Armadale Capital Regulatory News (ACP)

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

24 November 2020

Armadale Capital Plc ('Armadale' or 'the Company')

Bulk Test-work Commenced in China with Leading

 EPC Contractor

Armadale Capital plc (LON:ACP) the AIM quoted investment group focused on natural resource projects in Africa, is pleased to report that the international Engineering, Procurement, Construction and Manufacturing company Xinhai Mineral EPC ("Xinhai"), part of the Chinese Yantai Xinhai group, has been selected to commence metallurgical bulk test work as part of the first phase of the Front-End Engineering Design Studies ('FEED Studies') for the development of the Mahenge Graphite project.

The objective of the bulk test work is to provide sufficient data to confirm the results underpinning the definitive feasibility study and confirm the preferred flow sheet prior to completion of the Front-End Engineering Design to develop an EPCM fixed price contract.

As part of this process, bulk ore samples were selected from diamond core to produce a blend of 22% oxide ore and 78% fresh ore with an average grade of between 12-14 % TGC which is representative of the life of mine production profile.

The objectives of this test work include:

· Confirm overall rates of graphite recovery for all material types

· To maximise graphite flake sizes to achieve a minimum of 50% in excess of 150 microns

· To achieve a minimum grade of 95% TGC in all size fractions

Bulk ore samples have been despatched and received by Xinhai Mineral EPC with test work to commence this week. Xinhai will then use this data in the final design of the processing plant.

Armadale Chairman, Nick Johansen, commented: 

"After running a comprehensive selection process, we are pleased to report that Armadale has moved forward with the selection of Xinhai Mineral Processing to commence with this important step forward in the development of the Mahenge Graphite project. Xinhai are a highly experienced Chinese contracting group and leaders in their field of optimising mineral processing solutions, mine design and build and equipment manufacturing, and we very much look forward to working with them.

We are also pleased to report that our first bulk ore samples have now been received by Xinhai who are due to begin work upon these imminently with the objective of completing a metallurgical test programme to enable the detailed selection of the processing plant equipment. 

Development efforts are indeed gathering pace at Mahange and in addition to this exciting appointment to drive forward the FEED workstream, we are pleased to announce that following a positive site visit and follow up consultation that the Environmental and Social Impact Assessment (ESIA) is also progressing and we hope to be in a positive to update further in this regard in the near future. The ESIA is one of the final necessary components in the Mining Licence process and receipt of a Mining Licence will be one of the final and most important de-risking milestones for the Project. Our financing discussions are also progressing well and we continue to see strong levels of interest as we ensure that we put the best options forward for shareholders at this exciting stage of development for Armadale."

**ENDS**

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

Notes

Armadale Capital Plc is focused 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.

The Company owns the Mahenge Liandu graphite project in south-east Tanzania, which is now its main focus. The Project is located in a highly prospective region with a high-grade JORC compliant Indicated and inferred mineral resource estimate of 59.48Mt @ 9.8% TGC, making it one of the largest high-grade resources in Tanzania. The project has been established as a large, long life graphite deposit capable of producing high quality graphite concentrate for the rapidly emerging EV market. Metallurgical test work has confirmed that Mahenge can produce high quality, high purity graphite, with conventional technology achieving consistent purity of above 97% TGC, with 99.99% TGC achievable, making its product suitable for both the high growth EV/battery market and the expandable and graphite foil markets.

An optimised Definitive Feasibility Study ('DFS') established that US$985m pre-tax cashflow could be generated from an initial 15-year mine life, utilising just 25% of the resource, which remains open in multiple directions offering significant further upside. Based on average annual production of large flake high-purity graphite of 109ktpa, this led to an estimated pre-tax NPV of US$430m and IRR of 91%. Armadale intends to deliver low cost, fast-tracked production through a staged ramp-up plan, beginning with 60,000tpa graphite concentrate production for the first three years (Stage 1) before increasing to a life of mine average of 109,000tpa (Stage 2). Stage 1 has a low capital cost estimate of US$39.7m, including a contingency of U$S4.1m or 15% of total direct capital cost with 1.6 year (after tax) payback period from first production based on an average sales price of US$1,112/t. Stage 2 expansion is to be funded from cashflow.

Other assets Armadale has an interest in include the Mpokoto Gold project in the Democratic Republic of Congo and a portfolio of quoted investments.

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