Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company
26 September 2019
Armadale Capital Plc (‘Armadale’ or ‘the Company’)
Offtake Agreement MOU for Graphite Products Produced at Mahenge Liandu
+70% Target Graphite Production Now Under Offtake MOU
Armadale Capital plc (LON:ACP), the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce that it has signed a Memorandum of Understanding (“MOU”) for a proposed offtake agreement with CoolRU Information Technology (“CoolRU”), a China based technology company, for high quality graphite products produced at the Company’s Mahenge Liandu Graphite Project (“Mahenge Liandu” or the “Project”) in Tanzania.
- MOU signed with CoolRU, based in China, for the proposed offtake of 5,000 tonnes per annum (‘tpa’) of graphite concentrate produced at Mahenge Liandu
- MOU is for an initial term of five years and at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced
- MOU, in addition to agreement announced on 19 February 2019 with the Matrass Group, brings the total offtake under an MOU to 35,000tpa representing 71.4% of the 49,000tpa average annual production target
- Discussions advancing with a major organisation to secure a further offtake agreement in respect of the remaining target production
- Work is continuing in parallel to finalise a Definitive Feasibility Study (‘DFS’) and to convert MOUs into binding offtake agreements
Nick Johansen, Director of Armadale said: “Securing this MOU is another important step in the commercialisation of Mahenge Liandu. We now stand with over 70% of planned annual graphite production under offtake MOU and expect to secure further offtake agreements, which will cover all planned production. This news comes at a time when the Company is accelerating its transition from explorer to emerging graphite producer, whilst multiple important workstreams related to completion of the Project’s DFS are underway. Armadale will, as recently demonstrated, provide updates to market as each important workstream is concluded.”
Details of the MOU with CoolRU
Armadale has secured an MOU with CoolRU Information Technology for 5,000tpa of graphite concentrate produced at Mahenge Liandu over an initial five-year period.
CoolRU was established in 2006 and is registered in WangJing Science Park in Beijing China. It is working closely with Geek+, the world’s leading provider of advanced robotics and AI technologies, to offer truly comprehensive intelligent logistics solutions to customers.
CoolRU is developing various applications of graphene, and high technologies related to graphite industry including solutions used in forest fire prevention and autonomous vehicles.
The MOU with CoolRU follows the MOU with the Matrass Group announced on 19 February 2019 and brings the total offtake under an MOU to 35,000tpa representing 71.4% of the 49,000tpa average annual production target at the Project. Additionally, discussions are advancing with a major organisation to secure a further offtake agreement in respect of the remaining target production.
Mahenge Liandu Graphite Project, Tanzania
Armadale’s wholly-owned Mahenge Liandu Graphite Project is located in a highly prospective region, with a high-grade JORC compliant indicated and inferred mineral resource estimate announced February 2018 – 51.1Mt at 9.3% TGC. This includes 38.7Mt Indicted at 9.3% and 12.4Mt at 9.1% TGC, making it one of the largest high-grade resources in Tanzania.
The work to date has demonstrated the Project’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.
Currently, Armadale is completing a DFS based on the results of a Scoping Study that was completed in March 2018. The study was based on a throughput of 400,000tpa over a 32-year mine life and showed the project has robust economics and warrants further development.
The Scoping Study verified the Mahenge Liandu project could produce a coarse flake, high-purity graphite product underpinning a compelling business case to progress commercialisation plans.
The Scoping Study, based on a 400,000tpa throughput, highlighted the following key positive metrics:
- Producing an average of 49,000tpa of high-quality graphite products for a 32-year mine life
- Near surface nature of the deposit produced a low 1:1 strip ratio for the life of the mine
- Low operating cost of US$408/t, based on an average 12.5% TGC life of mine grade
- Pre-tax IRR of 122% and NPV of US$349m, with a low development capex of US$35m
- Maximum draw-down during the construction of the project is US$34.9m and the after-tax payback period is 1.2 years
There remains significant scope to further improve returns, with staged expansions as the current mine plan is based on circa 25% of the total resource.
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
Paul Johnson, Non-Executive Director (UK)
Tim Jones, Company Secretary
+44 (0) 20 7236 1177
Nomad and broker: FinnCap Ltd
Christopher Raggett / Max Bullen-Smith
+44 (0) 20 7220 0500
Joint Broker: SI Capital Ltd
+44 (0) 1483 413500
Press Relations: St Brides Partners Ltd
Isabel de Salis / Juliet Earl
+44 (0) 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 www.armadalecapitalplc.com.