Armadale Capital agrees final terms to sale of Mpokoto Gold Project

The AIM-traded firm said the deal was reached after Arrow Mining and African Royalty completed due diligence, with formal terms finalised and agreed.

It said the agreement now crystallised the value of the Mpokoto Project, with a company capable of obtaining the funding to bring the mine into production.

The transaction would allow Armadale to focus on advancing its primary value driver - the high-grade Mahenge Liandu Graphite Project in Tanzania - while ensuring it retained exposure to the development upside of the Mpokoto Project.

Under the agreement, Arrow Mining will take over the operations on the Mpokoto Project and would be obliged to pay Armadale a 1.5% royalty on gold sales achieved once in production.

The Mpokoto Project had a feasibility study based on a 720,000 tonnes-per-annum (tpa) operation over 4.5 years, producing an average of 24,900 ounces each year, with a substantial sulphide resource that could further extend the mine life.

Sale of the Mpokoto Project under the heads of agreement was conditional upon entry into a formal sale agreement, due diligence and other standard conditions for regulatory approvals, with those now satisfied.

“The board of Armadale is confident that African Royalty and its related parties, who have significant experience of operating in the Democratic Republic of the Congo, represents the best opportunity for Armadale to crystallise the value of the Mpokoto Project and begin receiving returns through the agreed royalty payments on gold sales,” said Armadale Capital director Nick Johansen.

“We look forward to reporting further news in due course relating to the development of Mpokoto and of our primary value driver, the Mahenge Liandu Project.”