Armadale Capital Regulatory News (ACP)

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

29 September 2021

Armadale Capital Plc

('Armadale' the 'Company' or the 'Group')

Interim Results

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce its unaudited interim results for the six months ended 30 June 2021.

Highlights:

· The focus of the Company throughout the interim reporting period was to obtain all required permits to commence development of the high-grade long life Mahenge Liandu Graphite project.

o Subsequent to the end of the half year the mining licence was granted for an initial 10-year term which can be extended marking a significant milestone for the Company.

o The mining licence, should it be extended would cover the initial 15 year mine life utilising only 25% of the estimated Resource.

· Progressing licencing applications ahead in preparation for development of Mahenge Liandu

o Mining licence application process commenced in June 2020 with the submission of the mining licence application to the Department of Energy and Minerals.

o The Environmental and Social Impact Assessment ('ESIA') to the National Environment Management Council ('NEMC') of Tanzania was granted in March 2021.

o A mining licence covering the Project was granted in September 2021 (post-period end).

· Natural Flake Graphite Testing Confirms Suitability For Use In Lithium-Ion Battery Anodes

o Positive confirmation received in June 2020 from Australia's Commonwealth Scientific and Industrial Research Organisation that Armadale's natural flake graphite is suitable for use in lithium-ion batteries.

· 1st phase of Front-End Engineering Design Studies undertaken by Chinese EPCM Xinhai Mineral EPC completed

o Positive results received confirming a premium quality high purity graphite concentrate, also suitable for the battery anode market and can be produced from Mahenge using conventional plant as outlined in the Company's existing Definitive Feasibility Study.

o Included metallurgical bulk test work programme which further confirmed the efficacy of the Company's intended process flow sheet and helped ratify project economics.

During the period Armadale further established Mahenge as a large, long life graphite developer with significant commercial potential capable of producing high quality graphite concentrate for the rapidly emerging EV market and as previously advised, strategic next steps are focused upon the completion of development funding options specifically a debt package for the project, the Company is also currently in discussions with a number of potential finance partners; we are hoping to be able to announce some further progress with regards to these efforts and also with our offtake discussions in the near term through optimised Definitive Feasibility Study ('DFS').

Key metrics for Armadale's Mahenge Graphite project:

o High-grade JORC compliant Indicated and inferred mineral resource estimate of 59.48Mt @ 9.8% TGC with outstanding purity of up to of 99.99% TGC achievable using conventional treatment

o Potential for US$985m pre-tax cashflow to be generated from initial 15 year mine life utilising just 25% of the resource, which remains open in multiple directions offering significant further upside

o Estimated pre-tax NPV of US$430m and IRR of 91%

o Average annual production of large flake high-purity graphite of 109ktpa

Nick Johansen, Director of Armadale, said: "The first half of 2021 has seen Armadale focus on project permitting which has seen the Company subsequent to the end of the half year progress to being a fully permitted development company. The mining permit is the culmination of a long project of advancement for the Company, which has progressed from the discovery of the deposit through to feasibility study and now is development ready. The Company is now well placed to proceed towards financing and development in an environment where there is increasing demand for graphite and we look forward to updating investors with regards to how our activities progress on this workstream as well as offtakes and additional development activities since the end of the 2021 half-year period"

For and on behalf of the Board

29 September 2021 

FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2021

Condensed Consolidated Statement of Comprehensive Income

For the six months ended 30 June 2021

Consolidated Statement of Financial Position

At 30 June 2021

Unaudited Consolidated Statement of Changes in Equity

For the period ended 30 June 2021

The following describes the nature and purpose of each reserve within shareholders' equity:

Reserve Description and purpose

Share capital Amount subscribed for share capital at nominal value

Share premium Amount subscribed for share capital in excess of nominal value, net of allowable expenses

Shares to be issued Share capital to be issued in connection with historical acquisition

Share option and warrant reserve Cumulative charge recognised under IFRS2 in respect of share-based payment awards

Foreign exchange reserve Gains/losses arising on re-translating the net assets of overseas operations into sterling

Retained earnings Cumulative net gains and losses recognised in the statement of comprehensive income

Consolidated Statement of Cash Flows

For the period ended 30 June 2021

Notes to the unaudited condensed consolidated financial statements

For the period ended 30 June 2021

1. Incorporation and principal activities

Country of incorporation

Armadale Capital Plc was incorporated in the United Kingdom as a public limited company on 19 August 2005. Its registered office is 1 Arbrook Lane, Esher, Surrey, KT10 9EG.

Principal activities

The principal activity of the Group during the period was that of an investment company.

2. Accounting policies

2.1. Statement of compliance

The financial information for the six months ended 30 June 2021 and 30 June 2020 is unreviewed and unaudited and does not constitute the Group's statutory financial statements for those periods within the meaning of Section 434 of the Companies Act 2006. The comparative financial information for the year ended 31 December 2020 has been derived from the Annual Report and Accounts, which were approved by the Board of Directors on 28 May 2021 and delivered to the Registrar of Companies. The report of the Auditors on those accounts was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This condensed set of financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2020 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2020 as described in those annual financial statements.

In respect of new financial reporting standards which came into effect for reporting periods beginning on 1 January 2021, the Directors consider that their implementation has no material effect on the financial information presented in this statement.

2.2. Going Concern

The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future. The Company's ability to continue as a going concern and to achieve its long term strategy of developing its exploration projects is dependent on further fundraising. During the period, a total of £1,095,350 was raised from share placing and warrant exercises (see note 4). Since the period end, all remaining loan notes, together with accrued interest, have been converted into Ordinary Shares in the Company, which is now debt free.

2.3. Exploration and evaluation assets

These assets are recorded at cost and are amortised over their expected useful life on a pro rata basis of actual production for the period to expected total production.

2.4. Investments

Investments are stated at fair value.

3. Loss per share

The calculation of loss per share is based on a loss of £27,000 (2020, £159,000) and on 480,763,732 (2020, 419,492,599) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.

There was no difference between basic loss per share and diluted loss per share as the Group reported a loss for the period.

4. Share capital

During the period, the Company placed 18,888,889 Ordinary Shares in the Capital of the Company to raise £850,000 with institutional and other investors. Also during the period 10,467,913 warrants were exercised providing proceeds of £245,350.

**ENDS**

For further information, please visit the Company's website www.armadalecapitalplc.com, follow Armadale on Twitter @ArmadaleCapital or contact:

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Notes

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 announced February 2018 - 59.5Mt at 9.8% 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.

The work to date has demonstrated the Project'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.

The Company's updated Definitive Feasibility Study (June 2020) confirmed Mahenge as a long-life low-cost graphite project with a US$430m NPV and IRR of 91% based on a two-stage 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 60,000t/pa graphite concentrate in the first three 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

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$985m over an initial 15 year mine-life and scope for further improvement as this utilises just 25% of the current resource, which remains open in multiple directions.

Projected timeline to first production is expected to be approximately 10-12 months from the start of construction and the capital cost estimate for Stage 1 is US$39.7m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, with a 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,112/t. Stage 2 expansion is expected to be funded from cashflow.

More information can be found on the website www.armadalecapitalplc.com.