HomeMagazine ArticlesIn depth: Junior muscle pushes for Mpokoto’s first gold in 2016

In depth: Junior muscle pushes for Mpokoto’s first gold in 2016

AIM-listed gold junior Armadale Capital is delivering on its immediate business strategy to invest in develop low capex with near-flagship Democratic Republic of Congo (DRC). Acquired just 15 months ago, construction is due to start in H2, 2015 with first production scheduled just 12 months later, CEO Justin Lewis tells Laura Cornish.

Despite the weak commodity climate, Armadale Capital is proving that companies and projects within the ‘junior sphere’ can still show development and cash generating potential. Its Mpokoto project proves it.

The criteria necessary to develop new mining projects in today’s weak commodity price environment is challenging, for juniors and majors. Unlocking value, with minimum capital outlay to generate cash returns quickly, are essential investor prerequisites; and according to Lewis, Armadale Capital fulfils these comfortably. “When I joined the company and board 18 months ago, I immediately implemented a strategy which would enable us to start generating cash as quickly as possible. The subsequent result is an African portfolio which focuses on small, near-term producing assets only. In this market, there is no point in having big projects which are financially risky and unattractive and don’t generate returns as quickly as possible,” Lewis outlines. In line with its strategy and business model, Armadale Capital changed direction from its acid mine drainage technology focus and instead picked up 80% of the “unloved” Mpokoto gold asset from Gold Fields in November 2013, inheriting a 380 000 oz resource (inferred and indicated) as well as a mining convention and licence. It is situated in the DRC’s Katanga province. The plan Significant drilling activity since the acquisition has more than doubled Mpokoto’s resource – to 678 000 oz (75% in indicated category) and an advanced scoping study has provided insight into the project’s value which includes a post-tax net present value (NPV) of US$55.3 million, based upon a discount rate of 8% and a…

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