This announcement contains inside information for the purposes of Article 7 of the Regulation (EU) No 596/2014 on market abuse. Upon the publication of this announcement via the Regulatory Information Service, this inside information is now considered to be in the public domain.
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company
30 April 2020
Armadale Capital Plc
(‘Armadale’ or ‘the Company’)
Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa is pleased to announce that is has raised £550,000 via a private subscription with certain existing high-net worth shareholders in the Company (the ‘Subscription’).
As part of the Subscription, 24,444,444 new ordinary shares (‘Ordinary Shares’)(‘Subscription Shares’) in the Company will be issued at a price of 2.25 pence per Ordinary Share representing a 4.65% premium to the closing mid-market price on 29 April 2020, being the last trading day immediately preceding this announcement. In addition, Subscribers will also receive one warrant for each Ordinary Share subscribed for, exercisable at a price of 3.25 pence and expiring on the two-year anniversary of the date of issue (the ‘Warrants’). In aggregate, 24,444,444 Warrants will be issued alongside this Subscription.
Use of Proceeds
Following the delivery of an extremely compelling feasibility study for the Mahenge Liandu graphite project in Tanzania, these funds will be used to progress the following post definitive feasibility study (‘DFS’) workstreams and for general working capital purposes:
- Complete DFS optimisation from detailed modelling of higher-grade zones to increase head grade in the mine schedule
- Progress existing off-take agreements converting from MOUs to binding agreements
- Finalise application for full Mining licence, thus furthering major permitting milestones
- Commence Detail Design Engineering stage to move to construction readiness
- Advance discussions with potential debt finance partners and project level development funding for construction
Nick Johansen, Chairman of Armadale, said:
“It is a testament to the outstanding economics of the Mahenge Liandu graphite project that existing investors have shown such strong demand to support the Company in moving forward as we focus on transitioning from explorer to producer. Compelling economics combined with low technical risks and 100% ownership make Mahenge an incredibly attractive investment and this demonstration of support is even more pleasing given current tightness in the equity capital markets.
“With extremely low running costs, these funds, together with our existing loan facility, put the Company in a solid financial position prior to the intended conclusion of project financing for mine construction, where we are already in discussion with a number of potential joint-venture partners and strategic investors.
“In readiness for this, work is already well underway upon the more detailed modelling of the Mahenge Liandu higher-grade zones ahead of an updated and optimised DFS and we look forward to delivering this in the near-term as well as updating on progress of existing MOU offtake agreements converting to more binding offtake agreements or partnerships. With a steady stream of news flow ahead, we look forward to updating the market with regularity.”
Total Voting Rights and Share Admission
Following Admission, the Company will have 431,396,837 Ordinary Shares of 0.1 pence each in issue with no shares held in treasury, each with one vote per share. Therefore, the total number of voting rights in the Company will be 431,396,837. This figure may be used by shareholders in the Company as the denominator for calculations to determine if they have a notifiable interest in the share capital of the Company under the FCA’s Disclosure Guidance and Transparency Rules, or if such interest has changed.
The Subscription is conditional upon, inter alia, admission (‘Admission’) of the Subscription Shares to trading (which will be issued and settled in CREST to the extent possible) on AIM. Application will be made for Admission, which is expected to occur by 8.00 a.m. on 6 May 2020.
The Subscription was managed privately and no broker fees were involved.
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 – 59.5Mt at 9.8% TGC. This includes 11.5Mt @ 10.5% Measured 32.Mt Indicted at 9.6% and 15.9Mt at 9.8% 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.
A recently completed Definitive Feasibility Study confirmed Mahenge as a long-life low-cost graphite project with a US$358m NPV and IRR of 91% based on a two-stage expansion strategy comprising:
- Stage One – processing plant and infrastructure at a nominal design basis rate of 0.4-0.5 Mt/pa to produce a nominal 60,000t/pa graphite concentrate in the first four years of production
- Stage Two – a second 0.5 Mt/y plant and associated additional infrastructure doubling throughput to 1 Mt/y from Year 5 of operation
The DFS shows that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$882m over an initial 17 year mine-life and scope for further improvement as this utilises just 25% of the current resource, which remains open in multiple directions.
Projected timeline to first production is expected to be approximately 10-12 months from the start of construction and the capital cost estimate for Stage 1 is US$38.6m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, with a 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,179/t. Stage 2 expansion is expected to be funded from cashflow.
Armadale Capital Plc
Nick Johansen, Non-Executive Director
Tim Jones, Company Secretary
|+44 (0) 20 7236 1177|
Nomad and broker: FinnCap Ltd
Christopher Raggett / Teddy Whiley
|+44 (0) 20 7220 0500|
Joint Broker: SI Capital Ltd
|+44 (0) 1483 413500|
Press Relations: St Brides Partners Ltd
Charlotte Page / Beth Melluish
|+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 59.48Mt @ 9.8% 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.