TIDMACP
RNS Number : 2537A
Armadale Capital PLC
28 May 2021
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector:
Investment Company
Armadale Capital Plc
('Armadale' or 'the Company')
Final Results and Notice of AGM
Armadale Capital plc (LON: ACP), the AIM quoted investment group
focused on natural resource projects in Africa, is pleased to
announce its final results for the year ended 31 December 2020
('Final Results' or 'Annual Report'). The Company also announces
that its Annual General Meeting ('AGM') will be held at Suite 2, 1
Altona Street, West Perth, Western Australia on 28 June 2021 at
17.00 AWST (10:00 BST). A notice of AGM, together with printed
copies of the Company's full Annual Report for the year ended 31
December 2020 will be posted to shareholders. Copies will also be
available to view on the Company's website:
www.armadalecapitalplc.com .
Strategic Report
Operational and Corporate Highlights for Period Ended 31
December 2020
Significant progress made in delivering key accretive milestones
in advancing the Mahenge Liandu Graphite Project in Tanzania
1. Completed Definitive Feasibility Study for Mahenge Liandu graphite project (March 2020)
2. Updated Mine Plan to materially increase production
increasing average annual output from 80ktpa to 109ktpa of
concentrate over life of mine
3. Delivered update to Definitive Feasibility Study (June 2020)
folding in results from revised Mine Schedule using higher-grade
cut off of 9% Total Graphitic Carbon ('TGC'), higher strip ratio of
1.95:1, and a rescheduled Stage 2 expansion. A significantly
increased production profile (30%) over the March 2020 Definitive
Feasibility Study
Updated Definitive Feasibility Study - Key Data
i) US$985m pre--tax cashflow generated from initial 15 year mine life
ii) Estimated pre--tax NPV of US$430m (utilising a discount rate of 10%) and IRR of 91%
iii) Staged ramp--up planned to facilitate near term production
with 60,000tpa graphite concentrate to be produced for the first
three years (Stage 1) before increasing to 109,000tpa (Stage 2)
iv) Capital cost estimate for Stage 1 is US$39.7m, which
includes a contingency of U$S4.1m or 15% of total direct capital
cost
v) 1.6-year payback for Stage 1 (after tax) based on an average
sales price of US$1,112/tonne. Stage 2 expansion is expected to be
funded from cashflow
4. Metallurgical test work carried out by Bureau Veritas in
Perth confirms Mahenge can produce high quality, high purity
graphite, with conventional technology achieving consistent purity
of above 97% TGC, some of the highest grades in the sector.
This work also confirmed:
i) Large proportion of concentrates in the medium size
fractions, ideally suited to the battery market
ii) Coarser grind sizes can retain a larger proportion of larger
flake sizes, suited to the expandable and graphite foil markets
iii) Results are typical of the high purity smaller and medium
flake size in the Mahenge graphite province
5. Engagement of leading supplier of graphite process plants
Xinhai Mineral EPC, to commence metallurgical bulk test work as
part of the first phase of the Front-End Engineering Design Studies
('FEED Studies')
6. Mining licence application submitted
7. Advancing workstream to secure project level funding mandate,
with NDAs signed with a number of parties (strategic investors,
debt providers and potential JV partners)
8. Offtakes MOU signed with a number of parties with significant
interest shown from additional offtake partners keen to secure
high-grade, high-purity Mahenge graphite. Advancing workstream to
progress to binding offtakes
Post Period End - advancing all workstreams
1. CSIRO (Australia's Commonwealth Scientific and Industrial
Research Organisation) testwork confirmed natural flake graphite
from Mahenge graphite project as a premium quality product with the
exceptionally high purity and characteristics required for use in
lithium-ion batteries
2. Successful results from first phase FEED studies by Xinhai
establishes that the selection of equipment used in the feasibility
study and confirms the low capex high margin project economics.
Positive testwork a major de-risking step in confirming process
flowsheet as per Definitive Feasibility Study
3. Environmental and Social Impact Assessment ('ESIA') formally
granted by National Environment Management Council ('NEMC') of
Tanzania
4. Ongoing review of quoted portfolio, where the Directors
believe there are opportunities for capital gains
5. Continue to actively review other exciting investment opportunities
During the year under review, Armadale continued to operate as a
diversified investing company natural resource projects in Africa.
To this end, its portfolio is divided into two groups:
-- Actively managed investments where the Company has majority
ownership of the investment; and
-- Passively managed investments where the Company has a
minority investment, typically in a quoted company, and does not
have management control.
Currently, the Company's key actively managed investment is the
Mahenge Liandu Graphite Project in Tanzania.
PASSIVELY MANAGED INVESTMENTS
Mine Restoration Investments Limited ('MRI'), South Africa
The shares in MRI are being carried at Nil market value (2019:
Nil) as MRI shares were suspended from trading on the Johannesburg
Stock Exchange. The MRI shares continued to be suspended throughout
the year.
Quoted Portfolio
The Company has a small portfolio of quoted investments,
principally in resource companies where the Directors believe there
are opportunities for capital gain. The Company continues to keep
its portfolio under review. The Company's strategy with its quoted
portfolio is to gain exposure in projects that have the potential
to create short to medium term returns for the Company as well as
diversify the Company's exposure to a broader range of commodities
while being able to enter and exit the position with minimal cost
and time.
The Company continues to hold its strategic investment in Forum
Energy Metals Corp, a company incorporated in Canada and listed on
the Toronto Stock Exchange, which the Company acquired in 2019.
SUSTAINABLE DEVELOPMENT
The Company is committed to sustainable development and
conducting its business ethically. Given that the Company invests
in the mining industry, one of its key focuses is on maintaining a
high level of health and safety, environmentally responsibility,
and support for the communities close to its investments.
CORPORATE INFORMATION
Principal risks and uncertainties
There are known risks associated with the mineral industry,
especially in Africa. The Board regularly reviews the risks to
which the Group is exposed and endeavours to minimise them as far
as possible. The following summary, which is not exhaustive,
outlines some of the risks and uncertainties currently facing the
Group:
-- The COVID-19 pandemic has risks for the Group in terms of its
ability to travel to and from its projects and ability for key
personnel to access its projects. As previously reported, the
impact of COVID-19 pandemic on the project is so far minimal as the
Company's site activities were substantially completed in 2019.
However, the financial impact on the Company is continuing to be
evaluated and strategies implemented to reduce cash outflow.
-- The Group is exposed to graphite. Graphite is a relatively
new commodity whose market is being driven by demand in renewable
energy. It is thus vulnerable to global energy policies.
-- In order to achieve its long term strategy of developing its
exploration project, the Group depends on the availability of and
access to future funding within the global economic
environment.
-- The impact of Brexit on companies operating in the UK is
still being monitored. Thus far Brexit has not impacted the Group's
ability to raise funds.
-- The exploration for and development of mineral resources
involves technical risks, infrastructure risks and logistical
challenges, which even a combination of careful evaluation and
knowledge may not eliminate.
-- There can be no assurance that the Group's project will be
fully developed in accordance with current plans.
-- Future development work and subsequent financial returns
arising may be adversely affected by factors outside the control of
the Group.
-- The Group operates in multiple national jurisdictions and is
therefore vulnerable to changes in government policies which are
outside its control. The mining regulation changes in Tanzania are
still being evaluated, however they seem to have minimal impact on
investment in graphite mining. The Group continues to monitor the
implementation of the changes to evaluate and mitigate sovereign
risks.
Some of the mitigation strategies the Group applies in its
present stage of development include, among others:
-- Proactive management to reducing fixed costs.
-- Rationalisation of all capital expenditures.
-- Maintaining strong relationships with government (employing
local staff and partial government ownership), which improves the
Group's position as a preferred small mining partner.
-- Engagement with local communities to ensure our activities
provide value to the communities where we operate.
-- Alternative and continued funding activities with a number of
options to secure future funding to continue as a going
concern.
-- The Directors regularly monitor such risks and will take
actions as appropriate to mitigate them. The Group manages its
risks by seeking to ensure that it complies with the terms of its
agreements, and through the application of appropriate policies and
procedures, and via the recruitment and retention of a team of
skilled and experienced professionals.
Key Performance Indicators
The Group's current key performance indicators ('KPIs') are the
performance of its underlying investments, measured in terms of the
development of the specific projects they relate to, the increase
in capital value since investment and the earnings generated for
the Group from the investment. The Directors consider that it is
still too early in the investment cycle of any of the investments
held, for meaningful KPIs to be given.
Success is also measured through the identification and
investment in suitable additional opportunities that fit the
Group's investment objectives.
Section 172 Statement
Section 172(1): A director of a company must act in the way he
considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to -
Section 172(1) (b) the interests of the company's employees,
Company's Comment: While the company is largely staffed by
contractor employees (rather than direct employees of the Company),
the directors consider that continuing active work on the Mahenge
Liandu Graphite Project to be in the best interest of such staff to
utilise their skills and develop their local communities. The board
seeks regular feedback from its key stakeholders (including staff
and advisers) to ensure that the corporate culture of the Company
remains highly ethical in terms of our Company's values and
behaviours.
Section 172(1) (c) the need to foster the company's business
relationships with suppliers, customers and others,
Company's Comment: The directors ensure that suppliers are
available and meeting commitments and there is good communication
with staff as a key requirement for high levels of engagement. This
is done by periodic and ad-hoc briefings and discussions.
Reasons to engage shareholders are to meet regulatory
requirements and understand shareholder sentiments on the business,
its prospects and performance of management.
This is done by regulatory news releases, keeping the investor
relations section of the website up to date, annual and half-year
reports and presentations and AGM.
Section 172(1) (d) the impact of the company's operations on the
community and the environment,
Company's Comment: The Company's activities impact communities
in the places where we operate and elsewhere. The Company engages
communities with employment / business development arrangements
within guidelines. Through preparation and compliance with
environmental and social management plans, which include the
regulatory requirements for the Company on its Mahenge Liandu
Graphite Project, the directors ensure that wherever possible its
activities have a positive impact on the community and avoid
adverse environmental impacts.
The Company has engaged the services of a local contact person
in Liandu who provides information to the community about our
intended project activities and is responsible for managing local
affairs and feedback to the Company.
Section 172(1) (e) the desirability of the company maintaining a
reputation for high standards of business conduct, and
Company's Comment: The directors consider standards of business
conduct in all dealings of the Company. The members of the board
have a collective responsibility and obligation to promote the
interests of the Company and are collectively responsible for
defining standards of business conduct which includes corporate
governance arrangements. The board provides strategic leadership
for the Company and operates within the scope of our corporate
governance framework and sets the strategic goals for the
Company.
Section 172(1) (f) the need to act fairly as between members of
the company.
Company's Comment: The board takes feedback from a wide range of
shareholders (large and small) and endeavours at every opportunity
to pro-actively engage with all shareholders (via regular news
reporting-RNS) and engage with any specific shareholders in
response to particular queries they may have from time to time. The
board considers that its key decisions during the year have
impacted equally on all members of the Company.
Board
Post period end, in March 2021, Ms Amne Suedi and Mr Steve
Mahede resigned from the Board as a Non-executive Directors and the
Company wishes them well in the future.
The Board is initiating a process to review its composition and
consider suitable candidates for the vacancies made recently.
Financial Results
For the year ended 31 December 2020 the Group did not earn any
revenues as its business related solely to the making of
investments in non-revenue producing resource projects and
companies.
The Group made a loss after tax of GBP0.196 million (2019:
GBP0.273 million) for the year ended 31 December 2020. Expenditure
on the Mahenge Liandu project during the year amounted to GBP0.662
million (2019: GBP0.593 million), which was capitalised as
additional exploration and evaluation assets.
Funds raised during the year amounted in total to GBP1.218
million of which GBP0.550 million came from a placing of shares and
GBP0.668 million came from the exercise of warrants and options.
Other share issues during the year were in respect of loan note
conversions.
At 31 December 2020, the Group had cash of GBP252,000 (2019:
GBP96,000) and debt of GBP577,000 (2019: GBP867,000). Since the
year end, the Board has determined that the Company will exercise
its right to convert all the remaining loan notes together with the
associated accrued interest into ordinary shares in the Company
with the result that the Group will be debt free.
Outlook
The Directors continue to believe that Mahenge Liandu represents
an exciting opportunity for the Group. As identified in the going
concern note to the Directors' Report, the Company's ability to
achieve its strategy with respect to the project is dependent on
the further fundraising. Furthermore, other notable investment
opportunities are under review, which the board believe could
replicate this success and deliver significant value to
shareholders.
Nicholas Johansen
Director
28 May 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2020
Note 2020 2019
GBP GBP
----- ---------- ----------
Administrative expenses (377,912) (468,948)
----- ---------- ----------
Share based payment charges - (22,550)
----- ---------- ----------
Change in fair value of derivative 37,143 (45,467)
----- ---------- ----------
Change in fair value of investments 13 176,006 46,145
----- ---------- ----------
Operating loss (164,763) (490,820)
----- ---------- ----------
Finance costs (31,162) (21,241)
----- ---------- ----------
Loss before taxation 6 (195,925) (512,061)
----- ---------- ----------
Taxation 9 - -
----- ---------- ----------
Loss for the year from continuing
operations (195,925) (512,061)
----- ---------- ----------
Profit from discontinued operations,
net of tax 10 - 239,513
----- ---------- ----------
Loss after taxation (195,925) (272,548)
----- ---------- ----------
Other comprehensive income
===== ========== ==========
Items that may be reclassified to
profit or loss:
---------------------------------------- ===== ========== ==========
Reclassification of foreign exchange
gain - (239,513)
---------------------------------------- ===== ========== ==========
Exchange differences on translating
foreign entities 39,070 (93,571)
---------------------------------------- ===== ========== ==========
Total comprehensive loss attributable
to the equity holders of the parent
company (156,855) (605,632)
----- ========== ==========
Loss per share attributable to the Pence Pence
equity holders of the parent company
----- ---------- ----------
Basic and diluted total loss per share 11 (0.04) (0.07)
----- ========== ==========
Basic and diluted loss per share from
continuing operations 11 (0.04) (0.14)
----- ========== ==========
Consolidated Statement of Financial Position
At 31 December 2020
Note 2020 2019
GBP GBP
Assets
Non-current assets
----- ------------- -------------
Exploration and evaluation assets 12 4,417,440 3,705,210
----- ------------- -------------
Investments 13 281,761 105,755
----- ------------- -------------
4,699,201 3,810,965
----- ------------- -------------
Current assets
----- ------------- -------------
Trade and other receivables 14 121,062 159,495
----- ------------- -------------
Cash and cash equivalents 251,738 95,641
----- ------------- -------------
372,800 255,136
----- ------------- -------------
Total assets 5,072,001 4,066,101
----- ============= =============
Equity and liabilities
----- ------------- -------------
Equity
----- ------------- -------------
Share capital 18 3,207,382 3,139,135
----- ------------- -------------
Share premium 21 22,348,000 21,037,478
----- ------------- -------------
Shares to be issued 21 286,000 286,000
----- ------------- -------------
Share option and warrant reserve 21 762,347 661,676
----- ------------- -------------
Foreign exchange reserve 21 127,238 88,168
----- ------------- -------------
Retained earnings 21 (22,406,009) (22,400,310)
----- ------------- -------------
Total equity 4,324,958 2,812,147
----- ------------- -------------
Current liabilities
----- ------------- -------------
Trade and other payables 15 170,375 267,566
----- ------------- -------------
Loans 16 576,668 866,854
----- ------------- -------------
Derivative liability 17 - 119,534
----- ------------- -------------
Total Liabilities 747,043 1,253,954
----- ------------- -------------
Total equity and liabilities 5,072,001 4,066,101
----- ============= =============
Consolidated Statement of Changes in Equity
For the year ended 31 December 2020
Share Share Shares Share Foreign Retained Total
Capital Premium to be Option Exchange Earnings
issued and Warrant Reserve
Reserve
GBP GBP GBP GBP GBP GBP GBP
---------- ----------- -------- ------------- ---------- ------------- -----------
At 1 January 2019 3,038,605 20,569,844 286,000 94,884 421,252 (21,129,940) 2,280,645
---------- ----------- -------- ------------- ---------- ------------- -----------
Loss for the year - - - - - (272,548) (272,548)
---------- ----------- -------- ------------- ---------- ------------- -----------
Other comprehensive
loss (333,030) (333,030)
---------- ----------- -------- ------------- ---------- ------------- -----------
Total comprehensive
loss for the year - - - - (333,030) (272,548) (605,578)
---------- ----------- -------- ------------- ---------- ------------- -----------
Issue of shares
and warrants 100,530 658,308 - 546,420 - - 1,305,258
---------- ----------- -------- ------------- ---------- ------------- -----------
Expenses of issue - (190.674) - - - - (190,674)
---------- ----------- -------- ------------- ---------- ------------- -----------
Transfer on exercise
of warrants - - - (2,178) - 2,178 -
---------- ----------- -------- ------------- ---------- ------------- -----------
Share based payment
charges - - - 22,550 - - 22,550
---------- ----------- -------- ------------- ---------- ------------- -----------
Total other movements 100,530 467,634 - 568,970 - - 1,137,134
---------- ----------- -------- ------------- ---------- ------------- -----------
At 31 December 2019 3,139,135 21,037,478 286,000 661,676 88,168 (22,400,310) 2,812,147
========== =========== ======== ============= ========== ============= ===========
Loss for the year - - - - - (195,925) (195,925)
========== =========== ======== ============= ========== ============= ===========
Other comprehensive
income - - - - 39,070 - 39,070
---------- =========== ======== ============= ========== ============= -----------
Total comprehensive
loss for the year - - - - 39,070 (195,925) (156,855)
---------- ----------- -------- ------------- ---------- ------------- -----------
Issue of shares
and warrants 68,247 1,310,522 - 239,556 - - 1,618,325
========== =========== ======== ============= ========== ============= ===========
Release on conversion
of loan notes - - - - - 51,341 51,341
========== =========== ======== ============= ========== ============= ===========
Transfer on exercise
of warrants - - - (138,885) - 138,885 -
---------- =========== ======== ============= ========== ============= -----------
Total other movements 68,247 1,310,522 - 100,671 - 190,226 1,669,666
---------- ----------- -------- ------------- ---------- ------------- -----------
At 31 December 2020 3,207,382 22,348,000 286,000 762,347 127,238 (22,406,009) 4,324,958
---------- ----------- -------- ------------- ---------- ------------- -----------
Consolidated Statement of Cash Flows
For the year ended 31 December 2020
2020 2019
GBP GBP
---------- ----------
Cash flows from operating activities
---------- ----------
Loss before taxation (195,925) (272,548)
---------- ----------
Adjustment for:
---------- ----------
Release of exchange gains on overseas
operation - (239,513)
---------- ----------
Share based payment charge - 22,550
---------- ----------
Change in fair value of derivative (37,143) 45,467
---------- ----------
Change in fair value of investments (176,006) (46,145)
---------- ----------
Finance costs 31,162 21,241
---------- ----------
(377,912) (468,948)
------------------------------------------- ---------- ----------
Changes in working capital
Receivables 11,182 (44,103)
---------- ----------
Payables (6,729) (14,868)
---------- ----------
Net cash used in operating activities (373,459) (527,919)
========== ==========
Cash flows from investing activities
---------- ----------
Expenditure on exploration and evaluation
assets (689,254) (474,049)
---------- ----------
Purchase of listed investments - (58,637)
---------- ----------
Net cash used in investing activities (689,254) (532,686)
========== ==========
Cash flows from financing activities
---------- ----------
Proceeds from share issues 1,245,576 968,696
---------- ----------
Issue costs - (46,500)
---------- ----------
Issue of loan notes - 400,000
---------- ----------
Proceeds from loan (Note 16) 50,000 30,000
---------- ----------
Loan repayment (50,000) (235,071)
---------- ----------
Interest paid (26,766) (5,189)
---------- ----------
Net cash from financing activities 1,218,810 1,111,936
========== ==========
Net increase in cash and cash equivalents 156,097 51,331
---------- ----------
Cash and cash equivalents at 1 January 95,641 44,310
---------- ----------
Cash and cash equivalents at 31 December 251,738 95,641
========== ==========
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**
Enquiries:
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
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
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 .
View source version on businesswire.com :
https://www.businesswire.com/news/home/20200603005976/en/
Armadale Capital Plc
Source: Armadale Capital Plc
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