Armadale Capital plc (LON: ACP) the AIM quoted investment company focused on natural resource projects in Africa, is holding its annual general meeting (‘AGM’) at 11.00 am today at Salisbury House, London Wall, London EC2M 5QQ. At the meeting, Paul Johnson, Non-Executive Director of Armadale, will make the following statement:
“We continue to make excellent progress advancing our key, actively managed investment, the Mahenge Liandu Graphite Project (‘Mahenge Liandu’ or ‘the Project’) in Tanzania, towards first production in 2021. The Project, which is owned 100% by Armadale, is situated in a highly prospective graphite region with a high-grade JORC Compliant Indicated and Inferred Mineral Resource Estimate of 51.1Mt at 9.3% total graphite content (‘TGC’), including 38.7Mt Indicated at 9.3% and 12.4Mt at 9.1% TGC. This makes Mahenge Liandu one of the largest high-grade graphite resources in Tanzania; a resource upgrade is expected to be announced in the near-term which will further consolidate our already attractive project credentials.
“Our 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, all contained within one contiguous ore body. The Scoping Study we completed in March 2018 further proved up the robust economics of the Project, delivering an NPV of US$349m and IRR of 122%. The Project capex drawdown was US$35m, demonstrating the potential for an extremely low project development cost, with a payback estimated of 1.2 years and a 32-year life of mine.
“Based on these encouraging Scoping Study results, we commenced a Definitive Feasibility Study (‘DFS’) in Q2 2018 to confirm the commercial viability of the deposit. The DFS is focusing on defining graphite product quality with a wide diameter diamond core drilling programme aimed at generating samples for marketing. In line with this, on Tuesday, we announced assay results of the first four of an 18-hole reverse circulation (‘RC’) drill programme, which show exceptionally high-grade near surface intercepts. These encouraging results are part of broader zone of high-grade mineralisation and are expected to have a positive outcome on the DFS, aiding our transition from exploration to mining phase.
“Eight diamond drill-holes have also been drilled and are currently being assayed to produce a concentrate that will enable completion of the final plant design that will be used in the DFS; results of this test work are expected in the near-term. The concentrate samples, along with the high-grade RC core already received will be used to assist commercial discussions and for downstream product test work. I’m pleased to say that commercial discussions are progressing positively; in February this year, we announced a MOU with the Matrass Group, a China based graphite mining and processing company for high quality graphite products produced at Mahenge Liandu. The MOU includes a proposed offtake of 30,000tpa of graphite concentrate for an initial five-year term, representing over 60% of average target annual production. Key meetings with current and prospective Chinese offtake and project finance partners are taking place with the intention to progress to binding agreements as part of our commitment to accelerating commercialisation plans.
“Our various other work streams to support the DFS are all progressing positively with overall completion of the study expected in Q4 2019. These activities include environmental and social studies covering the Project area and completion of a Relocation Action Plan; granting of a mining permit; a geotechnical drilling programme to define the final pit wall design; calculation of Proved and Probable Reserves; and finalisation of production flowsheets and final plant design parameters. Our work at Mahenge Liandu is underpinned by strengthening graphite market fundamentals driven by demand for spherical graphite from the new energy sector as well as emerging demand for expandable graphite used in products such as fireproof insulation.
“Whilst the advancement of Mahenge Liandu into production is the Board’s primary focus, and one which we believe will deliver significant value for shareholders, we continue to maintain and review Armadale’s small portfolio of quoted investments, principally in resource companies where the Directors believe there are opportunities for capital gain. In line with this, in January 2019, Armadale entered into an agreement with African Royalty Company Pty Limited, a related company to Arrow Mining Pty Ltd, for the sale of the Mpokoto Gold Project. Under the terms, we will receive a 1.5% royalty on gold sales achieved once the project is in production, ensuring the Company retains exposure to the development upside. Furthermore, Armadale maintains an ongoing review of other company and project level investments that may complement its existing portfolio.
“I would like to take this opportunity to thank our shareholders for their ongoing support and I look to the coming year with optimism as we work to realise the exceptional potential of Mahenge Liandu.”
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 51.1Mt @ 9.3% 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.
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