AIM-listed Armadale Capital has announced a meaningful upgrade in the mineral resource estimate for its high-quality Mahenge Liandu graphite project in Tanzania.
Tanzania – The results of the recent infill drilling campaign have seen the mineral resource estimate increase to 59.5Mt @ 9.8% Total Graphitic Content (TGC). Notably, says Armadale, the upgrade was largely underpinned by two coherent high-grade 3.1Mt @ 15% TGC near surface zones including 1.2Mt at 17.3% TGC.
Results of the recent drilling campaign have been reviewed by ROM Resources who has signed off on a mineral resource estimate of 59.5Mt @ 9.8% total graphite content.
High-grade near surface drilling results have been incorporated into the resource model, with two high-grade coherent zones totalling 3.1Mt @ 15% TGC zones including 1.2Mt @ 17.3%
The implication of the resource model is that more high-grade near surface graphite can potentially be mined at a lower extraction cost in the early years to bolster potential cashflow and enhance the project’s overall valuation
The results expected to have a positive outcome on the Definitive Feasibility Study currently being prepared
Nick Johansen director of Armadale said: “This latest upgrade is extremely welcome news and there are a number of clear positives to take from it.
“Firstly, we now have materially higher confidence in the mineral resource estimate with 11.5Mt @ 10.5% in the measured category; and secondly it has demonstrated the potential to mine higher volumes of graphite in the early years at a higher EBITDA margin to enhance the project’s overall upside.”
[subhead] Highly lucrative project
Armadale’s wholly-owned Mahenge Liandu graphite project is located in a highly prospective region and is one of the largest high-grade resources in Tanzania.
Work to date has demonstrated the project’s potential as a commercially viable deposit, with significant tonnage, high-grade coarse flake and near surface mineralisation (implying a low strip ratio) contained within one contiguous ore body.
Currently, Armadale is completing a DFS 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 and verified that Mahenge Liandu could produce a coarse flake, high-purity graphite product to underpin robust economics: low operating cost of US$408 per tonne, based on an average 12.5% TGC life of mine grade; pre-tax IRR of 122% and NPV of $349m; a low development capex of $35m; and after-tax payback period of 1.2 years.