Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company
25 October 2019
Armadale Capital Plc (‘Armadale’ or ‘the Company’)
Further Offtake Agreement MOU – Mahenge Liandu
Armadale Capital plc (LON:ACP) the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce it has signed a Memorandum of Understanding (“MOU”) for a proposed offtake agreement with Datong Resources (“Datong”), China, for high quality graphite products produced at the Company’s Mahenge Liandu Graphite Project (“Mahenge Liandu” or the “Project”) in Tanzania.
- MOU signed with Datong, based in China, for the proposed offtake of 25,000 tonnes per annum (tpa) of graphite concentrate produced at Mahenge Liandu;
- The 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;
- This MOU is in addition to the Company’s MOU announced on 19 February 2019 with the Matrass Group (30,000tpa) and the MOU with CoolRU announced on 26 September 2019 (5,000tpa) and brings the total offtake under an MOU to 60,000tpa representing 122% of the 49,000tpa average annual production target
- Work is continuing to finalise the Company’s Definitive Feasibility Study (“DFS”) and also to convert MOUs into binding offtake agreements with our partners.
Nick Johansen, Director of Armadale said: “Today’s offtake MOU marks a highly significant point in the transition of our Company from explorer to emerging producer and brings our offtake MOU portfolio to a point which exceeds the initial planned production from Mahenge Liandu.
“The ability to secure offtake MOUs of this magnitude demonstrates the robust nature of Mahenge Liandu and completes an important step as we proactively progress its development. Further updates to the market will be provided as each key step is completed, including as we move to finalisation of the project DFS.”
Details of the MOU with Datong Resources
Armadale has signed an MOU with Datong for the proposed offtake of 25,000 tpa of graphite concentrate produced at Mahenge Liandu for an initial five years. Datong is a subsidiary of the large enterprise group, Datong Group, based in Tianjin, China, which is focused on five sectors: the medical and health industry, health culture and tourism industry, mineral resources industry, clean energy industry and the innovative investment industry.
The MOU with Datong follows the MOU with CoolRU announced on 26 September 2019 and the MOU with Matrass Group announced on 19 February 2019. It brings the total offtake under an MOU to 60,000 tpa, representing 122% of the 49,000 tpa average annual production target outlined in the Project’s Scoping Study announced on 27 March 2018.
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 Capital is completing a Definitive Feasibility Study 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;
- The near surface nature of the deposit produced a low 1:1 strip ratio for the life of the mine;
- The Project has a low operating cost of US$408/t, based on an average 12.5% TGC life of mine grade;
- The Project has a pre-tax IRR of 122% and NPV of US$349m, with a low development capex of US$35m; and
- The 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.