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

Date 28 May 2021

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

 Subscription and Investment Portfolio Update

Armadale Capital plc (LON: ACP), the AIM quoted investment group focused on natural resource projects in Africa is pleased to announce that is has raised £850,000 via a private subscription with certain existing high-net worth shareholders in the Company (the 'Subscription').

As part of the Subscription, 18,888,889 new ordinary shares ('Ordinary Shares') ('Subscription Shares') in the Company will be issued at a price of 4.5 pence per Ordinary Share which was the mid-market price on 27 May 2021, being the last trading day immediately preceding this announcement. In addition, Subscribers will also receive one warrant for each Ordinary Share subscribed for, exercisable at a price of 7.00 pence and expiring on the three-year anniversary of the date of issue (the 'Warrants'). In aggregate, 18,888,889 Warrants will be issued alongside this Subscription.

The Subscription was carried out directly with investors and there were no broker fees paid.

Use of Proceeds

Following the delivery of an extremely compelling feasibility study for the Mahenge Liandu graphite project in Tanzania, these funds will strengthen the Company's balance sheet as it seeks to progress development finance workstreams ahead of construction; they will also enable Armadale to further progress essential Front End Engineering Design studies being carried out by the Chinese group Xinhai Mineral EPC and also be used for general working capital purposes.

Investment Portfolio Update

In addition to driving development at Mahenge Liandu graphite project, Armadale continues to operate as a diversified investing company investing in natural resource projects in Africa and to this end it has maintained a small portfolio of quoted investments, principally in resource companies where the Directors believe there are opportunities for capital gain.

With regard to these investments, Armadale wishes to inform investors that recently there have been significant gains in the Company's listed portfolio and that the current value of listed investments is approximately CAD 1.4 million.

The Company continues to keep its portfolio under review. The Company's strategy with its quoted portfolio is to gain exposure in projects that have the potential to create short to medium term returns for the Company as well as diversify the Company's exposure to a broader range of commodities while being able to enter and exit the position with minimal cost and time.

Armadale Chairman, Nick Johansen, commented: 

"It is fantastic to have such strong inward demand by investors and to be able to conduct this Subscription without a discount to the prevailing share price - a testament indeed to the compelling economics of Mahenge and a recognition of the way Armadale has significantly derisked the Mahenge project and driven significant shareholder value since previous fundraises more so in recent months with the approval of the Environmental and Social Impact Assessment which is the final necessary step in our Mining Licence application process. We have also delivered a successful first phase of our FEED studies testwork thus confirming our process flowsheet as per our Definitive Feasibility Study and helping to ratify the exceptional economics of the project. These funds will also help to strengthen the Company's existing balance sheet as we look to further potential progress development finance options with the number of finance partner / provider candidates with whom we are currently engaged.

We are also delighted to report that the Company's quoted investment portfolio has done particularly well as of late and with a present value of circa CAD 1.4 million, has delivered healthy returns for shareholders. The Company will continue to review opportunities as appropriate; investors should note that profits and capital from listed investments may at some stage be used to progress development at our Mahange graphite project. We look forward to updating the market regularly."

Total Voting Rights and Share Admission

Following Admission, the Company will have 501,167,889 Ordinary Shares of 0.1 pence each in issue with no shares held in treasury, each with one vote per share. Therefore, the total number of voting rights in the Company will be 501,167,889. This figure may be used by shareholders in the Company as the denominator for calculations to determine if they have a notifiable interest in the share capital of the Company under the FCA's Disclosure Guidance and Transparency Rules, or if such interest has changed.

The Subscription is conditional upon, inter alia, admission ('Admission') of the Subscription Shares to trading (which will be issued and settled in CREST to the extent possible) on AIM. Application will be made for Admission, which is expected to occur on or around 8.00 a.m. on 04 June 2021.

**ENDS**

Notes

Armadale's wholly-owned Mahenge Liandu Graphite Project is located in a highly prospective region, with a high-grade JORC compliant indicated and inferred mineral resource estimate announced February 2018 - 59.5Mt at 9.8% TGC. This includes 11.5Mt @ 10.5% Measured 32.Mt Indicted at 9.6% and 15.9Mt at 9.8% TGC, making it 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.

The Company's updated Definitive Feasibility Study (June 2020) confirmed Mahenge as a long-life low-cost graphite project with a US$430m NPV and IRR of 91% based on a two-stage expansion strategy comprising:

·      Stage One - processing plant and infrastructure at a nominal design basis rate of 0.4-0.5 Mt/pa to produce a nominal 60,000t/pa graphite concentrate in the first three years of production

·      Stage Two - a second 0.5 Mt/y plant and associated additional infrastructure doubling throughput to 1 Mt/y from Year 5 of operation

The DFS shows that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$985m over an initial 15 year mine-life and scope for further improvement as this utilises just 25% of the current resource, which remains open in multiple directions.

Projected timeline to first production is expected to be approximately 10-12 months from the start of construction and the capital cost estimate for Stage 1 is US$39.7m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, with a 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,112/t. Stage 2 expansion is expected to be funded from cashflow.

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