REG - Armadale Capital PLC - Mahenge Project Update

Armadale CapitalAnnouncement

13/02/2023 09:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230213:nRSM7077Pa&default-theme=true

RNS Number : 7077P  Armadale Capital PLC  13 February 2023

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

 

13 February 2023

 

Armadale Capital Plc

('Armadale' the 'Company' or the 'Group')

Mahenge Project Update

Armadale, the AIM quoted investment company focused on natural resource
projects in Africa, is pleased to announce that it has made further progress
advancing towards commercial production at the Mahenge Liandu Project in
Tanzania. This is an important strategic development as part of ongoing plans
to expedite the path to commissioning commercial mining operations.
Furthermore, the Company notes the improved investment climate which brings
with it increased potential to attract development funding in Tanzania.
Armadale notes the significant progress made at the neighbouring Black Rock
Resources project over the last 12 months.

Project Update

The Board has accelerated the development of the mining lease at the Mahenge
Liandu Project on several fronts, which collectively enhance the progression
towards commercial mining operations:

Ø The Group 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.

Ø Planning is underway for Geotech drilling to commence this dry season, with
the sites now prepared for the drill rig. The information from the proposed
drilling program will enable the design of a   plant and tails storage area.
This information will enhance the data from the test pits that were completed
last year.

Ø 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.

Ø 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.

 

 

 

 

Project Funding

The Group is continuing discussions with several potential financing partners
regarding the debt funding required for project development. Moreover,
significantly improved market fundamentals and conditions for graphite has
seen an increase in interest from stakeholders capable of providing long-term
project finance.

Graphite prices have continued to increase due to strong ongoing demand from
the EV sector, while Benchmark Mineral Intelligence see further price upside
due to a potential supply deficit materialising in 2023. Current prices are
materially above the level used in the company's feasibility study.

Integral to securing project funding is lining up future off-take partners.
With the post-Covid improvement in graphite market fundamentals globally, the
Board has commenced re-engaging with prospective end-users which are located
in Europe and China.

 

Nick Johansen, Director of Armadale, said: "With the global graphite market in
the midst of a cyclical upswing, due to strong underlying fundamentals
stemming from the buoyant EV sector, the Board remains squarely focused on
progressing plans to secure the framework agreement with the Tanzanian
government regarding the 16% ownership. More importantly, the Board is
re-doubling efforts to secure long-term project finance from a reputable
provider and lining up off-take partners to generate a clear road map to
commissioning a viable commercial mining operation."

Mahenge Liandu Project Summary

The feasibility study completed in March 2020 confirms the potential for
 Mahenge Liandu to be a significant supplier of high quality graphite with a
relatively low capex.

·    US$882m pre-tax cashflow generated from initial 17 year mine life
utilises just 25% of the resource, which remains open in multiple directions
offering significant further upside;

·    Estimated pre-tax NPV of US$358m and IRR of 91% with scope for
further positive improvement upon economics in near-term through delivery of
optimised DFS

·    Staged ramp-up planned to facilitate near term production with
60,000tpa graphite concentrate to be produced for the first four years (Stage
1) before increasing to 90,000tpa (Stage 2)

·    Capital cost estimate for Stage 1 is US$38.6m, which includes a
contingency of U$S4.1m or 15% of total direct capital cost, a slight increase
on the scoping study allowing for the staged ramp up

·    1.6 year payback for Stage 1 (after tax) based on an average sales
price of US$1,179/t

·    Stage 2 expansion is expected to be funded from cashflow.

 

 Enquiries:
 Armadale Capital Plc                                     +44 (0) 20 7236 1177

 Nick Johansen, Chairman

 Tim Jones, Company Secretary
 Nomad and Broker: finnCap Ltd                            +44 (0) 20 7220 0500

 Christopher Raggett / Simon Hicks / Seamus Fricker

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDFIFFTFIIVLIV