REG - Armadale Capital PLC - Mahenge Graphite Update

Armadale CapitalAnnouncement

22/05/2024 14:00

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RNS Number : 5065P  Armadale Capital PLC  22 May 2024

Armadale Capital Plc

('Armadale' or 'the Company')

 

Mahenge Graphite Update

 

Armadale Capital Plc (TIDM:ACP), an AIM quoted investment company focused on
natural resource projects, is pleased to provide an update on the Mahenge
Liandu graphite project in Tanzania.

 

Global Graphite Demand Trends

 

Global demand for graphite used in the anodes of electric vehicle batteries
increased from 448,044 tonnes in 2022, to 631,821 tonnes in 2023, mainly due
to a significant uplift in the volume of electric vehicles and household
battery storage units produced. This represented a 41% increase in 2023
(source: Adamas Intelligence)(( 1 )) and demand is projected to reach
11,200,000 tonnes by 2040, according to The International Energy
Agency(( 2 )). The use of natural graphite in batteries is pivotal to
releasing stored energy and graphite is the largest weighted component in
current battery chemistries. It has the potential to grow from 30% of the
anode to 50% by 2030 - as referenced by Benchmark Minerals and others.

 

In addition:

 

●     The World Bank expects almost 53.8% of mineral demand from energy
storage to come from graphite by 2050

●     This is almost a 500% increase in current demand levels, according
to The World Bank's "The Mineral Intensity of the Clean Energy Transition"
study(( 3 ))

●     The Hague Centre for Strategic Studies forecasts EV Battery demand
growing at a compound rate of 41% per annum from 2020 to 2025(( 4 ))

 

With China moving towards being a net-natural importer of graphite, further
deficits in the supply of natural graphite are forecast, according to Shruti
Kashyap, Product Director of Anodes from Benchmark Mineral
Intelligence.(( 5 ))

 

The Board is of the view that both the Chinese restriction on graphite
exports, as well as the extension of US restrictions on the importation of
Chinese graphite could have an impact on graphite prices. The near-term
shortage of funded graphite projects and the forecast increasing global demand
could lead to  increased interest in obtaining graphite from non-Chinese
sources.

 

The forecast increase in demand, as well as the requirement for the US and
Western economies to source non-Chinese graphite could provide significant
momentum for Mahenge. The Board believes that the project will provide
graphite with high purity, low cost and strong ESG credentials, alongside
being located in Tanzania, which provides optionality for the western supply
chain, especially the USA

 

Funding Developments in Tanzania

 

The Company is monitoring ⁠the development of several other graphite
projects in Tanzania and the Board believes that progress at these assets may
have a material impact to the terms available for financing on the Mahenge
project. The Mahenge project's potential is underpinned by the increasing
global demand for Graphite products and downstream processing facilities
outside of China.

 

Discussions with potential financiers remain ongoing. The Board remains
focused on developing Mahenge into a low-cost, high-purity graphite project
and to prioritising development and sourcing finance to ensure long-term
shareholder value. We aim to continue to progress the project to take
advantage of the forecast growing global demand for graphite.

 

FEED study Update

Armadale paused the FEED study whilst the Company monitored developments in
the graphite market and the ability of graphite projects in Tanzania to obtain
funding. With material progress on both fronts since then and the appointment
of Greg Entwistle to the Armadale Board, the Company is considering
recommencing the FEED study so the project is construction-ready when funding
is secured.

 

Recently, two nearby projects have made material progress on financing and
development, which is encouraging for potential future progress at Mahenge.
Black Rock Mining Ltd (BKT:ASX) have committed to invest $33 million AUD in
upgrading roads, relocating the local populace and connecting hydro-electric
power to Mahenge. Ecograf Ltd (EGR:ASX) have entered into an MOU with TANESCO
to supply grid power from these power lines.

 

The proposed Mahenge FEED study is significantly more detailed compared than
the Definitive Feasibility Study ("DFS"), and incorporates:

 

●     Final detailed engineering design of the plant

●     Civil engineering of the site layout and tailings dam design

●     Geotechnical modelling of the pit design

●     Safety, environmental and ESG studies

 

Greg Entwistle, recently appointed to the Armadale Board, has extensive
experience with graphite project feasibility studies in Tanzania and mining
project construction in Africa, Asia and Australia. He will be working closely
with local contractors to complete the FEED study.

 

Both the FEED study, and nearby infrastructure developments on other graphite
projects in particular Black Rock Mining Ltd's Project will be incorporated
into the updated Definitive Feasibility Study. Armadale hopes to benefit from
a potential reduction in costs through replacing diesel generators with a
cheaper, and greener hydro-electric power supply, as well as utilising trunk
roads being built nearby to the project.

 

Armadale believe this will lead to a two-fold benefit for shareholders, both
by reducing the potential capex and opex inputs in the revised DFS, and by
enhancing our ESG credentials by eliminating the use of Diesel Generators. The
focus on both remaining in the lowest quartile of the cost curve and boosting
our ESG credentials is something we believe to be key requirements for all
non-Chinese Supply Chains feeding into Tier 1 OEMs. We believe these two
factors will help make Mahenge an attractive prospect to feed into Western
supply chains.

 

Competent Person statement

 

The information in this announcement that relates to exploration results is
based on information compiled by Mr Matt Bull, a competent person, who is a
Member of the Australian Institute of Geoscientists. Mr Bull has sufficient
experience which is relevant to the style of mineralisation and type of
deposit under consideration and to the activity which he is undertaking to
qualify as a competent person as defined in the 2012 Edition of the
"Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves". Mr Bull consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.

 

 

 Enquiries:
 Armadale Capital Plc                                 +44 (0) 20 7236 1177

 Matt Bull, Executive Director

 Greg Entwistle Non Executive Director

 Tim Jones, Company Secretary

 Nomad and Broker: Cavendish Capital Markets Limited  +44 (0) 20 7220 0500

 Simon Hicks / Seamus Fricker

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the retained EU law version of the
Market Abuse Regulation (EU) No. 596/2014 (the "UK MAR") which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. The information is
disclosed in accordance with the Company's obligations under Article 17 of the
UK MAR. Upon the publication of this announcement, this inside information is
now considered to be in the public domain.

(( 1 ))
https://www.adamasintel.com/global-ev-battery-graphite-demand-up-41-2023/#:~:text=Globally%2C%20a%20record%20631%2C821%20tonnes,183%2C774%20tonne)%20increase%20over%202022.

(( 2 ))
https://www.iea.org/data-and-statistics/charts/global-graphite-demand-in-the-net-zero-scenario-2023-2040

(( 3 ))
https://pubdocs.worldbank.org/en/961711588875536384/Minerals-for-Climate-Action-The-Mineral-Intensity-of-the-Clean-Energy-Transition.pdf

(( 4 ))
https://hcss.nl/news/new-report-graphite-supply-chain-challenges-recommendations-for-a-critical-mineral/

(( 5 )) https://mmta.co.uk/impact-of-graphite-export-restrictions-in-china/
(https://mmta.co.uk/impact-of-graphite-export-restrictions-in-china/)

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