Armadale Capital Plc (‘Armadale’ or ‘the Company’)
Proposed acquisition of a High Grade Coarse Flake Graphite Project in Tanzania
Armadale, the AIM quoted investment company focused on natural resources projects, is pleased to announce it has entered into a heads of terms agreement to acquire the Mahenge Liandu Graphite Project in south-east Tanzania (‘Liandu Project’ or ‘the Project’). This investment is in line with Armadale’s strategy to build a portfolio of revenue generating African resource projects. The growth of Armadale’s investment portfolio represents an exciting new period for the Company with strategic development potential that will see Armadale couple its understanding of the African resource sector with opportunities in the graphite market in order to capitalise on the strong outlook for graphite from the burgeoning battery market.
- Proposed acquisition provides access to the highly prospective graphite market –global demand for commercial graphite is expected to double within the next eight years
- Growth fuelled by developments in the energy storage industry – graphite is an essential component of the modern lithium-ion battery, making it a key material in smart phones, tablets, laptops and electric cars
- Highly prospective Liandu Project in south-east Tanzania located in area of proven coarse flake, high grade graphite resources – ASX listed Kibaran Resources Ltd (ASX:KNL, AUS$40 million market cap) and Black Rock Mining Limited (ASX:BKT, AUS$13.6 million market cap) have both identified and are developing significant proven and valuable graphite projects immediately adjacent to the Project
- Armadale geologists have been on the ground, mapped and sampled the graphite schist. Results from 7 previous samples ranged from 12.8% - 24.0% Total Graphite Content (‘TGC’).
- Exploration drilling completed December 2015 with results underpinning licence prospectivity: 10m at 6.54% TGC, 24m at 12.9% TGC and 5m at 21.5% TGC
- Mineralised trend about 1.6 km in strike length and up to 500m wide identified, which remains open at depth
- Field work on the Project will commence following the completion of the Transaction – targeting Maiden Resource estimation in late 2016
- Transaction will complement Armadale’s current portfolio of assets, including the Mpokoto Gold Project in Democratic Republic of Congo, which has a Resource of 678,000 oz Au from 14.58 million tonnes ore at 1.45 g/t gold
Peter Marks Chairman of Armadale said, “This transaction creates a significant opportunity for Armadale in an industry with exciting demand fundamentals. Graphite is a raw material in lithium ion batteries, which are used to power electric vehicles, as well as being a critical factor in the energy storage revolution currently taking place.
“Mahenge Liandu is in an area of known high quality graphite indicating that this Project area may benefit from similar high mineral values. In addition to this, three holes have already been completed and sampled by the Armadale team, and results from this have further reinforced the Board’s view that the Mahenge Liandu Project is an ideal investment target, complementing Armadale’s current portfolio, including the Mpokoto Gold Project in the Democratic Republic of Congo.”
A presentation providing further details of the Liandu Project will be available to view on Armadale’s website: www.armadalecapitalplc.com.
Armadale has entered into a heads of terms agreement with Graphite Advancement Tanzania Pty Ltd (‘GAT’), an Australian company that through a Tanzanian subsidiary owns or has the right to 100% of the tenements that constitute the Liandu Project. Armadale has agreed to acquire GAT for an issue of 80 million Armadale shares on completion of the transaction (‘Completion’). GAT raised AUS$400,000 at a valuation of AUS$2 million (£1million) in November 2015. The vendor shareholders of GAT have agreed to enter into appropriate orderly market agreements.
The heads of term agreement is conditional upon:
- completion of a Sale & Purchase agreement;
- completion of usual due diligence by both parties; and
- any shareholder approvals that are required by either party.
Mahenge Liandu Graphite Project
The Liandu Project is located in the Ulanga District in south east Tanzania approximately 300km south west of Morogoro, and 10km from the town Mahenge (Figure 1 Location Map). The area is highly prospective for graphite with the Mahenge properties located immediately to the east of Kibaran Resources (ASX:KLN) (‘Kibaran’) Epanko Project where Kibaran completed a bankable feasibility study (‘BFS’) in July 2015, with the following key findings:
- Proven and Probable Ore Reserves of 10.9 Mt at 8.6% TGC
- Annual EBITDA of US$33.6m for 15 years
- Revenue Price US$1,466/t of concentrate, opex FOB Dar es Salaam $570/t
- Metallurgical Results: 85.7% of distribution > than 106 micron, carbon conc. of 96.3% TGC
Black Rock Mining (ASX:BKT) (‘Black Rock’) Mahenge Project is situated only 1km north-west of the Liandu Project and has a global resource of 131Mt at 7.9% TGC (including 38Mt at 10.2% TGC or 16.6 Mt at 11.1% TGC). Black Rock has delineated approximately 80% of their resources in eight months demonstrating the opportunity to add significant value to the Liandu Project in a short time frame. On 22 March 2016 Black Rock announced the results of an Independent Scoping Study with:
- 52,000 tpa graphite concentrate mining operation (25 year mine life);
- at cash costs of US$458/t; and
- a sales price of US$1,236/t (FOB Dar es Salaam).
Figure 1: Location Map – see full PDF on Armadale’s website www.armadalecapitalplc.com
The Project is located close to infrastructure with only 72 km of unsealed road from Ifakara to Mahenge and 76 km from the railway line to Dar es Salaam Port, the major East African Port.
GAT owns the rights to the Liandu Project through a ground package that comprises 29.9 square km comprising a granted prospecting licence (PL10969/2016) and a prospecting licence in application (App02788) that is in the process of being approved.
To date GAT has spent approximately AUS$400,000 on exploring the Project over the last 12 months. Reconnaissance mapping by GAT in November 2015 defined a mineralised trend about 1.6 km in strike length and up to 500m wide. Reconnaissance focused on the south east portion of PL10969/2016, and into App 02788. A total of 28 rock chip samples were collected from outcrops, with visual estimates of medium-coarse flake graphite ranging from 10-15%. Structural measurements suggested steep dipping, N-S trending mineralisation in the south, and shallow dipping NE-SW trending mineralisation as you move to the north. Seven of the rock chip samples collected were submitted to ALS Laboratory in Mwanza for assaying. All were mineralised ranging from 12.8 - 24% TGC confirming mineralisation is present on the southern trend (N-S), and the northern trend (NE-SW).
A small drilling programme was completed in December 2015 to test mineralisation and three holes (LDRC001-003) for 138m were completed. They were all drilled in the southern area with best results coming from section longitude -8o 44' 06" (Figure 3 & 4). firstname.lastname@example.org% TGC was encountered in LDRC0002 & email@example.com% TGC plus firstname.lastname@example.org% TGC was encountered in LDRC0003.
Armadale and GAT are currently completing mutual due diligence. Once completed the parties anticipate entering in to a sale & purchase agreement that will lead to Armadale acquiring the entire issued share capital of GAT for an issue of 80 million Armadale Shares.
Armadale’s geologists are currently finalising a proposed work programme with the aim of delineating a JORC resource at the Liandu Project and demonstrating the quality of the graphite. The programme will include a combination of detailed mapping and drilling, details of this programme will be announced upon completion of the acquisition
The Graphite Market
The global demand for commercial graphite is growing and is expected to double within the next eight years. This growth profile is being driven by the increasing number of applications for graphite in technology and industry. The material has applications in electronics, nuclear reactors, manufacturing, aircraft and automotive production and in developing energy markets. Importantly, graphite is an essential component of the modern lithium-ion battery, making it a key material in smart phones, tablets, laptops and electric cars.
Graphite is also used to produce graphene. Graphene is an allotrope of carbon, essentially a one-atom thick layer of graphite. Its weight and shape makes graphene desirable for uses in computer chips, laptops, optics and lasers.
Graphite, if it possesses the special property of ‘expandability,’ can also be further processed to produce ‘expanded’ graphite. ‘Expanded’ graphite is used to produce flexible graphite sheets and foils for manufacturing gaskets, packaging and other sealing materials in critical applications. In particular, it is useful in high temperature and high pressure environments and is also considered valuable in battery market. ‘Expanded’ graphite is highly valuable and highly sought after.
Graphite is a highly valuable commodity and its unique physical and chemical properties make it difficult to substitute.
Issue of Equity
The Company has today issued 3 million new ordinary shares (New Shares) to certain advisers and consultants in consideration of work carried out.
The issue of shares is subject, inter alia, to admission of the New Shares to trading on AIM (‘Admission’), which is expected to occur at 8am on 7 June 2016. Application has been made to the London Stock Exchange for the New Shares to be admitted to trading on AIM. The New Shares will, when issued, rank pari passu in all respects with the Company's existing Ordinary Shares.
Following Admission, the Company will have 99,551,967 Ordinary Shares in issue. The Company has no shares in treasury, therefore the figure of 99,551,967 should be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change of their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.
Competent Person statement
The information in this announcement that relates to Exploration Results is based on information compiled by Mr Peter Sheehan (Principal Consultant for Newport Mining Services), a Competent Person, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Sheehan has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Sheehan consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Armadale Capital Plc
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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.
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. Mpokoto has a current Total Mineral Resource of 678,000 oz gold (‘Au’) from 14.58 million tonnes (‘Mt’) @ 1.45g/t Au at a cut-off grade of 0.5g/t. The Company has recently announced the results of a Feasibility Study for Mpokoto which demonstrated a pre-tax net present value of US$43m based upon a discount rate of 5% and a gold price of US$1,250/oz. The Project is subject to four Mining Licences which are valid for an initial term of 30 years from 30 September 2014.
The Company also has a heads of terms agreement to acquire the Mahenge Liandu Graphite Project in south-east Tanzania. The project is located in a highly prospective region with proven coarse flake, high grade graphite resources – ASX listed Kibaran Resources Ltd (ASX:KNL) and Black Rock Mining Limited (ASX:BKT) have both identified and are developing significant proven and valuable graphite projects immediately adjacent to Liandu. A mineralised trend about 1.6 km in strike length and up to 500m wide has been identified at the project, which remains open at depth. Armadale geologists have mapped and sampled the graphite schist, with results from seven previous samples ranging from 12.8% - 24.0% Total Graphite Content (‘TGC’). Exploration drilling completed at the project in December 2015 has also further confirmed the mineral potential of licence area, with results including 10m at 6.54% TGC, 24m at 12.9% TGC and 5m at 21.5% TGC. Armadale is targeting a Maiden Resource estimation in late 2016.
Armadale also currently holds approximately a 30% interest in Mine Restoration Investments Ltd, a South African listed company, as well as a number of other quoted investments.
More information can be found on the website www.armadalecapitalplc.com.