ACP Armadale Capital Plc

Armadale Capital Plc

('Armadale' or 'the Company')

Mahenge Graphite Update

Armadale Capital Plc (TIDM:ACP), an AIM quoted investment company focused on natural resource projects, is pleased to provide an update on the Mahenge Liandu graphite project in Tanzania.

Global Graphite Demand Trends

Global demand for graphite used in the anodes of electric vehicle batteries increased from 448,044 tonnes in 2022, to 631,821 tonnes in 2023, mainly due to a significant uplift in the volume of electric vehicles and household battery storage units produced. This represented a 41% increase in 2023 (source: Adamas Intelligence)^[1] and demand is projected to reach 11,200,000 tonnes by 2040, according to The International Energy Agency^[2]. The use of natural graphite in batteries is pivotal to releasing stored energy and graphite is the largest weighted component in current battery chemistries. It has the potential to grow from 30% of the anode to 50% by 2030 - as referenced by Benchmark Minerals and others.

In addition:

●     The World Bank expects almost 53.8% of mineral demand from energy storage to come from graphite by 2050

●     This is almost a 500% increase in current demand levels, according to The World Bank's "The Mineral Intensity of the Clean Energy Transition" study^[3]

●     The Hague Centre for Strategic Studies forecasts EV Battery demand growing at a compound rate of 41% per annum from 2020 to 2025^[4]

With China moving towards being a net-natural importer of graphite, further deficits in the supply of natural graphite are forecast, according to Shruti Kashyap, Product Director of Anodes from Benchmark Mineral Intelligence.^[5]

The Board is of the view that both the Chinese restriction on graphite exports, as well as the extension of US restrictions on the importation of Chinese graphite could have an impact on graphite prices. The near-term shortage of funded graphite projects and the forecast increasing global demand could lead to  increased interest in obtaining graphite from non-Chinese sources.

The forecast increase in demand, as well as the requirement for the US and Western economies to source non-Chinese graphite could provide significant momentum for Mahenge. The Board believes that the project will provide graphite with high purity, low cost and strong ESG credentials, alongside being located in Tanzania, which provides optionality for the western supply chain, especially the USA

Funding Developments in Tanzania

The Company is monitoring ⁠the development of several other graphite projects in Tanzania and the Board believes that progress at these assets may have a material impact to the terms available for financing on the Mahenge project. The Mahenge project's potential is underpinned by the increasing global demand for Graphite products and downstream processing facilities outside of China.

Discussions with potential financiers remain ongoing. The Board remains focused on developing Mahenge into a low-cost, high-purity graphite project and to prioritising development and sourcing finance to ensure long-term shareholder value. We aim to continue to progress the project to take advantage of the forecast growing global demand for graphite.

FEED study Update

Armadale paused the FEED study whilst the Company monitored developments in the graphite market and the ability of graphite projects in Tanzania to obtain funding. With material progress on both fronts since then and the appointment of Greg Entwistle to the Armadale Board, the Company is considering recommencing the FEED study so the project is construction-ready when funding is secured.

Recently, two nearby projects have made material progress on financing and development, which is encouraging for potential future progress at Mahenge. Black Rock Mining Ltd (BKT:ASX) have committed to invest $33 million AUD in upgrading roads, relocating the local populace and connecting hydro-electric power to Mahenge. Ecograf Ltd (EGR:ASX) have entered into an MOU with TANESCO to supply grid power from these power lines.

The proposed Mahenge FEED study is significantly more detailed compared than the Definitive Feasibility Study ("DFS"), and incorporates:

●     Final detailed engineering design of the plant

●     Civil engineering of the site layout and tailings dam design

●     Geotechnical modelling of the pit design

●     Safety, environmental and ESG studies

Greg Entwistle, recently appointed to the Armadale Board, has extensive experience with graphite project feasibility studies in Tanzania and mining project construction in Africa, Asia and Australia. He will be working closely with local contractors to complete the FEED study.

Both the FEED study, and nearby infrastructure developments on other graphite projects in particular Black Rock Mining Ltd's Project will be incorporated into the updated Definitive Feasibility Study. Armadale hopes to benefit from a potential reduction in costs through replacing diesel generators with a cheaper, and greener hydro-electric power supply, as well as utilising trunk roads being built nearby to the project.

Armadale believe this will lead to a two-fold benefit for shareholders, both by reducing the potential capex and opex inputs in the revised DFS, and by enhancing our ESG credentials by eliminating the use of Diesel Generators. The focus on both remaining in the lowest quartile of the cost curve and boosting our ESG credentials is something we believe to be key requirements for all non-Chinese Supply Chains feeding into Tier 1 OEMs. We believe these two factors will help make Mahenge an attractive prospect to feed into Western supply chains.

Competent Person statement

The information in this announcement that relates to exploration results is based on information compiled by Mr Matt Bull, a competent person, who is a Member of the Australian Institute of Geoscientists. Mr Bull has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Bull consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information contained within this announcement is deemed to constitute inside information as stipulated under the retained EU law version of the Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. The information is disclosed in accordance with the Company's obligations under Article 17 of the UK MAR. Upon the publication of this announcement, this inside information is now considered to be in the public domain.