the 49ktpa referred in the original scoping study. Furthermore, utilising a staged production ramp-up, the Mine Plan allows for significant uplift in production capacity to a total of 100ktpa. A phased production profile will initially see increased starting production figures of 52ktpa further increasing to 66ktpa in year two and to 100ktpa in year four. The original scoping study was based on average annual production of only 49ktpa.

The results have been achieved through the identification of high grade material, a high-grade starter pit with an average grade of 13.2% over four years, and a strip ratio of 2.7. After year four the grade averages to 9.5% with a low overall strip ratio of 0.7 to 1. The staged increase in production allows a dramatic increase in production without increasing the initial capex. Furthermore, there remains significant scope to further improve returns with staged expansions as the current mine plan is based on circa 25% of the total resource.

The Company also expects that a staged ramp-up will enable operating costs to remain stable as output increases, maximising the value of the resource.

Further details will be provided in the forthcoming DFS.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

**ENDS**

Enquiries:
Armadale Capital Plc Nick Johansen, Non-Executive Director Tim Jones, Company Secretary				[phone]
Nomad and broker: FinnCap Ltd Christopher Raggett / Simon Hicks				[phone]
Joint Broker: SI Capital Ltd Nick Emerson				[phone]
Press Relations: St Brides Partners Ltd Charlotte Page / Beth Melluish				[phone]

Notes

Armadale Capital Plc is focused on investing in and developing a portfolio of investments, targeting the natural resources and/or infrastructure sectors in Africa. The Company, led by a team with operational experience and a strong track record in Africa, has a strategy of identifying high growth businesses where it can take an active role in their advancement.

The Company owns the Mahenge Liandu graphite project in south-east Tanzania, which is now its main focus. The Project is located in a highly prospective region with a high-grade JORC compliant Indicated and inferred mineral resource estimate of 59.48Mt @ 9.8% TGC, making it one of the largest high-grade resources in Tanzania, and work to date has demonstrated Mahenge Liandu’s potential as a commercially viable deposit with significant tonnage, high-grade coarse flake and near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body.

Other assets Armadale has an interest in, include the Mpokoto Gold project in the Democratic Republic of Congo and a portfolio of quoted investments.

More information can be found on the website www.armadalecapitalplc.com.

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