Mahenge Liandu Scoping Study Delivers NPV of US$349m with 122% IRR


Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce the results of the Scoping Study completed by BatteryLimits on the Mahenge Liandu Graphite Project in Tanzania (‘Mahenge’ or the ‘Project’), which demonstrates highly robust and compelling economics.


  • Scoping study completed at Mahenge on a 400,000 tpa throughput, producing an average of 49,000tpa of high quality graphite products during a 32 year life of mine
  • The Project has a low operating cost of US$408/t and is based on an average life of mine grade of 12.5% Total Graphitic Carbon (‘TGC’)
  • Results deliver a pre-tax IRR of 122% and NPV of US$349m with a low development capex of US$35m
  • The maximum drawdown during the construction of the Project is US$34.9m and the after-tax payback period is 1.2 years
  • Average basket price used in the Scoping Study (US$1,271 / t) considered very conservative and allows for significant upward improvements as potential off take agreements negotiated
  • The deposit is one of the highest grade large flake deposits globally after the recent upgrade to 51.1Mt at 9.3% TGC, including 38.7Mt Indicted at 9.3% and 12.4Mt Inferred at 9.1% TGC – represents a 25% increase from the previous 40.9Mt inferred resource at 9.41% TGC
  • There remains significant scope to further improve returns, with staged expansions as the current mine plan is based on approximately 25% of the total resource
  • Results to feed into a feasibility study to progress the Project to a decision to mine early in 2019 – in the interim Company will commence negotiations with identified strategic funders and offtake partners.

Nick Johansen, Director of Armadale said: “We have long held confidence in the commercial potential and economic value of Mahenge and the results of this Scoping Study greatly reinforces this view. The Project’s NPV of US$US349m is significant, especially when compared to our current market cap of ~£5m. With an IRR of 122%, 1.2 year payback and low development costs, we firmly believe that Mahenge is an attractive asset for development. Crucially, the Scoping Study was limited to just 25% of the Project’s current resource, which forms Stage 1 of a planned staged development programme. Accordingly, with an upgrade in throughput there is significant potential to improve the Project economics even further. Our next steps will now be to commence a definitive feasibility study so that we can advance Mahenge to a decision to mine early in 2019.”

Dave Pass, Scoping Study Manager said: “The results of the Scoping Study confirm the combination of high graphite feed grade and coarse flake high purity graphite product, delivering robust project economics and warranting progress to the next phase of feasibility studies. Given the size of the resource it would be expected that there remains significant room for further project optimisation.”

Study Design Parameters

The Mahenge Scoping study was based on a throughput of 400,000tpa over a 32 year mine life from the start of construction. The deposit has a low average strip ration of 1:1 for the life of the mine and a very low operating cost of US$408/t. A summary of the parameters is shown in Table 1.

Table 1 Scoping Study Parameters

Design Parameters   Units   Value
Nominal concentrate production at 12.5% TGC kt/y 49
Nominal strip ratio Waste : Ore 1:01
Graphite average basket price (US$ /t, real) 1,271
Project Life (including construction) (years) 32

Financial Results

The Project has a pre-tax IRR of 122% based on a relatively low capital cost of US$35m. The after-tax payback period is expected to 1.2 years.

Financial Parameters   Units   Value
Discount Rate % 10%
Exchange Rate USD : AUD 0.75
Capital Cost (US$ m, real) 35
IRR - after tax (%, real) 89%
NPV @ 10.0% - after tax (US$ m, real) 239
Payback Period - after tax, from 1st ore processed (Years) 1.2
Cash Costs (FOB DES) (US$/t, real) 408
IRR - before tax (%, real) 122%
NPV @ 10.0% - before tax (US$ m, real) 348.7

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.


Armadale Capital Plc

Tim Jones, Company Secretary

+44 20 7236 1177
Nomad and broker: finnCap Ltd

Christopher Raggett / Simon Hicks

+44 20 7220 0500
Press Relations: St Brides Partners Ltd

Susie Geliher / Charlotte Page

+44 20 7236 1177


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 Indicated and inferred mineral resource estimate of 51.1Mt @ 9.3% TGC, making it 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.

Other assets Armadale has an interest in, include the Mpokoto Gold project in the Democratic Republic of Congo and a portfolio of quoted investments.

More information can be found on the website

Short Name: Armadale Capital Plc
Category Code: MSCH
Sequence Number: 643883
Time of Receipt (offset from UTC): 20180327T080528+0100


Armadale Capital Plc


Armadale Capital Plc