Armadale Capital

  • Last month saw Black Rock Resources (ASX:BKT) reveal binding sales agreements for graphite produced at its Mahenge project in Tanzania. The Australian miner has agreed to supply ‘premium’ graphite with a nominal grade of between 97.5-98.5pc for $1,490/t and ‘ultra’ graphite grading more than 99pc for $2,161/t. Both of these prices come in at a significant premium to the $1,272/t used by London-listed Armadale Capital (LSE:ACP) in the scoping study for its Mahenge Liandu graphite project, which neighbours Black Rock’s Mahenge asset. With Mahenge Liandu sharing many similarities with Mahenge, could Black Rock’s update present a real buying opportunity at Armadale?

    Graphite opportunity

    Mahenge Liandu is a high-grade, coarse flake 29.9km2 project based in a Neoproterozoic system of high-grade metamorphic rocks with access to reliable infrastructure and Tanzania’s most populous city, Dar es Salaam. The project, which Armadale is currently focused on advancing to production, boasts a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite.

    Last March, these figures were used alongside a conservative graphite price of $1,272/t to complete a scoping study that gave Mahenge Liandu a pre-tax NPV of $349m (£261.7m) and an internal rate of return of 122pc. Meanwhile, the project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa. Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

    Given that Mahenge Liandu is Armadale’s critical project, it is likely that the asset underpins much of the company’s value. If we assume that Mahenge Liandu reaches production under Armadale, then the scoping study figures already suggest that the business could be considerably undervalued – even once project financing is taken into account. Indeed, the firm’s market cap currently sits at £4.8m and a placing bolstered its cash balance in February.

    However, if Armadale can secure binding sales agreements at a much higher price than $1,272, then Mahenge Liandu’s fundamentals would be enhanced even further. For example, if it can agree on a graphite sale price of $2,161/t, then the project’s NPV would nearly double. If this occurred, then the argument for Armadale being undervalued would strengthen, and the likelihood of a re-rate could increase.

    A look at the performance of Black Rock’s market performance since the beginning of the year highlights this potential even further. Indeed, it has risen from AUD$0.039 to AUD$0.099, giving it a market cap of AUD$55.33m (£30.39m) compared to Armadale’s £4.8m.

    Drawing parallels

    Encouragingly, there are already several indicators that suggest Armadale can replicate Black Rock’s prices. Firstly, and most obviously, there is the fact that Mahenge Liandu neighbours Mahenge, meaning the projects share the same deposit type and rock unit.

    Secondly, work carried out by Armadale at Mahenge Liandu to date has suggested numerous additional similarities between the projects in terms of quality. Indeed, test work at the project has delivered excellent levels of purity of up to 99.99pc total graphite content using conventional treatment. Likewise, graphite from the project has shown demonstrable expandability up to 330cm3/g, confirming its suitability for a range of high-value end uses.

    Both of these results are typical for the high-quality product that other operators have enjoyed in the graphite province surrounding the Mahenge Liandu project. Indeed, as the graph created by Armadale below shows, graphite from neighbouring projects in the region is among the purest in the industry. 

    Surging demand

    What’s more, thanks to favourable conditions in the graphite sector, there is also the possibility that the price companies are willing to pay for graphite in the future could increase beyond those secured by Black Rock. As we have previously written, several growing markets have arisen for the material thanks to its robust characteristics.

    Graphite’s most traditional application is in the industrial sector, where it is put to use in areas like steelmaking and brake lining. It is also being used increasingly in the creation of so-called ‘graphite foil’, an essential component in the production of electronic products like smartphones and tablets.

    Critically, recent years have also seen graphite become widely used in the production of lithium-ion (Li-ion) batteries - applied in emerging renewable energy technologies and, most importantly, electric vehicles (EVs) Indeed, according to the International Energy Agency (IEA), the number of EVs on roads globally will hit 125m by 2030 – this compares to just 3.1m in 2017.

    Likewise, numerous ‘gigafactories’ have arisen around the world to rush out unprecedented amounts of Li-ion batteries ahead of the EV boom. Notably, Tesla has built a new $5bn battery factory that could drive a 37pc increase in demand for natural graphite by 2020. The forecast output for the factory is 35GWph/y in Li-ion batteries, requiring the consumption of 28,000tpa of spherical graphite - double the size of the graphite market in 2017 alone.

    Meanwhile, on the supply side, nearly all of the world’s natural spherical graphite is currently sourced and processed in China. However, supply limitations, increasingly strict environmental regulations and an absence of the ‘high-quality’ graphene required by the market are putting the country under pressure. Many expect both China and its EV customers will look increasingly to operators in other geographies like Armadale and Black Rock as potential sources of supply that can subsequently be processed.

    Potential catalyst

    So, with all this potential upside in mind, what could be the trigger for a re-rate in Armadale’s share price? At the end of May, the business announced that it is fast-tracking plans to commercialise Mahenge Liandu. As part of this, the firm’s management team will hold meetings with current and prospective Chinese parties in early June to finalise binding off-take and project funding agreements.

    According to Armadale, securing these agreements will validate Mahenge Liandu and mark the start of the company’s transition from graphite explorer to emerging mining. If these meetings can indicate that Mahenge Liandu is indeed much more prospective than last year’s scoping study suggested, could an accompanying update be the catalyst that catches the attention of UK investors?

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

  • Armadale Capital (LSE:ACP) enjoyed a 3.2pc lift to 1.29p on Thursday morning after confirming that premium quality, high-value graphite concentrates can be produced from its flagship Mahenge Liandu deposit.  The latest round of metallurgical test-work at the Tanzania-based project delivered graphite concentrates of up to 97.1pc purity for large and medium-size flake fractions – something Armadale described as ‘exceptional’.

    All-in-all, the average grade of the composite sample was 8.65pc total graphite content. This produced an average purity of 96pc across all flake sizes with an average of 97pc in the high-value jumbo, large and medium flake size ranges. These results comfortably exceed the 95pc average purity used in the company’s scoping study for Mahenge Liandu and fall in line with the high-quality graphite sourced from similar projects in the surrounding Mahenge region.

    Armadale is now carrying out test-work on a high-grade composite that aims to maximise the proportion of larger flake sizes from Mahenge Liandu. Further optimisation work is also ongoing at a leading metallurgical laboratory in Perth, Australia.

    Armadale’s latest test-work forms part of ongoing Definitive Feasibility Study at Mahenge Liandu based on the results of a scoping study completed in March last year.  The study was based on a throughput of 400,000tpa of graphite over a 32-year mine life and showed that the project is economical and warrants further development based on a conservative $1,272/t graphite price. The project boasts a JORC-compliant indicated and inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite content, making it one of the most substantial high-grade resources in Tanzania.

    Speaking to MiningMaven, Armadale’s technical director Matt Bull said that prices for premium purity graphite concentrate with a purity of more than 95pc are much higher than the standard grade of 95pc or less.

    The standard grade is 95pc total graphite content, so if you can produce at a purity above that then the prices you can command increase with each percent point. The fact that we have we got up to 97.1pc, and can produce above 95pc consistently is very exciting and reflects the prospectivity of our surrounding area,’  he said. ‘This means we can deliver a top-drawer product to fast-growing end markets such as the lithium-ion batteries that power electric vehicles. This clearly enhances Mahenge Liandu’s overall economics at a time when we are steadily progressing from explorer to emerging producer.'

    Bull adds that the results should also help Armadale in gaining greater traction with prospective Chinese off-take and project finance partners.

    ‘The offtake and project financing talks are progressing well, and our ability to demonstrate that we can consistently produce high-quality graphite concentrates from our project area will be really important in making progress and securing partner,’  he said.

    We recently looked at whether investors are missing a major opportunity at Armadale given the conservative figures used in Mahenge Liandu’s scoping study. Australian miner Black Rock recently agreed to supply ‘premium’ graphite with a nominal grade of between 97.5-98.5pc for $1,490/t and ‘ultra’ graphite grading more than 99pc for $2,161/t.  Both of these prices come in at a significant premium to the $1,272/t used by Armadale in the scoping study for Mahenge Liandu, which neighbours and shares many similarities with Black Rock’s Mahenge asset.

    If Armadale can secure binding sales agreements at a much higher price than $1,272, then Mahenge Liandu’s fundamentals would be enhanced even further. For example, if it could agree on a graphite sale price of $2,161/t, then the project’s NPV would nearly double.  If this occurred, then the argument for Armadale being undervalued would strengthen, and the likelihood of a re-rate could increase.

    To read more, please click here

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

  • Graphite-focused firm Armadale Capital (LSE:ACP) sat at 1.36p a share on Wednesday after announcing steady progress at its flagship Mahenge Liandu project and favourable commodity market conditions. The business – which currently has a £5.1m market cap – has appointed leading international laboratory Bureau Veritas to conduct metallurgical test work at the Tanzania-based project.

    Armadale said the work will support previous tests at Mahenge Liandu that have shown ‘excellent flake size distribution and exceptional purity’. Specifically, these efforts confirmed that concentrates from the project can be upgraded readily to over the 99.95pc required to suit the rapidly expanding lithium-ion and expandable graphite markets.

    The company has now delivered a shipment of 1.6ts of diamond core to Perth, Australia, where it will undergo metallurgical testing to produce a concentrate that will enable completion of final plant design. The concentrate samples will also be used to assist commercial discussions and downstream product test work.

    Armadale added that its metallurgical work is on schedule for completion in June, while downstream test work results confirming product quality are scheduled for July.

    Mahenge Liandu is a high-grade coarse flake asset that Armadale expects to become a strategically-valuable world-class supplier to the lithium-ion battery sector once it enters production.  According to the firm, the project is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite.  A scoping study completed in March last year gave the site a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc based on a conservative $1,272/t basket graphite price.

    The metallurgical work detailed on Wednesday marks a crucial step towards the completion of Armadale’s ongoing definitive feasibility study (DFS) at Mahenge Liandu, on track for the final quarter of this year. These DFS results will contribute to the company’s ultimate decision on whether to mine the project.

    Elsewhere in Wednesday’s update, Armadale said it believes that an increasing amount of value is being placed on higher purity, higher quality graphite concentrates. To demonstrate its point the business pointed to Black Rock, which owns a graphite project neighbouring Mahenge Liandu. The company recently announced binding sales agreements at materially higher than benchmark prices for higher purity concentrates, and significantly higher than the $1272/t used in Armadale's scoping study.

    On this, Armadale’s director Nick Johansen added: ‘Should Mahenge Liandu secure higher average price binding sales agreements, based on enhanced product quality, this will positively impact the product fundamentals including NPV and IRR calculations. These were already robust: NPV of US$349m and IRR of 122%.’

    With this in mind, Johansen said Mahenge Liandu is gathering ‘considerable interest’ from third parties, with discussions to date demonstrating a ‘clear interest’ in providing project-level financing. ‘We anticipate [that these] will fall into place in a timely manner, given the completion of our DFS schedule for this year,’he added.

    To read MiningMaven’s recent in-depth interview with Armadale’s management team covering the company’s portfolio and macro outlook for its associated commodity markets, please click here.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has not been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Armadale Capital (LSE:ACP) has enjoyed a strong start to the year, with its shares rising from 0.85p to their current 1.16p. Aside from favourable macro conditions, the business - which is currently focused mainly on the graphite market – has been boosted by the progress made at its flagship Mahenge Liandu project in Tanzania. Here, with completion of the project’s definitive feasibility study and decision to mine imminent, Armadale’s management explains why the company’s current £4.6m market cap could represent a great value opportunity.

    Graphite opportunity

    As it stands, Armadale’s primary operational focus is graphite, which it expects to offer significant commercial value over the coming years. One of the lesser represented commodities on AIM, graphite occurs in metamorphic rocks and boasts numerous, highly practical properties. These include high electrical conductivity, the ability to form extremely-strong cohesive bonds, and resistance to heat (up to 3,000ºC) as well as solvents, dilute acids, and fused alkalis.

    Thanks to its attractive characteristics, several exciting and growing markets have arisen for the material. Its most traditional application is in the industrial sector, where graphite is put to use in areas like steelmaking and brake lining. It is also being used increasingly in the creation of so-called ‘graphite foil’, an essential component in the production of electronic products like smartphones and tablets.

    Critically, recent years have also seen graphite become widely used in the production of lithium-ion (Li-ion) batteries - applied in emerging renewable energy technologies and, most importantly, electric vehicles (EVs). This final market, in particular, is of most interest to Armadale, with the firm expecting demand for EVs market to deliver a paradigm shift in demand for the material. Based on industry forecasts, this looks within reach.

    Indeed, according to the International Energy Agency (IEA), the number of EVs on roads globally will hit 125m by 2030 – this compares to just 3.1m in 2017. Alongside falling prices for the next generation of cars – which had previously limited green vehicle access to only the wealthy - this increased uptake is expected to stem from a rise in environmentally friendly policies among governments around the world. Should this growth explosion play out, demand for all of the commodities required in the creation of EVs - most notably their batteries - will also rise. Indeed, forecasts such as the IEA’s have already seen the prices of popular ‘battery metals’ like nickel, cobalt, lithium, and even copper, fly at various points over recent years.

    Armadale’s technical manager Matt Bull says graphite is a lesser-known beneficiary of EV’s rise, adding that few in the market are aware that Li-ion batteries, in fact, contain more of the material than they do lithium. Indeed, as the company notes, numerous ‘gigafactories’ have arisen around the world to rush out unprecedented amounts of Li-ion batteries ahead of the EV boom. Notably, it says, Tesla has built a new $5bn battery factory that could drive a 37pc increase in demand for natural graphite by 2020. The forecast output for the factory is 35GWph/y in Li-ion batteries, requiring the consumption of 28,000tpa of spherical graphite - double the size of the graphite market in 2017 alone.

    As Bull notes, Tesla’s Gigafactory is just one of many such gigafactories either being constructed or planned globally. As such, batteries now account for a strong 25pc of total graphite demand, a figure that is expected to grow by around 15pc annually over coming years. ‘These are multi-billion-dollar plants, so you can be sure that they are going to want that security of supply,’he adds.

    Meanwhile, on the supply side, nearly all of the world’s natural spherical graphite is currently sourced and processed in China, where output and prices have been growing since 2016 thanks to forecast demand. In spite of this leading position, many think the global superpower will struggle to keep up with demand as the EV boom plays out. Alongside possible supply limitations, increasingly strict environmental regulations and an absence of the ‘high-quality’ graphene required by these new customers are likely to place pressure on the country. Indeed, one estimate suggests that 360,000t is already needed to supply the battery market.

     

    Naturally, many expect both China and its EV customers will look increasingly to other geographies as potential sources of supply that can subsequently be processed. Armadale believes an obvious candidate here will be East Africa, where a growing number of projects are reaching production and offering unprecedented graphite grades.

    ‘A lot of Chinese operators are being closed out because of environmental issues, so the market responsible for 97pc of production is slowly being cut. Meanwhile, a lot of these Chinese suppliers simply cannot produce graphite of the quality required. These factors are creating a gap between supply and demand, and China is now looking very seriously at external supply,’ says director Steve Mahede. ‘There are quite a few potential producers capable of achieving high grades in East Africa, but very few have yet entered production. We are looking to get exposure to this potential upside.’

    Mahenge Liandu progress

    Specifically, Armadale plans to enter the market through its 100pc-owned Mahenge Liandu graphite project in Tanzania. Mahenge is a high-grade coarse flake asset that the company expects to become a strategically-valuable ‘world-class’ supplier to the lithium-ion battery sector once it enters production. The 29.9km2 site is based in the Neoproterozoic system of high-grade metamorphic rocks with easy access to strong infrastructure and Tanzania’s most populous city, Dar es Salaam.

    According to Armadale, Mahenge is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite. A scoping study completed in March last year gave the site a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc; in comparison, Armadale’s market cap currently sits at just £4.61m. What’s more, these calculations are based on a conservative basket graphite price of $1,272/t.

    The project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa (c.49,000tps of graphite concentrate). Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

    Aside from the project’s long mine life and abundant resource, Bull tells us the Mahenge province is known for its mineralisation, from which high purity concentrates can be produced that are market-leading in the graphite sector. As he explains, this quality enables Mahenge’s product to be used in many areas, widening Armadale’s potential customer-base considerably.

    Graphite prices are largely a function of flake size and purity. So, a significant factor for us was that the graphite from Mahenge is the highest purity in the market with an excellent flake size. People want to buy the highest purity because it makes it easier to process. There are more applications for high purity graphite than there is for lower purity graphite – indeed, Mahenge’s graphite can be used in any area of the market, all the way from EVs to steelmaking.’

    The past year has seen Armadale step up the pace at Mahenge as it works to confirm the project’s viability through the completion of a definitive feasibility study (DFS). In an update earlier this month, the organisation said this DFS work is well advanced, with completion expected in the final quarter of the year.

    To date, Armadale has completed drilling to achieve ten years of planned production in the measured JORC-compliant category and updated its mine planning process accordingly. It has also sent 1.6ts of diamond core to Perth, where it will undergo metallurgical testing to enable the completion of final plant design. Elsewhere, the company has finalised its Environmental Social Impact Assessment and Relocation Action Plan for Mahenge and expects to submit this to the National Environment Management Council later this month. It also plans to submit an application for a mining lease in August.

    Outside of the project, Armadale said it has also made steady progress on the offtake front. It has begun a test work programme aimed at progressing the MoU for the offtake of 30,000tpa of graphite concentrate into a binding agreement. This MoU, signed with a Chinese partner called the Matrass Group, was announced in February several months after Armadale hired a Beijing-based marketing consultant to assist it in offloading its product. Meanwhile, the business said discussions are progressing with other offtake partners for the remaining 19,000tpa of graphite production.

    To complete the DFS, Armadale must now carry out product marketing, update Mahenge’s resource, and develop transport and logistics pathways at the project. It raised £795,275 in February by placing shares at 1.1p each to support it in doing this. Critically, the results of the DFS will contribute to the company’s ultimate decision on whether to mine the project, which it expects to make later this year.

    Mahede says investors can expect plenty of newsflow throughout the remainder of the year as this work completes. Both Armadale and investors alike will be hoping that this can help the firm sustain the strong market performance it has enjoyed over recent months. Indeed, the company has managed to mostly shake the sector-wide bear market towards the end of last year that has continued to leave many of its mining peers on their knees. Shares have risen from 0.85p to their current 1.16p so far this year, peaking at 1.7p.

    ‘There is plenty of positive news flow to come. Particularly if we can advance the off-take agreements, secure permitting, and if we can get project development funding, something we have begun to look into. Those are probably the most important things looking forward,’ says Mahede. ‘Aside from progress at Mahenge, I think one of the drivers will be conditions in the EV market. Usage of the vehicles is rising, and ongoing policy developments around the world – particularly in China – are really pushing the area forward.’

    Diversification

    Although Mahenge is Armadale’s primary asset, it is worth noting that the firm was not set up solely to get exposure to the graphite market. Indeed, the outfit’s overall aim is to give investors exposure to any high-quality resource projects in Africa. With this in mind, the company has several additional interests.

    One of these is the Mpokoto gold project in the Democratic Republic of Congo, which was sold to Arrow Mining in January. The project has a current total mineral resource of 678,000oz gold from 14.58MMts at 1.45g/t gold and is expected to produce c.25,000oz a year over a nine-year mine life. With Armadale retaining a 1.5pc royalty on all future gold sales at Mpokoto, the Arrow deal provided the company with ongoing exposure to the gold market alongside an increased focus on Mahenge’s development.

    Meanwhile, Armadale also maintains a small portfolio of quoted investments to diversify its exposure away from graphite and Mahenge. It invests primarily into gold production organisations where it sees an opportunity for capital gain and reviews these allocations regularly. Elsewhere, Armadale says it is open to entering additional projects in the future. However, Bull says that Mahenge will remain its primary focus for the time being.

    Supporting Armadale in its efforts to generate value across its portfolio is a highly experienced management comprising decades of sector-specific experience. For example, Mahede is an experienced mining CEO in Tanzania, having been born in the country and remaining a patron to the Tanzanian Community in Western Australia inc. Meanwhile, fellow non-executive director Nicholas Johansen has spent his career as a senior legal practitioner in the Australian mining sector.

    Elsewhere, Bull has senior experience at numerous related businesses such as Volt Resources, International Graphite, and Linden Resources. He also owns around 8.4pc of Armadale, which, when put alongside the ‘skin-in-the-game’ offered by other employees and consultants, helps to align management with shareholders.

    Finally, and most recently, Armadale added AIM veteran Paul Johnson to its board as a non-executive director. Johnson is an experienced public company director who currently serves as chief executive of African Battery Metals. He has previously served as chief executive of Metal Tiger, Metal NRG, and China Africa Resources. He has also been chairman of ECR Minerals and non-executive director of Greatland Gold, Papua Mining, and Thor Mining.

    Where to next?

    Armadale has a clear work schedule for the remainder of the year that will culminate in an all-important decision on whether to mine. This is likely to create a lot of newsflow, which could be highly value-generative if it goes the way the business plans.

    At the same time, Armadale is flattered by its exposure to the popular ‘EV boom’ investment strategy within a sector where a severe supply deficit looks to be forthcoming. Indeed, such a firm footing in a top-quality project in East Africa could serve Armadale particularly well when the likes of Tesla step up their search for graphite. With the backing of an experienced management team, it will be interesting to see what Armadale makes of the attractive opportunity in its possession.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has not been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Armadale Capital (LSE:ACP) rose 2.13pc to 1.2p on Friday morning after announcing progress towards the completion of a definitive feasibility study (DFS) for its flagship Mahenge Liandu graphite project in Tanzania.

    The firm said a final environmental and social impact assessment report for the project found that the potential impact of graphite mining and processing can be reduced, limited, and eliminated using ‘appropriate mitigation measures’. The report was informed by consultations with various local authorities and includes baseline environmental data that looked at ways to reduce the impact of mining at the site.

    Armadale said it has also completed a decommission implementation plan that considers ways to use the Mahenge Liandu side after mining completes. As part of this, the firm has examined ways to reduce the long-term impact of mining.

    Elsewhere, the firm said it has also received a relocation action plan (RAP) covering the proposed 9km2 mining licence at Mahenge Liandu. According to Armadale, the area affected by the project has limited areas of development and a low population density. As a result, the company anticipates a low compensation cost relative to the overall capital requirement of the project.

    Finally, Armadale added that it is finalising its comments to both the ESIA report and the RAP and expects to submit both to the National Environment Management Council of Tanzania by the end of April.

    The company’s director Nick Johansen said: ‘We are very pleased with the speed at which the DFS is advancing as we look to advance the world-class Mahenge Liandu Graphite Project in south-east Tanzania and establish a significant high-grade graphite mine. Both the ESIA Report and RAP are integral to this process, enabling us to apply for a mining licence, so we are delighted with the findings that appear favourable. We are now completing our in-house work on these documents and look forward to submitting both to the NEMC shortly. Other multiple workstreams are ongoing regarding the DFS and commercial discussions related to the Project; we anticipate updating the market with further progress in the near term.’

    Mahenge Liandu is a high-grade coarse flake asset that Armadale expects to become a strategically-valuable ‘world-class’ supplier to the lithium-ion battery sector once it enters production. The 29.9km2 site is based in the Neoproterozoic system of high-grade metamorphic rocks with easy access to strong infrastructure and Tanzania’s most populous city, Dar es Salaam.

    According to Armadale, Mahenge Liandu is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite. A scoping study completed in March last year gave the site a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc; in comparison, Armadale’s market cap currently sits at just £4.61m. What’s more, these calculations are based on a conservative basket graphite price of $1,272/t.

    The project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa (c.49,000tps of graphite concentrate). Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

    To read our recent interview with the business, please click here.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Shares in Armadale Capital (LSE:ACP) advanced 1.5pc on Wednesday morning after the business announced that it is fast-tracking plans to commercialise its flagship Mahenge Liandu graphite project. With a definitive feasibility study (DFS) for the Tanzania-based project due to complete in Q4 2019, the £4.4m firm said it is now focused on accelerating the various additional workstreams needed to reach production.

    Mahenge is a high-grade coarse flake asset that Armadale expects to become a strategically-valuable ‘world-class’ supplier to the lithium-ion battery sector once it enters production.  According to the organisation, Mahenge is one of the highest-grade, large flake deposits in the world, with a JORC-compliant, inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite.

    As part of its acceleration efforts, Armadale’s management team will hold meetings with current and prospective Chinese parties in early June to finalise binding off-take and project funding agreements. According to Armadale, securing these agreements will validate Mahenge Liandu and mark the start of the company’s transition from graphite explorer to emerging mining.

    As part of this work, test-work on fresh samples at Bureau Veritas’s facility in Perth is focusing on maximising the quality of Mahenge Liandu’s graphite product. Specifically, the work is aimed at enhancing purity levels for a certain volume of output, something that Armadale’s director Nick Johansen believes will highlight the project’s ‘true value’ to potential Chinese partners.

    ‘Our most important task is to ensure that a high-purity graphite product, which attracts a material price premium, can be consistently produced,’ he added in Wednesday’s release.

    Previous results from the region where Mahenge Liandu is based have confirmed the potential to produce high-value produce from graphite deposite. As such, results from Bureau Veritas’s test-work programme are being used in Mahenge Liandu’s plant design, which is being progressed by a leading Chinese group. This group has used the data to provide an update on engineering, procurement, and constructing pricing that will be factored into the Mahenge Liandu DFS.

    Armadale will also be fast-tracking its work on a graphite resource update as part of its acceleration efforts. This new figure – expected by the end of June - will incorporate the latest topographics survey data and the most recent round of reverse circulation and diamond drilling. The results of the update will then be used in the mine planning phase of Mahenge Liandu’s DFS.

    Elsewhere, Armadale has collected water samples from bore-holes around Mahenge Liandu’s proposed mining site for testing to ensure suitability during mine construction and within the process plant. Armadale said the ability to use this groundwater rather than securing liquid from a third-party source will be an ‘important cost-saving development’ when mining operations begin.

    Finally, Armadale said it has increased its engagement work with local community groups as part of its efforts to fast-track Mahenge Liandu’s commercialisation. This has so far involved donating food and necessary supplies to schools and well-being services.

    ‘Looking beyond the completion of the DFS, which is targeted for year-end, the Board is now focused on fast-tracking the various work streams critical to bringing the Mahenge Liandu Graphite Project into commercial production,’ added Johansen. ‘Our most important task is to ensure that a high-purity graphite product, which attracts a material price premium, can be consistently produced. In tandem, the team are finessing details for the processing plant, which has an initial capacity of 400ktpa, and at the same time are ensuring ground-water suitability at site.

    ‘Most importantly, we are ensuring our traction with the local community at Mahenge Liandu remains strong, as their ongoing support is critical to commissioning the Project. We look forward to providing shareholders with further regular updates as the Board moves to fast-track efforts towards transitioning from explorer towards emerging miner.’

    The 29.9km2 Mahenge Liandu project is based in the Neoproterozoic system of high-grade metamorphic rocks with easy access to strong infrastructure and Tanzania’s most populous city, Dar es Salaam. A scoping study completed in March last year gave the project a pre-tax NPV of $349m (£261.7m) and an internal rate of return (IRR) of 122pc; in comparison, Armadale’s market cap currently sits at just £4.4m. What’s more, these calculations are based on a conservative basket graphite price of $1,272/t.

    The project has a payback period of just 1.2 years, based on low capex requirements of only $35m after tax and a mine life of 32 years at 400,000tpa (c.49,000tps of graphite concentrate). Armadale believes this life of mine could be increased significantly, with current figures representing just a quarter of Mahenge’s total resource.

    To read MiningMaven’s in-depth interview with Armadale’s management team on the company’s prospects and predictions for the graphite market, please click here.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

     

     

  • Armadale Capital’s (LSE:ACP) primary interest is its 100pc-owned Mahenge Liandu project in Tanzania– one of the world’s highest-grading, large-flake graphite resources.

    Throughout summer 2019, the company’s share price has soared as work completed as part of an ongoing feasibility study (FS) has continued to demonstrate the asset’s market-leading grades and flake size.

    All the while, Armadale’s efforts to secure offtake financing arrangements for its project have continued against a backdrop of improving demand for graphite - a key element in the production of electric vehicle batteries.

    With several of Armadale’s peers securing highly attractive terms for the offtake of graphite produced at their projects, the economic fundamentals used to date at Mahenge Liandu are looking increasingly conservative.

    In the report below, we have analysed the opportunity for shareholder value creation at the organisation in detail.

    Please click here to download and read the report in full.

     

  • Shares in Armadale Capital (LSE:ACP) sat at 1.1p on Tuesday morning after the graphite-focused firm revealed several areas of substantial progress at its flagship Mahenge Liandu project in Tanzania.

    Armadale said initial metallurgical test-work results for the project, which it is currently advancing towards commercialisation, demonstrated graphite recovery of up to 95pc total graphite content (TGC). Although this is consistent with expectations, the organisation is now completing incremental test-work to enhance the quality of its final graphite concentrate product.

    It added that this new stage of metallurgical work is ‘progressing well’, with targeted premium purity levels currently sitting in the 95-97pc range. Such an enhancement would place Mahenge Liandu towards the high-end of graphite project globally, potentially facilitating premium pricing being factored into future offtake agreements.

    Elsewhere, Armadale said that a review of local rainfall data has indicated that the project will have enough surface water for both mining and processing. The use of surface and recycled water will minimise run-off from the site and into surrounding communities.

    Meanwhile, the business said further test-work has confirmed that water bores can be used in Mahenge Liandu’s process plant, mine construction, and operation phases and that groundwater can be used in drought conditions. These reduce the need for a bore field to be constructed to supply water, cutting overall project costs.

    Finally, Armadale said it recently held a meeting with a director of the council committee of the nearby Liandu village. This saw both parties agree that their existing relationship has delivered ‘considerable value’ to the community over the past two years and should continue.

    Mahenge Liandu boasts a high-grade JORC-compliant indicated and inferred mineral resource estimate of 51.1Mt at 9.3% TGC. This includes 38.7Mt at 9.3pc TGC and 12.4Mt at 9.1pc TGC, making the project one of the most considerable high-grade resources in Tanzania.

    Armadale is currently in the processing of completing a definitive feasibility study (DFS) for the project based on the results of a scoping study that was completed in March last year. This DFS is scheduled to end in Q4 this year.

    The firm’s scoping study suggested that Mahenge Liandua could produce an average of 49,000tpa worth of high-quality graphite products for a 32-year mine life – with plenty of upside potential. Other highlights included an operating cost of $408/t, based on an average 12.5pc TGC life of mine grade, a pre-tax IRR of 122pc and an NPV of $349m with a low development capex of $35m.

    Towards the end of last month, Armadale notably revealed what it described as ‘exceptionally high-grade assay results’ for the first four holes in an 18-hole reverse circulation drill programme at Mahenge Liandu. High-grade near-surface assayed intercepts recorded included 7m at 6.9pc TGC from 31m, 7m at 16.8pc TGC from surface, and 9m @ 14.8pc TGC from surface.

    In Tuesday’s update, Armadale’s director Nick Johansen hailed the company’s latest progress as it moves towards ‘aggressively ramping up’ its efforts to transform from explorer to emerging graphite producer.

    ‘With many moving parts critical to developing a seamless value chain for the Mahenge Liandu Project, it is pleasing to receive metallurgical test-work that is progressing to plan and with results in line with expectations. This will augur favourably as we move more proactively to secure binding off-take commitments and project level financing from our Chinese partners,’  he added. ‘It is also a positive outcome that surface water will be the primary water source as, along with the potential to price our final graphite product at a premium, this will also deliver a positive uplift on the Project’s overall economics.’

    To read our recent look into whether investors are missing a major opportunity at Armadale Capital as graphite prices soar, please click here.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

  • Armadale Capital (LSE:ACP) advanced 3.9pc to 1p on Friday after finalising the saleof its non-core project in the Democratic Republic of Congo (DRC). The Africa-focused natural resources business has entered a final formal sale agreement for the Mpokoto Project with African Royalty, a subsidiary of Arrow Mining.

    The deal will see Arrow take over operations at Mpokoto and pay Armadale a 1.5pc royalty on gold sales once production begins. A feasibility study calculates that Mpokoto can house a 720,000tpa operation producing an average of 24,900oz of gold for four-and-a-half years.

    Armadale said the transaction, first announced in October, crystallises Mpokoto’s value with a company capable of taking the mine into production. It also allows it to retain exposure to the project’s development upside.

    The company said it can now focus entirely on advancing its flagship asset, the high-grade Mahenge Liandu Graphite project in Tanzania. Mahenge Liandu contains a JORC compliant inferred mineral resource estimate of 51.1Mt at 9.3pc total graphite content. This includes 38.8Mt classified as indicated. A scoping study gave the project an NPV of $349m with an internal rate of return of 122pc, a 1.2 year payback period, and low development costs.

    Funds generated from the Mpokoto royalty will support Mahenge Liandu’s development. As of September last year, Armadale said it had been working on beginning a feasibility study at the graphite asset. It hopes this work can confirm the project’s commercial viability.

    Company director Nick Johansen said: ‘The board of Armadale is confident that African Royalty and its related parties, who have significant experience of operating in the DRC, represents the best opportunity for Armadale to crystallise the value of the Mpokoto Project and begin receiving returns through the agreed royalty payments on gold sales. We look forward to reporting further news in due course relating to the development of Mpokoto and of our primary value driver, the Mahenge Liandu Project.’

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
    The Author has not been paid to produce this piece by the company or companies mentioned above.
    Catalyst Information Services Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.
    MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

  • Today’s podcast guest is Matt Bull, Technical Director at Armadale Capital (LSE:ACP). Armadale owns the Mahenge Liandu project in Tanzania and released a comprehensive update on the project this week. Matt gives an overview of progress at the project and discusses the next stages required to move it a step closer to production.

    This interview was recorded on 16th April 2019.

    All opinions expressed are those of MiningMaven and the respective guests unless otherwise stated and should not be construed as investment advice or a recommendation to buy shares in any featured Company. From time to time MiningMaven principals may take equity positions in companies featured. Listeners are advised to do their own extensive research before buying shares which, as with all small-cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of a qualified investment adviser or stockbroker as they deem appropriate. MiningMaven.com is a trading division of Catalyst Information Services Limited. Registered in England no. 06537074 (Registered Office Address 3rd Floor Ivy Mill, Crown Street, Manchester, M35 9BG) #gold #mining #investing

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has not been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

  • Today’s guest on the MiningMaven podcast is Matt Bull, Technical Director at Armadale Capital (LSE:ACP). Armadale’s flagship asset is the Mahenge Liandu graphite project its developing in Tanzania. The company is working towards delivering a Definitive Feasibility Study later this year and has just released some excellent high-grade assay results which the firm says have validated its commercialisation plan.

    This interview was recorded on 25th June 2019.

    All opinions expressed are those of MiningMaven and the respective guests, unless otherwise stated and should not be construed as investment advice or a recommendation to buy shares in any featured Company. From time to time MiningMaven principals may take equity positions in companies featured. Listeners are advised to do their own extensive research before buying shares which, as with all small-cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of a qualified investment adviser or stockbroker as they deem appropriate. MiningMaven.com is a trading division of Catalyst Information Services Limited. Registered in England no. 06537074 (Registered Office Address 3rd Floor Ivy Mill, Crown Street, Manchester, M35 9BG) #mining #investing

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

     

  • In today’s podcast Armadale Capital’s (LSE:ACP) newly appointed non-executive director Paul Johnson explains what attracted him to the company, both from a career and investing perspective.

    Armadale’s primary focus is a graphite project in Tanzania and the company recently raised just under £800,000 to progress the project. Paul touches on the fundamentals of the asset and highlights the critical nature of a company’s ability to communicate to the market.

    This interview was recorded on 13th March 2019.

    All opinions expressed are those of MiningMaven and the respective guests, unless otherwise stated and should not be construed as investment advice or a recommendation to buy shares in any featured Company. From time to time MiningMaven principals may take equity positions in companies featured. Listeners are advised to do their own extensive research before buying shares which, as with all small cap exploration stocks, should be viewed as high risk. Investors should also seek the advice of a qualified investment adviser or stockbroker as they deem appropriate. MiningMaven.com is a trading division of Catalyst Information Services Limited. Registered in England no. 06537074 (Registered Office Address 3rd Floor Ivy Mill, Crown Street, Manchester, M35 9BG) #gold #mining #investing

    Author: Stuart Langelaan

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    The Author has not been paid to produce this piece by the company or companies mentioned above.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    Catalyst Information Systems Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and Catalyst Information Systems Ltd are not responsible for its content or accuracy. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

     

  • Towards the end of October, Ben Turney from our sister site ValueTheMarkets hosted Armadale Capital’s (LSE:ACP) technical director Matt Bull in a recorded presentation and interview. Bull provided a comprehensive update on the firm’s progress at its wholly-owned Mahenge Liandu graphite project in Tanzania, where it is currently completing a feasibility study.

    Among the topics covered were the project’s market-leading graphite purity and flake size and Armadale’s ongoing progress in securing offtake agreements and financing for its development. Elsewhere, Bull provided an update on the increasing demand for graphite globally against a backdrop of shrinking supply from China as the country tightens its environmental controls.

    He also argued that the economic fundamentals currently used at Mahenge Liandu are looking increasingly conservative given the attractive offtake deals recently secured by several of Armdale’s peers at their projects. This was a point recently highlighted in MiningMaven’s detailed report on the business, which can be read here.

    During the presentation, Bull also took questions from shareholders. These focused on numerous subjects, including the firm’s intention to hire a CEO, its plans for communicating its message, and the positive impact that recent progress could have on Mahenge Liandu’s economics.

    For a full recording of the presentation, please see below:

    Armadale Capital - Online Presentation and Q&A Session - 25/10/2019 from ValueTheMarkets.com on Vimeo.

    Author: Daniel Flynn

    The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    MiningMaven Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

    MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

    MiningMaven.com and MiningMaven Ltd are not responsible for the article’s content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance