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UPDATE - Armadale Capital's new resource estimate enhances economics of Mpokoto

Published: 00:12 14 Oct 2014 AEDT

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Africa-focused resource company Armadale Capital (LON:ACP) has announced another significant resource increase at its Mpokoto gold project in the Democratic Republic of Congo.

The company, which has an 80% stake in the project, announced a JORC code-compliant mineral resource estimate (MRE) following an infill drilling programme.

Overall mineral resources increased by just over one-third to 678,100 ounces (oz) gold (Au) from 506,700 oz Au, with 75% of the MRE now in the indicated category, up from 65% previously.

There has been an overall increase of 25% in the oxide portion of the MRE to 159,000 oz Au from 119,000 oz Au previously.

The indicated mineral resources within the oxide zone increased by 138% to 3.6mln tonnes, containing 144,400 oz Au from 1.27mln tonnes (60,000 oz Au) previously.

The overall grade has increased to 1.45 grams per tonne (g/t) from 1.42 g/t Au, with significant further upside potential, the company said.

Justin Lewis, director of Armadale, said the new numbers underpin the company’s confidence in its ability to deliver by the second half of 2015 a commercial gold mining project requiring reasonable capital expenditure and low operating expenditure.

“It is also very gratifying to note the expansion in the shallow oxide resource, the initial focus of the group’s development plan, which has now grown by more than 672 per cent since we acquired the project,” Lewis said.

“The continued unlocking of the project’s resource potential represents a major step within this development, and we now remain focused on completing further value enhancing milestones. This includes the granting of a mining licence, which is in the final stages, the expansion of our current scoping study and metallurgical test work to improve recovery rates,” he added.

House broker finnCap reiterated its 0.18p price target, and said the results support the previous conclusion that the shallow oxidised mineralisation at Mpokoto could be profitably mined at current gold prices.

Mining specialist VSA Capital said it expected more good news from Armadale to follow, though it added the caveat that hitting the production target date of the second half of next year may prove ambitious, largely due to permitting approval uncertainties.

Shares in Armadale Capital were up 2.1% at 0.0817p in mid-afternoon trading, having hit 0.09p at one stage.

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