Mahenge Liandu Graphite Project

Armadale owns a 100% interest in the Mahenge Liandu Graphite Project in south-east Tanzania

 
 
Overview

Armadale acquired a 100% interest Mahenge Liandu in July 2016.

The Project is located in a highly prospective region in south-east Tanzania, with a high-grade JORC compliant indicated and inferred mineral resource estimate of 59.5Mt @ 9.8% TGC. This includes 11.5Mt @ 10.5% Measured 32.Mt Indicted at 9.6% and 15.9Mt at 9.8% TGC. This resource establishes Mahenge Liandu as one of the largest high-grade projects in Tanzania, and work to date has demonstrated Mahenge Liandu’s potential as a commercially viable long-life low-cost graphite project.

Regional Geology

Regionally, the Mahenge Liandu Project area is within the Usagaran (Mozambique belt) Neoproterozoic system which principally comprises high-grade (amphibolites-grade) metamorphic rocks of both sedimentary and igneous origin ranging from schists to gneisses, including marbles, amphibolites, graphitic schist, mica and kyanite schist, acid gneisses, hornblende, biotite and garnet gneisses, quartzite and granulites which are overlain by Cretaceous sedimentary rocks in the east and Karoo Sediments in south west.

Structural Geology

The prospect is within the Pan-African Mozambique Belt, which is the orogenic belt resulting from orogenic activities that happened during Neo Proterozoic times. The belt extends along the eastern border of Africa from Ethiopia, Kenya to Tanzania. The orogenic event resulted in a complex series of geological events and was later affected by the east African rift system. The belt consists of high-grade mid-crustal rocks with a Neoproterozoic metamorphic overprint. It is divided into the Western Granulite and Eastern Granulite. The deposit is situated in the Usagaran association, where a younger sequence of sedimentary rocks (Cretaceous) has been thrust over the older Western Granulite Complex

Local Geology

The local geological setting of the Liandu prospect is characterised by complex deformation and metamorphism. The rocks are dipping roughly east to north east with dips ranging from 30° to 80° (degrees). An interpretation of structural measurements from both the regional and local mapping suggests synformal folding plunging to the north, which has the original mapping by government geologists overlain with the more detailed 2015-2016 field mapping.

The main lithology in the area include medium to high-grade metamorphic rocks, predominately a graphitic mica schist and hornblende gneiss. Other lithologies include marbles, muscovite gneisses/granitic gneisses and amphibolites. The rocks are sometimes silicified and, in many cases, have retained their original sedimentary bedding properties.

Resource

Mahenge Liandu has a current JORC 2012 compliant resource of 59.5Mt @ 9.8% TGC using a 7.5% TGC lower cut-off following an upgrade in October 2019. This resource estimate is broken down by categories as follows:

• Measured: 11.5Mt @ 10.5%

• Indicated: 32.1Mt @ 9.6%

• Inferred: 15.9Mt @ 9.8%

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.

A summary of the Resource is shown in Table 1.

 

Tonnage (Mt)

% Cut-Off TGC

Average %TGC

Inferred

15.9

7.5

9.8

Indicated

32.1

7.5

9.6

Measured

11.5

7.5

10.5

Total

59.5

7.5

9.8

Competent Person statement

The information in this Resource estimate is based on information compiled by Mr Matt Bull, a competent person, who is a Member of the Australian Institute of Geoscientists. Mr Bull has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Bull consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Definitive Feasibility Study

In March 2020, Armadale completed a Definitive Feasibility Study that confirmed Mahenge as a long-life low-cost graphite project with a US$358m NPV and IRR of 91% based on a two-stage expansion strategy comprising:

• Stage One – processing plant and infrastructure at a nominal design basis rate of 0.4-0.5 Mt/pa to produce a nominal 60,000t/pa graphite concentrate in the first four years of production

• Stage Two – a second 0.5 Mt/y plant and associated additional infrastructure doubling throughput to 1 Mt/y from Year 5 of operation

The DFS shows that Armadale can be a significant low-cost supplier to the graphite industry with the potential to generate pre-tax cashflows of US$882m over an initial 17 year mine-life and scope for further improvement as this utilises just 25% of the current resource, which remains open in multiple directions.

The capital cost estimate for Stage 1 is US$38.6m, which includes a contingency of U$S4.1m or 15% of total direct capital cost, with a 1.6 year payback for Stage 1 (after tax) based on an average sales price of US$1,179/t. Stage 2 expansion is expected to be funded from cashflow.

Production

Projected timeline to first production is expected to be approximately 10-12 months from the start of construction.

The ROM ore will be two-stage crushed, followed by grinding in a rod mill, with graphite recovered by flotation. The process includes multi-stage re-grind milling and cleaner flotation to improve liberation and product purity. The flotation concentrate is then dewatered by filtration and drying. The product is screened and bagged as final product in five different sized fractions and bagged for transport to port. The tailings will be thickened and pumped to the tailings storage facility (‘TSF’).

The second stage expansion in year 5 is expected to comprise a duplicate parallel production plant.

Power for the project will be supplied from diesel generators under a BOOM contract. Additional power for the second stage expansion plant is expected to be supplied from than upgraded local grid network.

Graphite concentrate produced will be road hauled to the Port of Dar Es Salaam for shipment to market.