Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company

22 May 2015

Armadale Capital Plc (‘Armadale’ or ‘the Company’)

Final Results

Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce its final results for the year ended 31 December 2014.

Highlights

• Targeting low capex, low opex commercial gold production in H1 2016 at the Mpokoto Gold Project in the Katanga province of the south of the Democratic Republic of the Congo (‘Mpokoto’ or the ‘Project’)
• In advanced discussions with potential partners to construct, operate and finance Mpokoto with a view to enable construction to commence in second half of the year
• Established resource of 678,000 oz Au from 14.58 million tonnes ore at 1.45 g/t gold (Au’) to produce approximately 25,000 oz per annum over a nine year life of mine
• NPV of US$55.3m based on a forecast gold price of US$1,250/oz - even at US$1,100/oz, the NPV of the Project is attractive at US$32.3m
• Significant further upside - exploration target of 2.4-3.0 million tonnes grading 1.25-1.5 g/t Au should yield an additional 120,000-150,000 oz Au
• Project part of a substantial 800,000 hectares of exploration licences yet to be explored - encompasses four 30-year mining licences
• Focused on identifying ways to realise value of interest in Mine Restoration Investments Ltd (‘MRI’)
• Strengthened board to progress Mpokoto through final development phases and into production – appointed Dr Andrew Tunks as non-executive director in May 2015
• Loss for the year of £1,077,697 (2013: £3,148,319) relates to expenses incurred developing the Project, as is typical of an exploration company
• As at 18 May 2015 the Group had cash balances of £120,000 and held listed shares with a balance sheet value of £720,00, with the cash alone being sufficient for the next three months of operations

Chairman’s Statement

A Year of Progress at Mpokoto.

We have made considerable progress, both on the ground and on a wider corporate level, in advancing the Mpokoto Gold Project (Mpokoto or the Project) in the Democratic Republic of the Congo (‘DRC’) closer to production. Importantly, we now have a cleaner corporate structure, achieved through the acquisition of Kisenge Limited, which means that Armadale shareholders now hold a direct 80% ownership of a much enhanced project, covering both Mpokoto and a further substantial 800,000 hectares in the Katanga province of the south of the DRC. This encompasses four 30-year mining licences covering Mpokoto, together with the opportunity to explore a much larger and prospective area, through the Kisenge Exploration Licences.

Your board remains fully committed to putting the Project into production in the first half of 2016. In line with this we are currently engaged in advanced discussions with potential partners, with a view to them working alongside Armadale to construct and operate the Project, as well as providing the capital requires to bring the Project into production. Your board looks forward to being able to update shareholders shortly in this respect.

In conjunction with developing Mpokoto, your board continues to look at options to realise our interest in the JSE listed Mine Restoration Investments Ltd. (MRI). Taking a longer term view, and given our size and resources, it makes sense for Armadale to focus on Mpokoto and the potential cash generation that can be derived from this early next year.

Mpokoto

Much has been achieved and announced since I last reported to you following our initial investment in Mpokoto in August 2013. At that time, in excess of US$20m had been invested by previous owners and it an estimated resource of 380,000 oz gold (Au) from 7.2 million tonnes (mt) with a grade of 1.65 grammes per tonne (g/t) Au had been declared. Our belief that there was significant further upside has been proven and the latest resource estimate is nearly double the initial one at 678,000 oz Au from 14.58 mt ore at 1.45 g/t. There is currently, in addition, an exploration target of 2.4-3.0 mt grading 1.25-1.5 g/t which should yield an initial additional 120,000-150,000 oz Au. This is targeted to be brought into the resource during the next phase of drilling.

We are nearing completion of the Definitive Feasibility Study, which we expect to endorse the operating parameters from the expanded scoping study. These include average operating costs (ex royalties and tax) of US$647/oz Au to produce approximately 25,000 oz per annum over the current life of mine of nine years. We expect the initial capital cost to treat the oxide ore to be in the order of US$20.4m. This would give an NPV of US$55.3m based on a forecast gold price of US$1,250/oz and a discount rate of 8%. Even at US$1,100/oz, the NPV of the Project is still attractive at US$32.3m. Accordingly, we believe substantial value has been created, and we remain positive about the prospects of production.

As we look to transition into production, we are now in funding discussions with parties, which include mining contractors, joint venture parties and mining finance banks, and look forward to providing an update to shareholders shortly.

Mine Restoration Investments Ltd (MRI)

In June 2014, as part of a major recapitalisation of MRI’s balance sheet, Armadale converted all outstanding debt into shares of MRI at ZAR0.05 per share, leaving Armadale with a resultant holding of approximately 28 per cent of MRI’s share capital.

MRI’s principal business, the processing of waste coal fines in Kwa-Zulu Natal, has been slow in ramping up production of processed fines since its plant commenced operations in early 2014. However, MRI has reported that the plant is operating on a profitable basis, that they are confident the majority of issues have now been dealt with, and the company is looking forward to increasing production significantly.

In addition to the equity interest in MRI, Armadale has a loan outstanding from Trinity Asset Management Ltd (‘TAM’), one the major shareholders of MRI, secured on MRI shares. Despite extensive negotiations with TAM the loan note remains outstanding and overdue and your board has decided it is prudent to provide fully for value of the loan. We continue to be actively engaged at pursuing options to realise our investment in MRI.

Board

I am delighted to have recently welcomed Dr Andrew Tunks to the board as a non-executive director. Andrew is a highly qualified geologist who has extensive experience in both gold and operating in Africa. We believe that the Andrew’s established relationships, leadership and experience in developing gold projects around the world is a perfect fit for Armadale as it progresses the Mpokoto Gold Project through its final development phases and into production.

Results

As at the date of this report the group does not have any revenue and has reported a loss of which a significant proportion relates to the impairment of the value of our investment related to MRI. During the year under review our principal focus has been the development of Mpokoto and a substantial proportion of our costs relate to expenses incurred developing the Project, as is typical of an exploration company.

We look forward to reporting to shareholders on the progress of Mpokoto as we continue to unlock its inherent value potential and thank all shareholders for their ongoing support. The board remains fully focused on building a solid emerging mining operation whose value is greater than what we believe is currently reflected in the share price. Your board will continue to work tirelessly in our efforts to build shareholder value through the Mpokoto Project.

Peter Marks

Chairman

21 May 2015

For further information please visit www.armadalecapitalplc.com or contact:

Financial Statements

Consolidated Statement of Comprehensive Income

For the year ended 31 December 2014

There was no other comprehensive income for the year (2013, nil).

Consolidated Statement of Financial Position

At 31 December 2014

Consolidated Statement of Changes in Equity

For the year ended 31 December 2014

The following describes the nature and purpose of each reserve within owners’ equity:

Consolidated Statement of Cash Flows

For the year ended 31 December 2014

Notes to the financial statements

For the year ended 31 December 2014

1. Accounting policies

1.1. Statement of compliance

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The principal accounting policies are set out below.

1.2. Going Concern

The financial statements have been prepared on the going concern basis as, in the opinion of the directors, there is a reasonable expectation that the Group will continue in operational existence for the foreseeable future.

At 18 May 2015, the Group had cash of £120,000 and held listed shares with a balance sheet value of £720,000. The cash in hand is sufficient to meet committed expenditure, including overheads, for approximately three months. In order to continue its operations and to develop further its exploration project, the Group will need to raise further funds. Discussions aimed at procuring the development finance needed to develop the project are at an advanced stage.

The directors believe that the project finance negotiations will be successfully concluded. Furthermore, they consider that it will be possible to raise further short-term working capital if required. However, there can be no certainty that either of these initiatives will succeed.

These factors indicate the existence of a material uncertainty which may cast significant doubt about the Group’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

1.3. Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive Income from the effective date of acquisition and up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

All intra-Group transactions, balances, income and expenses are eliminated in full on consolidation.

2. Loss/Profit per share

The calculation of loss per share is based on a loss of £1,077,697 (2013, £3,148,319), and on 3,564,390,283 ordinary shares (2013, 1,953,345,063), being the weighted average number of shares in issue during the year.

There is no difference between basic loss per share and diluted loss per share as the Group reported a loss for the year.

The company has issued options over ordinary shares and convertible loan notes, both of which could potentially dilute basic earnings per share in the future.

**ENDS**

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