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(Alliance News) - African natural resource investor Armadale Capital PLC on Monday said it is continuing to focus on progressing its graphite project in Tanzania as it swung to a small profit in the first half.
Shares in the investment firm were down 9.8% in London in midday trading at 1.51 pence each.
Armadale swung to a small pretax profit of GBP24,000 in the six months to June 30 compared to a GBP225,000 loss the year before. The company's administrative expenses narrowed to GBP187,000 from GBP218,000.
The company did not generate any revenue in either period. However, in the recent half, Armadale recorded GBP240,000 of currency exchange gains from its overseas operations, related to the sale of its interest in the Mpokoto gold project.
Armadale said its primary focus in the "rapid" advancement of its 100%-owned Mahenge Liandu graphite project in Tanzania.
"The first half of 2019 has seen us increasingly demonstrate Armadale's transition from explorer to emerging miner. At the centre of this has been the development of our wholly owned Mahenge Liandu graphite project towards production via the advancement of the definitive feasibility study. Upon completion, we expect the definitive feasibility study to confirm the compelling economics of the project, which has an net present value, per the 2018 scoping study, of USD349 million and an internal rate of return of 122%," said Non-Executive Director Nick Johansen.
The study is focused on defining graphite product quality with a wide diameter diamond core drilling programme aimed at generating samples for marketing. In line with this, Armadale has undertaken an 18-hole reverse circulation drill programme focused on the planned initial mine pit.
Johansen continued: "The robust project economics are underpinned by the strengthening graphite market with growth in demand being driven by burgeoning lithium ion battery and expandable markets. In line with this, several Tanzanian based graphite projects have secured binding offtake agreements during 2019, which has increased our confidence as we accelerate our commercialisation plans."
Armadale has signed an MOU for the proposed offtake of 30,000 tonnes per annum of graphite concentrate and "continues to progress" towards binding agreements and securing an offtake for the remaining 19,000 tonnes per annum.
"Our commercialisation plans have been aided by high grade assay data and positive metallurgical test-work results received during the period and post-period end, which demonstrate exceptionally high-grade near surface assayed intercepts and confirm that high-quality graphite concentrate of up to 97.1% can be produced," added Johansen.