LONDON (ShareCast) - (ShareCast News) - Armadale, a South African based mining company, saw activity decelerate at its Mpokoto Gold Project, as it sought alternative financing, and raised doubts as to whether a planned drilling campaign at its Mahenge Liandu project had begun.


The outfit was looking to find arrangements wherein the company can reduce its exposure to risk by no longer being the sole financer of MpoKoto, located in the south-west of the Democratic Republic of the Congo.

The key elements of the Definitive Feasibility Study ('DFS'), which forms the basis of the mining plan, are now largely complete.

There has however been a deceleration of activities on the site as the firm tries to finalise financing discussions with its potential partners, African Mining Contracting Services Group.

"These discussions are proving lengthy and to date, unrewarding, and so the Board is assessing alternative potential commercial arrangements through which Armadale could retain an interest in Mpokoto, but would have less exposure to the execution risk and potential dilution at Group level, which may be unavoidable if we were to finance the development of Mpokoto independently" said the Directors.

The company generated no revenue in the first half of the year, recording a loss before tax of £279,000, which was narrower than that of the previous period at £365,000.

Nonetheless, according to the chairman William Frewen, the company's immediate future is the Mahenge Liandu Graphite Project in south-east Tanzania, which was acquired post period end. The prospect delivers a compelling investment opportunity in the graphite market. The potential for commercial grade graphite has led the Board to determine that the Mahenge Liandu Graphite Project will increasingly become a focus for the company."

Yuen Low from Shore Capital said: "A drilling campaign was to have commenced on the Mahenge Liandu graphite project in Tanzania in Q3 2016, but the language in the interims suggests to us that this may not yet have occurred."

The Board is also seeking to divest Armadale's interest in Mine Restoration Investments Ltd and some of its portfolio of smaller quoted and non-core investments.

Cash and cash equivalents at 30 June 2016 rose to £614,000 from £26,000. Set against this was £0.58m of payables.

Shore Capital expect that another fundraise will be required in the first half of 2017.

Loss per share increased to 0.29p from 1.05p.

The share price fell 19.24% to 1.92p at 15:18 BST on Thursday.

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