Final Results and Notice of AGM

Final Results and Notice of AGM

Armadale Capital Plc

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

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 2019 (‘Final Results’ or ‘Annual Report’). The Company also announces that its Annual General Meeting (‘AGM’) will be held at Level 25, 108 St George’s Terrace, Perth, Western Australia on 30 June 2020 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 2019 will be posted to shareholders today. Copies will also be available to view on the Company’s website: www.armadalecapitalplc.com.

Highlights

• Targeting commercial production at flagship Mahenge Liandu Graphite Project in Tanzania in 2021(‘Mahenge’ or ‘Mahenge Liandu’)
• DFS confirms project as a long-life low-cost graphite project with c.US$358m NPV and IRR of 91%
• High-quality graphite flake of up to 97.1% purity
• Staged ramp-up to facilitate near term production
• Scope for further improvement - updated mine schedule (‘Mine Schedule’) has increased average annual output to 109ktpa of concentrate over life of mine, which is a 30% increase on the DFS
• Updated feasibility study based on updated Mine Schedule anticipated (‘Feasibility Study’)
• Poised to take advantage of increasing graphite demand as the electric vehicle market rapidly expands with strategic MoUs in place for offtake agreements
• Bolstered board of directors (‘Board’) to reflect and support Armadale’s progression to a production company
• Further upside potential from quoted portfolio, where the Directors believe there are opportunities for capital gains

Nick Johansen, Chairman of Armadale said: “We look to the year ahead with much anticipation. Having long held confidence in the significant value potential of Mahenge Liandu, the project continues to exceed our expectations as we progress towards production. With an extensive and incredibly pure graphite resource there is unquestionable market demand for our product – as highlighted through a number of strategic MoUs we have secured for offtake agreements, but of course the critical element to the viability of any project is ensuring the cost effectiveness of getting this resource out of the ground. The DFS results prove that Mahenge Liandu has significant commercial value; with a US$358m NPV and IRR of 91% and potential to significantly increase this through an optimised study currently being completed, the project’s economic profile is incredibly strong. Our focus now is to finalise ongoing discussions with potential debt finance partners and project level development funding so that we can commence construction, whilst further progressing our application for a full mining licence. With defined work programmes in place to deliver on these objectives and further advance our project, we are committed to commencing commercial production in 2021 and realising the value of Mahenge Liandu for the benefit of all stakeholders.”

Strategic Report

Operational and Corporate Highlights for Period Ending 31 December 2019

Significant progress made in delivering key accretive milestones in advancing the Mahenge Liandu Graphite Project in Tanzania

1. Completed Resource Upgrade incorporating high-grade near surface mineralisation intersected in drilling. 
2. Delivered revised Resource estimate which, broken down by categories is as follows:

• Measured: 11.5Mt @ 10.5% vs Nil previously
• Indicated: 32.1Mt @ 9.6% vs 38.7Mt @ 9.3% previously
• Inferred: 15.9Mt @ 9.8% vs 12.4Mt @ 9.1% previously 

3. Metallurgical test-work programme completed with results confirming that high-quality graphite flake of up to 97.1% purity can be produced
4. Targeting commercial production 2021
5. Further off-take MOU signed and discussions underway with other potential customers 
6. Advancing workstream to secure project level funding mandate

Post Period End – Key Data Announced From DFS

1. US$882m pre-tax cashflow generated from initial 17 year mine life
2. Estimated pre-tax NPV of US$358m (utilising a discount rate of 10%) and IRR of 91%
3. Staged ramp-up planned to facilitate near term production with 60,000tpa graphite concentrate to be produced for the first four years (Stage 1) before increasing to 90,000tpa (Stage 2)
4. Capital cost estimate for Stage 1 is US$38.6m, which includes a contingency of U$S4.1m or 15% of total direct capital cost
5. 1.6-year payback for Stage 1 (after tax) based on an average sales price of US$1,179/tonne. Stage 2 expansion is expected to be funded from cashflow

Considerable scope for further positive improvement upon economics in near-term through delivery of optimised DFS.

Post Period End - Other

1. Board strengthened with the previously announced appointments of Ms Amne Suedi as Non-Executive Director in January 2020 and Mr Matt Bull as Non-Executive Director in April 2020
2. Two additional MOUs signed to supply high quality graphite products produced at Mahenge Liandu
3. Focus remains upon converting existing off-take agreements from MoUs to binding offtake agreements
4. Continuation of application for full mining licence (thus furthering major permitting milestones)
5. Advancement of discussions with potential debt finance partners and project level development funding for construction
6. Ongoing review of quoted portfolio, where the Directors believe there are opportunities for capital gains
7. Continue to actively review other exciting investment opportunities

During the year under review, Armadale continued to operate as a diversified investing company 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.

With its large, high-grade open cut resource, and having completed a Definitive Feasibility Study that highlighted an NPV of US$358m and IRR of 91%, the Company is on track to commence production at the Project during the course of 2022. This is timely given that global need for graphite is set to accelerate driven by demand for spherical graphite from the new energy sector as well as emerging demand for expandable graphite used in products such as fire-proof insulation.

Notably, the strength of the market was highlighted when, post period end, the Company signed two additional off-take MOUs. The Company is also currently reviewing other potential markets and customers within this space.

Additionally, the Company continued to actively review other investment opportunities with a view to targeting investments with similar quality and potential as Mahenge Liandu.

ACTIVELY MANAGED INVESTMENTS

Mahenge Liandu Graphite Project, Tanzania

The Company continued to deliver excellent progress at its 100% owned Mahenge Liandu Graphite Project during 2019. where an extensive drilling campaign during the year delivered a meaningful upgrade in the Mineral Resource Estimate for Mahenge where the total Mineral Resource Estimate Increased to a JORC compliant 59.5Mt @ 9.8% Total Graphitic Content (‘TGC’) and making it one of the largest high-grade graphite deposits in Tanzania.

The revised resources estimate broken down by categories is as follows:

• Measured: 11.5Mt @ 10.5% vs Nil previously
• Indicated: 32.1Mt @ 9.6% vs 38.7Mt @ 9.3% previously
• Inferred: 15.9Mt @ 9.8% vs 12.4Mt @ 9.1% previously

This upgrade reflects the substantial work undertaken by our team on the ground in Tanzania this year and is a clear step forward the development of Mahenge away from production.

In addition, the Company successfully completed an outstanding metallurgical test-work programme where results which confirming high-quality graphite flake of up to 97.1% purity convincingly demonstrated that Armadale can produce a high-quality graphite concentrate.

Work to date has demonstrated Mahenge Liandu’s potential as a project with compelling economics and a deposit with significant tonnage, high-grade coarse flake and near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body.

The focus of activities for the remainder of 2019 into 2020 was the completion of a Definitive Feasibility Study (‘DFS’) which, post-period end on 31 March 2020 delivered extremely compelling economics. The study represented one of the most significant de-risking milestones in the Company’s history to date delivering economics such as a 91% IRR and a 1.6 year payback upon capital.

The DFS demonstrated that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$882m over an initial 17 year mine-life and scope for further improvement work for which is currently progressing with an updated DFS nearing completion.

Further details of the Definitive Feasibility Study may be found below.

Project Location & Licences

The Mahenge Project is located in the Morogoro region, Ulanga district, Tanzania close to existing transport infrastructure. It is 10km south of the Mahenge township and about 76km via a well-maintained dirt road to Ifakara after which it is 400km by sealed road from Dar-es-Salaam port. Other operators in the region include Blackrock Mining Limited and Kibaran Resources Limited, which have similar product purity and resource grades.

Location of Mahenge Liandu Prospect

The Company holds following exploration tenements for Mahenge Liandu:

• PL10846/2016 granted on 21/9/2016 expires 20/9/2020 area 7.34 square kilometres
• PL10840/2016 granted 21/9/2016 expires 20/9/2020 area 21.89 square kilometres

Project Geology

The prospect is situated within the pan African Mozambique belt, which is the orogenic belt resulting from activities taking place in the Neoproterozoic time. The belt extends along the eastern border of Africa from Ethiopia through Kenya and Tanzania. The orogenic event resulted in a complex series of geological events including the rifting system. The belt consists of high-grade mid-crustal rocks with a Neoproterozoic metamorphic overprint. It is divided into the Western Granulite and Eastern Granulite. The deposit is situated in the Eastern Granulites. The belt has undergone retrograde metamorphism which resulted in the present upper amphibolite metamorphic facies in the Project area.

Systematic drilling indicated the existence of broad, shallow to steep dipping schists overlaying granitic gneisses/gneiss. The gneisses are underlaid by marble units. The graphitic schists form alternating compositional layering, with quartz being the content that differentiates these units. High grade graphite schists (graphite schist) have a lower composition of quartz. Medium to low grade graphite schists (quartz graphite schist) have a higher visual quartz percentage. The marble unit likely forms the base of the sequence (there has not been drilling done beyond the marble unit).

The drilling results have been very consistent with the structural measurements taken during the mapping programme which suggested gentle to steep dipping to the south and south-southwest. The mineralisation remains open in all directions.

Definitive Feasibility Study

Post-period end a Definitive Feasibility Study was completed for Mahenge Liandu, which included the completion of a mine optimisation study, infill drilling and the resource upgrade.

Highlights of the Definitive Feasibility Study were as follows

• DFS confirms Mahenge in the board’s view as a large, long life, low cost graphite deposit with a focus on high quality graphite concentrate for the rapidly emerging EV market
• US$882m pre-tax cashflow generated from initial 17 year mine life utilises just 25% of the resource, which remains open in multiple directions offering significant further upside
• Estimated pre-tax NPV of US$358m (utilising a discount rate of 10%) and IRR of 91% with scope for further positive improvement upon economics in near-term through delivery of optimised DFS
• Staged ramp-up planned to facilitate near term production with 60,000tpa graphite concentrate to be produced for the first four years (Stage 1) before increasing to 90,000tpa (Stage 2)
• Capital cost estimate for Stage 1 is US$38.6m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, a slight increase on the scoping study allowing for the staged ramp up
• 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,179/t
  • Stage 2 expansion is expected to be funded from cashflow
• The outlook for the graphite market remains strong with the ongoing development of the EV market
• Scope for improvement of DFS economics through delivery of further detailed modelling of higher-grade zones to increase the head grade in the mine schedule - work is underway
• Application for Mining Licence is planned to commence in Q3 2020
• Projected timeline to first production is expected to be approximately 10-12 months from the start of construction
• DFS delivery has confirmed the commercial potential of Mahenge and will support ongoing discussions for offtake agreements, debt package finance for construction and project level development funding

The Definitive Feasibility Study for the Mahenge Graphite Project delivered extremely compelling economics. This study represents one of the most significant de-risking milestones in the Company’s history to date. The Feasibility Study demonstrated economics such as a 91% IRR and a 1.6 year payback upon capital. The DFS showed that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$882m over an initial 17 year mine-life and scope for further improvement

Environmental and Social Studies

During August 2018, the Company announced the completion of field work for Environmental and Social baseline surveys and the Company has finalised the Environmental Social Impact Assessment (‘ESIA’) and Relocation Action Plan (‘RAP’) for submission to the National Environment Management Council (‘NEMC’).

To help increase local engagement in the Project area, the Company has appointed a community liaison officer who will aid understanding of the impact and benefits of mining in the region. Further information in respect of this work of will be provided as progress is made.

Product Marketing and Offtake Partners

In February 2019, the Company announced an MOU with the Matrass Group, a China based graphite mining and processing company, for high quality graphite products produced at Mahenge Liandu. This includes a proposed offtake of 30,000tpa of graphite concentrate for an initial five-year term at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced.

In September 2019, the Company announced an MOU with CoolRU Information Technology, a China based technology company, for high quality graphite products produced at Mahenge Liandu. This includes a proposed offtake of 5,000tpa of graphite concentrate for an initial five-year term at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced.

In October 2019, the Company announced an MOU with Datong Resources (“Datong”), China, for high quality graphite products produced at Mahenge Liandu. This includes a proposed offtake of 25,000tpa of graphite concentrate for an initial five-year term at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced.

Offtakes under MOU total 60,000 tpa representing over 122% of average target annual production. Work to progress these MOU to a binding agreement is underway as are discussions with other potential offtake partners.

The graphite market continues to strengthen with several Tanzanian based graphite projects securing binding offtakes and construction financing packages over recent months. The rapid expansion of the electric vehicle market is expected to continue to drive this growth.

Project Level Financing

The Company is engaged in discussions to secure a project level funding mandate. Further details in respect of this element will be provided as material developments occur.

Mining Lease Application

Reflecting the progress of work to date, the Company expects to submit its application for a mining licence in August 2020.

Front End Engineering Design

Following completion of the DFS, the Company commenced some work for the Front-End Engineering Design (‘FEED’) programme. The FEED process is a detailed technical project planning phase undertaken prior to the commencement of construction and used as a basis to secure project construction bids.

Project Construction

Subject to a successful and timely completion of the aforementioned preparatory work, suitable project level financing and receipt of relevant regulatory permits and licences, the Company expects to commence the construction phase in Q2 2021.

Production

Based on current estimates and assuming a construction phase of 10 months the first production would be achieved from the Mahenge Liandu Project around Q1 2022.

PASSIVELY MANAGED INVESTMENTS

Mine Restoration Investments Limited (‘MRI’), South Africa

The shares in MRI are being carried at Nil market value (2018: 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, 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 Armadale’s key focuses is on maintaining a high level of health and safety, environmentally 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:

• The Group is exposed to graphite. Graphite is a relatively new commodity whose market is being driven by demand in renewable energy. It is thus vulnerable to 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 impact of COVID-19 pandemic on the project is so far minimal as the Company’s site activities were substantially completed in 2019. However, the financial impact on the Company is continuing to be evaluated and strategies implemented to reduce cash outflow.
• 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.
• To address the financial impact of COVID-19, the Company recently reduced Directors and office holders fees by 50% for an initial period of 3 months from April 2020. This will be reviewed again in June 2020.

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 contact person 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. In the year ending 31 December 2019 the Company contributed funds to the local primary school for food and other needs.

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

Post period end, in January 2020, Ms Amne Suedi was appointed to the Board as a Non-executive Director.

Ms Suedi is a highly experienced legal professional who specialises in Africa based investment and business law. Ms Suedi is the founder and CEO of Shikana Law Group, a law firm in Kenya, Zanzibar and Tanzania and headquartered in Dar es Salaam, which provides legal and investment advice to foreign investors operating in Africa. Previously Ms Suedi acted as a legal adviser to Pictet Asset Management in Switzerland and the World Trade Organisation.

In April 2020, Mr. Matt Bull was appointed to the Board as a Non-executive Director.

Mr. Bull has served as Technical Director of the Company since 2016 and has led the development of the Mahenge Liandu Graphite Project in Tanzania during that time. Mr. Bull is an experienced geologist responsible for managing numerous exploration projects in remote locations in Australia and Sub-Saharan Africa including the running of multi-rig drilling programs with large support teams.

Financial Results

For the year ended 31 December 20198 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 £0.273 million (2018: £0.648 million) for the year ended 31 December 2019.

Expenditure on the Mahenge Liandu project during the year amounted to £593,000, which was capitalised as additional exploration and evaluation assets. The disposal of the Mpokoto project was finalised in January and accumulated foreign exchange gains, arising on annual restatement of the project’s net assets, of £240,000 were released to revenue reserves. A strategic investment of £59,000 was made in shares of Forum Energy Metals Corp, a company incorporated in Canada and listed on the Toronto Stock Exchange. By 31 December 2019, the value of this investment had risen to £105,000.

Funds raised during the year amounted in total to £1.3 million of which £0.9 million came from placings of shares and £0.4 million from an issue of convertible loan notes. Other share issues during the year were in respect of loan note conversions and the discharge of certain consultants’ invoices. A new loan facility of £0.3 million was put in place but no drawdown was made during the year. Since the year end, a further £0.7 million has been raised from a placing of shares and from warrant and option exercises and £230,000 of the loan notes issued in 2019 have been converted into ordinary shares. The balance of the new loan facility, £0.25 million, remains available for drawdown.

At 31 December 2019, the Group had cash of £96,000 (2018: £44,000) and debt of £867,000 (2018: £677,000).

Outlook

Looking to the future, with its clear development path to production, the Directors believe that Mahenge Liandu represents 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. Furthermore, other notable investment opportunities are under review, which the board believe could replicate this success and deliver significant value to shareholders.

Nicholas Johansen

Director

4 June 2020

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2019

	2019	2018
	£	£
Administrative expenses	(468,948)	(392,945)
Share based payment charges	(22,550)	-
Change in fair value of derivative	(45,467)	-
Change in fair value of investments	46,145
Operating loss	(490,820)	(392,945)
Finance costs	(21,241)	(17,459)
Loss before taxation	(512,061)	(410,404)
Taxation	-	-
Loss for the year from continuing operations	(512,061)	(410,404)
Profit/(Loss) from discontinued operations, net of tax	239,513	(237,616)
Loss after taxation	(272,548)	(648,020)
Other comprehensive income
Items that may be reclassified to profit or loss:
Reclassification of foreign exchange gain	(239,513)
Exchange differences on translating foreign entities	(93,571)	83,407
Total comprehensive (loss) / income attributable to the equity holders of the parent company	(605,632)	(564,613)
Loss per share attributable to the equity holders of the parent company	Pence	Pence
Basic and diluted total loss per share	(0.07)	(0.23)
Basic and diluted loss per share from continuing operations	(0.14)	(0.14)

Consolidated Statement of Financial Position

At 31 December 2019

	2019 £	2018 £
Assets Non-current assets
Exploration and evaluation assets	3,705,210	3,192,999
Investments	105,755	973
	3,810,965	3,193,972
Current assets
Trade and other receivables	159,495	53,486
Cash and cash equivalents	95,641	44,310
	255,136	97,796
Non-current assets classified as held for sale	-	128,011
	255,136	225,807
Total assets	4,066,101	3,419,779
Equity and liabilities
Equity
Share capital	3,139,135	3,038,605
Share premium	21,037,478	20,569,844
Shares to be issued	286,000	286,000
Share option and warrant reserve	661,676	94,884
Foreign exchange reserve	88,168	421,252
Retained earnings	(22,400,310)	(22,129,940)
Total equity	2,812,147	2,280,645
Current liabilities
Trade and other payables	267,566	333,653
Loans	866,854	677,470
Derivative liability	119,534	-
	1,253,954	1,011,123
Liabilities directly associated with non-current assets classified as held for sale	-	128,011
Total Liabilities	1,253,954	1,139,134
Total equity and liabilities	4,066,101	3,419,779

Approved by the Board and authorised for issue on 4 June 2020

Signed on behalf of the Board

ES Mahede			N Johansen
Director			Director

Company Statement of Financial Position

At 31 December 2019

	2019 £	2018 £
Assets Non-current assets
Investments	1,705,755	1,600,973
Other receivables	2,078,657	1,394,461
	3,784,412	2,995,434
Current assets
Trade and other receivables	77,097	13,439
Cash and cash equivalents	88,466	4,240
	165,563	17,679
Total assets	3,949,975	3,013,113
Equity and liabilities
Equity
Share capital	3,139,135	3,038,605
Share premium	21,037,478	20,569,844
Shares to be issued	286,000	286,000
Share option and warrant reserve	661,676	94,884
Retained earnings	(22,245,747)	(21,753,522)
Total equity	2,878,542	2,235,811
Current liabilities
Trade and other payables	85,045	99,832
Loans	866,854	677,470
Derivative liability	119,534
Total liabilities	1,071,433	777,302
Total equity and liabilities	3,949,975	3,013,113

The Company has taken advantage of the exemption conferred by section 408 of Companies Act 2006 from presenting its own statement of comprehensive income. A loss after taxation of £490,403 (2018: £605,270) has been included in the financial statements of the parent company.

Approved by the Board and authorised for issue on 4 June 2020

Signed on behalf of the Board

ES Mahede			N Johansen
Director			Director

Company Registration No. 5541602

Consolidated Statement of Changes in Equity

For the year ended 31 December 2019

	Share Capital	Share Premium	Shares to be issued	Share Option and Warrant Reserve	Foreign Exchange Reserve	Retained Earnings	Total
	£	£	£	£	£	£	£
At 1 January 2018	2,980,211	19,720,193	286,000	94,884	337,845	(21,481,920)	1,937,213
Loss for the year	-	-	-	-	-	(648,020)	(648,020)
Other comprehensive loss	-	-	-	-	83,407		83,407
Total comprehensive loss for the year	-	-	-	-	83,407	(648,020)	(564,613)
Issue of shares	58,394	905,106	-	-	-	-	963,500
Expenses of issue	-	(55,455)	-	-	-	-	(55,455)
Total other movements	58,394	849,651	-	-	-	-	908,045
At 31 December 2018	3,038,605	20,569,844	286,000	94,884	421,252	(22,129,940)	2,280,645
Loss for the year	-	-	-	-	-	(272,548)	(272,548)
Other comprehensive loss	-	-	-	-	(333,030)		(333,030)
Total comprehensive loss for the year	-	-	-	-	(333,030)	(272,548)	(605,578)
Issue of shares and warrants	100,530	658,308	-	546,420	-	-	1,305,258
Expenses of issue		(190,674)					(190,674)
Transfer on exercise of warrants	-	-	-	(2,178)	-	2,178	-
Share based payment charges	-	-	-	22,550	-	-	22,550
Total other movements	100,530	467,634	-	568,970	-	-	1,137,134
At 31 December 2019	3,139,135	21,037,478	286,000	661,676	88,168	(22,400,310)	2,812,147

The following describes the nature and purpose of each reserve within owners’ equity:

Reserve	Description and purpose
Share capital	amount subscribed for share capital at nominal value
Share premium	amount subscribed for share capital in excess of nominal value, net of allowable expenses
Shares to be issued	share capital to be issued in connection with historical acquisition
Share option and warrant reserve	cumulative charge recognised under IFRS 2 in respect of share-based payment awards
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

Company Statement of Changes in Equity

For the year ended 31 December 2019

	Share Capital	Share Premium	Shares to be issued	Share Option and Warrant Reserve	Retained Earnings	Total
	£	£	£	£	£	£
At 31 December 2017	2,980,211	19,720,193	286,000	94,884	(20,953,744)	2,127,5446
IFRS9 adjustment to intercompany debt	-	-	-	-	(194,508)	(194,508)
At 1 January 2018	2,980,211	19,720,193	286,000	94,884	(21,148,252)	1,933,036
Loss for the year					(605,270)	(605,270)
Total comprehensive loss for the year					(605,270)	(605,270)
Issue of shares	58,394	905,106	-	-	-	963,500
Expenses of issue	-	(55,455)	-	-	-	(55,455)
Share based payment charges	-	-	-	-	-	-
Transfer on conversion of loan notes	-	-	-	-	-	-
Total other movements	58,394	849,651	-	-	-	908,045
At 31 December 2018	3,038,605	20,569,844	286,000	94,884	(21,753,522)	2,235,811
Loss for the year	-	-	-	-	(494,403)	(494,403)
Total comprehensive loss for the year	-	-	-	-	(494,403)	(494,403)
Issue of shares and warrants	100,530	658,308	-	546,420	-	1,305,258
Expenses of share issue	-	(190,674)	-	-	-	(190,674)
Transfer on exercise of warrants	-	-	-	(2,178)	2,178	-
Share based payment charges	-	-	-	22,550	-	22,550
Total other movements	100,530	467,634	-	566,792	2,178	1,137,134
At 31 December 2019	3,139,135	21,037,478	286,000	661,676	(22,245,747)	2,878,542

The following describes the nature and purpose of each reserve within owners’ equity:

Reserve	Description and purpose
Share capital	amount subscribed for share capital at nominal value
Share premium	amount subscribed for share capital in excess of nominal value, net of allowable expenses
Shares to be issued	share capital to be issued in connection with historical acquisition
Share option and warrant reserve	cumulative charge recognised under IFRS 2 in respect of share-based payment awards
Retained earnings	cumulative net gains and losses recognised in the statement of comprehensive income

Consolidated Statement of Cash Flows

For the year ended 31 December 2019

	2019	2018
	£	£
Cash flows from operating activities
Loss before taxation	(272,548)	(648,020)
Adjustment for:
Release of exchange gains on overseas operation	(239,513)	-
Impairment charge	-	194,401
Share based payment charge	22,550	-
Change in fair value of derivative	45,467	-
Change in fair value of investments	(46,145)
Finance costs	21,241	17,459
	(468,948)	(436,160)
Changes in working capital Receivables	(44,103)	1,077
Payables	(14,868)	98,048
Net cash used in operating activities	(527,919)	(337,035)
Cash flows from investing activities
Expenditure on exploration and evaluation assets	(479,238)	(224,095)
Purchase of listed investments	(58,637)	-
Sale of listed investments	-	5,732
Net cash used in investing activities	(537,875)	(218,363)
Cash flows from financing activities
Proceeds from share placement	968,696	560,000
Issue costs	(46,500)	(25,455)
Issue of loan notes	400,000	-
Loan repayment	(235,071)	-
Proceeds from loan	30,000	-
Net cash from financing activities	1,117,125	534,545
Net increase/(decrease) in cash and cash equivalents	51,331	(20,853)
Cash and cash equivalents at 1 January	44,310	65,163
Cash and cash equivalents at 31 December	95,641	44,310

Company Statement of Cash Flows

For the year ended 31 December 2019

	2019	2018
	£	£
Cash flows from operating activities
Loss before taxation	(494,403)	(605,270)
Adjustment for:
Share based payment charge	22,550	-
Impairment charge	168,920	404,808
Change in fair value of derivative	45,467	-
Change in fair value of investments	(46,145)
Finance costs	21,241	12,708
	(282,370)	(187,754))
Changes in working capital
Receivables	(63,658)	30,311
Payables	9,663	33,203
Net cash used in operating activities	(336,365)	(124,240)
Cash flows from investing activities
Advances to subsidiaries	(637,897)	(422,606)
Purchase of listed investments	(58,637)	-
Sale of listed investments	-	5,732
Net cash used in investing activities	(696,534)	(416,874)
Cash flows from financing activities
Proceeds from share placement	968,696	560,000
Issue costs	(46,500)	(25,455)
Issue of loan notes	400,000	-
Loan repayment	(235,071)	-
Proceeds from loan (Note 16)	30,000	-
Net cash from financing activities	1,117,125	534,545
Net increase/(decrease) in cash and cash equivalents	84,226	(6,569)
Cash and cash equivalents at 1 January	4,240	10,809
Cash and cash equivalents at 31 December	88,466	4,240

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

**ENDS**

Enquiries:
Armadale Capital Plc Nick Johansen, Non-Executive Director Tim Jones, Company Secretary	[phone]
Nomad and Broker: finnCap Ltd Christopher Raggett / Teddy Whiley	[phone]
Joint Broker: SI Capital Ltd Nick Emerson	[phone]
Press Relations: St Brides Partners Ltd Charlotte Page / Beth Melluish	[phone]

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 Indicated and inferred mineral resource estimate of 59.48Mt @ 9.8% TGC, making it 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.

More information can be found on the website www.armadalecapitalplc.com.

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