LONDON (ShareCast) - (Sharecast News) - Natural resources investment company Armadale Capital announced "significant progress" on the 2018 field work programme underway at its Mahenge Liandu Graphite Project in Tanzania on Friday.
The AIM-traded firm said that, with the feasibility study now "well advanced" and test work underpinning the "strong" commercial applications of the project's graphite concentrate, it had also appointed an experienced Beijing-based marketing consultant to pursue offtake agreements ahead of an anticipated decision to mine in early 2019.

It said it had now started graphite marketing activities in China with the appointment of Jenny Lee.

She would be based in Beijing to manage offtake discussions in-country, which would be coordinated alongside test-work from the recently-completed diamond drilling and metallurgical programmes.

Lee is the current managing director of Jialin International Trading in Hong Kong, with Armadale saying she was "highly experienced" in obtaining offtake agreements and managing ongoing sales arrangements in China.

Prior to her current role, Lee served as divisional manager of the Mineral Resources Division of AVIC International Steel Trade - one of the largest trading companies in China in the iron, coal and manganese sector importing into the Chinese market.

Armadale also said metallurgical test work had indicated that "exceptional purity" could be achieved alongside "excellent" flake size distribution at Mahenge Liandu, making the product "highly amenable" to a range of commercial applications.

It said results from a simple conventional flow sheet produced grades well above the standard 95% purity for most size fractions.

Downstream test work on concentrates also showed "excellent" expandability, particularly of the larger size fractions.

Test work to further enhance the purity of the graphite concentrate showed that acid treatment readily upgraded the concentrate further to above the 99.95% purity required for the rapidly expanding lithium-ion battery market.

Armadale said its feasibility study was now well advanced, with targeted publication in the fourth quarter.

Its reverse circulation drilling programme was completed with 18 holes for 951m, with high-grade coarse flake graphite mineralisation from surface identified in 17 of the holes.

Widths of up to 98m were intersected from surface with an average thicknesses of 43m.

The reverse circulation programme was designed to upgrade the current JORC resource of 51.1Mt at 9.3% total graphitic carbon, in order to declare a maiden reserve that would underpin a long-life low-cost mining operation, Armadale's board explained.

It added that work on environmental and social baseline surveys were nearing completion, with the environmental impact assessment, relocation action plan and valuation survey expected to be submitted in October.

"Mahenge Liandu continues to exceed all internal expectations," said Armadale Capital director Nick Johansen.

"With wide intervals of high-grade, and exceptionally high-grade, mineralisation identified from surface, we are confident that we will be able to demonstrate a long-life, low-cost mining operation in early 2019 when we make a decision to mine.

"In tandem with our operational advances, it is critical that we develop a marketing function capable of attracting long-term and well-priced offtake agreements for our future product, and today's appointment of our first Beijing-based marketing consultant is central to this objective."

Johansen said Lee's "extensive" operational experience in China and "proven success" in managing commercial sales negotiations made her ideally suited to represent Armadale in the market.

"Looking at our commercial potential, our scoping study released earlier this year sets the scene for what our project might look like and be capable of - including delivering average production of 49,000tpa of graphite products during a 32-year life of mine at a low operating cost of $408/t.

"With these parameters, Mahenge Liandu would deliver a pre-tax internal rate of return of 122% and net present value of $349m with a low development capex of $35m, highlighting the significant value accretion potential of this project for investors."

Johansen added that the company had also "consistently demonstrated" the high quality of its graphite products, as indicated from recent metallurgical test work, with a high-grade coarse flake product with exceptional purity being produced from "relatively simple" processing methods.

"With this in mind we are confident that our new marketing consultant will be able to command attractive pricing arrangements for our premium quality graphite product.

"We look forward to moving through the final phases of our development process and remain focussed on being in a position to make a decision to mine, and begin the construction phase, in 2019."

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