Update on Metallurgical Testwork at Mpokoto Gol...

Update on Metallurgical Testwork at Mpokoto Gold Project

Armadale Capital Plc

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

11 December 2015

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

Update on Metallurgical Testwork at Mpokoto Gold Project

Armadale, the AIM quoted investment company focused on natural resources projects in Africa, is pleased to provide a positive update on the metallurgical testwork programme being conducted at its Mpokoto Gold Project (‘Mpokoto’ or the ‘Project’) in the Katanga Province of the Democratic Republic of Congo. Results received to date have reconfirmed the proposed low cost two-phase processing route to recover gold from the oxide ores at Mpokoto initially, with a further second phase to treat the transition and fresh rock.

Highlights:

• Metallurgical testwork on two bulk samples of oxide ore has confirmed the previously stated recoveries of between 80-89%, with the final recovery dependent on grind size and leach residence time. This work furthers the management’s confidence in the proposed flow sheet
• Testwork simulated a similar process route to the current plant designs, which includes scrubbing, crushing of the scrubber oversize, milling, gravity concentration and carbon-in-leach (CIL) cyanidation of the gravity tailings
• Testwork showed higher recoveries were achieved of between 83% and 89%, averaging 86%, from the samples that were milled to 75 microns
• Further testwork continues to be undertaken on the fresh rock samples to assist in designing a process route for sulphide rich ores that occur beneath the oxidised profile
• Testwork will enable completion of the definitive feasibility study (‘DFS’) and financing arrangements this year with a view to production in 2016 – targeting approximately 25,000oz Au per annum over initial nine years life of mine with projected cash costs of US$647/oz
• Results demonstrate the effectiveness of the low cost modular, two phase, process design – proposed processing route to minimise upfront capital expenditure and reduce ongoing operating costs

Andrew Tunks, Director of Armadale, said, “Mpokoto continues to advance towards production in a methodical manner. We are pleased to be able to report these latest metallurgical testwork results that confirm earlier bench scale testwork on the oxide ore. The programme seeks to replicate the designed process route, and will enable us to ensure the design is as simple as possible to ensure a low operating cost, thereby increasing confidence in the design of the processing plant to extract the gold.

“We are now working to finalise the feasibility study before the end of the year, alongside our continued constructive engagement with A-MCS to conclude the financing agreement, which will bring with it up to US$20 million of financing. We look forward to updating shareholders on these milestones in the coming weeks and months ahead.”

These results follow the completion of a metallurgical testwork programme announced in September 2015 on bulk samples of Mpokoto oxide ores. A complete metallurgical test work programme was carried out on composite samples from the oxide zone at Mpokoto. The two oxide samples, totaling 1 tonne of ore, were subjected to a series of tests aimed to simulate the planned metallurgical process route, which has been designed for the operation.

Mpokoto has a current Total Mineral Resource of 678,000oz gold (‘Au’) from 14.58 million tonnes (‘Mt’) @ 1.45g/t Au at a cut-off grade of 0.5g/t. The Mpokoto Project has previously published results from a scoping study which project a post-tax net present value of US$32.3m based upon a discount rate of 8% and a gold price of US$1,100/oz. The Project is subject to four Mining Licences which are valid for an initial term of 30 years from 30 September 2014.

The Company is currently finalising a DFS on the Project, which will include the results of this metallurgical testwork and further input from Africa Mining Contracting Services group (‘A-MCS’), with a view to publishing initial results before the end of the year. In parallel with this work the Group remains in active discussions with its funding partner, A-MCS, to finalise the $20 million of capital required to commence construction of the Mpokoto Project.

Summary of results of Metallurgical Testwork

Metallurgical testwork has been conducted on two bulk samples, processing a total of 1 tonne of oxide ore. The grades of these two samples were an average 1.4 and 1.7 g/t. The results of this testwork are tabulated below:

• Two bulk samples selected from oxide ores of two of the projected mine pits were tested in November 2015 by Peacock & Simpson in Harare (Zimbabwe)
• The flowsheets simulated during the testwork were similar for both samples in that both included scrubbing, crushing of the scrubber oversize, milling, gravity concentration and carbon-in-leach (CIL) cyanidation of the gravity tailings.
• In the first sample, the ore was milled to 100% passing 400 microns, pre-conditioned and leached for 8 hours:
• In the second sample the ore was further milled to 80% passing 75 microns, pre-conditioned and leached (CIL) for 24 hours.

FLOWSHEET	Sample 1 1.40g/t Recovery (%)	Sample 2 1.72 g/t Recovery (%)
Gravity, mill to -400 microns, 8 hours CIL	80.9	83.6
Gravity, mill to 80% passing 75 microns, 24 hours CIL	82.9	86.0

• The cyanide additions were 1 kg/tonne for all tests. Tests were also carried out at a lower cyanide addition of 0.5 kg/tonne in tests without pre-conditioning. Gold dissolutions were 1-4% lower.

This testwork confirms that the process route utilising milling to 400 microns is the preferred option, in keeping with the policy to minimise upfront capital expenditure and reduce ongoing operating costs. Overall it demonstrates the effectiveness of the company’s low cost modular, two phase, process design, with an initial phase to treat the oxide ores and a further second phase to treat the transition and fresh rock. As previously set out, the plant additions, required only after the oxide plant has been in operation for approximately 4.5 years, will have a capital cost of approximately US$5 million and will extend the life of the mine by over 5 years.

The testwork was carried out in the laboratory of Peacock and Simpson in Harare, Zimbabwe. The consulting metallurgist overseeing the testwork and plant design for Armadale is Richard Way of Bara Consulting – a Johannesburg based mining consultancy firm.

Testwork continues to be undertaken on the transitional and fresh ore.

About Mpokoto Gold Project

Mpokoto is located in the western part of the Katanga Province approximately 250km west of Kolwezi in the Democratic Republic of Congo, approximately 25km from the Zambian border. The area is highly prospective, with local operators including Ivanhoe Mines and Glencore Plc. Since 1998, approximately US$20 million has been spent on gold exploration at the Project.

Competent Person Statement:

Scientific or technical information in this release has been reviewed by Dr. Andrew Tunks, a director of the Company. Dr Tunks who holds a BSc (Hons) from Monash University and a PhD in geology from the University of Tasmania and is a member of the Australasian Institute of Geoscientists (MAIG). Dr Tunks has sufficient experience, which is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (the JORC Code). Dr Tunks consents to the inclusion in this announcement of the information, in the form and context in which it appears.

A copy of the announcement can be found on the Company’s website at www.armadalecapitalplc.com.

Glossary of Technical Terms

Au	Gold
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Fresh	Depth of rock where the original mineralogy of the rock remains intact, without being affected by chemical or mechanical processes.
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Gravity Separation	A process in the treatment of ore whereby heavy mineral species such as gold are separated from the lighter minerals, such as quartz, by passing the ore through one of a variety of gravity separators.
	Â
g/t	Grams per tonne
	Â
Knelson Centrifugal Concentrator	A part of the process plant that undertakes Gravity Separation
	Â
Measured	That part of a Mineral Resource for which quantity , grade, densities, shape and physical characteristics are estimated with sufficient confidence to support detailed mine planning and final evaluation of the economic viability of the deposit. A Measured classification is the highest classification level for Mineral Resource estimates.
	Â
Indicated	That part of a Mineral Resource for which quantity , grade, densities, shape and physical characteristics are estimated with sufficient confidence to support mine planning and the evaluation of the economic viability of the deposit. An Indicated classification is of a lower confidence level than a Measured classification.
	Â
Inferred	That part of a Mineral Resource for which quantity and grade are estimated on the basis of limited geological evidence and sampling. An Inferred classification is of a lower confidence level than an Indicated classification.
	Â
Oxide	Shallow depth of rock where the original mineralogy of the rock is extensively broken down by the action of external agencies such as water percolation and chemical leaching.
	Â
oz	Ounce
	Â
QAQC	Quality Assurance and Quality Control
	Â
Transitional	Shallow to intermediate depth of rock (generally <150m) where the original mineralogy of the rock is broken down by the action of external agencies such as water percolation and chemical leaching. An intermediate weathering step between oxide and fresh.
	Â
Weathering	The process by which rocks are broken down and decomposed by the action of external agencies such as wind, rain, temperature changes, plants and bacteria.

**ENDS**

Enquiries:

Company

Justin Lewis, Director [phone]

Andrew Tunks, Director

Charles Zorab [phone]

Nomad and joint broker: finnCap Limited

Stuart Andrews/ Christopher Raggett [phone]

Joint broker: Beaufort

Jon Bellis [phone]

Joint broker: VSA Capital

Andrew Raca [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 sector 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 potential businesses where it can take an active role in their advancement.

Armadale owns 80% of the Mpokoto Gold Project in the Democratic Republic of Congo. Armadale is focussed on proving up the resource potential of Mpokoto with a view to commencing commercial gold production.

Armadale also holds approximately a 30% interest in Mine Restoration Investments Ltd, a South African listed company. In addition, Armadale has a small portfolio of listed investments which are focused on gold and copper 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.

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