Half-year Report

Armadale Capital

29/09/2021 06:59

RNS Number : 3489N

Armadale Capital PLC

29 September 2021

 

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

 

Unaudited
Six months ended
30 June
2021
£'000
30 June
2020
£'000
Administrative expenses
(157)
(176)
Change in fair value of derivative
-
37
Change in fair value of investments
139
2
Finance costs
(9)
(22)
Loss before taxation
(27)
(159)
Taxation
-
-
Loss after taxation
(27)
(159)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities
2
(13)
Total comprehensive loss attributable to equity holders of the parent company
(25)
(172)
Pence
Pence
Loss per share attributable to equity holders of the parent company (note 3)
Basic and fully diluted
(0.01)
(0.04)


                                                                                                     

 

 

Consolidated Statement of Financial Position

At 30 June 2021

 

Unaudited
Audited
30 June 2021
30 June 2020
31 December 2020
£'000
£'000
£'000
Assets
Non-Current assets
Exploration and evaluation assets
4,556
4,084
4,417
Investments
421
108
282
4,977
4,192
4,699
Current assets
Trade and other receivables
559
303
121
Cash and cash equivalents
562
436
252
1,121
739
373
Total assets
6,098
4,931
5,072
Equity and liabilities
Equity
Share capital (note 4)
3,237
3,197
3,207
Share premium
23,148
22,122
22,348
Shares to be issued
286
286
286
Share option and warrant reserve
972
813
762
Foreign exchange reserve
129
75
127
Retained earnings
(22,376)
(22,420)
(22,406)
Total equity
5,396
4,073
4,324
Current liabilities
Trade and other payables
96
253
171
Loans
606
604
577
Derivative liability
-
1
-
Total liabilities
702
858
748
Total equity and liabilities
6,098
4,931
5,072


 

 

 

Unaudited Consolidated Statement of Changes in Equity

For the period ended 30 June 2021

 

Share
Capital
£'000
Share Premium
£'000
Shares to be
Issued
£'000
Share Option Reserve
£'000
Foreign Exchange Reserve
£'000
Retained Earnings
£'000
Total
£'000
Balance 1 January 2020
3,139
21,037
286
662
88
(22,400)
2,812
Loss for the year
-
-
-
-
-
(196)
(196)
Other comprehensive income
-
-
-
-
39
-
39
Total comprehensive loss for the period
-
-
-
-
39
(196)
(157)
Issue of shares and warrants
68
1,311
-
239
-
-
1,618
Release on conversion of loan notes
-
-
-
-
-
51
51
Transfer on exercise of warrants
-
-
-
(139)
-
139
-
Total other movements
68
1,311
-
100
-
190
1,669
Balance 31 December 2020
3,207
22,348
286
762
127
(22,406)
4,324
Loss for the period
-
-
-
-
-
(27)
(27)
Other comprehensive loss
-
-
-
-
2
-
2
Total comprehensive loss for the period
-
-
-
-
2
(27)
(25)
Issue of shares
30
800
-
267
-
-
1,097
Transfer on exercise of warrants
-
-
-
(57)
-
57
-
Total other movements
30
800
-
210
-
57
1,097
Balance 30 June 2021
3,237
23,148
286
972
129
(22,376)
5,396

 

 

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

 

Unaudited
Audited
Six Months ended
Year ended
30 June 2021
30 June 2020
31 December 2020
£'000
£'000
£'000
Cash flows from operating activities
Loss before taxation
(27)
(159)
(196)
Change in fair value of derivative
-
(37)
(37)
Change in fair value of investments
(139)
(2)
(176)
Finance costs
9
22
31
(157)
(176)
(378)
Changes in working capital
Receivables
9
(16)
11
Payables
(33)
8
(7)
Net cash used in operating activities
(181)
(184)
(374)
Cash flows from investing activities
Expenditure on exploration and evaluation assets
(157)
(350)
(689)
Net cash used in investing activities
(157)
(350)
(689)
Cash flows from financing activities
Proceeds from share issues
648
845
1,246
Loan repayment
-
-
(50)
Proceeds from loan
-
50
50
Interest paid
-
(21)
(27)
Net cash from financing activities
648
874
1,219
Net increase/(decrease) in cash and cash equivalents
310
340
156
Cash and cash equivalents at 1 January 2021
252
96
96
Cash and cash equivalents at 30 June 2021
562
436
252


 

 

 

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:

 

Enquiries:
Armadale Capital Plc
Tim Jones, Company Secretary
+44 (0)20 7236 1177
Nomad and broker: finnCap Ltd
Christopher Raggett / Seamus Fricker /Edward Whiley
+44 (0)20 7220 0500

 

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.

 

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