Project Update

Project Update

Armadale Capital Plc

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

21 February 2020

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

Project Update

Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa, is pleased to provide an update on the Mahenge Liandu graphite project (‘Mahenge’ or ‘the Project’) in south-east Tanzania as it progresses towards commercialisation in line with the group’s transformation from explorer to emerging producer.

Highlights

• Definitive feasibility study (‘DFS’) is on track to be completed in this quarter (Q1 2020) following inclusion of results from the following work studies:
  • A detailed mine plan that will target high-grade, near surface graphite mineralisation for the first 3-5 years of production. This aims to maximise the returns in the early years of operations and is nearing completion
  • The study will include a ramp up from 400ktpa to 1mtpa throughput after 4 years which will maximise the value of the project as demand for graphite continuing to increase
  • A final round of metallurgical test-work is being completed at Bureau Veritas, in Perth, on high-grade composites of the diamond core with average grades of 14.9% and 15.6% Total Graphitic Carbon (‘TGC’). This is to confirm the flowsheet is suited to high grade ore
  • Site locations for the ROM pad, crushing circuit, process plant and tailing storage facilities have been finalised and a new access road has been marked out from site to the town of Mahenge to facilitate mine construction as well as mine production
  • Logistics for the operation have been costed with a local well-established Tanzanian contractor to truck the product from site to Dar es Salaam, where it will then be containerised for shipping
  • The results of the work programme will be the final part of the definitive feasibility study which is on track to be completed in March
• ACP director, Steve Mahede, recently met with senior Tanzanian officials and was confident that developing the mining projects through to production was a major priority to generate export earnings as well as positive economic multiplier benefits
• Commencing post-DFS era work programmes, with teams working on road access, production bores, ongoing commercialisation and project funding discussions with funding partners

Armadale Chairman, Nick Johansen, said: “With one of the largest high-grade resources in Tanzania this dovetails perfectly with our ongoing commitment to push the envelope to transform into an emerging producer by H1 2021.

“In support of this, refinements to our resource modelling and mine plan from the scoping study have increased our confidence that the project is going to be a low cost, long life operation.

“We look forward to sharing these key value metrics within the next month as we finalise the DFS, results for which we know are eagerly anticipated. I would like to thank shareholders for their patience in this regard and give my assurance that finalising this study is our primary objective. We will then look to accelerate commercialisation and funding initiatives with our partners to ensure we remain on track with our fast-paced growth plans.”

Mahenge Liandu Graphite Project, Tanzania

Armadale’s wholly-owned Mahenge Liandu Graphite Project is located in a highly prospective region, with a high-grade JORC compliant indicated and inferred mineral resource estimate announced October 2019 – 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, making it one of the largest high-grade resources in Tanzania.

The 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.

Currently, Armadale Capital is completing a Definitive Feasibility Study based on the results of a Scoping Study that was completed in March 2018. The study was based on a throughput of 400,000tpa over a 32-year mine life and showed the project has robust economics and warrants further development.

The Scoping Study verified the Mahenge Liandu Project could produce a coarse flake, high-purity graphite product underpinning a compelling business case to progress commercialisation plans.

The Scoping Study, based on a 400,000tpa throughput, highlighted the following key positive metrics:

• 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.

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 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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