Armadale Capital Regulatory News (ACP)

9 Mar 2016 07:00

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Placing & Planned Exploration Programme at Mpokoto

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce details of its proposed exploration programme for the coming year at its Mpokoto Gold Project (‘Mpokoto’ or ‘the Project’) in the Katanga Province of the Democratic Republic of Congo (‘DRC’). The Company intends to initiate a 2,000m auger drill programme followed by a 2,500m diamond drill programme. In addition the Company has been reviewing historical results in the wider Kisenge licence area with a view to identifying further exploration targets.

The objective of the overall programme is increasing the planned life of mine, which currently stands at four years for Phase 1 production, expanding the current Total Mineral Resource of 678,000oz gold (‘Au’) from 14.58 million tonnes (‘Mt’) @ 1.45g/t Au at a cut-off grade of 0.5g/ and improving the overall project economics which are benefiting from the current gold price environment.

To progress the commencement of this exploration programme ahead of anticipated initial gold production, the Company has raised £210,000 through the placing of 7,000,000 new ordinary shares of 0.1 pence each in the capital of the Company at a price of 3p pence per share (the ‘Placing Shares’) with existing investors (the ‘Placing’).

With regards to overall project financing, the Company continues its negotiations with Africa Mining Contracting Services group (‘A-MCS’) regarding finalising the project finance of at least US$20m for Mpokoto. Both parties understand the positive impact an increase in life of mine and resources will have on the economics of the Project and remain confident on finalising the details of the financing.

Dr. Andrew Tunks, Director of Armadale, said:

“We continue to work to develop Mpokoto alongside our funding discussions. Having identified multiple prospective targets from which to extend the current defined resource of 678,000oz gold, we are confident we can invest this capital to both increase the established resource and enhance the already compelling economics. The exploration programme will initially target, with auger drilling, oxide mineralisation to the north and south of the main orebodies where mineralisation remains open along strike, and then, the high-grade mineralisation adjacent to previous hole MPD064, which intercepted 55m @ 3.8 g/t Au including 15.4 @ 10.5 g/t Au with the diamond drilling programme.

“There is increasing interest in near term gold projects and we believe through targeted investment we can raise the value of Mpokoto significantly. The Mpokoto feasibility study projected operating costs of US$792/oz and a pre-tax net present value (‘NPV’) of US$19.05 million has been established for Phase 1, which importantly relates only to the shallow oxide orebody (30-40m) and a gold price of US$1,250/oz. With the work planned, there is potential to increase the NPV further through the inclusion of the deeper unweathered ore in Phase 2, which has an additional NPV of approximately US$20 million, in addition to the potential resource increase possible from the upcoming drill programme. With further considerable upside to the current resource model and clear routes to production, we believe we are well positioned to advance discussions with A-MCS to finalise project financing for at least US$20 million.”

Exploration and Development Programme

The Company is undertaking an initial 2,000m auger drilling programme followed by a 2,500m diamond drill programme to test prospective targets identified in late 2015, which indicate possible strike extensions of the known high grade gold mineralisation.

The Company has prioritised targets identified following soil sampling to the south-east and north-west of the Mpokoto mine area. The results of this soil sampling exercise demonstrated 750m of continuous anomaly extending to the north-west from pit 1 and 3,200m extending to the south-east of pit 3, significantly enlarging the known anomalous gold zone.

Figure 1: Geochemical Surveys – gold anomaly targets identified following soil sampling to be drill tested – see PDF on website www.armadalecapitalplc.com

The proposed drilling programme, will initially target, with auger drilling, oxide mineralisation to the north and south of the main orebodies, where mineralisation remains open along strike. Following this the Company will look to target, with a diamond drilling programme, the high-grade mineralisation adjacent to the previous hole MPD064, which intercepted 55m @ 3.8 g/t Au including 15.4 @ 10.5 g/t Au.

As previously announced, to support this programme, the Company has formed an alliance with Alpha Drilling (‘Alpha’), a Botswana based drilling organisation with operations in the DRC and extensive experience in sub-Saharan Africa, to provide in-house drilling capacity. It is proposed Alpha will supply and operate a diamond drilling rig with the alliance benefitting the Company through a lowering of the overall cost of drilling.

The Company has proven the success of its planned exploration approach; soil and termite mound sampling followed by auger, Reverse Circulation and core drilling were successfully used to identify the current gold resource at Mpokoto, which presently stands at 678,000oz of which 520,000oz is in the indicated category.

Additionally, the Company is undertaking an ongoing review of the extensive database generated by previous owners of the larger Kisenge exploration licence. This has generated an initial exploration target at Katombe, which shows an anomaly of gold, tungsten and arsenic over a 12km length in an east west direction. Historical drilling returned three gold intersections. The Company will look at conducting a further programme of geophysical and geochemical work at this prospect.

The Company continues to target low-cost commercial production. Phase 1 operations will focus on open pit mining presently scheduled over four years (annual mine production of 720,000 tonnes per annum) to produce an average 24,900 oz of gold per annum, which is expected to generate average annual revenues of US$30.80 million at a gold price of US$1,250/oz.

Details of the Placing:

The Placing is subject, inter alia, to admission of the Placing Shares to trading on AIM (‘Admission’), which is expected to occur at 8am on 14 March 2016. Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. The Placing Shares will, when issued, rank pari passu in all respects with the Company's existing Ordinary Shares.

Following Admission, the Company will have 96,551,967 Ordinary Shares in issue. The Company has no shares in treasury, therefore the figure of 96,551,967 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change of their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

**ENDS**

Notes

Armadale Capital Plc is focussed 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.

Armadale is focused on the development of the Mpokoto Gold project in the Democratic Republic of the Congo, in which it owns an 80% interest. Mpokoto has a current Total Mineral Resource of 678,000 oz gold (‘Au’) from 14.58 million tonnes (‘Mt’) @ 1.45g/t Au at a cut-off grade of 0.5g/t. The Company has recently announced the results of a Feasibility Study for Mpokoto which demonstrated a pre-tax net present value of US$43m based upon a discount rate of 5% and a gold price of US$1,250/oz. The Project is subject to four Mining Licences which are valid for an initial term of 30 years from 30 September 2014.

Armadale also currently holds approximately a 30% interest in Mine Restoration Investments Ltd, a South African listed company, as well as a number of other quoted investments.

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

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