Appointment of Marketing Consultant

LONDON--(BUSINESS WIRE)--

Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company

21 September 2018

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Appointment of Marketing Consultant to Negotiate Product Offtake

from Mahenge Liandu Graphite Project

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce significant progress on the 2018 field work programme underway at its Mahenge Liandu Graphite Project in Tanzania (‘Mahenge Liandu’ or the ‘Project’). With the feasibility study now well advanced and test work underpinning the strong commercial applications of the Project’s graphite concentrate, Armadale has appointed an experienced Beijing-based marketing consultant to pursue offtake agreements ahead of an anticipated decision to mine in early 2019.

Overview

• Highly experienced Beijing-based marketing consultant appointed to manage offtake agreements and marketing activities in China
  • Significant commercial experience – previously General Manager of the Mineral Resources Division of AVIC International Steel Trade Ltd, one of the largest trading companies in China in the iron, coal and manganese sector importing into the Chinese market
• Metallurgical test work indicates that exceptional purity can be achieved alongside excellent flake size distribution, making the product highly amenable to a range of commercial applications
  • Results from a simple conventional flowsheet produced grades well above the standard 95% purity for most size fractions
  • Downstream test work on concentrates showed excellent expandability particularly of the larger size fractions
  • Test work to further enhance the purity of the graphite concentrate showed that acid treatment readily upgrades the concentrate further to above the 99.95% purity required for the rapidly expanding Lithium-ion battery market
• Feasibility Study now well advanced with targeted publication in Q4 2018:
  • Reverse Circulation (‘RC’) drilling programme completed with 18 holes for 951m completed
  • High-grade coarse flake graphite mineralisation from surface identified in 17 of 18 holes
  • Widths of up to 98m intersected from surface with average thicknesses of 43m
  • The RC programme is designed to upgrade the current JORC Resource of 51.1Mt at 9.3% Total Graphitic Carbon (‘TGC’) in order to declare a Maiden Reserve that will underpin a long-life low-cost mining operation
• Work on environmental and social baseline surveys are nearing completion with the environmental impact assessment (EIA), relocation action plan (RAP) and valuation survey expected to be submitted in October 2018

Appointment of Marketing Consultant

Armadale has now commenced graphite marketing activities in China with the appointment of Jenny Lee as a consultant to the company. She will be based in Beijing to manage offtake discussions in-country, which will be co-ordinated alongside test-work from the recently completed diamond drilling and metallurgical programmes.

Jenny is the current Managing Director of Jialin International Trading, Hong Kong and is highly experienced in obtaining offtake agreements and managing ongoing sales arrangements in China. Prior to her current role she served as Divisional Manager of the Mineral Resources Division of AVIC International Steel Trade Ltd, one of the largest trading companies in China in the iron, coal and manganese sector importing into the Chinese market.

Metallurgical Test Work

Test work completed on graphite from Mahenge Liandu indicates that exceptional purity can be achieved alongside excellent flake size distribution. The results from a simple conventional flowsheet produced grades well above the standard 95% purity for most size fractions.

Flake Size	Weight %	TGC %
> 500 µm	3.6	97.7
> 300 µm	20.9	97.8
> 180 µm	23.6	97.8
> 150 µm	18.4	98.0
> 106 µm	13.3	98.2
> 75 µm	7.9	97.6
< 75 µm	3.6	95.2

Table 1 Flake size distribution and grade of Mahenge Liandu Graphite

Downstream test work on concentrates from the Project also showed excellent expandability, particularly of the larger size fractions. These results suggest Armadale will be able to target a rapidly growing high value potential market; expandability over 200cm3/g is required in many potential applications, with expandability over 400cm3/g considered excellent for most applications.

Flake Size	800 Degrees C	1000 Degrees C
> 500 µm	440 cm3/g	480cm3/g
> 300 µm	370 cm3/g	420cm3/g
> 180 µm	300 cm3/g	380cm3/g
> 106 µm	210cm3/g	230cm3/g
> 75 µm	165cm3/g	170cm3/g
< 75 µm	99.65	115cm3/g

Table 2 Expandability of Mahenge Liandu Graphite at various flake sizes

Test work conducted to further enhance the purity of the graphite concentrate showed that acid treatment readily upgrades the concentrate further to above the 99.95% purity required for the rapidly expanding Lithium-ion battery market. This market is focused on the medium sized flake sizes from 106 µm to 300 µm sizes where Mahenge Liandu achieved purity up to 99.99%.

Flake Size	Purity
> 500 µm	99.93
> 300 µm	99.99
> 180 µm	99.98
> 106 µm	99.96
> 75 µm	99.94
< 75 µm	99.65

Table 3 Purity achieved via acid treatment of Mahenge Liandu Graphite Concentrate

RC Drilling Results

Ongoing RC drilling results continue to confirm wide graphite mineralisation from surface with a total of 16 holes for 770m completed. Widths of up to 77m from surface have been intersected. The drilling is targeting high grade near surface mineralisation and 15 of the 16 holes have intersected coarse flake graphite mineralisation from surface. A majority of the holes intersected areas of very high grade mineralisation.

HoleID	Easting	Northing	Azi/Dip	MaxDepth	MinFrom	MinTo	MinThickness
LDRC0050	251818	9035117	325/-60	52.00	0.00	44.00	44.00
LDRC0051	251783	9035216	325/-60	67.00	0.00	55.00	55.00
LDRC0052	251744	9035287	325/-60	79.00	0.00	77.00	77.00
LDRC0053	251717	9935358	325/-60	64.00	0.00	60.00	60.00
LDRC0054	251683	9035432	325/-60	46.00	0.00	40.00	40.00
LDRC0055	251851	9035548	325/-60	44.00	0.00	40.00	40.00
LDRC0056	251882	9035482	325/-60	37.00	0.00	31.00	31.00
LDRC0057	251918	9035402	325/-60	22.00	0.00	-	No intercept
LDRC0058	251946	9035342	325/-60	46.00	0.00	35.00	35.00
LDRC0059	251978	9035267	325/-60	68.00	0.00	62.00	62.00
LDRC0060	252012	9035190	325/-60	56.00	0.00	43.00	43.00
LDRC0061	251929	9035120	325/-60	34.00	0.00	24.00	24.00
LDRC0062	251848	9035036	325/-60	65.00	0.00	58.00	58.00
LDRC0063	251511	9035343	325/-60	40.00	0.00	20.00	20.00
LDRC0064	251531	9035283	325/-60	16.00	0.00	4.00	4.00
LDRC0065	251563	9035204	325/-60	34.00	0.00	21.00	21.00
LDRC0064	251358	9035177	325/-60	102	0	98	98
LDRC0065	251329	9035250	325/-60	79	0	79	76

Table 4 RC drilling summary

Permitting

The Environmental and Social impact studies “ESIA” in the field have now been completed. A final report for the work is in progress by specialist consultant Enviromine. After completion of the report, it will be submitted to National Environmental Management Committee for validation and initiation of environmental permit approval.

Furthermore, Armadale contracted Property Matrix Limited to conduct a valuation study covering the 10km² area of the proposed mining permit application. Their team is onsite conducting those studies and the result will be incorporated into a valuation report. The report will then be submitted to the Government Chief Valuer for approval.

Both the ESIA and Valuation team have been working closely with government authorities and the surrounding communities to ensure compliance with applicable regulations.

Nick Johansen, Director of Armadale said, “Mahenge Liandu continues to exceed all internal expectations – with wide intervals of high-grade, and exceptionally high-grade, mineralisation identified from surface, we are confident that we will be able to demonstrate a long-life, low-cost mining operation in early 2019 when we make a decision to mine. In tandem with our operational advances, it is critical that we develop a marketing function capable of attracting long-term and well-priced offtake agreements for our future product, and today’s appointment of our first Beijing-based marketing consultant is central to this objective. Jenny’s extensive operational experience in China and proven success in managing commercial sales negotiations makes her ideally suited to represent Armadale in this prospective market.

“Looking at our commercial potential, our scoping study released earlier this year sets the scene for what our project might look like and be capable of – including delivering average production of 49,000tpa of graphite products during a 32-year life of mine at a low operating cost of US$408/t. With these parameters, Mahenge Liandu would deliver a pre-tax IRR of 122% and NPV of US$349m with a low development capex of US$35m, highlighting the significant value accretion potential of this project for investors. We have also consistently demonstrated the high quality of our graphite products, as indicated from recent metallurgical test work, with a high-grade coarse flake product with exceptional purity being produced from relatively simple processing methods. With this in mind we are confident that our new marketing consultant will be able to command attractive pricing arrangements for our premium quality graphite product.

“We look forward to moving through the final phases of our development process and remain focussed on being in a position to make a decision to mine, and begin the construction phase, in 2019.”

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**

For further information, please visit the Company’s website www.armadalecapitalplc.com, follow Armadale on Twitter @ArmadaleCapital or contact:

Enquiries:
Armadale Capital Plc Tim Jones, Company Secretary	[phone]
Nomad and broker: finnCap Ltd Christopher Raggett / Simon Hicks	[phone]
Joint Broker: SVS Securities Tom Curran / Ben Tadd	[phone]
Press Relations: St Brides Partners Ltd Susie Geliher / Charlotte Page	[phone]

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 inferred mineral resource estimate of 51.1Mt @ 9.3% TGC. Marking the project 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.

Category Code: MSCU

Sequence Number: 655839

Time of Receipt (offset from UTC): 20180920T165137+0100