Transforming from explorer to emerging graphite producer Investor Presentation October 2019
Corporate Information Key Dat ata Subs bstantial al Shar areh ehol older ders Ticker (LSE) ACP Kabunga Holdings Pty Ltd 13.55% Shares in issue 403,189,482 Matt Bull (Technical Director) 8.24% Share Price (1 October 2019) 2.05p Directors 1.58% 52 week high / low 2.48p/0.85p Others 76.63% Market cap £8.27m Shar are e Pri Price Char art 2.5 2.3 2.1 1.9 1.7 1.5 1.3 1.1 0.9 0.7 0.5 Kabunga Holdings Pty Ltd Matt Bull Directors Others October ‘18 October ‘19 Investor Presentation – October 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 – October 2019 3
Board & Management Jenny Lee Steve Mahede Nicholas Johansen Paul Johnson Matt Bull China Representative BSc (Hons) BEng MBA BEcon GDLP LLB (Hons) BSc, ACA Graphite Marketing Technical Director Non-Executive Director Non-Executive Director Non-Executive Director Experienced marketing A geologist with experience in Qualified engineer with more Experienced legal practitioner Currently CEO of Power Metal executive with 24 years in the graphite, gold and iron ore than 35 years’ in mining based in Northern Territory, Resources plc, an AIM quoted mining sector focused on raw across Australia and Africa related project management Australia exploration group material procurement Worked greenfield exploration & Experienced CEO in Australia Extensive involvement in CEO for Value Generation Ltd, resource development programs Headed large China-based and Africa junior mining exploration and a family investment group for Rio Tinto, Golden West, Volt shipping & logistics group production companies across focused on natural resources & Linden Resources importing into the Chinese many different commodities and fintech sectors. BSc (Eng) from the University market of Western Australia and MBA Former director of Volt from Murdoch University Expert in environmental Holds a degree in Resources (ASX: VRC) and Highly experienced at regulation Management Science from currently on the Board of Lindian obtaining and managing off- University of Manchester and Patron of the Tanzanian Resources (ASX: LIM) take agreements and product is a Chartered Accountant, Community in Western Law degree with Honours from transport and logistics Chartered Loss Adjuster and Australia Inc Charles Darwin University, NT Bachelor of Science with Associate of the Chartered and Bachelor of Economics Insurance Institute honours in geology and from the University of geophysics from the University Adelaide of Adelaide Investor Presentation – October 2019 4
MAHENGE LIANDU GRAPHITE PROJECT 5
Project Overview • 100% owned, near surface, high grade deposit – focus on commencing production in 2021 Two tenements over 29.9km 2 in 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 underway • Met test work completed • Development of transport pathway underway • Mineral Resource update nearing completion • Finalisation of production flowsheets and plant design • On track to deliver DFS Q4 2019 • Considerable sales interest – two MOUs signed and advanced discussions underway with other potential customers • Project development funding progressing Investor Presentation – October 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 Tanzania-Zambia Railway Kilombero Bridge Investor Presentation – October 2019 7
Resource & Mine • 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, up to 97.1% purity for large and medium flake fractions • 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 Robus ust t econo nomic ics fro rom m Scopi ping ng Stud udy comp mple lete ted Q1 2018 ✓ NPV of US$349m and IRR of 122% ✓ Lowest quartile cash costs driven by high mined grade of 12.5% and Tonnage % Cut-Off Average % low strip ratio of 1:1 for LOM (Mt) TGC TGC ✓ 1.2 year payback on $US35m capex after tax Inferred 12.4 3.5 9.1 ✓ Based on conservative basket price of $US1,272/t Indicated 38.7 3.5 9.3 ✓ High-quality graphite product confirmed ✓ Measured 0 3.5 0 Potential to increase throughput as mine life based on conservative assumptions Total 51.1 3.5 9.3 Investor Presentation – October 2019 8
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 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 Flake Size Purity TGC (%) 500 µm 440 cm³/g 480 cm³/g 500 µm 99.93 300 µm 370 cm³/g 420 cm³/g 300 µm 99.99 180 µm 300 cm³/g 380 cm³/g 180 µm 99.98 106 µm 210 cm³/g 230 cm³/g 106 µm 99.96 75 µm 165 cm³/g 170 cm³/g 75 µm 99.94 -75 µm N/A 115 cm³/g Investor Presentation – October 2019 9
Peer Comparison Planned Output & Head Grade Armadale’s point of difference from peers is its niche focus and high ore grade, which will deliver lower OPEX/t - a key comparative advantage HE HEAD GRA RADE PLANN NNED ANNU NNUAL OU OUTPUT Source: Company data (Note: all information from PFS, DFS or BFS to ensure relative consistency) Investor Presentation – October 2019 10
Peer Comparison Purity & Resource Grade Armadale ranks top-tier on product purity & resource grade relative to rivals, while enjoying a material proportion of high-value larger flakes (>65% of distribution) “Armadale, Blackrock & Kiba baran are re neighb hbour urs which h expla plains why hy the purities are relatively high & clustered” PUR URITY TY Investor Presentation – October 2019 11 RESOU OURCE CE GRADE
Peer Comparison Market Cap & CAPEX The advanced Mahenge Liandu project is niche and high-grade, comparing favourably to peers in terms of asset vs market cap (based on price close @ 23 Sept 2019) (GBPm) 120 100 80 60 40 20 0 Syrah Magnis Walkabout Blackrock Nextsource Triton Kibaran Volt Sovereign Graphex Armadale MARKET MA T CAP CAPEX Investor Presentation – October 2019 12
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 CAPEX/t X/t OP OPEX/t X/t Investor Presentation – October 2019 13
GRAPHITE MARKET Investor Presentation – October 2019 14
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 Source: Industrial Minerals Investor Presentation – October 2019 15
Drilling Down to Key Primary Sub-Drivers 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 Investor Presentation – October 2019 16
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