TIDMACP
RNS Number : 1508Z
Armadale Capital PLC
12 May 2023
Armadale Capital Plc / Index: AIM / Epic: ACP / Sector:
Investment Company
12 May 2023
Armadale Capital Plc
('Armadale' or 'the Company')
Final Results and Notice of AGM
Armadale Capital plc (LON: ACP), the AIM quoted investment group
focused on natural resource projects in Africa, is pleased to
announce its final results for the year ended 31 December 2022
('Final Results' or 'Annual Report'). The Company also announces
that its Annual General Meeting ('AGM') will be held at Level 1,
48-50 Smith Street, Darwin, Northern Territory, Australia on 20
June 2023 at 18.00 ACST (09.30 BST) . A notice of AGM, together
with printed copies of the Company's full Annual Report for the
year ended 31 December 2022, will be posted to shareholders on 16
May 2023. Copies will also be available to view on the Company's
website: www.armadalecapitalplc.com .
Strategic Report
For the year ended 31 December 2022
Operational and Corporate Highlights for Period Ending 31
December 2022
Significant progress made in delivering key accretive milestones
in advancing the Mahenge Liandu Graphite Project in Tanzania
1. In February 2022 the Company applied for three incremental
exploration licences which are prospective for graphite
mineralisation and materially enhance the Mahenge Liandu Project's
exploration potential.
2. In March, the Company, pursuant to environmental compliance
requirements of the mining license, successfully completed the
installation of a weather station and has commenced the monthly
collection of data. The station records data at 5 second intervals
and covers all weather parameters including temperature, pressure,
wind, moon phase, humidity, solar radiation and rainfall. All data
is automatically uploaded to the cloud. This data is critical to
establishing the base line information required to assist with the
planning of the mining operations on the Project.
3. In addition, the Company has also installed a total of 7
stream gauges and one barotroll in the water streams located at the
mine site in March 2022 which will be used for the hydrological
studies which will assist in the location and design of
infrastructure for the operations. The devices record 3 parameters
which are temperature, pressure and depth at 5 second intervals.
The data from all devices are being manually downloaded at a
frequency rate of once per month.
4. As Part of the ongoing FEED study, the Company cleared pads
for geotech drilling at the proposed plant Site and tailing dam
location. 10 pads were cleared at the tailing storage facility area
and 6 pads were cleared at the plant site area as a part of
geotechnical studies and the Company is now preparing for Diamond
Drilling in the proposed areas
5. A test pit program has been completed at the proposed plant
site, tailing storage facility and the access road areas. A total
of 41 test pits with 3 meters depth have been excavated, DCP
tested, strata logged, sampled and backfilled. 11 pits have been
excavated at plant site, 25 pits excavated at tailing storage
facility and 5 pits excavated at the access road to the mine
site.
6. The Company was granted the prospecting license PL 119961/
2022 by the ministry of minerals on 28 June 2022, for the
exploration of graphite minerals. The license area comprises of
19.99 square kilometres, located at Isongo and Liandu villages of
Ulanga District, in Morogoro Region.
7. Through the year, the Company's primary focus was on securing
project development funding for the Mahenge Liandu Graphite project
while advancing the permitting and local community engagement.
8. The Company has received an encouraging level of interest in
funding the Mahenge Liandu Graphite project and has advanced its
discussions with a number of potential finance partners with
respect to securing project development funding.
Post Period End
9. The Company continues to collect environmental baseline data
as is required for the compliance of the mining lease and to assist
in the design and planning of the proposed mining operations. In
addition, the base line data for temperature, pressure, wind, moon
phase, humidity, solar radiation, rainfall and stream flow data
assists the local community to have access to regional weather data
for local planning requirements in the Mahenge region.
10. Planning underway for Geotech drilling, with the sites now
prepared for the drill rig. The information from the proposed
drilling program will enable the detailed design of the plant and
tails storage area. This information will enhance the data from the
test pits that were completed last year.
11. Logistics routes for the product continue to be assessed to
determine the optimum methods to ensure the final product will
enter the market at the desired price level.
12. Discussions are ongoing with the Government of Tanzania
regarding the framework for the 16% ownership, with draft
Shareholder agreements, Articles of Association and Joint Financial
model being submitted to both parties for review.
13. Ongoing review of quoted portfolio, where the Directors
believe there are opportunities for capital gains
14. Continue to actively review other exciting investment
opportunities.
During the year under review, Armadale continued to operate as a
diversified investing group focused on natural resource projects in
Africa. To this end, its portfolio is divided into two groups:
-- actively managed investments where the Company has majority ownership of the investment; and
-- passively managed investments where the Company has a
minority investment, typically in a quoted company, and does not
have management control.
Currently, the Company's key actively managed investment is the
Mahenge Liandu Graphite Project in Tanzania. At present, the
Company is actively marketing the Project to potential industry
partners and end users (offtakers) of graphite products. The
Company is also pursuing a range of potential options relating to
development finance for the project
PASSIVELY MANAGED INVESTMENTS
Mantengu Mining Limited (formerly Mine Restoration Investments
Limited) South Africa
The Company's holding of shares in Mantengu Mining Limited
("MML") (formerly Mine Restoration Investments Limited), which were
fully written off when MML entered administration, have been
reinstated at their fair value of GBP105,000 following a reverse
takeover by MML and a relisting of its shares on the Johannesburg
Stock Exchange.
Quoted Portfolio
The Company has a portfolio of quoted investments, valued at
GBP1,245,000 on 4 May 2023, principally in resource companies where
the Directors believe there are opportunities for capital gain. The
Company continues to keep its portfolio under review. The Company's
strategy with its quoted portfolio is to gain exposure in projects
that have the potential to create short to medium term returns for
the Company as well as diversify the Company's exposure to a
broader range of commodities while being able to enter and exit the
position with minimal cost and time.
SUSTAINABLE DEVELOPMENT
The Company is committed to sustainable development and
conducting its business ethically. Given that the Company invests
in the mining industry, one of its key focuses is on maintaining a
high level of health and safety, environmental responsibility, and
support for the communities close to its investments.
CORPORATE INFORMATION
Principal Risks and Uncertainties
There are known risks associated with the mineral industry,
especially in Africa. The Board regularly reviews the risks to
which the Group is exposed and endeavours to minimise them as far
as possible. The following summary, which is not exhaustive,
outlines some of the risks and uncertainties currently facing the
Group:
-- Although reducing throughout the year under review, COVID-19
continues to have risks for the Group in terms of its ability to
travel to and from its projects and ability for key personnel to
access its projects. As previously reported, the impact of COVID-
19 on the project is so far minimal as the Company's site
activities were substantially completed in 2019.
-- Through the Mahenge Liandu Graphite Project the Group is very
exposed to graphite. Graphite is a relatively new commodity whose
market is being driven by demand in renewable energy. The Company
believes it is thus vulnerable to changing global energy
policies.
-- The impact of Brexit on companies operating in the UK is
still being monitored. Thus far Brexit has not impacted the Group's
ability to raise funds.
-- The exploration for and development of mineral resources
involves technical risks, infrastructure risks and logistical
challenges, which even a combination of careful evaluation and
knowledge may not eliminate.
-- There can be no assurance that the Group's project will be
fully developed in accordance with current plans.
-- Future development work and subsequent financial returns
arising may be adversely affected by factors outside the control of
the Group.
-- The availability and access to future funding within the global economic environment.
-- The Group operates in multiple national jurisdictions and is
therefore vulnerable to changes in government policies which are
outside its control. The mining regulation changes in Tanzania are
still being evaluated, however they seem to have minimal impact on
investment in graphite mining. The Group continues to monitor the
implementation of the changes to evaluate and mitigate sovereign
risks.
Principal Risks and Uncertainties
-- The Group is exposed to gold as the holder of a royalty on
gold production from its previously held gold project. The Group's
potential future royalty stream will be affected by fluctuations in
the prevailing market price of gold and to variations of the US
dollar in which gold sales will be denominated.
Some of the mitigation strategies the Group applies in its
present stage of development include, among others:
-- Proactive management to reducing fixed costs.
-- Rationalisation of all capital expenditures.
-- Maintaining strong relationships with government (employing
local staff and partial government ownership), which improves the
Group's position as a preferred small mining partner.
-- Engagement with local communities to ensure our activities
provide value to the communities where we operate.
-- Alternative and continued funding activities with a number of
options to secure future funding to continue as a going
concern.
The Directors regularly monitor such risks and will take actions
as appropriate to mitigate them. The Group manages its risks by
seeking to ensure that it complies with the terms of its
agreements, and through the application of appropriate policies and
procedures, and via the recruitment and retention of a team of
skilled and experienced professionals.
Key Performance Indicators
The Group's current key performance indicators ('KPIs') are the
performance of its underlying investments, measured in terms of the
development of the specific projects they relate to, the increase
in capital value since investment and the earnings generated for
the Group from the investment. The Directors consider that it is
still too early in the investment cycle of any of the investments
held, for meaningful KPIs to be given.
Success is also measured through the identification and
investment in suitable additional opportunities that fit the
Group's investment objectives.
Section 172 Statement
Section 172(1): A director of a company must act in the way he
considers, in good faith, would be most likely to promote the
success of the company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to -
Section 172(1) (b) the interests of the company's employees,
Company's Comment: While the Company is largely staffed by
contractor employees (rather than direct employees of the Company),
the directors consider that continuing active work on the Mahenge
Liandu Graphite Project to be in the best interest of such staff to
utilise their skills and develop their local communities. The board
seeks regular feedback from its key stakeholders (including staff
and advisers) to ensure that the corporate culture of the Company
remains highly ethical in terms of our Company's values and
behaviours.
Section 172(1) (c) the need to foster the company's business
relationships with suppliers, customers and others,
Company's Comment: The directors ensure that suppliers are
available and meeting commitments and there is good communication
with staff as a key requirement for high levels of engagement. This
is done by periodic and ad-hoc briefings and discussions.
Reasons to engage shareholders are to meet regulatory
requirements and understand shareholder sentiments on the business,
its prospects and performance of management.
This is done by regulatory news releases, keeping the investor
relations section of the website up to date, annual and half-year
reports and presentations and AGM.
Section 172(1) (d) the impact of the company's operations on the
community and the environment,
Company's Comment: The Company's activities impact communities
in the places where we operate and elsewhere. The Company engages
communities with employment / business development arrangements
within guidelines. Through preparation and compliance with
environmental and social management plans, which include the
regulatory requirements for the Company on its Mahenge Liandu
Graphite Project, the directors ensure that wherever possible its
activities have a positive impact on the community and avoid
adverse environmental impacts.
The Company has engaged the services of a local manager in
Liandu who provides information to the community about our intended
project activities and is responsible for managing local affairs
and feedback to the Company.
Section 172(1) (e) the desirability of the company maintaining a
reputation for high standards of business conduct, and
Company's Comment: The directors consider standards of business
conduct in all dealings of the Company. The members of the board
have a collective responsibility and obligation to promote the
interests of the Company and are collectively responsible for
defining standards of business conduct which includes corporate
governance arrangements. The board provides strategic leadership
for the Company and operates within the scope of our corporate
governance framework and sets the strategic goals for the
Company.
Section 172(1) (f) the need to act fairly as between members of
the company.
Company's Comment: The board takes feedback from a wide range of
shareholders (large and small) and endeavours at every opportunity
to pro-actively engage with all shareholders (via regular news
reporting-RNS) and engage with any specific shareholders in
response to particular queries they may have from time to time. The
board considers that its key decisions during the year have
impacted equally on all members of the Company.
Board
There were no changes in the Board during the year under review
or post period end. The Board continues to consider potential
replacements for former Board members with a focus on a potential
appointment of a UK based Board member.
Financial Results
For the year ended 31 December 2022 the Group did not earn any
revenues as its business related solely to the making of
investments in non-revenue producing resource projects and
companies.
The Group made a loss after tax of GBP0.206 million (2021:
GBP0.333 million) for the year ended 31 December 2022. Expenditure
on the Mahenge Liandu project during the year amounted to GBP0.468
million (2021: GBP0.272 million), which was capitalised as
additional exploration and evaluation assets.
Funds raised during the year amounted to GBP1.3 million from the
exercise of warrants and options.
At 31 December 2022, the Group had cash of GBP1,046,000 (2021:
GBP886,000) and nil debt finance (2020: nil). At 4 May 2023 the
Group had cash of GBP737,000 and listed investments worth
GBP1,245,000.
Outlook
The year under review shows that Mahenge Liandu continues to
represent an exciting opportunity for the Group. As identified in
the going concern note to the Directors' Report, the Company's
ability to achieve its strategy with respect to the project is
dependent on the further fundraising. The Directors continue to
keep other investment opportunities, in line with the Group's
investment objectives, under review, which the board believe could
deliver significant value to shareholders.
Nicholas Johansen
Director
11 May 2023
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2022
2022 2021
GBP'000 GBP'000
--------------------------------------- -------- --------
Administrative expenses (309) (330)
-------- --------
Change in fair value of investments 103 8
-------- --------
Operating loss (206) (322)
-------- --------
Finance costs - (11)
-------- --------
Loss before taxation (206) (333)
-------- --------
Taxation - -
-------- --------
Loss after taxation (206) (333)
-------- --------
Other comprehensive income
======== ========
Items that may be reclassified to
profit or loss:
---------------------------------------- ======== ========
Exchange differences on translating
foreign entities 252 (61)
---------------------------------------- -------- --------
Total comprehensive profit/(loss)
attributable to the equity holders
of the parent company 46 (394)
======== ========
Loss per share attributable to the Pence Pence
equity holders of the parent company
-------- --------
Basic and diluted loss per share (0.04) (0.07)
======== ========
Consolidated Statement of Financial Position
At 31 December 2022
2022 2021
GBP'000 GBP'000
Assets
Non-current assets
--------- ---------
Exploration and evaluation assets 5,483 4,727
--------- ---------
Investments 562 138
--------- ---------
6,045 4,865
----------------------------------- --------- ---------
Current assets
--------- ---------
Trade and other receivables 150 150
--------- ---------
Cash and cash equivalents 1,046 886
--------- ---------
1,196 1,036
----------------------------------- --------- ---------
Total assets 7,241 5,901
========= =========
Equity and liabilities
--------- ---------
Equity
--------- ---------
Share capital 3,324 3,275
--------- ---------
Share premium 25,153 23,906
--------- ---------
Shares to be issued 286 286
--------- ---------
Share option and warrant reserve 362 925
--------- ---------
Foreign exchange reserve 318 66
--------- ---------
Retained earnings (22,279) (22,636)
--------- ---------
Total equity 7,164 5,822
--------- ---------
Current liabilities
--------- ---------
Trade and other payables 77 79
--------- ---------
Total Liabilities 77 79
--------- ---------
Total equity and liabilities 7,241 5,901
========= =========
Consolidated Statement of Changes in Equity
For the year ended 31 December 2022
Share Share Shares Share Foreign Retained Total
Capital Premium to be Option Exchange Earnings
issued and Warrant Reserve
Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- -------- ------------- ---------- ---------- ----------
At 1 January 2021 3,208 22,348 286 762 127 (22,406) 4,325
--------- --------- -------- ------------- ---------- ---------- --------
Loss for the period - - - - - (333) (333)
--------- --------- -------- ------------- ---------- ---------- --------
Other comprehensive
loss - - - - (61) - (61)
--------- --------- -------- ------------- ---------- ---------- --------
Total comprehensive
loss for the year - - - - (61) (333) (394)
--------- --------- -------- ------------- ---------- ---------- --------
Issue of shares
and warrants 67 1,558 - 266 - - 1,891
--------- --------- -------- ------------- ---------- ---------- --------
Transfer on exercise
of warrants - - - (103) - 103 -
--------- --------- -------- ------------- ---------- ---------- --------
Total other movements 67 1,558 - 163 - 103 1,891
--------- --------- -------- ------------- ---------- ---------- --------
At 31 December
2021 3,275 23,906 286 925 66 (22,636) 5,822
========= ========= ======== ============= ========== ========== ========
Loss for the period - - - - - (206) (206)
========= ========= ======== ============= ========== ========== ========
Other comprehensive
income - - - - 252 - 252
--------- --------- -------- ------------- ---------- ---------- --------
Total comprehensive
income for the year - - - - 252 (206) 46
--------- --------- -------- ------------- ---------- ---------- --------
Issue of shares 49 1,247 - - - - 1,296
--------- --------- -------- ------------- ---------- ---------- --------
Transfer on exercise
and expiry of warrants - - - (563) - 563 -
--------- --------- -------- ------------- ---------- ---------- --------
Total other movements 49 1,247 - (563) - 563 1,296
--------- --------- -------- ------------- ---------- ---------- --------
At 31 December
2022 3,324 25,153 286 362 318 22,279 7,164
--------- --------- -------- ------------- ---------- ---------- --------
Consolidated Statement of Cash Flows
For the year ended 31 December 2022
2022 2021
GBP'000 GBP'000
------------------------------------------- -------- --------
Cash flows from operating activities
-------- --------
Loss before taxation (206) (333)
-------- --------
Adjustment for:
-------- --------
Change in fair value of investments (102) (8)
-------- --------
Finance costs - 11
-------- --------
(308) (330)
------------------------------------------- -------- --------
Changes in working capital
Receivables (11) 1
-------- --------
Payables 12 (39)
-------- --------
Net cash used in operating activities (307) (368)
======== ========
Cash flows from investing activities
-------- --------
Expenditure on exploration and evaluation
assets (518) (399)
-------- --------
Purchase of listed investments (411) -
-------- --------
Sale of listed investments 89 152
-------- --------
Net cash used in investing activities (840) (247)
======== ========
Cash flows from financing activities
-------- --------
Proceeds from share issues 1,307 1,249
-------- --------
Net cash from financing activities 1,307 1,249
======== ========
Net increase in cash and cash equivalents 160 634
-------- --------
Cash and cash equivalents at 1 January 886 252
-------- --------
Cash and cash equivalents at 31
December 1,046 886
======== ========
G oing Concern
The financial statements have been prepared on the going concern
basis as, in the opinion of the Directors, there is a reasonable
expectation that the Group and the Company will continue in
operational existence for the foreseeable future.
At 31 December 2022, the Group had cash of GBP1,046,000 (2021,
GBP886,000) and no debt finance (2021, nil).
At 4 May 2023, the Company had cash of GBP737,000 and listed
investments with a traded value of GBP1,245,000. The Directors have
prepared a cash flow forecast for the next twelve months which
shows that the cash in hand together with expected further receipts
is sufficient to meet current commitments in respect of exploration
expenditure and corporate overheads for a period of at least twelve
months, after which further fundraising will be required.
The Company's ability to continue as a going concern and to
achieve its long term strategy of developing its exploration
projects is dependent on further fundraising. Against the
background of the encouraging progress with the Mahenge Liandu
graphite project and the Company's history of raising funds through
the issue of equity, the Directors consider that there is a
reasonable expectation that the required capital will be raised.
However, there are currently no binding agreements in place. Should
the Directors be unable to raise sufficient funds, the Company may
be unable to realise its assets and discharge its liabilities in
the normal course of business.
These factors indicate the existence of a material uncertainty
which may cast doubt over the Group's and Company's ability to
continue as a going concern. The financial statements do not
include the adjustments that would result if the Group or Company
were unable to continue as a going concern.
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU No. 596/2014) which is part of UK law by virtue of
the European Union (Withdrawal) Act 2018. Upon the publication of
this announcement, this inside information is now considered to be
in the public domain.
More information can be found on the website
www.armadalecapitalplc.com .
**ENDS**
Enquiries:
Armadale Capital Plc
Nick Johansen, Non-Executive Director
Tim Jones, Company Secretary +44 (0) 20 7236 1177
Nomad and Broker: finnCap Ltd
Christopher Raggett / Teddy Whiley / Seamus Fricker +44 (0) 20 7220 0500
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