Armadale Capital PLC Mahenge Project Update (7077P)
February 13 2023 - 3:00AM
UK Regulatory
TIDMACP
RNS Number : 7077P
Armadale Capital PLC
13 February 2023
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector:
Investment Company
13 February 2023
Armadale Capital Plc
('Armadale' the 'Company' or the 'Group')
Mahenge Project Update
Armadale, the AIM quoted investment company focused on natural
resource projects in Africa, is pleased to announce that it has
made further progress advancing towards commercial production at
the Mahenge Liandu Project in Tanzania. This is an important
strategic development as part of ongoing plans to expedite the path
to commissioning commercial mining operations. Furthermore, the
Company notes the improved investment climate which brings with it
increased potential to attract development funding in Tanzania.
Armadale notes the significant progress made at the neighbouring
Black Rock Resources project over the last 12 months.
Project Update
The Board has accelerated the development of the mining lease at
the Mahenge Liandu Project on several fronts, which collectively
enhance the progression towards commercial mining operations:
Ø The Group continues to collect environmental baseline data as
is required for the compliance of the mining lease and to assist in
the design and planning of the proposed mining operations. In
addition, the base line data for temperature, pressure, wind, moon
phase, humidity, solar radiation, rainfall and stream flow data
assists the local community to have access to regional weather data
for local planning requirements in the Mahenge region.
Ø Planning is underway for Geotech drilling to commence this dry
season, with the sites now prepared for the drill rig. The
information from the proposed drilling program will enable the
design of a plant and tails storage area. This information will
enhance the data from the test pits that were completed last
year.
Ø Logistics routes for the product continue to be assessed to
determine the optimum methods to ensure the final product will
enter the market at the desired price level.
Ø Discussions are ongoing with the Government of Tanzania
regarding the framework for the 16% ownership, with draft
Shareholder agreements, Articles of Association and Joint Financial
model being submitted to both parties for review.
Project Funding
The Group is continuing discussions with several potential
financing partners regarding the debt funding required for project
development. Moreover, significantly improved market fundamentals
and conditions for graphite has seen an increase in interest from
stakeholders capable of providing long-term project finance.
Graphite prices have continued to increase due to strong ongoing
demand from the EV sector, while Benchmark Mineral Intelligence see
further price upside due to a potential supply deficit
materialising in 2023. Current prices are materially above the
level used in the company's feasibility study.
Integral to securing project funding is lining up future
off-take partners. With the post-Covid improvement in graphite
market fundamentals globally, the Board has commenced re-engaging
with prospective end-users which are located in Europe and
China.
Nick Johansen, Director of Armadale, said: "With the global
graphite market in the midst of a cyclical upswing, due to strong
underlying fundamentals stemming from the buoyant EV sector, the
Board remains squarely focused on progressing plans to secure the
framework agreement with the Tanzanian government regarding the 16%
ownership. More importantly, the Board is re-doubling efforts to
secure long-term project finance from a reputable provider and
lining up off-take partners to generate a clear road map to
commissioning a viable commercial mining operation."
Mahenge Liandu Project Summary
The feasibility study completed in March 2020 confirms the
potential for Mahenge Liandu to be a significant supplier of high
quality graphite with a relatively low capex.
-- US$882m pre-tax cashflow generated from initial 17 year mine
life utilises just 25% of the resource, which remains open in
multiple directions offering significant further upside;
-- Estimated pre-tax NPV of US$358m and IRR of 91% with scope
for further positive improvement upon economics in near-term
through delivery of optimised DFS
-- Staged ramp-up planned to facilitate near term production
with 60,000tpa graphite concentrate to be produced for the first
four years (Stage 1) before increasing to 90,000tpa (Stage 2)
-- 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, a
slight increase on the scoping study allowing for the staged ramp
up
-- 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.
Enquiries:
Armadale Capital Plc
Nick Johansen, Chairman +44 (0) 20 7236
Tim Jones, Company Secretary 1177
Nomad and Broker: finnCap Ltd +44 (0) 20 7220
Christopher Raggett / Simon Hicks / Seamus Fricker 0500
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