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LONDON (Alliance News) - Armadale Capital PLC shares dropped on Friday after the company said it is still chasing the required finance from its potential partner on its main project in the Deomcratic Republic of the Congo.
Armadale shares were down 20% to 1.99 pence per share on Friday morning.
Armadale's primary focus is on the Mpokoto gold project in the Democratic Republic of the Congo, where it is aiming to initially build an operation based around "easy mining, low cost weathered ore".
Armadale said it is still in talks concerning the potential for A-MCS to become a partner on the project by constructing, operating and providing funding of at least USD20.0 million to allow construction to start in the second half of this year. The total capital cost of the initial phase is USD25.2 million.
"We now have completed all the key elements of the definitive feasibility study, which forms the basis of our mining plan and is an essential step in obtaining finance to fund the construction of the project. As shareholders are aware we have been in a long term dialogue with our potential partners African Mining Contracting Services Group to finalise project finance and I am pleased to report that A-MCS continue to show keen interest in the project," said the company.
The initial open pit operation will be able to produce around 24,900 ounces of gold per year to generate average annual revenue of around USD30.8 million based on a gold price of USD1,250 per ounce - which can be compared to current spot gold prices on Friday of USD1,254 per ounce.
That can also be compared to the estimated operating cost of around USD792 per ounce.
As well as developing a commercial project, Armadale said further exploration is continuing as it believes there is another 120,000 to 150,000 ounces of gold left to find.
The company admitted progress at the project is running at a slower place than originally expected.
The natural resource investment company also reported a pretax loss of GBP991,512 in 2015 compared to the GBP1.1 million booked in 2014.
Although the level of impairments rose to GBP316,213 from GBP67,500 last year, the company managed to reduce its administrative costs to GBP616,062 from GBP693,664 and didn't repeat the GBP225,326 loan provision that was booked in 2014.
With no incoming revenue, Armadale said it is paying particular attention to its overheads so it can plough its resources into Mpokoto, and warned on Friday that the project will continue to swallow up a "significant proportion" of its cash resources for the "foreseeable future".
Armadale reported a cash balance of GBP160,938 at the end of 2015, declining from GBP237,849 at the start of the year.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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