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Armadale Capital has announced an initial investment and option to increase its interest in the Mpokoto gold project (Mpokoto).

Armadale is an AIM quoted investment company focused on natural resources projects and its strategy is to build a portfolio of revenue generating African resource projects. Mpokoto is a highly prospective, low-cost gold project in the Katanga Province in the Democratic Republic of Congo (DRC).

Mpokoto is located in the western part of the Katanga Province approximately 250km west of Kolwezi, and approximately 25km from the Zambian border. The area is highly prospective, with local operators including Ivanplats Limited and GlencoreXstrata Plc.

Peter Marks, Chairman of Armadale said, “I am pleased to be able to announce this initial investment in Mpokoto in the DRC, with an option to significantly increase our exposure.  With an Indicated and Inferred JORC resource of 7.2 million tonnes @ 1.65g/t Au (approximately 380 000 ounces Au), a resource that appears relatively low cost to develop, and a defined strategy in place to realise the value potential in the near term, Mpokoto represents a compelling investment opportunity.

“At this stage, gold production is targeted to commence at Mpokoto in 2014 and operations at our other investment, Mine Restoration Investments Ltd, remain on track to achieve production at its coal briquetting plant in South Africa in September 2013. Consequently, I am confident that our diverse investment portfolio will start to generate revenues for the company in the near term. With a multi-asset portfolio in place providing exposure to the natural resources and infrastructure sectors, in line with our objectives, Armadale has established itself as a growth-oriented company and I look forward to updating shareholders on these developments in due course.”

Netcom is a gold exploration company, which offers near term value uplift through its right to acquire an 80% interest in the highly prospective, low-cost, Mpokoto, presently owned by Casa Mining Ltd (Casa), a private company.

Netcom can acquire its 80% interest in the Project through funding the required work to obtain a Mining Exploitation License. Armadale has made an initial US$150 000 investment to take a 15% equity interest in Netcom. In addition to this, the company will make a further subscription of up to US$105 000 in three tranches at the same valuation, to take its interest in Netcom to c.23%, and has the first right to provide any further funding.

Armadale has entered into an option agreement with existing shareholders of Netcom to increase its aggregate interest to c.90% of Netcom. The consideration payable is an issue of 700 million Ordinary Shares at a price of 0.01p per Ordinary Share together with the issue of a further:

·         60 million Ordinary Shares upon completion of a scoping study, targeted for the end of 2013

·         60 million Ordinary Shares upon the delineation of a JORC reserve of at least 120,000 ounces of gold

·         100 million Ordinary Shares upon the production of the first 5 000 ounces of gold from the Project

The option is exercisable up to 16 February 2014 at Armadale’s discretion. In addition, the shareholders of Netcom have the right to sell their shares to Armadale, subject to the satisfaction of certain conditions, including:

·         Due diligence being completed to Armadale’s sole satisfaction

·         Completion of a positive scoping study

·         Netcom demonstrating that the Project is fully funded to the satisfaction of Armadale

·         Armadale obtaining any regulatory approval that it may require.

Highlights

·         Strategic investment in advanced African gold exploration project, offering near term value upside

o   Initial US$150 000 investment in cash for 15% equity interest in Netcom Global Inc., (‘Netcom’), which has the right to acquire an 80% interest in Mpokoto

o   Further subscription of up to US$105 000 in cash in three tranches to take equity interest to approximately c.23%

o   Option to acquire existing equity, to take total equity interest in Netcom to c.90% for a consideration of £700,000 via the issue of 700 million ordinary shares in the capital of Armadale (Ordinary Shares) at a price of 0.1p per Ordinary Share, with a further issue of up to 220 million Ordinary Shares upon the achievement by Netcom of certain milestones

·         Highly prospective Mpokoto Gold Project in the Katanga Province in the Democratic Republic of Congo

o   Indicated and Inferred resource estimated at 380 000 oz Au from 7.2 million tonnes @ 1.65g/t gold (Au) at a cut-off grade of 0.5 g/t Au (75% Indicated category)

o   Exploration Target potential* of 20-24 million tonnes @ 1.5-1.8 g/t Au

o   Defined development programme to unlock license value in the near term in place – scoping study targeted for the end of 2013

o   Investment in Netcom will allow progression of the Mining Exploitation License application, anticipated to be completed by end of 2013

o   Project is anticipated to be a relatively low-cost heap leach operation – ore is metallurgically simple with operating costs estimated at US$700-900 per ounce

o   Balance of 20% of Project owned by a Congolese Government company

·         Transaction complements Armadale’s current portfolio of assets, including Mine Restoration Investments Ltd’s coal briquetting operation, which is targeted to deliver its first revenue in September 2013

*Tetra Tech Consultancy estimate.  The quantity and grade of the Exploration Target is conceptual and there has been insufficient exploration to define a Mineral Resource

A copy of the announcement, which includes a map and drawings relating to Mpokoto’s location and geology can be found on the Company’s website at www.armadalecapitalplc.com.

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