Armadale Capital Plc (LON:ACP) DFS confirms Mahenge as a long-life low-cost graphite project

Project with US$358m NPV and IRR of 91%

Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa, is pleased to provide the key data from its Definite Feasibility Study for its Mahenge Liandu graphite project (‘Mahenge’ or ‘the Project’) in south-east Tanzania.


  • DFS confirms Mahenge in the board’s view as a large, long life, low cost graphite deposit with a focus on high quality graphite concentrate for the rapidly emerging EV market
  • US$882m pre-tax cashflow generated from initial 17 year mine life utilises just 25% of the resource, which remains open in multiple directions offering significant further upside
  • Estimated pre-tax NPV of US$358m and IRR of 91% with scope for further positive improvement upon economics in near-term through delivery of optimised DFS
  • Staged ramp-up planned to facilitate near term production with 60,000tpa graphite concentrate to be produced for the first four years (Stage 1) before increasing to 90,000tpa (Stage 2)
  • Capital cost estimate for Stage 1 is US$38.6m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, a slight increase on the scoping study allowing for the staged ramp up
  • 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,179/t
    • Stage 2 expansion is expected to be funded from cashflow
  • The outlook for the graphite market remains strong with the ongoing development of the EV market
  • Scope for improvement of DFS economics through delivery of further detailed modelling of higher-grade zones to increase the head grade in the mine schedule – work is underway
  • Application for Mining Licence is planned to commence in Q2 2020
  • Projected timeline to first production is expected to be approximately 10-12 months from the start of construction
  • DFS delivery has confirmed the commercial potential of Mahenge and will support ongoing discussions for offtake agreements, debt package finance for construction and project level development funding

Nick Johansen, Armadale Chairman, commented: “As expected, the Definitive Feasibility Study for the Mahenge Graphite Project has delivered extremely compelling economics. This study represents one of the most significant de-risking milestones in the Company’s history to date and we are delighted with the outcome. Across all commodities globally there are few mining projects that can demonstrate economics such as a 91% IRR and a 1.6 year payback upon capital. The DFS shows that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$882m over an initial 17 year mine-life and scope for further improvement.

Compelling economics combined with low technical risks and 100% ownership make Mahenge an incredibly attractive investment. As previously advised, agreements with a number of potential offtake partners have already been secured and with the delivery of the data from the DFS, the Company is now in a strong position to move these agreements further forward in addition to advancing workstreams on potential debt finance packages and project level development funding for construction. We look forward to updating the market regularly with regards to these workstreams as well as further upgrades to the DFS and the Mining Licence.”

Project summary
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 of 59.5Mt at 9.8% 
Total Graphitic Carbon (‘TGC’). This includes 11.5Mt @ 10.5% Measured 32.Mt Indicted at 9.6% and 15.9Mt at 9.8% TGC, making it one of the largest high-grade resources in Tanzania.

Based on this resource, the DFS was initiated in October 2019 based on a two-stage project expansion strategy comprising:

  • Stage One – processing plant and infrastructure at a nominal design basis rate of 0.4-0.5 Mt/pa to produce a nominal 60kt/pa graphite concentrate in the first four years of production
  • Stage Two – a second 0.5 Mt/y plant and associated additional infrastructure doubling throughput to 1 Mt/y from Year 5 of operation.

A mine optimisation study was undertaken based on an appropriate balance of grade and strip ratio, rather than defining the largest economic pit. The result was an approximately 4 year starter pit(s) that used a 10% TGC cut-off to ensure the highest possible grade of ore feed in the early years followed by a larger LOM pit utilising a reduced (6% TGC) cut-off grade for the remainder of the schedule to minimise waste and keep the stripping ratio as low as possible. The resulting mining inventory is shown in table 1. The mining operation will be undertaken by a local mining contractor.

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