grade graphite mine Investor Presentation May 2019 Corporate - - PowerPoint PPT Presentation

Building a high- grade graphite mine

Investor Presentation May 2019

Corporate Information

Ticker (LSE) ACP Shares on issue 375m Share Price (15 May 2019) 1.4p 52 week high / low 1.92p/0.88p Market cap £5.1m

• Avg. daily volume (shares)

1.75m (3 mths)

Subs bstantial al Shar areh ehol

• lder

ders

Kabunga Holdings Pty Ltd 13.1% Resource Corporate Pty Ltd 8.4% Directors 1.0% Private Investors 16.4% finnCap Ltd Nomad & Joint Broker SI Capital Joint Broker

Adviser sers

0.8 1 1.2 1.4 1.6 1.8 2

Key Dat ata Shar are e Pri Price Char art

Investor Presentation – May 2019 2

Group Overview

• Armadale Capital (ACP) is an AIM-listed diversified investment company focused on

natural resource projects in Africa

• Current focus on advancing the Mahenge Liandu Graphite Project in Tanzania to

production

• Low technical risk project - a large, high-grade open cut resource
• Located in east Africa - the world’s largest graphite province
• Potential to become a top producer over the next decade
• Strong market dynamics - accelerating demand for spherical graphite driven by new

energy sector and expandable graphite used in flame retardant applications

• Quoted portfolio providing opportunities for capital gain
• Actively reviewing additional value-adding investment opportunities
• Experienced team with notable success advancing projects within the mining sector

Investor Presentation – May 2019 3

Board & Management

Steve Mahede BEng MBA Non-Executive Director

Qualified engineer with more than 35 years’ in mining related project management Experienced CEO in Australia and Africa BSc (Eng) from the University

• f Western Australia and MBA

from Murdoch University Patron of the Tanzanian Community in Western Australia Inc

Nicholas Johansen BEcon GDLP LLB (Hons) Non-Executive Director

Experienced legal practitioner based in Northern Territory, Australia Extensive involvement in junior mining exploration and production companies across many different commodities Expert in environmental regulation Law degree with Honours from Charles Darwin University, NT and Bachelor of Economics from the University of Adelaide

Paul Johnson BSc, CA Non-Executive Director

Currently ED for African Battery Metals plc, an AIM quoted exploration group CEO for Value Generation Ltd, a family investment group focused on natural resources and fintech sectors. Holds a degree in Management Science from University of Manchester and is a Chartered Accountant, Chartered Loss Adjuster and Associate of the Chartered Insurance Institute

Jenny Lee China Representative Graphite Marketing

Experienced marketing executive with 24 years in the mining sector focused on raw material procurement Headed large China-based shipping & logistics group importing into the Chinese market Highly experienced at

• btaining and managing off-

take agreements and product transport and logistics

Matt Bull BSc (Hons) Technical Director

A geologist with experience in graphite, gold and iron ore across Australia and Africa Worked greenfield exploration & resource development programs for Rio Tinto, Golden West, Volt & Linden Resources Former director of Volt Resources (ASX: VRC) and currently on the Board of Lindian Resources (ASX: LIM) Bachelor of Science with honours in geology and geophysics from the University

• f Adelaide

Investor Presentation – May 2019 4

MAHENGE LIANDU GRAPHITE PROJECT

5

Project Overview

• 100% owned, near surface, high grade deposit –

focus on commencing production 2021

• Two tenements over 29.9km2in a highly

prospective region

• One of the largest high-grade graphite projects in

Tanzania and proven potential as a commercially viable deposit

• 2019 Milestones
• Environmental and social permitting submitted
• Mining licence – expect to submit August 2019
• On track to deliver DFS Q4 2019
• Development of transport pathway underway
• Finalisation of production flowsheets and plant

design

• FEED Study to commence Q4 2019
• Considerable sales interest - MOU with Matrass

Group, a China based graphite mining/processing company and advanced discussions with other potential customers

• Project development funding progressing

Investor Presentation – May 2019 6

Project Location

• Located close to established

infrastructure

• Mains power within 5km
• 80km by sealed and gravel

roads to central rail hub at Ifakara

• Direct rail access to Dar es

Salaam port 320km away

• Labour and materials within

10km at Mahenge town

Investor Presentation – May 2019 7

Tanzania-Zambia Railway Kilombero Bridge

Resource & Mine

Investor Presentation – May 2019 8

• Near surface high-grade deposit
• Inferred Resource of 51.1Mt at 9.3% TGC
• 38.7Mt indicted at 9.3% and 12.4Mt at 9.1% TGC
• Excellent quality graphite concentrates confirmed
• High purity and excellent flake size distribution, with

>65% large-to-super jumbo category

• Optimised mine plan of 13Mt @ 12.5% TGC
• DFS underway to confirm 400,000tpa plant over 32-year

mine life - represents only 25% of the overall resource

✓ NPV of US$349m and IRR of 122% ✓ Lowest quartile cash costs driven by high mined grade of 12.5% and low strip ratio of 1:1 for LOM ✓ 1.2 year payback on $US35m capex after tax ✓ Based on conservative basket price of $US1,272/t ✓ High-quality graphite product confirmed ✓ Potential to increase throughput as mine life based on conservative assumptions Robus ust t econo nomic ics fro rom m Scopi ping ng Stud udy comp mple lete ted Q1 2018

Tonnage (Mt) % Cut-Off TGC Average % TGC Inferred 12.4 3.5 9.1 Indicated 38.7 3.5 9.3 Measured 3.5 Total 51.1 3.5 9.3

Excellent Testwork

• Test work delivered excellent levels of purity up to 99.99% TGC using conventional treatment
• Demonstrable expandability up to 440cm³

/g achieved – confirming suitable for a range of high value end uses (i.e. graphite foil)

• These results are typical for high-quality product from the graphite province surrounding the

Mahenge Liandu project

Investor Presentation – May 2019 9

Flake Size (µm) Expansion Volume at 800 °C Expansion Volume at 1000 °C

Fla lake Siz ize (µm) ) Purity y aft fter acid id treatment

Flake Size Expansion @ 800°C Expansion @ 1000°C 500 µm 440 cm³/g 480 cm³/g 300 µm 370 cm³/g 420 cm³/g 180 µm 300 cm³/g 380 cm³/g 106 µm 210 cm³/g 230 cm³/g 75 µm 165 cm³/g 170 cm³/g

• 75 µm

N/A 115 cm³/g Flake Size Purity TGC (%) 500 µm 99.93 300 µm 99.99 180 µm 99.98 106 µm 99.96 75 µm 99.94

Value Triggers

Mult ltip iple le wor

• rk st

streams s underw erway on

• n vario

rious area eas s of

• f the

e Defin efiniti tive Feasi sibil ilit ity Stu tudy

• Development of the transport and logistics pathway – expected June 2019
• Resource update targeting high grade near surface mineralisation – expected June 2019
• Metallurgical work results confirming product quality and downstream test-work confirming the

potential uses of Mahenge Liandu concentrates – expected July 2019

• Updating and optimisation of the pit design – expected September 2019
• Construction of water bores and assessment of flow rates and ground water conditions –

expected November 2019

• Completion of the full DFS – expected November 2019

Investor Presentation – May 2019 10

Peer Comparison

Planned Output & Ore Grade

Armadale’s point of difference from peers is its niche focus and high ore grade, which will deliver low

• wer

er OPEX/t - a key ey comp

• mparativ

ive adv dvantage

Investor Presentation – May 2019 11

Source: Company data (Note: all information from PFS, DFS or BFS to ensure relative consistency)

PLANN NNED ANNU NNUAL OU OUTPUT HE HEAD GRA RADE

Peer Comparison

Purity & Head Grade

Armadale le ra ranks s top top-tie tier on

• n pro

product t pu purit rity & & re reso source e gra rade re rela lativ ive to to rivals, s, wh whil ile e enj njoyin ing a ma mater eria ial l proport rtio ion of

• f high-valu

lue larger flakes es (>65 65% of

• f di

distri ributio ion)

Investor Presentation – May 2019 12

RESOU OURCE CE GRADE PUR URITY TY “Armadale, Blackrock & Kibaran are neighbours which explains why the purities are relatively high & clustered”

Peer Comparison

Market Cap & CAPEX

The e advanced Mahen enge Liandu pro rojec ect is niche and high-grade, e, comp

• mparin

ing fa favourably to to pe peer ers in n term terms of

• f asse

set vs ma mark rket cap

Investor Presentation – May 2019 13

CAPEX MA MARKET T CAP

Peer Comparison

CAPEX & OPEX per Tonne

The Mahenge Liandu project’s OPEX/t is lower relative to most peers due to the high ore grade

Investor Presentation – May 2019 14

OP OPEX/t X/t CAPEX/t X/t

15

GRAPHITE MARKET

Investor Presentation – May 2019

Primary Global Graphite Demand Drivers

• Increasing global graphite demand reflects new product innovation in the high-tech

manufacturing sector moving from niche to mainstream plus other applications, while traditional uses (i.e. steel sector) remain flat at best

• Industrial Minerals estimates natural flake graphite could reach 1.6Mtpa by 2025E which is up

circa 180% on 2014’s level

Investor Presentation – May 2019 16

Source: Industrial Minerals

Drilling Down to Key Primary Sub-Drivers

Investor Presentation – May 2019 17

Spherical graphite for lithium-ion battery manufacturers, which are rapidly expanding capacity via new mega-giga factories, reflecting growing end user demand for: ▪ Electric vehicles ▪ Electronic equipment ▪ Power storage equipment to enable off-peak use of power generated by solar/wind

Expandable le graphit ite e for flammable retardant building materials replacing toxic brominated products, due to changing safety regulatory requirements

Secondary Global Graphite Demand Drivers

Incrementall lly, ot

• ther

er traditi tional l and newly ly emer ergin ing appli licati tion

• ns, at the

e ma margin in, are e con

• ntr

trib ibuti ting to to higher r gra raphite dem emand, includin ing:

Investor Presentation – May 2019 18

Gra Graphite paper er/shee eet for sealing gaskets, tapes & packing Gra Graphite foi

• il used in electronic products like smart phones/tablets

Gr Graphene for electronic, medical, chemical and industrial processes

Tighter Global Supply Creates Opportunities

While China has long been the world’s leading natural graphite supplier, tougher environmental rul ules s and nd mi minin ing re regula latio ions s are re re reducin ing its ts out

• utput,

t, re resu sultin ing in: n:

• China slowly moving to net-natural graphite importer, which will lead to severe supply deficits

moving into the 2020s (BMI)

• Growing opportunities for east African producers to fill an expanding void

Investor Presentation – May 2019 19

BMI data highlights upward price trends over past two years Securing premium pricing depends on purity, flake- size, product consistency, supply reliability and suitability for downstream applications

Legislative Environment

• Tanzania is a stable democracy with a legal

system founded on English common law

• The official languages are Swahili and English
• Tanzania has a long mining history and

currently the 4th largest gold producer in Africa

• 30% corporate tax rate
• New mining legislation introduced in July 2017

had a moderate impact on the graphite sector

• 3% royalty levied for industrial minerals
• Mining Commission established in April 2018 to

facilitate grant, renewal and transfer of mining licences

Investor Presentation – May 2019 20

INVESTMENT CASE

21

Investment Case

• Building a significant high-grade graphite mine at the Mahenge Liandu Graphite

Project

• Notable value triggers:
• Application for a mining lease expected to be submitted in August 2019
• Numerous milestones advancing DFS towards completion in Q4 2019
• Potential to support a 400,000tpa operation over a 32-year mine life
• Ability to generate meaningful value with an NPV of US$US349m and IRR of 122%
• Significant upside - 32 year mine life based on a quarter of the Resource
• Project potential underpinned by increasing global demand for graphite products –

first MOU signed and significant sales interest

• Experienced team actively reviewing other exciting investment opportunities

Investor Presentation – May 2019 22

Disclaimer

This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. This presentation does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. To the fullest extent permitted by law, Armadale Capital PLC does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted. This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Armadale Capital Plc. These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation subject to any continuing obligations under applicable law, Armadale Capital Partners Ltd does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation only changes in events, conditions or circumstances on which any such forward looking statement is based. Exploration Targets: It is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information in this presentation relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. Hence the terms Resource(s) or Reserve(s) have not been used in this context in this presentation. The potential quantity and grade of resource targets are conceptual in nature since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determinationof a Mineral Resource or Ore Reserve.

Investor Presentation – May 2019 23