Armadale Capital Plc Interim Results

 
TIDMACP 
 
 

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

20 September 2018

Armadale Capital Plc

('Armadale' the 'Company' or the 'Group')

Interim Results

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce its unaudited interim results for the six months ended 30 June 2018.

Highlights

 
 
    -- Primary focus on the rapid advancement of 100% owned Mahenge Liandu 

Project in Tanzania ('Mahenge Liandu' or the 'Project') ahead of a

decision to mine in early 2019

 
    -- Highly robust economic fundamentals delivered through Scoping Study in 

March 2018:

NPV of US$349 million

IRR of 122%

Payback of 1.2 years

Low capex of US$35 million

 
    -- High concentrate grades of up to 99.1% TGC produced using low-cost 

processing methods

 
    -- Excellent flake size distribution and graphite expandability 

highlights Mahenge Liandu's amenability to a range of applications,

including the high growth battery market

 
    -- 25% increase in total resource to 51.1Mt at 9.3% Total Graphitic 

Carbon ('TGC'), including 38.7Mt Indicted at 9.3% and 12.4Mt at 9.1%

TGC (post period end)

 
    -- Additional upside through royalty payments available from the Mpokoto 

Gold Project in the DRC - sale agreement with potential buyer

anticipated to be finalised in H2 2018

 
    -- Active growth strategy - committed to identifying and investing in 

African resource projects, which offer prospective upside opportunity

Nick Johansen, Director of Armadale, said: "Our objective to confirm and highlight the commercial viability of our 100% owned Mahenge Liandu Graphite Project in Tanzania is now gaining momentum. The completion of the Scoping Study in April was a significant milestone and the results, which underpinned the highly robust fundamentals which could be achieved at Mahenge Liandu, gave further support to our strategy of fast-tracking work ahead of a decision to mine in early 2019.

"We believe that there is now a window of opportunity for Armadale to capitalise on our various competitive advantages at Mahenge Liandu - made possible by the simple geology of the project, the well-understood metallurgy, the quality of the high-grade mineralisation and the relatively straightforward mining techniques which we anticipate would be amenable to exploit the deposit. We are confident that this will provide us with a low capex, low opex mining operation capable of delivering a very high grade and commercially attractive product which is in high demand for multiple industrial applications.

"We certainly have the right asset and the right end product, but we believe we have the right postcode too. Mahenge Liandu is flanked by some of the world's major new graphite discoveries, and we see the recent political and legislative developments in Tanzania, particularly the formation of the new Mining Commission, as a significant and positive move to reaffirm the countries' position as one of Africa's premier mining destinations. We are encouraged by the impact that the Mining Commission has had in just a few months since its formation, and we view this as a further signal of Tanzania's general spirit of cooperation when looking to foreign investment and unlocking strategic natural resources for the benefit of all stakeholders.

"I look forward to providing further operational and corporate updates in the coming weeks and months as we look to identify our optimum route to first production at Mahenge Liandu."

Directors' Statement The six months ended 30 June 2018 has been exciting and productive for Armadale. The results of the Scoping Study together with the resource upgrade by 25% continue to prove that the Mahenge Liandu project is a significant discovery for the Company.

The Company focus for the last six months has been on Scoping Study and commencement of the Feasibility Study for its Mahenge Liandu Graphite Project in Tanzania ('the Project' or 'Mahenge Liandu') including diamond drilling and infill RC drilling. The first half of 2018 contained the following highlights:

1. Infill drilling that delivered a resource upgrade to 51.1Mt at 9.3% Total Graphitic Carbon ('TGC'), including 38.7Mt Indicted at 9.3% and 12.4Mt at 9.1% TGC

2. Completion of Scoping Study that produced excellent economics for the project. The key numbers are: Project's NPV of US$349m, IRR of 122%, payback of 1.2 years and low development costs.

3. The potential of the Mahenge Liandu project led to a successful GBP963,500 equity raising, as announced on 9 April 2018. The funds will be used to support the Feasibility Study and provide for working capital.

4. The appointment of joint broker SVS Securities which secured the bulk of the April 2018 equity raising.

5. The appointment of Feasibility Study Manager and the commencement of the Feasibility Study.

6. Commencement of diamond drilling at Mahenge Liandu which is designed to support the upgrade of the current JORC Resource of 51.1Mt at 9.3% TGC to Probable and Proven Reserves in support of the on-going Feasibility Study.

The above activities have produced consistently good results that have confirmed the value of the Mahenge Liandu project.

In mid-2017 the Tanzanian government introduced two mining laws (the Natural Wealth and Resources (Permanent Sovereignty) and the Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) bills) and dissolved the powers of the Mining Commissioner. For some time, no new mining licences or exploration permits were issued. In April 2018, the Tanzanian government established a new Mining Commission to oversee the implementation of the new rules. This Commission is now working and has commenced issuing mining licences, exploration permits and exploration licences. The Board is now of the firm view that the Company should continue its exploration activities at Mahenge Liandu as there are no major risks in obtaining environmental permit and mining licence.

Apart from the Mahenge Liandu project activities, the Board is continuing its efforts to complete the sale of its secondary investment in the Mpokoto Gold project in the DRC.

The Board continues to also look to identify and invest in African resources projects in accordance with our stated investing policy.

We closed the period with cash reserves of GBP394,000. With minimal expenditure this is sufficient to satisfy the Company's present needs for approximately six months. The Company will need to raise further capital to implement its plans for the Mahenge Liandu project. The Directors are actively considering a range of financing options and are confident of securing the funds necessary to support the development of Mahenge Liandu.

The directors would like to take this opportunity to thank our shareholders, employees and partners for their on-going support and commitment to date in 2018.

For and on behalf of the Board 19 September 2018

FINANCIAL STATEMENTS FOR THE SIX MONTHSED 30 JUNE 2018

Condensed Consolidated Statement of Comprehensive Income For the six months ended 30 June 2018

 
                                   Unaudited Six months ended 
                                   30 June 2018 GBP'000  30 June 2017 GBP'000 
Revenue                            -                   - 
Cost of sales                      -                   - 
Gross profit                       -                   - 
Administrative expenses            (218)               (252) 
Finance costs                      (7)                 (14) 
Loss before tax                    (225)               (266) 
Taxation                           -                   - 
Loss after tax attributable        (225)               (266) 
to equity 
holders of the parent company 
Loss after taxation                (225)               (266) 
Other comprehensive income 
Items that may be reclassified 
to profit or loss: 
Exchange differences               14                  9 
on translating 
foreign entities 
Total comprehensive loss           (211)               (257) 
attributable to the 
equity holders  of 
the parent company 
                                   Pence               Pence 
Loss per share attributable 
to equity holders of the 
parent company (note 3)            (0.08)              (0.11) 
Basic and fully diluted 
 
 

Consolidated Statement of Financial Position At 30 June 2018

 
                             Unaudited                   Audited 
                             30 June 2018  30 June 2017  31 December 2017 
                             GBP'000         GBP'000         GBP'000 
Assets 
Non-Current assets 
Exploration and              2,735         9,056         2,384 
evaluation 
assets 
Property, plant              -             14            - 
and equipment 
Investments                  7             7             7 
                             2,742         9,077         2,391 
Current assets 
Trade and other              121           184           55 
receivables 
Cash and cash                394           292           65 
equivalents 
                             515           476           120 
Non current assets           322           -             322 
classified 
as held for sale 
                             837           476           442 
Total assets                 3,579         9,553         2,833 
Equity and liabilities 
Equity 
Share capital (note 4)       3,038         2,978         2,980 
Share premium                20,570        19,686        19,720 
Shares to be issued          286           286           286 
Share option reserve         95            94            95 
Loan note reserve            -             37            - 
Foreign exchange reserve     352           1,119         338 
Retained earnings            (21,707)      (15,608)      (21,482) 
Total equity                 2,634         8,592         1,937 

Current liabilities 
Trade and other payables     161           552           134 
Loan notes                   453           409           431 
                             614           961           565 
Liabilities directly         128           -             128 
associated with 
non-current assets 
held  for sale 
                             742           961           693 
Non-current liabilities 
Long term borrowings         203           -             203 
Total liabilities            945           961           896 
Total equity and             3,579         9,553         2,833 
liabilities 
 
 

Unaudited Consolidated Statement of Changes in Equity For the period ended 30 June 2018

 
                Share Capital  Share Premium  Shares to be  Share Option  Loan Note  Foreign   Retained  Total GBP'000 
                GBP'000          GBP'000          Issued GBP'000  Reserve       Reserve    Exchange  Earnings 
                                                            GBP'000         GBP'000      Reserve   GBP'000 
                                                                                     GBP'000 
Balance         2,946          19,010         286           86            37         1,110     (15,342)  8,133 
1 
January 
2017 
Loss for        -              -              -             -             -          -         (266)     (266) 
the 
period 
Other           -              -              -             -             -          9         -         9 
comprehensive 
income 
Total           -              -              -             -             -          9         (266)     (257) 
comprehensive 
loss 
for the 
period 
Issue of        32             737            -             -             -          -         -         769 
shares 
Expenses        -              (61)           -             -             -          -         -         (61) 
of issue 
Share           -              -              -             8             -          -         -         8 
based 
payment 
charges 
Total           32             676            -             8             -          -         -         716 
other 
movements 
Balance         2,978          19,686         286           94            37         1,119     (15,608)  8,592 
30 
June 
2017 
Loss for        -              -              -             -             -                    (5,911)   (5,911) 
the 
period 
Other           -              -              -             -             -          (781)     -         (781) 
comprehensive 
loss 
Total           -              -              -             -             -          (781)     (5,911)   6,692) 
comprehensive 
loss 
for the 
period 
Issue of        2              34             -             -             -          -         -         36 
Shares 
Share           -              -              -             1             -          -         -         1 
based 
payment 
charges 
Transfer        -              -              -             -             (37)       -         37        - 
on 
conversion 
of loan 
notes 
Total           2              34             -             1             (37)       -         37        37 
other 
movements 
Balance         2,980          19,720         286           95            -          338       (21,482)  1,937 
31 
December 
2017 
Loss for        -              -              -             -             -          -         (225)     (225) 
the 
period 
Other           -              -              -             -             -          14        -         14 
comprehensive 
income 
Total           -              -              -             -             -          14        (225)     (211) 
comprehensive 
loss 
for the 
period 
Issue of        58             905            -             -             -          -         -         963 
shares 
Expenses        -              (55)           -             -             -          -         -         (55) 
of issue 
Total           58             850            -             -             -          -         -         908 
other 
movements 
Balance         3,038          20,570         286           95            -          352       (21,707)  2,634 
30 
June 
2018 
 
 

The following describes the nature and purpose of each reserve within shareholders' equity:

 
Reserve                          Description and purpose 
Share capital                    Amount subscribed for share 
                                 capital at nominal value 
Share premium expenses           Amount subscribed for share 
                                 capital in excess 
                                 of nominal value, net  of allowable 
Shares to be issued              Value of share capital to 
                                 be issued in connection 
                                 with the  acquisition of Netcom 
Share option reserve             Reserve for share options granted 
                                 but not exercised 
Foreign exchange reserve         Gains/losses arising on 
                                 re-translating the net 
                                 assets of overseas  operations 
                                 into sterling 
Retained earnings                Cumulative net gains and 
                                 losses recognised 
                                 in the statement of  comprehensive income 
 
 

Consolidated Statement of Cash Flows For the period ended 30 June 2018

 
                            Unaudited                  Audited 
                            Six Months ended           Year ended 
                            30 June 2018    30 June    31 December 2017 
                                            2017 
                            GBP'000           GBP'000      GBP'000 
Cash flows from 
operating 
activities 
Loss before taxation        (225)           (266)      (6,177) 
Depreciation                -               2          2 
Unrealised foreign          14              22         - 
exchange 
differences 
Loan note accretion         -               6          - 
Impairment of               -               -          5,726 
investments 
Loan note interest          22              8          44 
accrued 
Share based payment         -               8          9 
charge 
Shares issued in            -               31         68 
settlement 
of liabilities 
                            (189)           (189)      (328) 
Changes in working 
capital 
Receivables                 (67)            (24)       (36) 
Payables                    27              57         72 
Net cash used               (229)           (156)      (292) 
in operating 
activities 
Cash flows from 
investing 
activities 
Expenditure on              (350)           (258)      (549) 
exploration 
and evaluation assets 
Net cash used               (350)           (258)      (549) 
in investing 
activities 
Cash flows from 
financing 
activities 
Proceeds from issue         938             651        651 
of shares 
Issue costs                 (30)            (61)       (61) 
Proceeds from loan          -               -          200 
Net cash from financing     908             590        790 
activities 
Net increase in cash        329             176        (51) 
and cash equivalents 
Cash and cash               65              116        116 
equivalents 
at 1 January 2018 
Cash and cash               394             292        65 
equivalents 
at 30 June 2018 
 
 

Notes to the unaudited condensed consolidated financial statements

For the period ended 30 June 2018

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 2018 and 30 June 2017 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 2017 has been derived from the Annual Report and Accounts, which were approved by the Board of Directors on 22 May 2018 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 2017 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 2017 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 2018, 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.

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 cost less provision for impairment.

2.5.Non-current assets classified as held for sale

These assets are so classified when they are available for immediate sale and plans for disposal are in hand. They are stated at estimated net realisable value.

3.Loss per share

The calculation of basic loss per share is based on a loss of GBP225,000 (2017, GBP266,000) and on 271,094,748 (2017, 235,679,376) Ordinary Shares, being the weighted average number of Ordinary Shares in issue during the period.

There is 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 58,393,941 Ordinary Shares in the Capital of the Company to raise GBP964,000 (GBP934,000 after expenses) with institutional and other investors.

**ENDS**

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

 
Enquiries: 
Armadale Capital Plc                      [phone] 
Tim Jones, Company Secretary 
Nomad and broker: finnCap Ltd             [phone] 
Christopher Raggett / Max Bullen-Smith 
Joint Broker: SVS Securities              [phone] 
Tom Curran / Ben Tadd 
Press Relations: St Brides Partners Ltd   [phone] 
Susie Geliher / Charlotte Page 
 
 

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 inferred mineral resource estimate of 51.1Mt @ 9.3% TGC. Marking the project 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20180919005426/en/

 
This information is provided by Business Wire 
 
 

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September 20, 2018 02:00 ET (06:00 GMT)