Last week Armadale released their updated DFS. It was a re-work of the existing DFS to focus on higher grade mining in the first three years. What this does is lower the cost in the first three years bringing in higher cashflow which in turn can be used to payback any potential debt as part of the financing package and importantly fund the growth of the mine to double the ore throughput increasing annual graphite concentrate pa to around 120k tonnes.
Strategically, this is a well thought out re-work.
In my latest video I explain just how this could play out over the 15 year mine life with annual free cashflow up to $80m pa! In my scenario its quite conceivable Armadale could be paying a dividend as early as year 4, thats potentially only 5-6 years away!
The key thing investors should keep an eye out for now is news on financing. The company have signalled this could be coming soon. In addition they have a number of other catalysts to look out for such as securing the mining license and now DFS complete, converting off-take MOU’s to binding agreements.
I believe as do others that Armadale’s Mahenge graphite project is one of, if not the best graphite projects in Tanzania due to it being such low cost, and high purity – its purities of 97%+ across all flake fractions mean it should be achieving premium basket prices with significant interest from EV battery producers.
It’s worth also noting they have used the most conservative basket prices amongst peers which has still resulted in a pre-tax project NPV of $430m over 10x initial Capex cost of just $39.7m ! Quite frankly metrics you will struggle to find elsewhere.
Ive updated my latest Armadale research note to reflect the recent DFS update which you can read here