AIM-listed investment company Armadale Capital has entered into a heads of agreement to acquire the high-grade coarse flake Mahenge Liandu graphite project in Tanzania.

This investment is in line with Armadale Capital’s strategy to build a portfolio of revenue generating African resource projects.

Armadale Capital has agreed to acquire Graphite Advancement Tanzania, an Australian company that through a Tanzanian subsidiary owns and has the right to 100% of the tenements that constitute the Liandu project, for an issue of 80 million Armadale shares on completion of the transaction.

The heads of term agreement is conditional upon:

  • completion of a sale and purchase agreement;
  • completion of usual due diligence by both parties; and
  • any shareholder approvals that are required by either party.

The growth of Armadale Capital’s investment portfolio, which currently includes the Mpokoto gold project in the Democratic Republic of Congo, represents an exciting new period for the company with strategic development potential that will see Armadale Capital couple its understanding of the African resource sector with opportunities in the graphite market.

The acquisition provides access to the highly prospective graphite market – the demand of which is expected to double within the next eight years – from the burgeoning battery market. This growth is being fuelled by developments in the energy storage industry – graphite is an essential component of the modern lithium-ion battery, making it a key material in smart phones, tablets, laptops and electric cars.

ASX-listed Kibaran Resources and Black Rock Mining have both identified and are developing significant proven and valuable graphite projects immediately adjacent to the Mahenge Liandu graphite project.

To date, Armadale Capital geologists have been on the ground, mapped and sampled the graphite schist. Results from seven previous samples ranged from 12.8% – 24.0% total graphite content (TGC). Exploration drilling completed at the project in December 2015 has also further confirmed the mineral potential of licence area, with results including 10 m at 6.54% TGC, 24 m at 12.9% TGC and 5 m at 21.5% TGC.

Field work on the project will commence following the completion of the transaction – targeting a maiden resource estimation in late 2016.

“This transaction creates a significant opportunity for Armadale in an industry with exciting demand fundamentals, says Armadale Capital chairman Peter Marks.

“Mahenge Liandu is in an area of known high quality graphite indicating that this project area may benefit from similar high mineral values. In addition to this, three holes have already been completed and sampled by the Armadale team, and results from this have further reinforced the board’s view that the Mahenge Liandu project is an ideal investment target, complementing Armadale’s current portfolio.”