Aim-listed, Africa-focused mining investment company Armadale Capital has signed a memorandum of understanding (MoU) for a proposed offtake agreement with Chinese graphite mining and processing company Matrass Group, for graphite products produced at Armadale’s Mahenge Liandu project, in Tanzania.

The MoU relates to the proposed offtake of 30 000 t/y of graphite concentrate for an initial five-year term at a price to be agreed based on the Chinese benchmark for the quality of the graphite produced, and representing over 60% of Mahenge Liandu’s average targeted yearly production.

Armadale noted that a testwork programme, aimed at progressing the MoU to a binding agreement, is planned to start before the end of March. 

Armadale director Nick Johansen said he was “delighted” with the offtake MoU.

“Demand for high-quality graphite products, such as ours, has been highlighted through other offtake agreements, including [with] ASX-listed Black Rock Mining and the binding offtake for 205 000 [t/y] from its project, which is proximal to Mahenge Liandu.”

He stated that the MoU with Matrass Group and Black Rock’s agreement demonstrated “growing market demand for graphite from the region,” and reinforced Armadale’s confidence that binding offtake agreements will be secured for its entire 49 000 t/y forecast production.

Armadale has entered into discussions with several potential customers regarding the remaining 19 000 t/y of production. These discussions are ongoing.

Meanwhile, the company on Tuesday stated that the feasibility study drilling has been completed with further site activities expected to restart in the coming weeks once the Tanzanian wet season has ended.

Moreover, the environmental- and social-impact assessment has been completed, with the valuation study returning lower-than-planned relocation costs which further enhanced the economics of the project.