Acquisition of Kisenge Limited

LONDON--()--

1 September 2014

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Acquisition of Kisenge Limited

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce that it has entered into an agreement to acquire 100% of Kisenge Limited (‘Kisenge’), which holds the exploration rights to a significant area in the Katanga Province in the south of the Democratic Republic of the Congo, where Armadale’s Mpokoto Gold Project (‘Mpokoto’ or ‘the Project’) is situated. The acquisition gives the Company direct ownership over its flagship project, the Mpokoto Gold Project, in addition to providing Armadale with the rights to four additional mineral exploration licences, which are prospective for other minerals including gold, manganese and diamonds.

Overview

  • Acquisition consolidates Armadale’s tenure over its flagship Mpokoto Gold Project, which has a current resource of 507,000oz of contained gold (‘Au’) and an Exploration Target of 10Mt-15Mt at 1.2g/t-1.5g/t Au
  • Agreement to acquire Kisenge Limited for an aggregate consideration of US$520,000, payable in cash upon completion
  • Transaction significantly increases the Company’s land holding in the Katanga Province to an area totalling approximately 0.89 million hectares, providing an opportunity to explore for other minerals within this area of the highly prospective Katanga Province, which has known occurrences of manganese, gold and diamonds
  • Acquisition includes an experienced development team based in Lubumbashi and Kisenge
  • Company focussed on leveraging strengthened in-country position to continue development of Mpokoto – primary goal is to commence commercial gold production before the end of 2015

Justin Lewis, Director of Armadale, said: “The opportunity to acquire Kisenge is a significant step in the development of the Mpokoto Gold Project. It gives Armadale direct ownership over the Project and also greatly strengthens the Company’s position in-country where we remain focussed on advancing Mpokoto into production. In this vein, I am also pleased to report that our mining licence application continues to progress well and we have now progressed through the majority of the procedural steps before grant.

“Aside from the acquisition supporting the development of Mpokoto, Kisenge significantly increases Armadale’s footprint in the mineral exploration licences in the Katanga province; Armadale now has the right to explore a significant area in the south west of the Katanga province, which has historically been prospective for a number of minerals, particularly gold, diamonds and manganese. The Directors look forward to developing exploration plans in order to realise value from these licence areas in the future.”

Background on Kisenge

Kisenge holds an 80% interest in Mines d’Or de Kisenge sarl (‘MDDK’) which holds the rights to mineral exploration licences within the Katanga Province and, a 100% interest in Cluff Mining Congo sarl (‘Cluminco’), a mining services company. MDDK holds 32 mineral exploration licences (Permis de Recherche) covering approximately 0.89 million hectares in the Kisenge area, within which Armadale’s Mpokoto project is situated. MDDK has recently applied for a separate mining licence over the Mpokoto Project, which is progressing well through the application process.

MDDK is owned 80% by Kisenge and 20% by Enterprise Miniere de Kisenge-Manganese sarl (‘KMC’), a Congolese government owned entity. Previously, through Armadale’s wholly owned subsidiary, Netcom, it had acquired the contractual rights to Kisenge’s 80% interest in the Mpokoto Project. The acquisition of Kisenge sees Armadale take direct ownership of its interest in Mpokoto, thereby securing it tenure over the Project, whilst extending its footprint and rights in the wider area comprised within the mineral exploration licences.

The Company has recently completed the in-fill drilling programme over the Project, with the final results expected shortly and also continues to advance the updated Scoping Study for the Mpokoto Project. Armadale expects to publish intial results from the drilling programme shortly.

Details of the Acquisition

Armadale has entered into an agreement to acquire 77 per cent of the issued share capital of Kisenge Limited from its largest shareholder, Tremont Master Holdings (‘Tremont’) and made an offer to acquire the balance of the issued share capital of Kisenge for an aggregate consideration of US$520,000, payable in cash upon completion. In addition, Armadale has agreed to make an additional payment equal to the sum of any VAT recovered by Kisenge prior to 31 March 2015 in respect of expenditure made prior to 31 July 2014 up to a maximum of US$165,000. Tremont has agreed to accept the offer. Pursuant to drag along provisions contained in Kisenge’s Articles, from the date of the major shareholders’ acceptance all other shareholders are deemed to have also accepted the offer. It is anticipated that the acquisition will complete on or about 24 September 2014, following the receipt of acceptances or execution of outstanding transfers by Tremont in accordance with the drag along rights set out in the articles of association of Kisenge. Upon completion Armadale will own 100% of Kisenge.

Details on Kisenge

Kisenge is a company incorporated in the British Virgin Islands and has two group companies incorporated in the Democratic Republic of Congo, Cluminco, a wholly owned subsidiary, and MDDK, of which it owns 80% with the balance of 20% owned by KMC.

As at 31 December 2013, Kisenge had audited consolidated Total Assets of US$2.53 million and Liabilities of US$0.28 million and made of loss of US$1.60m for the year ended 31 December 2013. As at 31 July 2014, Kisenge’s unaudited management accounts show consolidated Total Assets of US$1.76 million and Liabilities of US$1.27 million.

Issue of Shares

In conjunction with the acquisition of Kisenge, Armadale intends, upon completion to issue 65 million ordinary shares in the capital of the Company to certain key employees of Kisenge at par value. A further announcement will be made at completion.

**ENDS**

Enquiries:

 
 

Armadale Capital

Justin Lewis, Director +61 3 9627 9954
 

Nomad and broker: finnCap Limited

Stuart Andrews +44 207 220 0500
Christopher Raggett
 

Press relations: St Brides Media & Finance Ltd.

Susie Geliher +44 207 236 1177
Charlotte Heap

Notes

Armadale Capital Plc is focussed 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.

Armadale is focused on the development of the Mpokoto Gold project in the Democratic Republic of the Congo, in which it owns an 80% interest. Armadale also currently holds approximately a 30% interest in Mine Restoration Investments Ltd, a South African listed company, which aims to develop profitable operations in South Africa through the briquetting and sale of coal fines in KwaZulu Natal, as well as a number of other quoted investments.

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

Short Name: Armadale Capital Plc
Category Code: MSC
Sequence Number: 430994
Time of Receipt (offset from UTC): 20140901T084632+0100

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