REG - Armadale Capital PLC - Final Results and Notice of AGM
12/05/2023 07:00
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RNS Number : 1508Z Armadale Capital PLC 12 May 2023
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company
12 May 2023
Armadale Capital Plc
('Armadale' or 'the Company')
Final Results and Notice of AGM
Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on
natural resource projects in Africa, is pleased to announce its final results
for the year ended 31 December 2022 ('Final Results' or 'Annual Report'). The
Company also announces that its Annual General Meeting ('AGM') will be held at
Level 1, 48-50 Smith Street, Darwin, Northern Territory, Australia on 20 June
2023 at 18.00 ACST (09.30 BST). A notice of AGM, together with printed
copies of the Company's full Annual Report for the year ended 31 December
2022, will be posted to shareholders on 16 May 2023. Copies will also be
available to view on the Company's website: www.armadalecapitalplc.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.armadalecapitalplc.com&esheet=52230450&newsitemid=20200603005976&lan=en-US&anchor=www.armadalecapitalplc.com&index=1&md5=9801c0c7a7343b17a80cecb854a43b6a)
.
Strategic Report
For the year ended 31 December 2022
Operational and Corporate Highlights for Period Ending 31 December 2022
Significant progress made in delivering key accretive milestones in advancing
the Mahenge Liandu Graphite Project in Tanzania
1. In February 2022 the Company applied for three incremental
exploration licences which are prospective for graphite mineralisation and
materially enhance the Mahenge Liandu Project's exploration potential.
2. In March, the Company, pursuant to environmental compliance
requirements of the mining license, successfully completed the installation of
a weather station and has commenced the monthly collection of data. The
station records data at 5 second intervals and covers all weather parameters
including temperature, pressure, wind, moon phase, humidity, solar radiation
and rainfall. All data is automatically uploaded to the cloud. This data is
critical to establishing the base line information required to assist with the
planning of the mining operations on the Project.
3. In addition, the Company has also installed a total of 7 stream
gauges and one barotroll in the water streams located at the mine site in
March 2022 which will be used for the hydrological studies which will assist
in the location and design of infrastructure for the operations. The devices
record 3 parameters which are temperature, pressure and depth at 5 second
intervals. The data from all devices are being manually downloaded at a
frequency rate of once per month.
4. As Part of the ongoing FEED study, the Company cleared pads for
geotech drilling at the proposed plant Site and tailing dam location. 10 pads
were cleared at the tailing storage facility area and 6 pads were cleared at
the plant site area as a part of geotechnical studies and the Company is now
preparing for Diamond Drilling in the proposed areas
5. A test pit program has been completed at the proposed plant site,
tailing storage facility and the access road areas. A total of 41 test pits
with 3 meters depth have been excavated, DCP tested, strata logged, sampled
and backfilled. 11 pits have been excavated at plant site, 25 pits excavated
at tailing storage facility and 5 pits excavated at the access road to the
mine site.
6. The Company was granted the prospecting license PL 119961/ 2022 by
the ministry of minerals on 28 June 2022, for the exploration of graphite
minerals. The license area comprises of 19.99 square kilometres, located at
Isongo and Liandu villages of Ulanga District, in Morogoro Region.
7. Through the year, the Company's primary focus was on securing project
development funding for the Mahenge Liandu Graphite project while advancing
the permitting and local community engagement.
8. The Company has received an encouraging level of interest in funding
the Mahenge Liandu Graphite project and has advanced its discussions with a
number of potential finance partners with respect to securing project
development funding.
Post Period End
9. The Company continues to collect environmental baseline data as is
required for the compliance of the mining lease and to assist in the design
and planning of the proposed mining operations. In addition, the base line
data for temperature, pressure, wind, moon phase, humidity, solar radiation,
rainfall and stream flow data assists the local community to have access to
regional weather data for local planning requirements in the Mahenge region.
10. Planning underway for Geotech drilling, with the sites now prepared for
the drill rig. The information from the proposed drilling program will enable
the detailed design of the plant and tails storage area. This information will
enhance the data from the test pits that were completed last year.
11. Logistics routes for the product continue to be assessed to determine
the optimum methods to ensure the final product will enter the market at the
desired price level.
12. Discussions are ongoing with the Government of Tanzania regarding the
framework for the 16% ownership, with draft Shareholder agreements, Articles
of Association and Joint Financial model being submitted to both parties for
review.
13. Ongoing review of quoted portfolio, where the Directors believe there
are opportunities for capital gains
14. Continue to actively review other exciting investment opportunities.
During the year under review, Armadale continued to operate as a diversified
investing group focused on natural resource projects in Africa. To this end,
its portfolio is divided into two groups:
· actively managed investments where the Company has majority ownership
of the investment; and
· passively managed investments where the Company has a minority
investment, typically in a quoted company, and does not have management
control.
Currently, the Company's key actively managed investment is the Mahenge Liandu
Graphite Project in Tanzania. At present, the Company is actively marketing
the Project to potential industry partners and end users (offtakers) of
graphite products. The Company is also pursuing a range of potential options
relating to development finance for the project
PASSIVELY MANAGED INVESTMENTS
Mantengu Mining Limited (formerly Mine Restoration Investments Limited) South
Africa
The Company's holding of shares in Mantengu Mining Limited ("MML") (formerly
Mine Restoration Investments Limited), which were fully written off when MML
entered administration, have been reinstated at their fair value of £105,000
following a reverse takeover by MML and a relisting of its shares on the
Johannesburg Stock Exchange.
Quoted Portfolio
The Company has a portfolio of quoted investments, valued at £1,245,000 on 4
May 2023, principally in resource companies where the Directors believe there
are opportunities for capital gain. The Company continues to keep its
portfolio under review. The Company's strategy with its quoted portfolio is to
gain exposure in projects that have the potential to create short to medium
term returns for the Company as well as diversify the Company's exposure to a
broader range of commodities while being able to enter and exit the position
with minimal cost and time.
SUSTAINABLE DEVELOPMENT
The Company is committed to sustainable development and conducting its
business ethically. Given that the Company invests in the mining industry, one
of its key focuses is on maintaining a high level of health and safety,
environmental responsibility, and support for the communities close to its
investments.
CORPORATE INFORMATION
Principal Risks and Uncertainties
There are known risks associated with the mineral industry, especially
in Africa. The Board regularly reviews the risks to which the Group is
exposed and endeavours to minimise them as far as possible. The following
summary, which is not exhaustive, outlines some of the risks and uncertainties
currently facing the Group:
· Although reducing throughout the year under review, COVID-19
continues to have risks for the Group in terms of its ability to travel to and
from its projects and ability for key personnel to access its projects. As
previously reported, the impact of COVID-19 on the project is so far minimal
as the Company's site activities were substantially completed in 2019.
· Through the Mahenge Liandu Graphite Project the Group is very exposed
to graphite. Graphite is a relatively new commodity whose market is being
driven by demand in renewable energy. The Company believes it is thus
vulnerable to changing global energy policies.
· The impact of Brexit on companies operating in the UK is still
being monitored. Thus far Brexit has not impacted the Group's ability to raise
funds.
· The exploration for and development of mineral resources involves
technical risks, infrastructure risks and logistical challenges, which even a
combination of careful evaluation and knowledge may not eliminate.
· There can be no assurance that the Group's project will be fully
developed in accordance with current plans.
· Future development work and subsequent financial returns arising may
be adversely affected by factors outside the control of the Group.
· The availability and access to future funding within the global
economic environment.
· The Group operates in multiple national jurisdictions and is
therefore vulnerable to changes in government policies which are outside its
control. The mining regulation changes in Tanzania are still being
evaluated, however they seem to have minimal impact on investment in graphite
mining. The Group continues to monitor the implementation of the changes to
evaluate and mitigate sovereign risks.
Principal Risks and Uncertainties
· The Group is exposed to gold as the holder of a royalty on gold
production from its previously held gold project. The Group's potential future
royalty stream will be affected by fluctuations in the prevailing market price
of gold and to variations of the US dollar in which gold sales will be
denominated.
Some of the mitigation strategies the Group applies in its present stage of
development include, among others:
· Proactive management to reducing fixed costs.
· Rationalisation of all capital expenditures.
· Maintaining strong relationships with government (employing local
staff and partial government ownership), which improves the Group's position
as a preferred small mining partner.
· Engagement with local communities to ensure our activities provide
value to the communities where we operate.
· Alternative and continued funding activities with a number of options
to secure future funding to continue as a going concern.
The Directors regularly monitor such risks and will take actions as
appropriate to mitigate them. The Group manages its risks by seeking to ensure
that it complies with the terms of its agreements, and through the application
of appropriate policies and procedures, and via the recruitment and retention
of a team of skilled and experienced professionals.
Key Performance Indicators
The Group's current key performance indicators ('KPIs') are the performance of
its underlying investments, measured in terms of the development of the
specific projects they relate to, the increase in capital value since
investment and the earnings generated for the Group from the investment. The
Directors consider that it is still too early in the investment cycle of any
of the investments held, for meaningful KPIs to be given.
Success is also measured through the identification and investment in suitable
additional opportunities that fit the Group's investment objectives.
Section 172 Statement
Section 172(1): A director of a company must act in the way he considers, in
good faith, would be most likely to promote the success of the company for the
benefit of its members as a whole, and in doing so have regard (amongst other
matters) to -
Section 172(1) (b) the interests of the company's employees,
Company's Comment: While the Company is largely staffed by contractor
employees (rather than direct employees of the Company), the directors
consider that continuing active work on the Mahenge Liandu Graphite
Project to be in the best interest of such staff to utilise their skills and
develop their local communities. The board seeks regular feedback from its key
stakeholders (including staff and advisers) to ensure that the corporate
culture of the Company remains highly ethical in terms of our Company's values
and behaviours.
Section 172(1) (c) the need to foster the company's business relationships
with suppliers, customers and others,
Company's Comment: The directors ensure that suppliers are available and
meeting commitments and there is good communication with staff as a key
requirement for high levels of engagement. This is done by periodic and ad-hoc
briefings and discussions.
Reasons to engage shareholders are to meet regulatory requirements and
understand shareholder sentiments on the business, its prospects and
performance of management.
This is done by regulatory news releases, keeping the investor relations
section of the website up to date, annual and half-year reports and
presentations and AGM.
Section 172(1) (d) the impact of the company's operations on the community and
the environment,
Company's Comment: The Company's activities impact communities in the places
where we operate and elsewhere. The Company engages communities with
employment / business development arrangements within guidelines. Through
preparation and compliance with environmental and social management plans,
which include the regulatory requirements for the Company on its Mahenge
Liandu Graphite Project, the directors ensure that wherever possible its
activities have a positive impact on the community and avoid adverse
environmental impacts.
The Company has engaged the services of a local manager in Liandu who provides
information to the community about our intended project activities and is
responsible for managing local affairs and feedback to the Company.
Section 172(1) (e) the desirability of the company maintaining a reputation
for high standards of business conduct, and
Company's Comment: The directors consider standards of business conduct in all
dealings of the Company. The members of the board have a collective
responsibility and obligation to promote the interests of the Company and are
collectively responsible for defining standards of business conduct which
includes corporate governance arrangements. The board provides strategic
leadership for the Company and operates within the scope of our corporate
governance framework and sets the strategic goals for the Company.
Section 172(1) (f) the need to act fairly as between members of the company.
Company's Comment: The board takes feedback from a wide range of shareholders
(large and small) and endeavours at every opportunity to pro-actively engage
with all shareholders (via regular news reporting-RNS) and engage with any
specific shareholders in response to particular queries they may have from
time to time. The board considers that its key decisions during the year have
impacted equally on all members of the Company.
Board
There were no changes in the Board during the year under review or post period
end. The Board continues to consider potential replacements for former Board
members with a focus on a potential appointment of a UK based Board member.
Financial Results
For the year ended 31 December 2022 the Group did not earn any revenues as
its business related solely to the making of investments in non-revenue
producing resource projects and companies.
The Group made a loss after tax of £0.206 million (2021: £0.333 million)
for the year ended 31 December 2022. Expenditure on the Mahenge Liandu
project during the year amounted to £0.468 million (2021: £0.272
million), which was capitalised as additional exploration and evaluation
assets.
Funds raised during the year amounted to £1.3 million from the exercise of
warrants and options.
At 31 December 2022, the Group had cash of £1,046,000 (2021: £886,000)
and nil debt finance (2020: nil). At 4 May 2023 the Group had cash of
£737,000 and listed investments worth £1,245,000.
Outlook
The year under review shows that Mahenge Liandu continues to represent an
exciting opportunity for the Group. As identified in the going concern note to
the Directors' Report, the Company's ability to achieve its strategy with
respect to the project is dependent on the further fundraising. The
Directors continue to keep other investment opportunities, in line with the
Group's investment objectives, under review, which the board believe could
deliver significant value to shareholders.
Nicholas Johansen
Director
11 May 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
£'000 £'000
Administrative expenses (309) (330)
Change in fair value of investments 103 8
Operating loss (206) (322)
Finance costs - (11)
Loss before taxation (206) (333)
Taxation - -
Loss after taxation (206) (333)
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities 252 (61)
Total comprehensive profit/(loss) attributable to the equity holders of the 46 (394)
parent company
Loss per share attributable to the equity holders of the parent company Pence Pence
Basic and diluted loss per share (0.04) (0.07)
Consolidated Statement of Financial Position
At 31 December 2022
2022 2021
£'000 £'000
Assets
Non-current assets
Exploration and evaluation assets 5,483 4,727
Investments 562 138
6,045 4,865
Current assets
Trade and other receivables 150 150
Cash and cash equivalents 1,046 886
1,196 1,036
Total assets 7,241 5,901
Equity and liabilities
Equity
Share capital 3,324 3,275
Share premium 25,153 23,906
Shares to be issued 286 286
Share option and warrant reserve 362 925
Foreign exchange reserve 318 66
Retained earnings (22,279) (22,636)
Total equity 7,164 5,822
Current liabilities
Trade and other payables 77 79
Total Liabilities 77 79
Total equity and liabilities 7,241 5,901
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Capital Share Premium Shares to be issued Share Foreign Exchange Reserve Retained Earnings Total
Option and Warrant Reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2021 3,208 22,348 286 762 127 (22,406) 4,325
Loss for the period - - - - - (333) (333)
Other comprehensive loss - - - - (61) - (61)
Total comprehensive loss for the year - - - - (61) (333) (394)
Issue of shares and warrants 67 1,558 - 266 - - 1,891
Transfer on exercise of warrants - - - (103) - 103 -
Total other movements 67 1,558 - 163 - 103 1,891
At 31 December 2021 3,275 23,906 286 925 66 (22,636) 5,822
Loss for the period - - - - - (206) (206)
Other comprehensive income - - - - 252 - 252
Total comprehensive income for the year - - - - 252 (206) 46
Issue of shares 49 1,247 - - - - 1,296
Transfer on exercise and expiry of warrants - - - (563) - 563 -
Total other movements 49 1,247 - (563) - 563 1,296
At 31 December 2022 3,324 25,153 286 362 318 22,279 7,164
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
£'000 £'000
Cash flows from operating activities
Loss before taxation (206) (333)
Adjustment for:
Change in fair value of investments (102) (8)
Finance costs - 11
(308) (330)
Changes in working capital (11) 1
Receivables
Payables 12 (39)
Net cash used in operating activities (307) (368)
Cash flows from investing activities
Expenditure on exploration and evaluation assets (518) (399)
Purchase of listed investments (411) -
Sale of listed investments 89 152
Net cash used in investing activities (840) (247)
Cash flows from financing activities
Proceeds from share issues 1,307 1,249
Net cash from financing activities 1,307 1,249
Net increase in cash and cash equivalents 160 634
Cash and cash equivalents at 1 January 886 252
Cash and cash equivalents at 31 December 1,046 886
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
and the Company will continue in operational existence for the foreseeable
future.
At 31 December 2022, the Group had cash of £1,046,000 (2021, £886,000) and
no debt finance (2021, nil).
At 4 May 2023, the Company had cash of £737,000 and listed investments with
a traded value of £1,245,000. The Directors have prepared a cash flow
forecast for the next twelve months which shows that the cash in hand together
with expected further receipts is sufficient to meet current commitments in
respect of exploration expenditure and corporate overheads for a period of at
least twelve months, after which further fundraising will be required.
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. Against the background of the encouraging progress with the
Mahenge Liandu graphite project and the Company's history of raising funds
through the issue of equity, the Directors consider that there is a reasonable
expectation that the required capital will be raised. However, there are
currently no binding agreements in place. Should the Directors be unable to
raise sufficient funds, the Company may be unable to realise its assets and
discharge its liabilities in the normal course of business.
These factors indicate the existence of a material uncertainty which may cast
doubt over the Group's and Company's ability to continue as a going concern.
The financial statements do not include the adjustments that would result if
the Group or Company were unable to continue as a going concern.
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.
More information can be found on the website www.armadalecapitalplc.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.armadalecapitalplc.com&esheet=52244720&newsitemid=20200702005192&lan=en-US&anchor=www.armadalecapitalplc.com&index=1&md5=7209221bbf1231bc13f525c3f5835785)
.
**ENDS**
Enquiries:
Armadale Capital Plc +44 (0) 20 7236 1177
Nick Johansen, Non-Executive Director
Tim Jones, Company Secretary
Nomad and Broker: finnCap Ltd +44 (0) 20 7220 0500
Christopher Raggett / Teddy Whiley / Seamus Fricker
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