Consolidated Statement of Cash Flows

For the period ended 30 June 2021

Notes to the unaudited condensed consolidated financial statements

For the period ended 30 June 2021

1. Incorporation and principal activities

         Country of incorporation

Armadale Capital Plc was incorporated in the United Kingdom as a public limited company on 19 August 2005. Its registered office is 1 Arbrook Lane, Esher, Surrey, KT10 9EG.

Principal activities

The principal activity of the Group during the period was that of an investment company.

2. Accounting policies

2.1.   Statement of compliance

The financial information for the six months ended 30 June 2021 and 30 June 2020 is unreviewed and unaudited and does not constitute the Group's statutory financial statements for those periods within the meaning of Section 434 of the Companies Act 2006. The comparative financial information for the year ended 31 December 2020 has been derived from the Annual Report and Accounts, which were approved by the Board of Directors on 28 May 2021 and delivered to the Registrar of Companies. The report of the Auditors on those accounts was unqualified and did not contain any statement under Section 498 of the Companies Act 2006.

This condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. This condensed set of financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2020 which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2020 as described in those annual financial statements.

In respect of new financial reporting standards which came into effect for reporting periods beginning on 1 January 2021, the Directors consider that their implementation has no material effect on the financial information presented in this statement.

2.2.   Going Concern

The financial statements have been prepared on the going concern basis as, in the opinion of the Directors, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future. The Company's ability to continue as a going concern and to achieve its long term strategy of developing its exploration projects is dependent on further fundraising.  During the period, a total of £1,095,350 was raised from share placing and warrant exercises (see note 4).  Since the period end, all remaining loan notes, together with accrued interest, have been converted into Ordinary Shares in the Company, which is now debt free.

2.3. Exploration and evaluation assets

         These assets are recorded at cost and are amortised over their expected useful life on a pro rata basis of actual production for the period to expected total production.

2.4. Investments

Investments are stated at fair value.

3.   Loss per share

The calculation of loss per share is based on a loss of £27,000 (2020, £159,000) and on 480,763,732 (2020, 419,492,599) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.

There was no difference between basic loss per share and diluted loss per share as the Group reported a loss for the period.

4.   Share capital

During the period, the Company placed 18,888,889 Ordinary Shares in the Capital of the Company to raise £850,000 with institutional and other investors. Also during the period 10,467,913 warrants were exercised providing proceeds of £245,350.

**ENDS**

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

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU No. 596/2014) which is part of UK law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

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.