TIDMACP
RNS Number : 3418M
Armadale Capital PLC
23 May 2022
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector:
Investment Company
23 May 2022
Armadale Capital Plc
('Armadale' or 'the Company')
Final Results and Notice of AGM
Armadale Capital plc (LON: ACP), the AIM quoted investment group
focused on natural resource projects in Africa, is pleased to
announce its final results for the year ended 31 December 2021
('Final Results' or 'Annual Report'). The Company also announces
that its Annual General Meeting ('AGM') will be held at Suite 2, 23
Railway Road. Subiaco, Western Australia 2016 on 20 June 2022 at
17.00 AWST (10:00 BST) . A notice of AGM, together with printed
copies of the Company's full Annual Report for the year ended 31
December 2021, will be posted to shareholders. Copies will also be
available to view on the Company's website:
www.armadalecapitalplc.com .
Strategic Report
For the year ended 31 December 2021
Operational and Corporate Highlights for Period Ending 31
December 2021
Significant progress made in delivering key accretive milestones
in advancing the Mahenge Liandu Graphite Project in Tanzania
1. In January 2021, the Company reported on the CSIRO
(Australia's Commonwealth Scientific and Industrial Research
Organisation) test work which confirmed natural flake graphite from
Mahenge graphite project as a premium quality product with the
exceptionally high purity and characteristics required for use in
lithium-ion batteries.
2. In March 2021, the Environmental and Social Impact Assessment
('ESIA') was formally granted by National Environment Management
Council ('NEMC') of Tanzania.
3. In September 2021, the Company announced the formal
confirmation and receipt of the Mining Licence (ML/007744/2020) for
the Mahenge Graphite Project from the Tanzanian Ministry of Energy
and Minerals. The Mining Licence provides the Company with
exclusive development and mining rights over the graphite resources
within the 8.54km(2) Mining Licence and is a major de-risking
milestone for investors. The mining licence was granted for an
initial 10-year term which can be extended. Should it be extended,
it would cover the initial 15-year mine life utilising only 25% of
the estimated Resource.
4. 1st phase of Front-End Engineering Design Studies undertaken
by Chinese EPCM Xinhai Mineral EPC completed with positive results
received confirming a premium quality high purity graphite
concentrate, also suitable for the battery anode market and can be
produced from Mahenge using conventional plant as outlined in the
Company's existing Definitive Feasibility Study. This included
metallurgical a test work programme which further confirmed the
efficacy of the Company's intended process flow sheet and helped
ratify project economics.
5. The main focus going forward is gaining project development
finance and binding off take agreements to bring the project to
production.
6. In December 2021, the Company appointed Mr. Greg Entwhistle
as Project Director. Over the past five years, Mr Entwistle has
specialised in the emerging graphite sector in East Africa
consulting to several groups that are advancing projects towards
production. Mr. Entwhistle brings considerable skills and
experience to expedite progress of the Group's Mahenge Graphite
project towards commissioning production .
Post Period End
1. In February 2022 the Company applied for three incremental
exploration licences which are prospective for graphite
mineralisation and materially enhance the Mahenge Liandu Project's
exploration potential.
2. Ongoing review of quoted portfolio, where the Directors
believe there are opportunities for capital gains.
3. Continue to actively review other exciting investment opportunities.
During the year under review, Armadale continued to operate as a
diversified investing group focused on natural resource projects in
Africa. To this end, its portfolio is divided into two groups:
-- actively managed investments where the Company has majority ownership of the investment; and
-- passively managed investments where the Company has a
minority investment, typically in a quoted company, and does not
have management control.
Currently, the Company's key actively managed investment is the
Mahenge Liandu Graphite Project in Tanzania. At present, the
Company is actively marketing the Project to potential industry
partners and end users (offtakers) of graphite products. The
Company is also pursuing a range of potential options relating to
development finance for the project.
PASSIVELY MANAGED INVESTMENTS
Mine Restoration Investments Limited ('MRI'), South Africa
The shares in MRI are being carried at Nil market value (2020:
Nil) as MRI shares were suspended from trading on the Johannesburg
Stock Exchange. The MRI shares continued to be suspended throughout
the year.
Quoted Portfolio
The Company has a small portfolio of quoted investments, valued
at GBP150,000 on 16 May 2022, principally in resource companies
where the Directors believe there are opportunities for capital
gain. 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.
SUSTAINABLE DEVELOPMENT
The Company is committed to sustainable development and
conducting its business ethically. Given that the Company invests
in the mining industry, one of its key focuses is on maintaining a
high level of health and safety, environmental responsibility, and
support for the communities close to its investments.
CORPORATE INFORMATION
Principal Risks and Uncertainties
There are known risks associated with the mineral industry,
especially in Africa. The Board regularly reviews the risks to
which the Group is exposed and endeavours to minimise them as far
as possible. The following summary, which is not exhaustive,
outlines some of the risks and uncertainties currently facing the
Group:
-- Although reducing throughout the year under review, the
COVID-19 pandemic continues to have risks for the Group in terms of
its ability to travel to and from its projects and ability for key
personnel to access its projects. As previously reported, the
impact of the COVID- 19
pandemic on the project is so far minimal as the Company's site
activities were substantially completed in 2019.
-- Through the Mahenge Liandu Graphite Project the Group is very
exposed to graphite. Graphite is a relatively new commodity whose
market is being driven by demand in renewable energy. The Company
believes it is thus vulnerable to changing global energy
policies.
-- The impact of Brexit on companies operating in the UK is
still being monitored. Thus far Brexit has not impacted the Group's
ability to raise funds.
-- The exploration for and development of mineral resources
involves technical risks, infrastructure risks and logistical
challenges, which even a combination of careful evaluation and
knowledge may not eliminate.
-- There can be no assurance that the Group's project will be
fully developed in accordance with current plans.
-- Future development work and subsequent financial returns
arising may be adversely affected by factors outside the control of
the Group.
-- The availability and access to future funding within the global economic environment.
-- The Group operates in multiple national jurisdictions and is
therefore vulnerable to changes in government policies which are
outside its control. The mining regulation changes in Tanzania are
still being evaluated, however they seem to have minimal impact on
investment in graphite mining. The Group continues to monitor the
implementation of the changes to evaluate and mitigate sovereign
risks.
-- The Group is exposed to gold as the holder of a royalty on
gold production from its previously held gold project. The Group's
potential future royalty stream will be affected by fluctuations in
the prevailing market price of gold and to variations of the US
dollar in which gold sales will be denominated.
Some of the mitigation strategies the Group applies in its
present stage of development include, among others:
-- Proactive management to reducing fixed costs.
-- Rationalisation of all capital expenditures.
-- Maintaining strong relationships with government (employing
local staff and partial government ownership), which improves the
Group's position as a preferred small mining partner.
-- Engagement with local communities to ensure our activities
provide value to the communities where we operate.
-- Alternative and continued funding activities with a number of
options to secure future funding to continue as a going
concern.
The Directors regularly monitor such risks and will take actions
as appropriate to mitigate them. The Group manages its risks by
seeking to ensure that it complies with the terms of its
agreements, and through the application of appropriate policies and
procedures, and via the recruitment and retention of a team of
skilled and experienced professionals.
Key Performance Indicators
The Group's current key performance indicators ('KPIs') are the
performance of its underlying investments, measured in terms of the
development of the specific projects they relate to, the increase
in capital value since investment and the earnings generated for
the Group from the investment. The Directors consider that it is
still too early in the investment cycle of any of the investments
held, for meaningful KPIs to be given.
Success is also measured through the identification and
investment in suitable additional opportunities that fit the
Group's investment objectives.
Section 172 Statement
Section 172(1): A director of a company must act in the way he
considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to -
Section 172(1) (b) the interests of the company's employees,
Company's Comment: While the Company is largely staffed by
contractor employees (rather than direct employees of the Company),
the directors consider that continuing active work on the Mahenge
Liandu Graphite Project to be in the best interest of such staff to
utilise their skills and develop their local communities. The board
seeks regular feedback from its key stakeholders (including staff
and advisers) to ensure that the corporate culture of the Company
remains highly ethical in terms of our Company's values and
behaviours.
Section 172(1) (c) the need to foster the company's business
relationships with suppliers, customers and others,
Company's Comment: The directors ensure that suppliers are
available and meeting commitments and there is good communication
with staff as a key requirement for high levels of engagement. This
is done by periodic and ad-hoc briefings and discussions.
Reasons to engage shareholders are to meet regulatory
requirements and understand shareholder sentiments on the business,
its prospects and performance of management.
This is done by regulatory news releases, keeping the investor
relations section of the website up to date, annual and half-year
reports and presentations and AGM.
Section 172(1) (d) the impact of the company's operations on the
community and the environment,
Company's Comment: The Company's activities impact communities
in the places where we operate and elsewhere. The Company engages
communities with employment / business development arrangements
within guidelines. Through preparation and compliance with
environmental and social management plans, which include the
regulatory requirements for the Company on its Mahenge Liandu
Graphite Project, the directors ensure that wherever possible its
activities have a positive impact on the community and avoid
adverse environmental impacts.
The Company has engaged the services of a local manager in
Liandu who provides information to the community about our intended
project activities and is responsible for managing local affairs
and feedback to the Company.
Section 172(1) (e) the desirability of the company maintaining a
reputation for high standards of business conduct, and
Company's Comment: The directors consider standards of business
conduct in all dealings of the Company. The members of the board
have a collective responsibility and obligation to promote the
interests of the Company and are collectively responsible for
defining standards of business conduct which includes corporate
governance arrangements. The board provides strategic leadership
for the Company and operates within the scope of our corporate
governance framework and sets the strategic goals for the
Company.
Section 172(1) (f) the need to act fairly as between members of
the company.
Company's Comment: The board takes feedback from a wide range of
shareholders (large and small) and endeavours at every opportunity
to pro-actively engage with all shareholders (via regular news
reporting-RNS) and engage with any specific shareholders in
response to particular queries they may have from time to time. The
board considers that its key decisions during the year have
impacted equally on all members of the Company.
Board
In March 2021, Ms Amne Suedi and Mr Steve Mahede resigned from
the Board as non-executive Directors and the Company wishes them
well in the future. The Board is actively considering potential
replacements for former Board members with a focus on a potential
appointment of a UK based Board member.
Financial Results
For the year ended 31 December 2021 the Group did not earn any
revenues as its business related solely to the making of
investments in non-revenue producing resource projects and
companies.
The Group made a loss after tax of GBP0.333 million (2020:
GBP0.196 million) for the year ended 31 December 2021. Expenditure
on the Mahenge Liandu project during the year amounted to GBP0.272
million (2020: GBP0.662 million), which was capitalised as
additional exploration and evaluation assets.
Funds raised during the year amounted in total to GBP1,279,000
of which GBP850,000 came from a placing of shares and GBP429,000
came from the exercise of warrants and options. Other share issues
during the year were in respect of loan note conversions.
At 31 December 2021, the Group had cash of GBP886,000 (2020:
GBP252,000 ) and no debt finance (2020: loan notes of GBP577,000 ).
At 16 May 2022, following the exercise of further warrants, the
Group had cash of GBP1,942,000.
Outlook
The year under review shows that Mahenge Liandu continues to
represent an exciting opportunity for the Group. As identified in
the going concern note to the Directors' Report, the Company's
ability to achieve its strategy with respect to the project is
dependent on the further fundraising. The Directors continue to
keep other investment opportunities, in line with the Group's
investment objectives, under review, which the board believe could
deliver significant value to shareholders.
Nicholas Johansen
Director
20 May 2022
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
--------------------------------------- -------- --------
Administrative expenses (330) (378)
-------- --------
Share based payment charges - -
-------- --------
Change in fair value of derivative - 37
-------- --------
Change in fair value of investments 8 176
-------- --------
Operating loss (322) (165)
-------- --------
Finance costs (11) (31)
-------- --------
Loss before taxation (333) (196)
-------- --------
Taxation - -
-------- --------
Loss after taxation (333) (196)
-------- --------
Other comprehensive income
======== ========
Items that may be reclassified to
profit or loss:
---------------------------------------- ======== ========
Exchange differences on translating
foreign entities (61) 39
---------------------------------------- -------- --------
Total comprehensive loss attributable
to the equity holders of the parent
company (394) (157)
======== ========
Loss per share attributable to the Pence Pence
equity holders of the parent company
-------- --------
Basic and diluted loss per share (0.07) (0.04)
======== ========
Consolidated Statement of Financial Position
At 31 December 2021
2021 2020
GBP'000 GBP'000
Assets
Non-current assets
--------- ---------
Exploration and evaluation assets 4,727 4,417
--------- ---------
Investments 138 282
--------- ---------
4,865 4,699
----------------------------------- --------- ---------
Current assets
--------- ---------
Trade and other receivables 150 121
--------- ---------
Cash and cash equivalents 886 252
--------- ---------
1,036 373
----------------------------------- --------- ---------
Total assets 5,901 5,072
========= =========
Equity and liabilities
--------- ---------
Equity
--------- ---------
Share capital 3,275 3,207
--------- ---------
Share premium 23,906 22,348
--------- ---------
Shares to be issued 286 286
--------- ---------
Share option and warrant reserve 925 762
--------- ---------
Foreign exchange reserve 66 127
--------- ---------
Retained earnings (22,636) (22,406)
--------- ---------
Total equity 5,822 4,325
--------- ---------
Current liabilities
--------- ---------
Trade and other payables 79 170
--------- ---------
Loans - 577
--------- ---------
Total Liabilities 79 747
--------- ---------
Total equity and liabilities 5,901 5,072
========= =========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Share Share Shares Share Foreign Retained Total
Capital Premium to be Option Exchange Earnings
issued and Warrant Reserve
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- -------- ------------- ---------- ---------- ----------
At 1 January 2020 3,140 21,037 286 661 88 (22,400) 2,812
--------- --------- -------- ------------- ---------- ---------- --------
Loss for the period - - - - - (196) (196)
--------- --------- -------- ------------- ---------- ---------- --------
Other comprehensive
loss - - - - 39 - 39
--------- --------- -------- ------------- ---------- ---------- --------
Total comprehensive
loss for the year - - - - 39 (196) (157)
--------- --------- -------- ------------- ---------- ---------- --------
Issue of shares
and warrants 68 1,311 - 240 - - 1,619
--------- --------- -------- ------------- ---------- ---------- --------
Release on conversion
of loan notes - - - - - 51 51
--------- --------- -------- ------------- ---------- ---------- --------
Transfer on exercise
of warrants - - - (139) - 139 0
--------- --------- -------- ------------- ---------- ---------- --------
Total other movements 68 1,311 - 101 - 190 1,670
--------- --------- -------- ------------- ---------- ---------- --------
At 31 December
2020 3,208 22,348 286 762 127 (22,406) 4,325
========= ========= ======== ============= ========== ========== ========
Loss for the period - - - - - (333) (333)
========= ========= ======== ============= ========== ========== ========
Other comprehensive
loss - - - - (61) - (61)
--------- --------- -------- ------------- ---------- ---------- --------
Total comprehensive
loss for the year (61) (333) (394)
--------- --------- -------- ------------- ---------- ---------- --------
Issue of shares
and warrants 67 1,558 - 266 - - 1,891
========= ========= ======== ============= ========== ========== ========
Transfer on exercise
of warrants - - - (103) - 103 -
--------- --------- -------- ------------- ---------- ---------- --------
Total other movements 67 1,558 - 163 - 103 1,891
--------- --------- -------- ------------- ---------- ---------- --------
At 31 December
2021 3,275 23,906 286 925 66 (22,636) 5,822
--------- --------- -------- ------------- ---------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
2021 2020
GBP'000 GBP'000
------------------------------------------- -------- --------
Cash flows from operating activities
-------- --------
Loss before taxation (333) (196)
-------- --------
Adjustment for:
-------- --------
Change in fair value of derivative - (37)
-------- --------
Change in fair value of investments (8) (176)
-------- --------
Finance costs 11 31
-------- --------
(330) (378)
------------------------------------------- -------- --------
Changes in working capital
Receivables 1 11
-------- --------
Payables (39) (7)
-------- --------
Net cash used in operating activities (368) (374)
======== ========
Cash flows from investing activities
-------- --------
Expenditure on exploration and evaluation
assets (399) (689)
-------- --------
Sale of listed investments 152 -
-------- --------
Net cash used in investing activities (247) (689)
======== ========
Cash flows from financing activities
-------- --------
Proceeds from share issues 1,249 1,246
-------- --------
Proceeds from loan (Note 15) - 50
-------- --------
Loan repayment - (50)
-------- --------
Interest paid - (27)
-------- --------
Net cash from financing activities 1,249 1,219
======== ========
Net increase in cash and cash equivalents 634 156
-------- --------
Cash and cash equivalents at 1 January 252 96
-------- --------
Cash and cash equivalents at 31
December 886 252
======== ========
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.
**S**
Enquiries:
Armadale Capital Plc
Nick Johansen, Non-Executive Director
Tim Jones, Company Secretary +44 (0) 20 7236 1177
Nomad and Broker: finnCap Ltd
Christopher Raggett / Teddy Whiley +44 (0) 20 7220 0500
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 .
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END
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