Mahenge Liandu Project DFS Update

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

15 May 2019

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

Mahenge Liandu Project DFS Update

Armadale Capital plc (LON: ACP), the AIM quoted investment company focused on natural resource projects in Africa, is pleased to provide a progress update in respect of its Mahenge Liandu Graphite Project’s (‘the Project’) Definitive Feasibility Study (‘DFS).

Readers are advised to review the Company’s detailed update in respect of the DFS which was provided within its announcement dated 16 April 2019, and which may be viewed through the following link: https://polaris.brighterir.com/public/armadale_capital/news/rns/story/rn0k02w

Highlights

• Advancing the DFS – on track to complete Q4 2019
• Appointed leading international laboratory Bureau Veritas to conduct the metallurgical test work and support previous work which demonstrated excellent flake size distribution and exceptional purity
• Metallurgical test work for product quality assessment on schedule for completion in June 2019 and downstream test work results confirming product quality in July 2019
• Discussions with third parties regarding project financing progressing
• Strengthening market fundamentals for higher purity higher quality graphite concentrates

Nick Johansen, Director of Armadale said: “I am pleased to confirm that further steps have been made towards the timely completion of the DFS including product quality assessment and metallurgical testing. Previous test work in this regard demonstrated excellent flake size distribution and exceptional purity and we are optimistic that similar outcomes can be achieved from this latest round of test work.

“Notably, recent graphite market developments point to increasing values being placed on higher purity higher quality graphite concentrates. As an example, Black Rock Resources (ASX:BKT), which owns the neighbouring Mahenge Project, announced binding sales agreements at materially higher than benchmark prices for higher purity concentrates and significantly higher than the $US1272/t used in our March 2018 Mahenge Liandu Scoping Study. Should Mahenge Liandu secure higher average price binding sales agreements, based on enhanced product quality, this will positively impact the product fundamentals including NPV and IRR calculations. These were already robust: NPV of US$349m and IRR of 122%.

“In line with strong market fundamentals, the Project is gathering considerable interest. Our discussions with third party organisations to date demonstrate a clear interest in providing project level financing, which we anticipate will fall into place in a timely manner, given the completion of our DFS schedule for this year.”

Further Details

Leading international laboratory Bureau Veritas has been appointed to conduct the metallurgical test

work as part of the DFS at the Company’s Mahenge Liandu Graphite Project. The results of metallurgical test work for product quality are scheduled for delivery to the Company in June 2019 in line with expectations, while downstream test work results confirming product quality are expected in July 2019, also in line with expectations.

Product quality wide diameter drilling has previously been completed to create representative concentrates and a metallurgical test work programme has been designed to provide input to the process flow sheet by determining recovery rates, flake size distribution and final product purity.

Accordingly, the Company has delivered a shipment of 1.6 tonnes of diamond core to Perth, Australia, which will undergo metallurgical testing to produce a concentrate that will enable completion of the final plant design that will be used in the DFS. The concentrate samples will also be used to assist commercial discussions and for downstream product test work.

To assist the understanding of the metallurgical test work and product quality assessment process the following key steps are to be undertaken:

Stage 1

• Create representative oxide and fresh composites
• Create composites in individual holes to test variability across the deposit
• Comminution testing on global composites
• Detailed head assay analysis
• Grind optimisation test work
• Flotation optimisation test work
• Initial concentrate analysis

Stage 2

• Variability flotation test-work
• Test work on high grade composites
• Larger scale composite flotation.
• Vendor test work

Previous test work was conducted at Bureau Veritas in Perth and produced excellent results (see Table 1 below) with approximately 5.5kg of graphite concentrates produced. The results confirm that high quality graphite concentrates can be produced using a conventional flotation circuit.

Table 1:

Flake size		Distribution %		Purity % TGC
500		3.8		98.2
300		20.9		98.2
180		23.5		98.2
150		18.3		98.5
106		13.0		98.7
75		8.5		98.6
25		8.0		98.1
-25		3.9		95.7

Test work has confirmed that the concentrates from the Project can be readily upgraded to over the 99.95% required to suit the rapidly expanding lithium-ion and expandable graphite markets.

Graphite Market Update

Recent market developments point to increasing values being placed on higher purity higher quality graphite concentrates: Black Rock Resources (ASX:BKT), which owns the neighbouring Mahenge Project, announced binding sales agreements at materially higher than benchmark prices for higher purity concentrates and significantly higher than the $1272/t used in the Company’s Scoping Study.

Graphite Grade v Pricing:

Nominal Graphite Grade

(TGC)						(US$/tonne) CIF China (ex-duty)
94.5% - 95.5%						$1,117
Premium
97.5% - 98.25%						$1,490
Ultra
>99%						$2,161

This compares to the bench-mark prices for standard quality 95% TGC concentrates as recorded by Benchmark Minerals in November 2018 for #100 Mesh graphite of $US950/t using an exchange rate of RMB:US 6.71

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**

For further information, please visit the Company’s website www.armadalecapitalplc.com, follow Armadale on Twitter @ArmadaleCapital or contact:

Enquiries:
Armadale Capital Plc Tim Jones, Company Secretary			+44 20 7236 1177
Nomad and broker: finnCap Ltd Christopher Raggett / Max Bullen-Smith			+44 20 7220 0500
Joint Broker: SVS Securities Tom Curran / Ben Tadd			+44 20 3700 0093
Press Relations: St Brides Partners Ltd Isabel de salis / Juliet Earl			+44 20 7236 1177

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’s main focus is its 100% owned Mahenge Liandu graphite project in south-east Tanzania. This Project is in a highly prospective region with a high-grade JORC compliant inferred mineral resource estimate of 51.1Mt @ 9.3% TGC, marking it as one of the largest high-grade resources in Tanzania. 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.

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