Armadale Capital : Resource Upgrade Confirms High Grade Near Surface Mineralisation

Resource Upgrade Confirms High Grade Near Surface Mineralisation

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

15 October 2019

Armadale Capital Plc ('Armadale' or 'the Company')

Resource Upgrade Confirms High Grade Near Surface Mineralisation

Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa, is delighted to announce a meaningful upgrade in the Mineral Resource Estimate for its high-quality Mahenge Liandu Graphite Project ('Mahenge Liandu' or 'the Project') in Tanzania.

The results of the recent infill drilling campaign have seen the Mineral Resource Estimate increase to 59.5Mt @ 9.8% Total Graphitic Content ('TGC'). Notably, the upgrade was largely underpinned by two coherent high-grade 3.1Mt @ 15% TGC near surface zones including 1.2Mt at 17.3% TGC.

Highlights

• Results of the recent drilling campaign have been reviewed by Mark Biggs of ROM Resources who has signed off on a Mineral Resource Estimate of 59.5Mt @ 9.8% total graphite content
• The revised resources estimate is broken down by categories as follows:
  • Measured: 11.5Mt @ 10.5% vs Nil previously
  • Indicated: 32.1Mt @ 9.6% vs 38.7Mt @ 9.3% previously
  • Inferred: 15.9Mt @ 9.8% vs 12.4Mt @ 9.1% previously
• High-grade near surface drilling results have been incorporated into the resource model, with two high-grade coherent zones totalling 3.1Mt @ 15% TGC zones including 1.2Mt @ 17.3%
• The implication of the resource model is that more high-grade near surface graphite can potentially be mined at a lower extraction cost in the early years, to bolster potential cashflow and enhance the Project's overall valuation
• Incorporating current topographic and recent drilling data into the geological model has significantly increased confidence of the revised Mineral Resource Estimate with 33.6Mt now in the Indicated and Measured categories
• Results expected to have a positive outcome on the Definitive Feasibility Study ('DFS') currently being prepared

Nick Johansen Director of Armadale said: 'This latest upgrade is extremely welcome news and there are a number of clear positives to take from it. Firstly, we now have materially higher confidence in the Mineral Resource Estimate with 11.5Mt @ 10.5% in the Measured category; and secondly it has demonstrated the potential to mine higher volumes of graphite in the early years at a higher EBITDA margin to enhance the Project's overall upside. This upgrade reflects the substantial work undertaken by our team on the ground in Tanzania this year and is a clear demarcation as we continue to transform from explorer to emerging producer.'

FURTHER INFORMATION

JORC Resource Statement

The Resource update is based on an addition 18 RC holes and 8 diamond drill holes which confirmed the geological interpretation of a south east dipping stratigraphically controlled graphite deposit. The update incorporates an updated topographic survey, density data from the diamond drilling campaign and an area of close spaced drilling used to confirm the geologic interpretation. Table 1 shows the total resource using a cut-off grade of 7.5% TGC.

Overall	Tonnage (Mt)	%TGC
Inferred	15.90	9.75
Indicated	32.06	9.58
Measured	11.52	10.54
	59.48	9.81

Table 1 JORC Compliant Mineral Resource table Mahenge Liandu

Mahenge Liandu Graphite Project, Tanzania

Armadale's wholly-owned Mahenge Liandu Graphite Project is located in a highly prospective region and is one of the largest high-grade resources in Tanzania. The work to date has demonstrated the Project'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.

Currently, Armadale is completing a DFS based on the results of a Scoping Study that was completed in March 2018. This study was based on a throughput of 400,000tpa over a 32-year mine life and verified that Mahenge Liandu could produce a coarse flake, high-purity graphite product to underpin robust economics: low operating cost of US$408/t, based on an average 12.5% TGC life of mine grade; pre-tax IRR of 122% and NPV of US$349m; a low development capex of US$35m; and after-tax payback period of 1.2 years.

To strengthen the resource, the Company has undertaken extensive work programmes, which have generated exceptional high-grade near surface results with two 3.1Mt @ 15% TGC zones including 1.2Mt @ 17.3%. This data has been incorporated into the geological model to increase the Mineral Resource Estimate significantly to 59.5Mt @ 9.8% from 51.1Mt @ 9.3% TGC, broken down by categories as follows:

• Measured: 11.5Mt @ 10.5% vs Nil previously
• Indicated: 32.1Mt @ 9.6% vs 38.7Mt @ 9.3% previously
• Inferred: 15.9Mt @ 9.8% vs 12.4Mt @ 9.1% previously

There are clear implications that more high-grade near surface graphite can potentially be mined at a lower extraction cost in the early years, to bolster potential cashflow and enhance the Project's overall valuation. Additionally, there remains scope to further improve returns with staged expansions as the current mine plan is based on circa 25% of the total resource.

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

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 contents of this announcement.

**ENDS**

Enquiries:
Armadale Capital Plc Paul Johnson, Non-Executive Director (UK) Tim Jones, Company Secretary		[phone]
Nomad and broker: FinnCap Ltd Christopher Raggett / Max Bullen-Smith		[phone]
Joint Broker: SI Capital Ltd Nick Emerson		[phone]
Press Relations: St Brides Partners Ltd Isabel de Salis / Juliet Earl		[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 Indicated and inferred mineral resource estimate of 51.1Mt @ 9.3% TGC, making it 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.

More information can be found on the website www.armadalecapitalplc.com.

Statement of Competence and Compliance

Qualifications and Experience

This Report has been prepared by Mark Biggs for and on behalf of Armadale Capital PLC. Mark Biggs has over 38 years of experience in base metal, industrial mineral, coal exploration and mine evaluation throughout Australia, South Africa, Mongolia and China. He has worked extensively within the Bowen and Surat Basins and was resident at several Central Queensland coal mines for 22 years. He has held several roles in these mine's Technical Services, including Senior Geologist, Chief Geologist, Coal Quality and Scheduling Superintendent and Acting Technical Services Manager. Mark has extensive experience in open cut and underground exploration techniques, geophysical techniques, assay interpretation, geotechnical and structural modelling, mining, and scheduling.

Mark is a Director and Principal Geologist for ROM Resources, which has been operating since 2012. His academic qualifications extend to a Bachelor and master's degree in Applied Science from the Queensland University of Technology. Mark is a Member of The Australasian Institute of Mining & Metallurgy and a Member of the Geological Society of Australia. Mark is a Competent Person for industrial minerals as defined by the JORC Code (2012) and successfully completed the AusIMM Online Professional Certificate in JORC Code Reporting in November 2018.

Independence and Disclosure

Neither Mark Biggs nor ROM Resources have a direct or indirect financial interest in, or association with Armadale Capital PLC or any of their subsidiary companies, the properties and tenements reviewed in this report, apart from standard contractual arrangements for the preparation of this report and other previous independent consulting work. In preparing this report, ROM Resources has been paid a fee for time expended based on its standard daily rates. The present and past arrangements for services rendered to Armadale Capital PLC do not in any way compromise the independence of ROM Resources with respect to this review. Drafts of this Competent Person's Report have been provided to Armadale Capital PLC, but only for the purposes of verifying factual information and the reasonableness of assumptions contained herein.

Limitation

The views expressed in this Competent Person's Report are solely those of ROM Resources and Mark Biggs, unless specifically identified within the report as those of other parties. To the extent permitted by law, Mark Biggs and ROM Resources disclaims all liability for loss or damage (whether foreseeable or not and whether indirect or not) suffered by any person acting on the report or arising as a consequence of the information in the Competent Person's Report on the graphite resources within the Mahenge Liandu Project, whether such loss or damages arises in connection with any negligence, default or lack of care on behalf of other parties associated with the preparation of the report.

Consent

ROM Resources hereby consents to the inclusion of this Competent Person's Report in any public reporting, in both electronic and hard copy format, in the form and full context in which it appears. As at the date of Competent Person's Report set out above ROM Resources has not withdrawn consent.

ROM Resources was only commissioned to prepare the Competent Person's Report and has only authorised issue of this Competent Person's Report on Armadale Capital PLC exploration tenements specified in the Competent Person's Report. It has not been involved in the preparation of, or authorised issue of, any other part of any of Armadale Capital PLC reporting, in which this Competent Person's Report is included.

Disclaimer

This Report is to be read as a whole, and sections or parts thereof should therefore not be read or relied upon out of context. This disclaimer must accompany every copy of the Report, which is an integral document and must be read in its entirety.

Competent Person's Statement

The information in the report to which this statement is attached that relates to Mineral Resources is based on information compiled by Mr Matt Bull and Mr Mark Biggs.

The information in this report that relates to Exploration Targets, Exploration Results is based on information compiled by Mr Matt Bull, a Competent Person who is a member of Australian Institute of Geoscientists. Mr Bull is the Technical Director of Armadale Capital and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken 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'. Matt 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 in this report that relates to Mineral Resources or Ore Reserves is based on information compiled by Matt Bull as mentioned above, and Mark Biggs, a Competent Person who is a Member of the Australasian Institute of Mining and Metallurgy. Mark Biggs is a Director of ROM Resources Pty Ltd. Mark Biggs has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken 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'. Mark Biggs consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The estimates of the Industrial Mineral (Graphite) Resources presented in this Report are a true reflection of the Mineral Resources as at 14^th October 2019. Where quoted, it should be noted that where Exploration Target tonnages calculated in the report they are considered conceptual in nature. There has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

NAME	JOB TITLE	REGISTRATION	EXPERIENCE (YEARS)
Mark Biggs	Principal Geologist/Director ROM Resources	AusIMM 107188	32
Matt Bull	Armadale Technical Director	AIG	16

Technical Specialists

The following Technical Specialists (who may or may not be Competent Persons) were involved in the preparation of this Resource and have appropriate experience in their field of expertise with regards to the activity that they are undertaking and consent to the inclusion in the report of the matters based on the relevant technical information in the form and context in which it appears.

NAME	JOB TITLE	REGISTRATION	EXPERIENCE (YEARS)	RESPONSIBILITY
Matthew Bull	Armadale Technical Director	AIG	16	Geology

Reliance on Other Experts

No other experts were consulted in the generation of these updated resource estimates.

Armadale Capital Plc

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