Armadale Jumps on Improved Mahenge Liandu Graphite Mine Plan

Shares of London-listed investment group Armadale Capital (LSE:ACP) jumped more than 30 percent on Tuesday (March 10) after the company outlined an improved mine plan for its Mahenge Liandu graphite project in Tanzania. 

The new plan includes a ramp up to 500,000 metric tons (MT) of processed ore per year after two years, and to 1 million MT after four years.

A 2018 scoping study, based on throughput of 400,000 MT per year over a 32 year mine life, delivered a net present value of US$349 million and an internal rate of return of 122 percent. Operating costs for the project are estimated at US$408 per MT, with a development capital expenditure of US$35 million.

According to the company, since the scoping study was released, incremental improvements have been delivered, and the expectation is that an upcoming definitive feasibility study (DFS) will have significantly uplifted economics.

“We have long held confidence in the enormous commercial potential and economic value of our 100 percent owned Mahenge graphite project,” Armadale Chairman Nick Johansen said.

“These results are expected to make a positive impact upon our DFS, which is nearing completion, and we look forward to updating further upon this in the near future.”

The original scoping study estimated that the mine could produce an average of 49,000 MT per year of high-quality graphite products, but the improved mine plan allows for an increase in output capacity to a total of 100,000 MT per year.

“The (planned) staged increase in production allows a dramatic increase in production without increasing the initial capital expenditure,” the company stated.

“Furthermore, there remains significant scope to further improve returns with staged expansions as the current mine plan is based on circa 25 percent of the total resource.”

Mahenge Liandu has a high-grade JORC-compliant indicated and inferred mineral resource estimate of 59.9 million MT at 9.8 percent total graphite content.

The company expects that a staged ramp up will keep operating costs stable as output increases.

On Tuesday, shares of Armadale closed up 11.63 percent at GBX 2.40.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.