Aim-quoted natural resources project developer Armadale Capital has entered into an agreement to acquire the Mahenge Liandu graphite project, in south-east Tanzania.

The company entered into the agreement with Australian company Graphite Advancement Tanzania (GAT), which, through a Tanzanian subsidiary, owns or has the right to 100% of the tenements that constitute the Liandu project.

Armadale has agreed to acquire GAT for an issue of 80-million Armadale shares on completion of the transaction. The agreement is also conditional on completion of the sale and purchase agreement, completion of usual due diligence by both parties and any shareholder approvals that are required by either party.

“This transaction creates a significant opportunity for Armadale in an industry with exciting demand fundamentals. Graphite is the raw material in lithium ion batteries, which are used to power electric vehicles, as well as being a critical factor in the energy storage revolution currently taking place,” Armadale chairperson Peter Marks noted in the company statement released earlier this month.

The Liandu project is located in the Ulanga district, in south-east Tanzania, about 300 km south-west of Morogoro, and 10 km from the town Mahenge.

The Mahenge properties are located immediately to the east of ASX-listed Kibaran Resources’ Epanko project. Kibaran Resources and Australian junior Black Rock Mining have identified and are developing significant proven and valuable graphite projects immediately adjacent to the project.

“Mahenge Liandu is in an area of known high-quality graphite, indicating that this project area may benefit from similar high mineral values,” Marks pointed out.

In addition, three holes have already been completed and sampled by the Armadale team. Results from this have further reinforced the board’s view that the Mahenge Liandu project is “an ideal investment target”, complementing Armadale’s current portfolio, including the Mpokoto gold project, in the Democratic Republic of Congo, which has a resource of 678 000 oz of gold from 14.58-million tonnes of ore at 1.45 g/t of gold, Marks added.

Armadale geologists have mapped and sampled the graphite schist, with results from seven previous samples ranging from 12.8% to 24.0% total graphite content (TGC). Further, exploration drilling was completed in December 2015, with the results underpinning licence prospectivity of 10 m at 6.54% TGC, 24 m at 12.9% TGC and 5 m at 21.5% TGC.

Fieldwork on the project will start following the completion of the transaction, with the maiden resource estimation being targeted for late 2016.

Armadale’s geologists are currently finalising a proposed work programme with the aim of delineating a Joint Ore Reserves Committee-compliant resource at the Liandu project and demonstrating the quality of the graphite.

Details of this programme, which will include a combination of detailed mapping and drilling, will be announced on completion of the acquisition.