REG-Armadale Capital Plc Half-year Report
29/09/2020 08:50
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Half-year Report
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company
29 September 2020
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 2020.
Highlights:
* Mahenge Liandu Graphite Project established as a large, long life graphite
deposit capable of producing high quality graphite concentrate for the rapidly
emerging EV market through optimised Definitive Feasibility Study (‘DFS’)
* 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
* 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
* Estimated pre-tax NPV of US$430m and IRR of 91%
* Average annual production of large flake high-purity graphite of 109ktpa
* Low cost, fast-tracked production to be delivered through staged ramp-up
* 60,000tpa graphite concentrate to be produced for the first three years
(Stage
1) before increasing to life of mine average of 109,000tpa (Stage 2)
* Low capital cost estimate - Stage 1 is US$39.7m, including contingency of
U$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 to be funded from cashflow
* Significant commercial potential, fuelled by growth in the electric vehicle
and renewable energy market
* Signed NDAs with two separate parties with the aim of advancing project
level
funding discussions with a view to bringing in an investment partner to
progress through to mine construction
* Two additional MoUs signed to supply high quality graphite products produced
at Mahenge Liandu – currently focussed on converting these to binding
offtake agreements
* Post period, in August 2020, commenced testing with Australia’s Commonwealth
Scientific and Industrial Research Organisation (‘CSIRO’) to better to
evaluate Mahenge natural flake graphite for its suitability for use in the
battery graphite market
* Progressing licencing applications ahead of commencing mine construction
* Projected timeline to first production is expected to be approximately 10-12
months from the start of construction
* Mining Licence application process commenced in June 2020 with the submission
to the Department of Energy and Minerals
* Post Period, in September 2020, submitted the Environmental and Social Impact
Assessment (‘ESIA’) to the National Environment Management Council
(‘NEMC’) of Tanzania
* Board strengthened to support company transition from explorer to producer
with the appointments of:
* Ms Amne Suedi as Non-Executive Director in January 2020
* Mr Matt Bull as Non-Executive Director in April 2020
Nick Johansen, Director of Armadale, said: “The first half of 2020 has seen
us firmly establish Mahenge Liandu as the large, long life, low cost graphite
deposit we know it to be. The enhanced numbers of the DFS clearly highlight
the significant value potential of our flagship asset, which is primed to
cater to rising graphite demand in light of EV and renewable energy market
developments. Indeed, the outlook for graphite is strong with market analysts
predicting that the global graphite market will grow to US$21.4bn by 2024 at a
CAGR of 5.6%, with demand for flake graphite, such as that which we will be
producing at Mahenge, rising from less than 600,000tpa in 2014 to more than
1.6Mtpa in 2025 and 2Mtpa by 2028. Our focus and commitment is therefore on
ensuring we meet this demand. To this end we have defined a staged development
model that will enable us to commence production in as short a time frame as
possible whilst minimising capital expenditure to ensure we continue to
maximise value for our stakeholders.
“Testament to the quality of our asset and sense of our development
approach, we have received significant interest from a number of commercial
parties and are now progressing two MoUs into binding offtake agreements for
the supply of our graphite product. Alongside this, we are advancing project
level funding discussions with two prospective parties so that we can progress
our project through to mine construction in a way that minimises dilution for
shareholders. We also very much look forward to the results from the test work
being undertaken by CSIRO, which we hope will further support our marketing
efforts in promoting Mahenge graphite as a high-value product for the rapidly
expanding EV market.
“Ultimately we are doing all we can to ensure that once we have our Mining
Licence granted, we are ready for action. The next 12-18 months should be
incredibly formative for our company and we look forward to continuing to keep
shareholders abreast of developments. In the meantime, I would like to give my
thanks to all for their continued to support and commend the team on their
excellent hard work during what has become an unprecedented time globally.
Ensuring the safety of our team is naturally our priority and as we implement
new COVID compliant safety measures, we are delighted to confirm that progress
continues to be made and our overriding objectives for Mahenge Liandu remain
unchanged.”
Directors’ Statement
The six-month period to 30 June 2020 has seen considerable advancement of the
Mahenge Liandu Graphite Project in Tanzania (‘Mahenge Liandu’ or the
‘Project’), with delivery of the Definitive Feasibility Study (‘DFS’),
which was completed in March 2020, and an updated DFS, which was announced in
June 2020.
The Board continues to review additional investment opportunities and also
holds a portfolio of quoted investments where the Board considers there is an
opportunity for material capital appreciation. The Board may invest in
additional opportunities, in line with its investing policy, with any material
investments notified to the market as appropriate.
The Company raised £550,000 in a private placement during the period. A
further £438,000 has been raised from warrant and option exercises and
£395,000 of the loan notes issued in 2019 have been converted into ordinary
shares. The Company finished the period with £436,000 cash at hand.
The Directors would like to take this opportunity to thank shareholders for
their ongoing support and commitment and look forward to providing further
updates as the Company continues to advance Mahenge Liandu towards production,
realising its increasingly demonstrable potential and building value for
shareholders.
For and on behalf of the Board
29 September 2020
FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2020
Condensed Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2020
Unaudited
Six months ended
30 June 30 June
2020 2019
£’000 £’000
Administrative expenses (176) (187)
Share based payment charges - (21)
Change in fair value of derivative 37 -
Change in fair value of investments 2 -
Finance costs (22) (8)
Loss before taxation (159) (216)
Taxation - -
Loss from continuing operations (159) (216)
Profit from discontinued operations, net of tax (note 3) - 240
(Loss)/profit after taxation (159) 24
Other comprehensive income
Items that may be reclassified to profit or loss:
Exchange differences on translating foreign entities (13) 26
Total comprehensive (loss)/income attributable to equity holders of the parent
company
(172) 50
Pence Pence
(Loss)/Earnings per share attributable to equity holders of the parent company (0.04)
(note 4)
0.01
Total (loss)/profit per share - basic
- fully diluted (0.04) 0.01
Loss per share from continuing operations - basic (0.04) (0.06)
- fully diluted (0.04) (0.06)
Consolidated Statement of Financial Position
At 30 June 2020
Unaudited Audited
30 June 30 June 31 December
2020 2019 2019
£’000 £’000 £’000
Assets
Non-Current assets
Exploration and evaluation assets 4,084 3,457 3,705
Investments 108 60 106
4,192 3,517 3,811
Current assets
Trade and other receivables 303 92 159
Cash and cash equivalents 436 42 96
739 134 255
Total assets 4,931 3,651 4,066
Equity and liabilities
Equity
Share capital (note 5) 3,197 3,111 3,139
Share premium 22,122 21,160 21,037
Shares to be issued 286 286 286
Share option and warrant reserve 813 116 662
Foreign exchange reserve 75 208 88
Retained earnings (22,420) (22,106) (22,400)
Total equity 4,073 2,775 2,812
Current liabilities
Trade and other payables 253 180 268
Loans 604 696 867
Derivative liability 1 - 119
Total liabilities 858 876 1,254
4,931 3,651 4,066
Total equity and liabilities
Unaudited Consolidated Statement of Changes in Equity
For the period ended 30 June 2020
Share Share Shares to Share Foreign Retained Total
Capital Premium be Option Exchange Earnings
£’000 £’000 Issued Reserve Reserve £’000 £’000
£’000 £’000 £’000
Balance 1 January 2019 3,038 20,570 286 95 421 (22,129) 2,281
Loss for the period - - - - - (273) (273)
Other comprehensive loss - - - - (333) - (333)
Total comprehensive loss for the period (333) (273) (606)
- - - -
Issue of shares and warrants 101 658 - 546 - - 1,305
Expenses of issue - (191) - - - - (191)
Transfer on exercise of warrants - - - (2) - 2 -
Share based payment charges - - - 23 - - 23
Total other movements 101 467 - 567 - 2 1137
Balance 30 December 2019 3,139 21,037 286 662 88 (22,400) 2,812
Loss for the period - - - - - (159) (159)
Other comprehensive loss - - - - (13) - (13)
Total comprehensive loss for the period - - - - (13) (159) (172)
Issue of shares 58 1,085 - 240 - - 1,383
Transfer on exercise of warrants - - - (89) - 89 -
Release on conversion of loan notes - - - - - 50 50
Total other movements 58 1,085 - 151 - 139 1,433
Balance 30 June 2020 3,197 22,122 286 813 75 (22,420) 4,073
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 2020
Unaudited Audited
Six Months ended Year ended
30 June 2020 30 June 2019 31 December 2019
£’000 £’000 £’000
Cash flows from operating activities
(Loss)/profit before taxation (159) 24 (273)
Foreign exchange release on disposal of overseas operation - (240)
(240)
Share based payment charge - 21 23
Change in fair value of derivative (37) - 45
Change in fair value of investments (2) - (46)
Finance costs 22 7 21
(176) (188) (470)
Changes in working capital
Receivables (16) (38) (44)
Payables 8 (133) (15)
Net cash used in operating activities (184) (359) (529)
Cash flows from investing activities
Expenditure on exploration and evaluation assets (350) (162) (479)
Purchase of listed investments - (59) (59)
Net cash used in investing activities (350) (221) (538)
Cash flows from financing activities
Proceeds from share placement 845 709 969
Issue costs - (132) (46)
Issue of loan notes - - 400
Loan repayment - - (235)
Proceeds from loan 50 - 30
Interest paid (21) - -
Net cash from financing activities 874 577 1,118
Net increase/(decrease) in cash and cash equivalents 340 (3) 51
Cash and cash equivalents at 1 January 2020 96 45 45
Cash and cash equivalents at 30 June 2020 436 42 96
Notes to the unaudited condensed consolidated financial statements
For the period ended 30 June 2019
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 2020 and 30 June
2019 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 2019 has been derived from the Annual Report and
Accounts, which were approved by the Board of Directors on 2 June 2020 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 2019 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 2019 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 2020, 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 the
extension and/or conversion of its loan notes and further fundraising.
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. Release of exchange gains on overseas operation
The Company’s interest in the Mpokoto gold project was sold on 11 January
2019, at which point the accumulated net foreign exchange gains arising on
historical revaluations of the investment were released to income from the
foreign exchange reserve.
4. Loss per share
The calculation of total basic loss per share is based on a loss of £159,000
(2019, profit of £24,000) and on 419,492,599 (2019, 352,164,475) Ordinary
Shares, being the weighted average number of Ordinary Shares in issue during
the period.
The calculation of fully diluted earnings per share in 2019 was based on
406,666,587 diluted shares, being the weighted average number of diluted
shares during the period. In 2020, there was no difference between basic loss
per share and diluted loss per share as the Group reported a loss for the
period.
5. Share capital
During the period, the Company placed 24,444,444 Ordinary Shares in the
Capital of the Company to raise £550,000 with institutional and other
investors. Also during the period, £395,000 of loan notes were converted into
13,166,663 ordinary shares and 19,979,702 options and warrants were exercised
providing proceeds of £437,553
**ENDS**
For further information, please visit the Company’s website
www.armadalecapitalplc.com
(https://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.armadalecapitalplc.com&esheet=52296834&newsitemid=20200929005476&lan=en-US&anchor=www.armadalecapitalplc.com&index=1&md5=5ebd89acd1f30833e32ad63e0ca1866b)
, follow Armadale on Twitter @ArmadaleCapital or contact:
Enquiries:
Armadale Capital Plc +44 (0)20 7236 1177
Tim Jones, Company Secretary
Nomad and joint broker: finnCap Ltd +44 (0)20 7220 0500
Christopher Raggett / Edward Whiley
Joint Broker: SI Capital Ltd +44 (0)1483 413500
Nick Emerson
Press Relations: St Brides Partners Ltd +44 (0)20 7236 1177
Charlotte Page / Beth Melluish
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 inferred mineral resource estimate of
51.1Mt @ 9.3% TGC. Marking the project one of the largest high-grade resources
in Tanzania, and work to date has demonstrated Mahenge Liandu’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.
In addition to this project Armadale has a portfolio of quoted investments.
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