ACP discovers high-grade coarse flake graphite mineralisation

Armadale Capital (AIM:ACP) today announced a preliminary discovery of high-grade coarse flake graphite mineralisation close to the surface at its Mahenge Liandu project in Tanzania (‘Mahenge Liandu’).

The Mahenge Liandu project is located in the Ulanga District in south east Tanzania, approximately 300km south west of Morogoro and 10km from the town Mahenge.

In June 2016, high grade graphite mineralisation of up to 33.8% TGC was demonstrated through the analysis of rock-chip samples, while previous drilling confirmed high-grade mineralisation from the surface, with results including 60m @ 10.7% TGC including 24m @ 12.9% TGC and 5m @ 21.5% TGC. The samples were taken from graphite schist outcrops over 1.5km of strike that was mapped by the previous owner surrounding the initial discovery holes.

The area is highly prospective for graphite with Mahenge Liandu located immediately to the east of Kibaran’s Epanko project. Those familiar with the current state of the graphite play will be familiar with Kibaran.

In July 2015, Kibaran completed a bankable feasibility study, with the following key findings:

• Proven and probable ore reserves of 10.9mt at 8.6% TGC;
• Annual EBITDA of US$33.6m for 15 years;
• Sales price US$1,466/t of concentrate, opex FOB Dar es Salaam $570/t; and
• Metallurgical results: 85.7% of distribution greater than 106 micron, carbon concentrate of 96.3% TGC.

Also in the area is Black Rock Mining’s (ASX:BKT) Mahenge project, situated 1km north-west of Armadale’s Mahenge Liandu project. It has a global resource of 131mt at 7.9% TGC (including 38mt at 10.2% TGC or 16.6mt at 11.1% TGC). Furthermore, Black Rock has delineated circa 80% of its resources in eight months, demonstrating the opportunity to add significant value to the Mahenge Liandu project in a short time frame. On 22 March 2016, Black Rock announced the results of an independent scoping study with:

• 52,000 tpa graphite concentrate mining operation (25-year mine life);
• at cash costs of US$458/t; and
• a sales price of US$1,236/t (FOB Dar es Salaam).

ACP is hoping to gain similar traction and this preliminary discovery of high-grade coarse flake graphite mineralisation has confirmed it is on the right track.

It must be noted, however, that ACP is an early stage play and may not reach these levels. It should also be noted that for political and social reasons, this is a very high-risk stock. Getting mining projects up and running in countries such as Tanzania is no simple feat, and there may be challenges ahead. Investors interested in this stock should seek professional financial advice.

The company has found wide intervals of graphite schist, logged as high grade, have been intersected on the first reverse circulation (‘RC’) drill line completed with mineralisation commencing from near surface.

ACP has commenced drilling circa 2km from a previous RC drill hole, which returned 60m @ 10.7% Total Graphitic Carbon (‘TGC’).

Drilling is continuing on site and is expected to be completed in 3 to 4 weeks.

“This preliminary discovery of high-grade coarse flake graphite mineralisation underpins our belief that Mahenge Liandu offers significant upside opportunity,” said William Frewen, Chairman of Armadale.

“Moreover, being able to announce an extension to the maiden discovery from the first line of drilling is extremely encouraging. Following the recent restructuring of the Mpokoto gold asset, which we maintain prospective exposure to, we believe these highly encouraging results firmly underpin our refocused growth strategy as we target the burgeoning graphite market, which is experiencing increasing demand from lithium-ion battery manufacturers.”

Preliminary RC drilling results

The current drilling programme, which will conclude in 3 to 4 weeks, is targeting the most advanced prospect within the project area. It is well defined by extensive areas of graphite outcrop and there is a strong electro-magnetic anomaly over the planned drilling area. The first batch of samples has now been submitted to ALS in Brisbane, Australia for analysis.