Armadale's Mahenge Liandu graphite project. Image courtesy of Armadale

AIM-listed Armadale Capital has signed an MOU for a proposed offtake agreement with China-based Datong Resources for high quality graphite products produced at the company’s Mahenge Liandu graphite project in Tanzania.

Tanzania – The MOU is for a proposed 25 000 tpa of graphite concentrate produced at Mahenge Liandu for an initial term of five years and at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced.

This MOU is in addition to the company’s MOU announced on 19 February 2019 with the Matrass Group for 30 000 tpa and the MOU with CoolRU announced on 26 September 2019 for 5 000 tpa and brings the total offtake under an MOU to 60 000 tpa representing 122% of the 49 000 tpa average annual production target.

READ MORE: Mahenge Liandu shows more potential

Work is continuing to finalise the company’s definitive feasibility study (DFS), which is based on the results of a scoping study that was completed in March 2018. The study was based on a throughput of 400 000 tpa over a 32-year mine life verified the Mahenge Liandu project could produce a coarse flake, high-purity graphite product and showed the project has robust economics and warrants further development.

Work is also focused on converting the MOUs into binding offtake agreements with Armadale Capital’s partners.

 “The offtake MOU with Datong Resources marks a highly significant point in the transition of our company from explorer to emerging producer and brings our offtake MOU portfolio to a point which exceeds the initial planned production from Mahenge Liandu,” says Armadale Resources director Nick Johansen.

“The ability to secure offtake MOUs of this magnitude demonstrates the robust nature of Mahenge Liandu and completes an important step as we proactively progress its development,” he added.

Mahenge Liandu at a glance
Armadale’s wholly-owned Mahenge Liandu graphite project is located in a highly prospective region, with a high-grade JORC compliant indicated and inferred mineral resource estimate announced February 2018 – 51.1 Mt at 9.3% TGC. This includes 38.7 Mt indicted at 9.3% and 12.4 Mt at 9.1% TGC, making it one of the largest high-grade resources in Tanzania.

There remains significant scope to further improve returns, with staged expansions as the current mine plan is based on circa 25% of the total resource.