UK-based investment firm Armadale Capital is on course to make a decision on whether or not to begin mining operations early next year at its Mahenge Liandu project in Tanzania.

Currently, a feasibility study is underway at the graphite project and the company expects to commence production in 2020.

The company noted that multiple work streams are progressing well to accelerate completion of the feasibility study and define initial reserves prior to the decision to mine.

“We remain on course to make a decision to mine in early 2019.”

Diamond drilling is ongoing to collect representative samples for test work and product marketing, with the company planning to complete a total of 450m of drilling and seven drill holes.

Armadale Capital director Nick Johansen Armadale said: “The various critical work streams at Mahenge Liandu are all progressing extremely well, and we remain on course to make a decision to mine in early 2019 – meaning that with a fair wind, we should be producing graphite by H1 2020.

“We have already demonstrated that Mahenge Liandu is one of the most attractive graphite development assets globally; with lowest quartile opex and capex costs, an IRR of 122% and a 1.2 year payback. The project NPV of US$349m is also a stark contrast to our current market cap of under £5m.

“Combining these robust economics with ever-improving demand fundamentals for graphite, Armadale is ideally positioned to rapidly capitalise on this market opportunity and become a significant new high quality graphite producer within the next 18-24.”

According to the company, a Reverse Circulation (RC) drill rig has been mobilised on-site in a bid to upgrade the Joint Ore Reserves Committee (JORC) resource, which stands at 51.1Mt at 9.3% total graphitic carbon (TGC), to probable and proven reserves.

An airborne topographic survey is also in progress covering the 10km² area of the proposed mining permit.

The company expects to submit an environmental impact assessment (EIA) and relocation action plan (RAP) in eight to ten weeks.