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.
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Enquiries:
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Armadale Capital Plc
Matt Bull, Executive
Director
Greg Entwistle Non Executive
Director
Tim Jones, Company
Secretary
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+44 (0) 20 7236 1177
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Nomad and Broker: Cavendish Capital Markets
Limited
Simon Hicks / Seamus
Fricker
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+44 (0) 20 7220 0500
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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.