Strategic Financing & Corporate Update

Strategic Financing & Corporate Update

Armadale Capital Plc

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

27 February 2019

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

Strategic Financing & Corporate Update

Proposed Director Appointment & New Joint Broker

Armadale Capital plc (LON: ACP) the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce a strategic financing and corporate update including a proposed director appointment and the appointment of a new joint broker.

Highlights:

• Completion of a strategic financing raising £795,275 through a placing and subscription of 72,297,728 new ordinary shares (“Financing Shares") at a price of 1.1p per share to support the completion of the Definitive Feasibility Study for the Mahenge Liandu Graphite project in Tanzania;
• Each Financing Share has an attaching warrant to subscribe for a further new ordinary share at a price of 2.2p with a life to expiry of three years from admission of the Financing Shares (72,297,728 "Financing Warrants”);
• Proposed appointment of Paul Johnson, former CEO of natural resource investing company Metal Tiger plc onto the board of Armadale, in connection with the strategic financing (subject to completion of standard new director due diligence); and
• SI Capital Limited to be appointed as a new joint broker to the Company with immediate effect following their significant contribution to the strategic financing

Nick Johansen, Director of Armadale said: “The strategic financing announced today provides the necessary capital to secure the completion of the Company’s key Definitive Feasibility Study for its Mahenge Liandu Graphite project and will bring Armadale to the point at which we will make the decision to mine.

“The Mahenge Liandu Graphite deposit is one of the highest-grade large flake deposits globally with a JORC Resource of 51.1Mt at 9.3% TGC, including 38.7Mt Indicated at 9.3% and 12.4Mt Inferred at 9.1% TGC. We believe that the DFS, to be published later this year, will highlight and confirm the compelling economics established in the Scoping Study released in March 2018. This Scoping Study demonstrated a project NPV of US$349m and a project IRR of 122%. Project capex drawdown calculated was US$35m demonstrating the potential for an extremely low project development cost, against a payback estimated of 1.2 years and a 32-year life of mine.

“Set against our listed peers in the graphite exploration and development business the directors believe the Company is considerably undervalued. As evidence of this belief, and our commitment to be aligned with shareholders, my board colleagues, together with our Project Manager and largest individual shareholder, have all resolved to participate in the strategic financing through direct contributions in the case of Paul Johnson, or in lieu of loan repayments or fees.

“I am extremely pleased that, subject to completion of standard director due diligence, Paul Johnson will be joining the board. We look forward to working with Paul as the Company looks to deliver the Definitive Feasibility Study findings and significantly enhance awareness of the Company’s value proposition. Similarly, we also welcome SI Capital Limited as new joint broker and thank them for their significant contribution to the strategic financing which has put the Company in a robust financial position. We look forward to increasing our corporate presence and investor profile over the coming months as we deliver forthcoming developments in what is expected to be a highly proactive and exciting period for the Company.”

Strategic Financing – Further Information

Armadale Capital has completed a strategic financing raising £795,275 through the placing and subscription of 72,297,728 new ordinary shares at a price of 1.1p per share.

The price of 1.1p represents the market bid price of the Company as at market close on Friday 22 February 2019.

The strategic financing was undertaken with new and existing investors to provide working capital to be applied principally to the completion of the Definitive Feasibility Study currently underway for Company’s Mahenge Liandu Graphite project in Tanzania.

New investor participation was secured largely through SI Capital Limited, which following successful completion of the strategic financing exercise, has been appointed as Joint Broker to the Company.

Further information with regard to participation by a director, senior management and the Company’s largest individual shareholder, is provided below.

Each Financing Share has an attaching warrant to subscribe for a further new ordinary share at a price of 2.2p with a life to expiry of three years from the admission of the placing share, resulting in the issue of 72,297,728 Financing Warrants.

Should all Financing Warrants be exercised a further £1,590,550 of working capital would be generated for the Company.

Of the financing total, £622,500 represents new cash and £172,775 represents settlement of outstanding creditors, settlement of certain advisory fees and repayment of a loan facility previously made to the Company.

Director and PDMR Dealing and Related Party Transactions

Steve Mahede (as a Director of the Company), Matt Bull (as Technical Manager of the Company and a ‘person discharging managerial responsibility’) and Kabunga Holdings Pty Ltd (as a ‘substantial shareholder’) are related parties of the Company (as defined in the AIM Rules for Companies).

Steve Mahede, a director of the Company, (see section below: PDMR dealing) has converted £8,250 of fees into new ordinary shares on the same terms as the strategic financing for 750,000 Financing Shares and 750,000 Financing Warrants.

Resource Corporate Pty Limited, of which Matt Bull is the beneficiary (see section below: PDMR dealing) has converted £41,250 in respect of a loan previously provided to the Company, into new ordinary shares on the same terms as the strategic financing for 3,750,000 Financing Shares and 3,750,000 Financing Warrants. In addition, Resource Corporate Pty Limited has converted £45,125 of fees into new ordinary shares on the same terms as the strategic financing for 4,102,273 Financing Shares and 4,102,273 Financing Warrants.

Kabunga Holdings Pty Limited, a connected party to Asimwe Kabunga, (see section below: Related Party Dealing) has subscribed £112,500 to the strategic financing for 10,227,273 new ordinary shares and 10,227,273 warrants. In addition, Kabunga Holdings Pty Limited has converted £48,150 of fees into new ordinary shares on the same terms as the strategic financing for 4,377,273 Financing Shares and 4,377,273 Financing Warrants.

The Independent Director, being Nicholas Johansen, considers having consulted with the Company’s nominated adviser, finnCap, that the terms of Steve Mahede’s and Kabunga Holdings Pty Ltd’s participation in the strategic financing are fair and reasonable insofar as the Company’s shareholders are concerned.

Following admission of the Financing Shares the relevant holdings in the Company are as follows:

Name		Current number of Ordinary Shares held		% of existing number of Ordinary Shares		Number of Financing Shares subscribed for		Number of Ordinary Shares held post-Admission		% of issued share capital as enlarged by the Financing
Nicholas Johansen		2,012,122		0.7%		0		2,012,122		0.5%
Matt Bull		23,683,852		8.6%		7,852,273		31,536,125		8.4%
Kabunga Holdings Pty Ltd		34,455,871		11.4%		14,604,546		49,060,417		13.14%
Steve Mahede		1,000,000		0.3%		750,000		1,750,000		0.5%

New Proposed Director Appointment

A further announcement including all required regulatory disclosures will be made in due course in respect of the appointment of Paul Johnson as Non-executive Director of the Company, following satisfactory completion of standard new director due diligence in line with normal market and regulatory practice.

Value Generation Limited, which is a private company wholly owned by Paul Johnson, and his wife Michelle Johnson, has contributed £25,000 to the strategic financing for 2,272,727 Financing Shares and 2,272,727 Financing Warrants.

In addition, upon appointment the Company has agreed to issue 7,500,000 options to Mr Johnson at an exercise price of 2.2p and a life to expiry of three years. Of the 7,500,000 options, 5,000,000 options will vest immediately, and 2,500,000 options will vest after 12 months service to the company.

New Joint Broker Appointment

SI Capital Limited is appointed as Joint Broker to the Company with immediate effect and is awarded with 695,000 warrants (“Broker Warrants”) to subscribe for new ordinary shares at an exercise price of 2.2p, with a life to expiry of three years. SVS Securities has ceased to be the Company’s Joint Broker with immediate effect.

Admission and Total Voting Rights

The Placing is subject, inter alia, to admission of the Financing Shares to trading on AIM (“Admission”), which is expected to occur on or around 12 March 2019. Application has been made to the London Stock Exchange for the Financing Shares to be admitted to trading on AIM. The Financing Shares will, when issued, rank pari passu in all respects with the Company's existing Ordinary Shares.

Following Admission, the Company will have 375,331,704 Ordinary Shares in issue. The Company has no shares in treasury, therefore the figure of 375,331,704 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change of their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

The information below is provided in accordance with the requirements of Article 19(3) of the EU Market Abuse Regulation No 596/2014.

**ENDS**

Enquiries:
Armadale Capital Plc Tim Jones, Company Secretary		[phone]
Nomad and Broker: finnCap Ltd Christopher Raggett / Max Bullen-Smith		[phone]
Joint Broker: SI Capital Limited Nick Emerson		[phone]
Press Relations: St Brides Partners Ltd Susie Geliher / Juliet Earl		[phone]

Notes for Editors:

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’s primary value driver is its 100% ownership of the Mahenge Liandu Graphite Project in south-east Tanzania. The Project is located in a highly prospective region with a high-grade JORC compliant Indicated and inferred mineral resource estimate of 51.1Mt @ 9.3% TGC, making it one of the largest high-grade resources in Tanzania. 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. A Scoping Study released in March 2018 demonstrated a project NPV of US$349m and a project IRR of 122%. Project capex drawdown calculated was US$35m demonstrating the potential for an extremely low project development cost, against a payback estimated of 1.2 years and a 32 year life of mine.

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

1		Details of the person discharging managerial responsibilities (“PDMR”) / person closely associated (“PCA”)
a)		Name		Steve Mahede
2.		Reason for the Notification
a)		Position/status		PDMR – Non-Executive Director
b)		Initial notification/Amendment		Initial notification
3.		Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)		Name		Armadale Capital plc
b)		LEI		213800495EK876JETD10
4.		Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)		Description of the Financial instrument, type of instrument		Ordinary Shares of 0.1 pence each
		Identification code		GB00BYMSY631
b)		Nature of the transaction		Subscription for Ordinary Shares
c)		Price(s) and volume(s)		Price(s)       Volume(s) 1.1 pence    750,000
d)		Aggregated information: Aggregated volume Price		Single transaction as per 4 (c)
e)		Date of the transaction		25 February 2019
f)		Place of the transaction		London Stock Exchange, AIM Market (XLON)

1		Details of the person discharging managerial responsibilities (“PDMR”) / person closely associated (“PCA”)
a)		Name		Matt Bull
2.		Reason for the Notification
a)		Position/status		PDMR – Technical Director
b)		Initial notification/Amendment		Initial notification
3.		Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor
a)		Name		Armadale Capital plc
b)		LEI		213800495EK876JETD10
4.		Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted
a)		Description of the Financial instrument, type of instrument		Ordinary Shares of 0.1 pence each
		Identification code		GB00BYMSY631
b)		Nature of the transaction		Subscription for Ordinary Shares
c)		Price(s) and volume(s)		Price(s)          Volume(s) 1.1 pence       7,852,273
d)		Aggregated information: Aggregated volume Price		Single transaction as per 4 (c)
e)		Date of the transaction		25 February 2019
f)		Place of the transaction		London Stock Exchange, AIM Market (XLON)

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