Exceptionally High Purity – Metallurgical Test-work

Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company

8 August 2019

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Exceptionally High Purity – Metallurgical Test-work

97% Purity Average Concentrate Grade

for Jumbo, Large and Medium Flake Concentrate Achieved

Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa, is pleased to announce exceptionally high purity results from ongoing metallurgical test-work on diamond drill core from its wholly-owned Mahenge Liandu Graphite Project in Tanzania.

The results, which include 96.8% for jumbo size graphite flakes, 97.1% for large and 97.1% for medium flake sizes, comfortably exceed the 95% average used in the scoping study, while they are in line with the exceptional graphite quality sourced from the Mahenge region in Tanzania.

Highlights:

• Ongoing metallurgical test-work delivers exceptional graphite concentrates of up to 97.1% purity for large and medium size flake fractions
• Test-work on a high-grade composite currently underway is aimed at maximising the proportion of larger flake sizes
• Results confirm that premium quality, high-value graphite concentrates can be produced from the Mahenge Liandu deposit
• Prices for premium purity graphite concentrates (concentrations >95%) are materially higher than the standard grade (c.95% or less)
• Further optimisation work is ongoing at leading metallurgical laboratory, Bureau Veritas in Perth, Australia
• This test-work forms part of ongoing Definitive Feasibility Study into a high value 400,000tpa graphite operation at Mahenge with a 32-year mine life

Nick Johansen Director of Armadale said: “As we move to gain greater traction with prospective Chinese off-take and project finance partners, it is extremely pleasing to verify high-purity graphite concentrates can be consistently produced from the Mahenge Liandu project.

“The ability to deliver a premium product to fast-growing end markets such as lithium-ion batteries clearly enhances the Project’s overall economics at a time when we are steadily progressing from explorer to emerging producer.

“The Board looks forward to further updating shareholders as progress executing the business plan in the lead up to the Definitive Feasibility Study being finalised towards year end.”

FURTHER INFORMATION

Metallurgical Test-work

Material from seven diamond drill holes from the pit area were used to generate metallurgical composites with the results of the master fresh ore composite now returned.

The results of the test-work indicate a premium quality, high purity graphite concentrate can be produced from a representative sample or mineralisation. The average grade of the composite was 8.65% TGC and this produced an average purity of 96% across all flake sizes with an average of 97.0% in the high value jumbo, large and medium flake size ranges.

Table 1: Flake size distribution and purity from fresh ore composite

The purity levels targeted for the programme are between 95-97% at this stage of metallurgical test-work, which is at the higher end of graphite projects globally.

Test-work on a higher grade composite of ~15% TGC is currently underway with a focus on maximising the proportion of higher value larger flake sizes while maintaining high purity levels.

Reverse Circulation Drilling Results Update

Assay results from the infill drilling are expected to be finalised shortly. Notably, infill drilling targeted higher-grade parts of the deposit. Previous results returned exceptionally high-grade results including 7m @ 16.9% TGC, 7m @ 16.8% TGC and 9m @ 14.8% TGC.

PROJECT BACKGROUND

Mahenge Liandu Graphite Project, Tanzania

Armadale Capital’s wholly-owned Mahenge Liandu graphite project is 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

• 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.

**ENDS**

Notes

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.

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