Armadale finds possible offtake partner for Mahenge Liandu
By Josh White
Date: Tuesday 19 Feb 2019
(Sharecast News) - Natural resources investment company Armadale Capital has signed a memorandum of understanding (MoU) for a proposed offtake agreement with the Matrass Group - a China based graphite mining and processing company - for high quality graphite products produced at Armadale's Mahenge Liandu Graphite Project in Tanzania, it announced on Tuesday.
The AIM-traded firm also updated the market the feasibility study and the environmental and social impact study (ESIA) underway at the project.
It said the MoU was signed for the proposed offtake of 30,000 tonnes per annum (tpa) of graphite concentrate produced at Mahenge Liandu for an initial five-year term, at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced, representing over 60% of average target annual production.
A test-work programme aimed to progress the MoU to a binding agreement was planned to begin before the end of the first quarter.
Discussions regarding the remaining 19,000tpa of production were said to be ongoing, with a number of potential customers.
On the feasibility study, Armadale said drilling was now complete, with further site activities expected to recommence in the coming weeks following the end of the Tanzanian wet season.
The ESIA was also now complete, with the valuation study returning lower than planned relocation costs, which the board said further enhanced the robust economics of the project indicated in the scoping study.
"In order to expedite our development objectives at Mahenge Liandu, we have been simultaneously pushing our commercial activities and operational work streams over the past six months with the intention of securing offtake agreements and finalising the various permitting items," said Armadale Capital director Nick Johansen.
"I am delighted to report that our commercial efforts have been rewarded with this offtake MoU for 60% of our average target annual production with the Matrass Group.
"Demand for high quality graphite products, such as ours, have been highlighted through other offtake agreements, including ASX listed Black Rock Mining and the binding offtake for 205,000tpa from its project, which is proximal to Mahenge Liandu."
Johansen said that "spoke volumes" for the growing market demand for graphite from the region, which reportedly boasted some of the highest purity graphite concentrates globally, adding that it reinforced the board's confidence that binding offtake agreements would be secured for the entire 49,000tpa forecast production.
"As recent activities have focussed on securing offtake agreements and mine permitting, both of which are making positive progress, we look forward to recommencing activities for the feasibility study and we look forward to updating the market further in this regard."
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