Armadale Capital issues update on the Mahenge Liandu graphite project
Source - SMW
Armadale Capital provided an update in respect of the significant progress made advancing the Mahenge Liandu Graphite Project in Tanzania towards production, including the remaining steps needed to complete the Definitive Feasibility Study (DFS).
- DFS completion expected in Q4 2019 following Scoping Study that reported net present value (NPV) of $349m, Development CAPEX of $35m, pre-tax internal rate of return (IRR) of 122%; and 32-year life of mine with an after-tax payback period of 1.2 years.
- Drilling to achieve ten years of planned production in the Measured JORC compliant category completed
- Mine planning process updated to reflect results of completed drilling programme
- Product quality wide diameter drilling completed to create representative concentrates and test work to optimise process flow sheet by determining recovery rates, flake size distribution and final product purity
- 1.6t of diamond core sent to Perth, Australia where it will undergo metallurgical testing that will enable completion of the final plant design Environmental Social Impact Assessment (ESIA) and Relocation Action Plan (RAP) finalised and expected to be submitted to the National Environment Management Council (NEMC) this month
- Test work programme aimed to progress the MOU for offtake of 30,000tpa of graphite concentrate to a binding agreement underway
- Discussions progressing with further offtake partners for remaining 19,000tpa of graphite concentrate
- Application for a mining lease expected to be submitted in August 2019 Graphite market continues to strengthen with a number of Tanzanian based graphite projects securing binding offtakes over recent months
Director Nick Johansen said: "The Mahenge Liandu Graphite deposit is one of the highest-grade large flake deposits globally with a current JORC Resource of 51.1Mt at 9.3% TGC.
"With work now underway to upgrade this resource to declare a maiden reserve, the potential of the Project is set to increase.
"We are now working on securing the mining permit and completing the Definitive Feasibility Study which will allow us to make the decision to mine and ultimately advance Mahenge Liandu into production.
"The Scoping Study released in March 2018 demonstrated an NPV of US$349m and IRR of 122%. Project capex drawdown was US$35m demonstrating the potential for an extremely low project development cost, with a payback estimated of 1.2 years and a 32-year life of mine.
"We expect the DFS to confirm our confidence in the extremely compelling economics of the project.
"We are encouraged by the strengthening graphite market which has been reflected across a number of comparable graphite-projects that are securing project finance and advancing to mine construction.
"The Tanzanian government is now actively recognising the requirement for foreign investment in the mining sector and we are pleased to note the accommodating investment conditions.
"I look forward to reporting further as our DFS and partner discussions continue.
"The company will release regular updates as material developments occur, including those areas covered in the ongoing work streams outlined below."
At 10:34am: (LON:ACP) Armadale Capital PLC share price was -0.25p at 1.35p