Armadale Capital PLC (LON:ACP) has moved into the highly prospective graphite market with the acquisition of a graphite project in south-east Tanzania.

The AIM-listed firm has agreed to acquire the Mahenge Liandu Graphite Project in an all-share deal from Aussie firm Graphite Advancement Tanzania Pty Ltd (GAT).

Armadale will acquire GAT for 80mln shares, which will be issued upon completion.

The project is in an area of “proven coarse flake, high grade graphite resources”, the company said, with two Australian miners, Kibaran Resources Ltd and Black Rock Mining Limited, developing graphite projects immediately adjacent to the site.

Peter Marks, Chairman of Armadale, said: “This transaction creates a significant opportunity for Armadale in an industry with exciting demand fundamentals.

“Mahenge Liandu is in an area of known high quality graphite indicating that this Project area may benefit from similar high mineral values.”

The company has already drilled and sampled three holes, and the results have “further reinforced” its confidence that the Mahenge Liandu Project is an “ideal investment target”.

The graphite market is expected to double over the next eight years, according to the company, led by an increase in demand electronic devices.