MRI - Production Update, Offtake and Completion...

MRI - Production Update, Offtake and Completion of Financing

Armadale Capital Plc

Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company

21 February 2014

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

MRI - Production Update, Offtake and completion of financing

Armadale Capital Plc (“Armadale” or the “Company”), the AIM quoted investment company focused on natural resource projects in Africa, notes today’s announcement by Mine Restoration Investment Limited (“MRI”), in which it has a 40% equity interest.

Highlights

• Agreed commercial terms for the sale of coal fines produced at its coal fines processing and briquetting project at Vaalkrantz, South Africa (‘the Coal Processing Plant’); and
• Completion of a financing by MRI, including:
  • Placement to raise ZAR2.5m, before expenses; and
  • Convertible loan agreement with Armadale for a further ZAR2m.

Justin Lewis, Director of Armadale commented: “I am pleased to see the continued progress of MRI’s coal fines processing and briquetting project. MRI has today announced it has agreed commercial terms to supply processed coal fines, which are being produced from the Coal Processing Plant, which will provide an additional cash flow stream. At the same time MRI continues to have discussions and trials with other potential customers for the coal briquettes it is also able to produce.

“Secondly, Armadale has entered into a loan agreement with MRI, providing a further R2m of capital (c£110,000), which together with existing loans is convertible into new MRI shares at a 50% discount to the 30 day VWAP. The additional funds will provide working capital and enable MRI to continue its discussions with a view to increasing MRI’s equity interest in the Coal Processing Plant.”

MRI Production and Offtake

As announced on 17 January 2014 by MRI, the Coal Processing Plant has been fully commissioned and is capable of commencing commercial operations. The Coal Processing Plant processes coal fines at Keaton Energy Holdings Limited’s Vaalkrantz Colliery (‘the Mine’) from existing coal fines dumps at the Mine and coal fines that are discarded from the washplant at the Mine. MRI has the right to process, at no initial cost, all the discarded coal fines at the Mine. The Coal Processing Plant is able to initially process these coal fines, thereby upgrading the quality of the coal, before briquetting the coal and producing a saleable product.

The Coal Processing Plant is currently testing the briquettes with potential customers, and identifying areas of optimisation. In addition, the Coal Processing Plant is currently processing coal fines from the existing fines dumps at the Mine, to produce a washed product. Processed coal fines can be produced at less cost to MRI than briquettes and will provide an alternative revenue source for the Company in addition to the sale of its briquettes. The Company has agreed commercial terms with Keaton Energy, which has a first right of refusal for all products from the Coal Processing Plant, and will commence sales to them before the end of the month.

Loan to MRI

Armadale has entered into a further loan agreement with MRI, extending its current loans by ZAR2,000,000 (c£110,000) for an aggregate amount of ZAR3,179,047.22 (“Armadale Loan Facility”). The loan pays interest at the South African Reserve Bank Prime Rate and is repayable 12 months from advance.

The Armadale Loan Facility includes a conversion option whereby Armadale may, at its election, convert the Armadale Loan Facility into MRI shares at a conversion price of 5 cents per share, being a 50% discount to the 30-day Volume Weighted Average Price (“VWAP”) of MRI. The maximum number of new MRI shares to be issued in terms of the Armadale Conversion Option is 63,580,940, amounting to a further 8.13% of the issued share capital of MRI on a fully diluted basis.

A full copy of the MRI announcement can be found at www.minerestoration.co.za

**ENDS**

Enquiries:

Company

Justin Lewis, Director [phone]

Charles Zorab [phone]

Nomad and broker: finnCap Limited

Stuart Andrews/Christopher Raggett [phone]

Press relations: St Brides Media & Finance Ltd.

Susie Geliher/Charlotte Heap [phone]

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

Notes

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

Armadale holds the right to an 80% interest in the Mpokoto Gold Project in the Democratic Republic of Congo. Armadale are focused on proving up the resource potential of Mpokoto with a view to commencing commercial gold production in 2015.

Armadale also holds approximately a 40% interest in Mine Restoration Investments Ltd, a South African listed company, which aims to develop profitable operations within the South African mining industry through its coal briquetting operation in KwaZulu Natal and acid mine drainage technology in the Witwatersrand basins.

In addition, Armadale has a small portfolio of listed investments which are focused on gold production and exploration. The Directors continue to maintain an active acquisition strategy and will review investment opportunities that they believe have the potential to be accretive in terms of shareholder value.