Armadale Capital Plc / Index: AIM / Epic: ACP / Sector: Investment Company 27 October 2014 Armadale Capital Plc (Armadale or the Company) Significantly Improved Financial Returns Demonstrated from Expanded Mpokoto Scoping Study
Armadale, the AIM quoted investment company focused on natural resource projects in Africa, is pleased to announce the results of an updated and expanded Scoping Study (the Study), for the Mpokoto Gold Project (Mpokoto or the Project) in the Katanga Province of the Democratic Republic of Congo.
The Study follows the publication of the results of an initial scoping study in April 2014 which was focused on a portion of the shallower oxide ores.

The updated and expanded scoping Study demonstrates a very significant expansion in the overall size and value of the Project and has incorporated the results of the successful drilling programme in July 2014 and has been expanded to include all ore types.
HIGHLIGHTS
* Mpokoto continues to demonstrate that it is a robust low cost gold development project with attractive economic fundamentals even at a gold price of US$1,000/oz * Overall mine life has been extended by 80% to nine years, with a total of 231,000 of gold (Au) anticipated to be produced * Post-tax net present value ("NPV") of US$55.3 million based on a discount rate of 8% and a gold price of US$1,250 per ounce - an increase of 68% from the NPV US$33m shown in the previous study in April 2014 * Average operating costs over the life of mine remain under $650/oz, despite the treatment of higher cost un-weathered ore * Start-up capital cost of US$20.42 million remains low Key Findings of Expanded Scoping Study:
Initial Study Expanded Study Net Present Value (NPV) - post-tax and royalty $33.0 million1 $55.3 million1 Average annual production 24,000oz 25,600oz Open Pit Life of Mine (LOM) 5 years 9 years LOM average operating cash cost US$649/oz2 US$647/oz2 Total Start-up Capital Cost US$20.2 million3 US$20.4 million3 Start-up capital payback period 20 months 20 months
1 based on a discount rate of 8% and a gold price of US$1,250 per ounce from commencement of construction 2 excluding royalties 3 Additional capital (~US$12.9 million) to be funded from cashflow Continued Further Upside * Significant exploration upside opportunity via: o Extension of existing ore zones to increase current 678,100oz Au Mineral Resource: ? in filling resource between planned pits ? extension of resource down dip following existing high grade intercepts at depth o Further potential to upgrade existing resource, as well defining a maiden economic Reserve Next Steps * Further drilling programme to continue to expand mine life of Project, anticipated to be completed by Q1 2015; * Definitive Feasibility Study, to be undertaken in parallel and completed by Q1 15; * Construction of the mine is anticipated to take approximately 12 months with production commencing in 2016. Justin Lewis, Director of Armadale, commented: "The results of this updated and expanded scoping study, including the whole ore body, demonstrate how far the Mpokoto Gold Project has developed since being acquired by Armadale in August 2013.

This study demonstrates a project with a 9 year mine life, producing over 230,000 oz of gold at a low operating cost of less than $650/oz.

In an uncertain gold price environment, the combination of being in the bottom quartile of producing African gold mines in terms of operating costs, and a relatively low capital requirement makes Mpokoto a very attractive project, which remains economic even at a gold price as low as $1,000/oz. "We continue to focus on advancing Mpokoto to the next stage of its development before targeting commercial gold production.

The Board have decided to undertake additional drilling on the Project, in light of the exploration target identified by CSA, in order to further enlarge the overall resource as well further extend the mine life.

In parallel, work will commence shortly on a Definitive Feasibility Study, with a view to completing both in Q1 2015.

This additional work will result in construction not commencing before Q3 2015 with first production in H1 2016.

We look forward to updating the market on these development milestones in due course.

At the same time the Board intends to commence discussions with regards to financing the development and construction of the Project." Management Conference Call Armadale will host a conference call for analysts and investors at 9.00am UK time today to provide further information on the Scoping Study.

To participate in this conference call, please dial 0808 109 5644, or +44 (0) 20 8322 2500 if you are calling from outside of the UK, using participant code 2689351.

Please note all lines will be muted with the exception of Armadale Director Justin Lewis. In addition, to view a copy of the presentation online, please go to www.meetingzone.com/presenter and log on as a participant using 2689351 as the participant code.

On the right hand side of your computer screen you will find an option to submit questions during the call (please note you will only be able to see the presentation and the Q&A section once the call has been made live by the host). Unfortunately the online presenter programme is not compatible with iPads and iPhones but if you are listening to the call and would like to send questions during this time, please email them to referencing Armadale call and we will pass these onto the Company for you. Please note, the call and webpage will be made live at 8.50am UK time to give you time to log on but the call will not commence until 9.00am. If you have any problems please contact St Brides Media & Finance on or +44 (0) 20 7236 1177. An updated corporate presentation focussed on the scoping study will also be available on the Companys website www.armadalecapital.com. Overview
Armadale has previously undertaken a scoping level assessment for the Mpokoto Gold Project; the results of this work were reported during April 2014.

Subsequent to the completion of this study further work has been undertaken on the Project including:
* further exploration drilling campaign; * an update of the mineral resources (JORC compliant); * additional geotechnical evaluation of the fresh un-weathered rock; * a pit optimisation study using Datamine software; and * a significant metallurgical test work programme.
The additional work undertaken has resulted in the requirement to update the scoping level work completed; the results of this update are reported in the Study.
The following are the headline results of the expanded Study:
* the Study considers all three types of gold bearing material, these being: o Oxide material o Transition material o Fresh un-weathered material * indicated and inferred categories of mineral resources are considered in the evaluation * 60,000 tpm scenario to produce 231,000 koz (recovered) over 9 years * the metallurgical process flow sheet developed to treat the mined material differs for the oxide, transition and fresh material: o the initial process plant for oxides is a simple scrubbing, gravity concentration, CIL, elution, electro winning and smelting process o the plant is modified in year 4 for the transition and fresh material with the addition of crushing, flotation circuits followed by a fine grind of the resulting sulphide concentrate to liberate the gold then finally intense cyanidation, elution, electro winning and smelting * The plant is based on a low cost modular approach The Study is based upon the updated JORC 2012 compliant Mineral Resource Estimate announced on 13 October 2014.

The Study demonstrates positive returns with robust economics, which supports the further development of the Project.

The next stages will focus on expanding the overall Project, in particular the expansion of the existing Mineral Resource and the development of improved metallurgical work. The 60,000 tpm scenario generates a post-tax NPV of US$55.3 million at a gold price of US$1,250 per ounce and at an 8% discount rate.

Importantly the Project remains economic at lower gold prices, with a post-tax NPV of US$18.5m after taking into account both the start-up capital cost and the expansion capital cost and at US$1,000 per oz gold price and an 8% discount rate. Mpokoto requires start-up capital cost of US$20.42 million, on the basis of using a contract miner who will provide the mining fleet.

The total payback period for this capital is 20 months. Given the identification of a further exploration target adjacent to the existing resource, the Board has decided to undertake further drilling in parallel with the completion of the definitive feasibility study; both of which are anticipated to be completed in Q1 2015.

Given that the Study estimated that the mine will take approximately 12 months to construct, production is now anticipated to commence in early 2016. The key technical, operational and financial parameters for Stage 1 of the Project are summarised in the following table. Parameter Unit Initial Study Expanded Study % difference Ore Mined Mt 3.44 5.81 68.9 Average head grade mined g/t 1.28 1.46 14.1 Waste mined Mt 15.65 19.56 25.0 Strip ratio Waste:ore 4.53 3.37 (25.6) Contained gold (RoM) Koz 142 273 92.3 Average gold recovery rate (oxides) % 90 90 - Average gold recovery rate (Transition and Fresh) % - 81 - Average annual production over LOM Oz 24,000 25,600 6.7 Open pit mine life Years 5 9 80.0 Processing plant capacity Mtpa 0.72 0.72 - Start Up Capital Cost (Yr 1) US$m 20.2 20.4 - Start Up capital payback period Months 20 20 - Operating cash costs US$/oz 649 647 - Total Cash costs (including royalties and tax) US$/oz 715 723 1.1
Project Ownership, Licence and Location The Mpokoto Gold Project is situated in the south west of the Katanga Province of the DRC.

The Project is located approximately 200 kilometres to the west of the established mining town of Kolwezi and approximately 150 kilometres east of the Angolan border town of Dilolo.

Mines dOr de Kisenge sarl ("MDDK") holds 32 exploration licenses (Permis de Recherche) in the Kisenge area where the Mpokoto Project is situated. MDDK is in the final stages of securing a separate mining licence over the Mpokoto Project, in which Armadale has an 80% interest; this is anticipated to be granted shortly. MDDK is owned as to 80% by Kisenge Limited and as to 20% by Enterprise Miniere de Kisenge-Manganese sarl ("KMC"), a government entity.

Armadale owns Kisenge Limited. Figure 1: Mineralised zone location within larger licence area [DRC Licence and topo (3)] Geology and Mineral Resource Statement The Mpokoto area is a metavolcano-sedimentary succession referred to as the Lukoshi formation with metamorphism to amphibolite grade.

The gold mineralisation is hosted within sheared interlayered conglomeratic sandstones.

It occurs as northwest to southeast striking and moderately south and southwest dipping sheared intervals between clastic meta-sedimentary rocks in the hanging wall and meta-igneous rocks in the footwall.

The deposit contains oxide, transitional and primary sulphide ore types with oxide ores from surface to approximately 30 to 40 metres below surface.

The table below summarises the updated mineral resources currently identified at the project site.

The resource update was completed and published in October 2014 and shows a significant increase in the resources from the previous March 2014 resource statement as well as significant movement of resources into higher confidence resource categories.

A cut-off grade of 0.5 g/t has been used in resource declaration while 0.7 g/t has been used in the mine planning. MINERAL RESOURCE RESULTS FOR MPOKOTO (AU>=0.5G/T) Weathering Classification Tonnes Au g/t Ounces Oxide Measured - - - Indicated 3,600,000 1.25 144,600 Sub-total 3,600,000 1.25 144,600 Inferred 440,000 1.02 14,400 Total 4,040,000 1.23 159,000 Transitional Measured - - - Indicated 2,740,000 1.26 110,700 Sub-total 2,740,000 1.26 110,700 Inferred 390,000 1.14 14,300 Total 3,130,000 1.24 125,000 Fresh Measured - - - Indicated 4,720,000 1.63 248,000 Sub-total 4,720,000 1.63 248,000 Inferred 2,700,000 1.69 146,100 Total 7,420,000 1.65 394,100 All Grand Total 14,580,000 1.45 678,100
Mine Plan In order to identify payable material and to optimise the mine planning for the project, a pit optimisation study was undertaken using Datamine NPV Scheduler optimisation software.

The inputs into this optimisation study were based on the previous technical and economic work undertaken on the project.

Selection of the optimal pit on which to base pit design work was based on targeting a gold production cost of around US$650 per oz. Mining is planned to be undertaken by standard open pit methods.

The differing metallurgical process requirements of the different types of material means that sequencing of the mining will focus on mining oxide material first followed by transition and fresh ore.

This approach is supported by the fact that the different material types lie sequentially on top of each other with oxide material at surface followed by transition and fresh material.

The plant will be modified during the late stages of oxide mining to enable processing of transition and fresh material. The oxide ores planned to be mined initially lie in a weathered zone.

The rock in this zone is weak and friable and it has been assumed that the material will be free dig down to depths of approximately 30m to 40m.

Waste and ore will be loaded using a hydraulic shovel tipping into 60 tonne dump trucks for hauling to the plant or waste dumps.

Waste dumps will be adjacent to the pits.

Below the weathered zone drill and blast will be employed on transition and fresh material prior to loading and hauling.

Mining costs will therefore differ for each material type. Five discrete pits have been identified along the strike of the orebody, with maximum depth of mining being approximately 120m below surface in the main Pit A (see Figure 1).

The mine is planned to produce at 60,000 tpm with 80% of production being mined from the main pit.

A total of 5.81 million tonnes will be mined at a strip ratio of 3.37 tonnes of waste to one tonne of ore.

The run of mine grade is estimated at 1.46 g/t and a total of 272,766 oz of gold will be delivered to the mill.

The material mined consists of a combination of the different material types as follows: * Oxide material: 44%. * Transition material: 23%. * Fresh material: 33%. Material contained in the mining inventory is split according to the following JORC mineral resource categories: * Indicated resource category: 92% * Inferred resource category: 6% * Exploration target material (unclassified): 2% Metallurgy and Processing Initially a plant will be constructed to process oxide ores in the first phase of the mining operation.

After approximately 3.5 years modification of the plant will be initiated with the addition of crushing and milling sections with the plant modifications targeted to be completed by year 4.5, by which time oxide mining will have completed and only transition and fresh material is being delivered to the plant. The oxide ore that will be delivered to the plant initially is amenable to gravity methods of gold recovery.

The process is therefore relatively simple, consisting of scrubbing followed by various stages of gravity concentration prior to leaching (CIL), elution and electro-winning of gold.

The estimated metallurgical recovery for this plant on oxide material is 90%. Plant modifications to enable treatment of the transition and fresh material will consist of the addition of a crushing and milling section to replace the scrubber and the addition of a flotation section after the gravity recovery section to concentrate the sulphides.

The estimated metallurgical recovery for the modified plant on transition and fresh (sulphide) material is 81%. Further metallurgical test work has been commissioned and is currently being undertaken which it is anticipated will further improve the recovery from the transitional and fresh material. Tailings from the process will be delivered to a tailings storage facility adjacent to the plant site. Capital Costs The start-up capital cost for plant and infrastructure for the Project is estimated to be US$20.42 million.

It is estimated that US$10.4 million of capital would be required for the acquisition of a mining fleet for the Project, however the Study has assumed that a contract miner will be utilised and the contractor will be responsible for providing and financing the mining fleet.

The additional costs of contract mining has been accounted for in the operating cost estimate and therefore the fleet capital is not included in the start-up capital cost. All infrastructure required to support the proposed mining plan has been evaluated and allowed for.

This infrastructure includes the following aspects: * Bulk power supply and on site power reticulation. * Bulk water supply and on site water reticulation. * Buildings (offices, change house, first aid). * Workshops. * Stores yard and stores building. * Senior employee camp. * Roads and security. Capital costs have been generated for the mining plan and engineering concepts developed.

The costs have been factored from public domain information available on similar projects as well as input from potential plant and equipment suppliers.

Costs have been factored to account for escalation with time and for potential savings that may be incurred by use of in-country resources.

The costs are summarised in the table below, costs have been divided between start-up capital and sustaining/plant modification capital.
Project capital cost summary Capital Item Start-Up Capital US$M Plant Modification Capital US$M Total Capital US$M Mining equipment -
- Mining pre-strip 1.94
1.94 Plant 8.26 10.37 18.63 Tailings Dam 2.00
2.00 Infrastructure 6.50 2.56 9.06 Electrical installations (including power plant) 1.72
1.72 Total Capital Cost 20.42 12.93 33.35 Note: the mining equipment capital assumes a fleet rental and is amortised in the mining operating cost. Start-up capital spend is US$20.42 million from commencement of construction, while the remaining US$12.93 million is incurred between year 3.5 and year 4.5 and is largely for the plant modifications and additional power requirements for processing of transition and fresh material.

It is anticipated that plant modification and sustaining capital will be funded from the cash flows generated by the Project. Operating Costs Operating costs have been generated in a similar manner to the capital costs developed, that is by the factorisation of public domain information available on similar projects.

The tables below shows a summary of the operating cost for the life of mine. Cost per tonne Processed (US$/t) Mining 11.38 Processing 11.98 G&A 2.30 Total 25.66 Note: Mining cost excludes capital for pre-strip mining The costs presented in the above table are average life of mine costs and are made up of varying rates for the mining and processing of the different types of material.

Mining and processing unit rates applied to the different material types are listed below: * Weathered waste (free dig): US$ 2.42/t mined * Weathered ore (free dig): US$ 2.72/t mined * Un-weathered waste (drill and blast): US$ 2.99/t mined * Un-weathered ore (drill and blast): US$ 3.39/t mined * Processing oxide material: US$ 7.69/t milled * Processing transition and fresh material: US$ 15.40/t milled It is noted that the average cost of mining per tonne at a strip ration of 3.37 tonnes of waste per tonne of ore is approximately US$2.6/t mined.

This is weighted heavily to the lower end of the range of mining costs.

The two factors driving this low cost are: * A capital amount of US$1.94 million for pre-strip mining has been excluded from the average mining cost calculation. * Approximately 70% of the tonnage mined is free dig which is the lowest cost mining. Fiscal Terms A financial evaluation of the Project was prepared based on the mining plan and estimated costs generated and using a base case gold price of US$1,250 per ounce.

The tax implications for the Project were also considered in this evaluation.

It is noted that the Project has special dispensation in respect of certain taxes by means of a Mining Convention signed between the Licence Holder (then represented by Cluff Mining) and the Government.

A summary of the fiscal assumptions used in the Study are shown in the table below. Tax Rate Corporate Tax o 30% on net profit Tax Holiday o 100% for initial 5 years of production o 50% from Year 6 to Year 15 Mining Royalty o 1% on gold export o 1% on gold Pithead value (First 10 years of Project) VAT o 16% (Holiday on petroleum products)
In addition to the tax due to the Government of the Democratic Republic of Congo there are certain royalties and fees payable to the previous owners of the Project which are linked to the sale agreement.

These royalties are as follows: Royalty Rate Original owner o 2.5% of Revenue
Previous owner o $20/oz on first 150koz (varies with Gold Price from low at US$10/oz to high of US$40/oz) o $10/oz on production from 150koz to 1Moz (fixed regardless of gold price)
Financial Evaluation Results The results of the financial evaluation undertaken, at a gold price of US$1,250/oz, shows a post-tax and royalties positive cash flow of US$105.7 million and a cash positive situation after 20 months based on the initial start-up capital expenditure.

The maximum funding requirement is US$20.4 million.

The cash operating cost is relatively low at US$647/oz (pre-tax and royalties).

The Project is focused on gold production at a low cash cost and the evaluation results in a cash cost of approximately half that of the gold price used. A sensitivity has been run on the base case model produced and described above.

Sensitivities have been run on revenue, operating costs and capital costs by varying these factors up and down and evaluating the effect of the NPV at 8%.

The results of the sensitivity analysis are shown in the table and graph below. SUMMARY OF FINANCIAL EVALUATION AND GOLD PRICE SENSITIVITY ANALYSIS Criteria
Gold Price in US$/oz
1,000 1,100 1,200 1,250 1,300 1,400 1,600 Revenue (US$m) 230.5 253.6 276.7 288.2 299.7 322.8 368.9 Net cash flow (US$m) 48.0 71.1 94.2 105.7 117.2 140.3 186.4 Tax and Royalties (US$m) 12.7 16.0 17.1 17.6 18.1 19.1 25.8
Pre-tax NPV at 10% (US$m) 23.9 38.7 53.6 61.0 68.4 83.2 112.9 After Tax NPV (US$m)
5% discount 23.6 39.3 56.7 65.4 74.2 91.6 122.9 8% discount 18.5 32.3 47.6 55.3 63.0 78.4 105.9 10% discount
15.7 28.4 42.6 49.7 56.7 70.9 96.3 Payback period (months) 30 26 22 20 19 16 15 IRR 53% 91% 145% 181% 225% 354% 1,355% As is usual in these analyses, the project is most sensitive to variations in revenue and least sensitive to variations in capital. Environmental and Social Armadale, through the project owner MDDK, adheres to the highest standards of corporate social responsibility and is committed to relations with communities that are based on shared value and participatory processes aimed at empowering stakeholders.

MDDK appreciates that maintaining its Social Licence to Operate is a key business function that would ensure the project succeeds and produces benefits for its shareholders. An environmental impact assessment and management plan (EIA and EMP) have been undertaken for the project by MDDK.

This work has been undertaken as required by local legislation.

The work has assessed environmental and social issues and has included a public consultation program.

The following steps have been undertaken: * Social and environmental baselines * Determination of impacts * Determination of mitigation measures * Development of mitigation plans Conclusions and Recommendations The results of the scoping study have shown that the Mpokoto Project has economic potential worthy of further evaluation and continued development.

It is proposed that the following next steps be taken to further understand the project and to reduce the risk profile: * Undertake additional exploration drilling to increase the level of confidence in the mineral resource and to identify additional resources.

Exploration targets have been identified to the north west and south east of Pit A and to the south of Pit C, exploration drilling will be focused on these areas.

Exploration target tonnages identified total 3.7Mt at an average grade of 1.03 g/t totalling 122koz. * Undertake additional metallurgical test work on samples from the oxide, transitional and sulphide ore types to enable more detailed process design work to be undertaken.

Work in this respect is ongoing, the process route has been confirmed and work is now focused on maximising recoveries through the selected route. * Undertake a more detailed geotechnical evaluation to include a geotechnical drilling program at the pits identified and laboratory test work on cores recovered.

Currently scoping level work has been undertaken; further work will involve drilling cores for laboratory test work and more detailed analysis focused on the areas where mining will take place. * Initiate work on a feasibility study with a focus on confirming the low cost approach.

This work is planned to start later in 2014 and will have a significant focus on finalisation and detailing of engineering concepts and proving the cost base used in the scoping study. Scoping Study Preparation The Scoping Study has been prepared by Bara Consulting (Pty) Ltd, with input from: * Armadale Capital Plc who provided input in regards to company structure, ownership, licensing and tenure.

In addition various historical documents relating to work previously undertaken on the project by Wardrop, Senet and Xiamen Zijin Mining and Metallurgy Technology Co.

Ltd.

was provided. * CSA Global who provided input in respect of geology and resources. * Appropriate Process Technologies (APT) and Peacocke and Simpson (P&S) who provided input in respect of metallurgical test work, metallurgical recoveries and process plant costs. Qualified Person Scientific or technical information in this release has been reviewed by Mr.

Andrew (Jim) Pooley Pr Eng, BSc Eng (Hons), FSAIMM, Managing Director, of Bara Consulting Pty Ltd.

Jim Pooley is a fellow of the Southern African Institute of Mining and Metallurgy and has over 19 years experience, which is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code).

Mr.

Jim Pooley consents to the inclusion in this announcement of the information, in the form and context in which it appears.
The information in this release that relates to in-situ Mineral Resources has been prepared by Mr.

David Williams BSc (Hons) MAusIMM MAIG, Principal Consultant, of CSA Global Pty Ltd.

David Williams is a member of the Australasian Institute of Mining and Metallurgy, and a member of the Australian Institute of Geoscientists (MAIG) and has over 20 years experience, which is relevant to the style of mineralisation under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (the JORC Code).

Mr.

David Williams consents to the inclusion in this announcement of the information, in the form and context in which it appears.
**ENDS** Enquiries: Company Justin Lewis, Director +44 207 233 1462 Charles Zorab, Investor Relations Nomad and broker: finnCap Limited Stuart Andrews/Christopher Raggett +44 207 220 0500 Press relations: St Brides Media & Finance Ltd. Susie Geliher/Charlotte Heap +44 207 236 1177 Notes Armadale Capital Plc is focussed on investing in and developing a portfolio of investments, targeting the natural resources and/or infrastructure sectors.

The Company, led by a team with operational experience and a strong track record in Africa, has a strategy of identifying high growth businesses where it can take an active role in their advancement. Armadale is focused on the development of the development of the Mpokoto Gold project in the Democratic Republic of the Congo, to which it holds the right to an 80% interest, together with a significant area of exploration licenses in the South West of the DRC covering some 800,000 hectares which are prospective for many minerals including, manganese, gold and diamonds.

Armadale also holds other investments, including a 30% interest in Mine Restoration Investments Ltd, a South African listed company which has a waste coal processing operation in KwaZulu Natal, as well as a number of other quoted investments.
More information can be found on the website www.armadalecapitalplc.com.
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