Armadale Capital forms joint venture with Kisenge Mining

Africa-focused natural resources investment company Armadale Capital announced on Monday that Kisenge Mining, formerly known as African Mining Services, has completed due diligence and exercised its option to form a joint venture with Armadale to develop and operate the Mpokoto gold project in the Katanga province of the Democratic Republic of Congo.

The AIM-traded firm said phase one of the joint venture agreement will enable KMP to earn a 25% interest in Armadale’s subsidiary, Kisenge Limited, the joint venture entity, through providing funding and projected related services up to $1.25m, including incremental metallurgical test-work, refining the current Definitive Feasibility Study to incorporate financing the project and initial capital works.

Upon completion of that phase, KMP has 30 days to decide whether to exercise an option to proceed with phase two of the joint venture agreement.

If KMP proceeds, it will seek to arrange funding to put Mpokoto into production, after which it will receive a further 60% in Kisenge - lifting its aggregate interest to 85%, providing Armadale is satisfied KMP has fulfilled its obligations.

“Mpokoto has an established resource of 678,000oz of gold at 1.45 g/t Au and has completed a DFS based on a production rate of circa 25,000oz annually over an initial four-year mine life for the first phase of mining,” said Armadale chairman William Frewen.

“With attractive economics and a defined route to production we are confident that the Project offers significant potential and we are pleased that the completion of KMP’s due diligence has led to the commencement of Phase I of the joint venture agreement.”

Frewen said KMP will assume operational responsibility and provide funding to further advance Mpokoto, adding that the board is optimistic that once KMP has completed the revised DFS and other work it will progress to phase two of the joint venture agreement to bring Mpokoto into commercial production.

“If this materialises, Armadale will enjoy the benefits of owning a material interest in a producing gold mine.

“This development means that management’s efforts and resources can remain focused on progressing the next phase of the Mahenge Liandu graphite project, where an initial JORC resource estimate is anticipated in the coming weeks, followed by further news in Q1 2017 relating to the results of metallurgical test-work and commencement of feasibility work.”