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Armadale Capital PLC

******** Investment Management

12 March 2014


******* **** - Senior Investment Analyst

Armadale Capital is an AIM listed company focussed on investing in natural resource extraction, mining and the secondary sectors associated with this investment category. Armadale Capital owns an 80% interest in the Mpokoto Gold Project in the Democratic Republic of Congo, 40% of Mine Restoration Investments Ltd in South Africa and a small percentage of Redcliffe Resources Ltd in Australia.

Current Numerical Valuations

Currency: GBX Market Capitalisation: 4.4m PE Ratio: -2.292 Year Range: 0.07-0.35 Asset Valuation: 3.87m NAV: 0.12p

Assessing the Value of Armadale Capital

Although under a wholly numerical evaluation, Armadale Capital comes up towards the weaker end of the AIM, from a fundamental perspective Armadale Capital looks set to create signicant shareholder over the medium and long term, with the possibility of signicant prots being made prior to this if they accelerate their Mpokoto Gold Project. ! The Mpokoto Gold Project in particular looks to be able to provide Armadale Capital with very large turnovers over the medium term, with the 20" government owned stake in the project undoubtedly allowing an increase in the rate of acquiring mining licences. Moreover this government involvement will likely decrease the overall bureaucratic inuence of the Congolese government on the project. ! Furthermore, the placing of #525,000 of shares on 12th March seems to suggest that Armadale Capital have been able to progress faster with the Mpokoto Gold Project than the market was expecting, which could well mean that Armadale Capital is close to developing the mine for commercial use.!
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Armadale Capital PLC

******** Investment Management

12 March 2014

Relevant Commodity Projections

The natural resources sector and its subsidiary sectors are clearly subject to movements within the commodities market. The commodities especially relevant to Armadale Capital are:
Coal Copper Gold

Armadale Capitals 40" ownership of Mine Restoration Investments also has the potential to provide steady revenues in the future, with details of these initial revenues becoming known on 30th May when results are to be published. ! The business model in place with Mine Restoration Investments is a particularly exciting one whereby the company receives coal nes free of charge from Keaton Energy; at which point it processes them and sells them back to Keaton Energy, creating the potential for a low cost and reasonably high margin business. The technology also exists to produce coal briquettes from these processed coal nes, but currently the prot margins remain equal to those of merely processing raw coal nes and therefore this option doesnt seem to be being followed at the present time.! The recently purchased stake in Redcli$e Resources appears to follow the sentiment of the Mpokoto Gold Project, in that their copper project in Mbesi %Tanzania& looks to be another current low value asset that could potentially yield very high revenues in the long term. ! Overall, within the price range of 0.13'0.25 Armadale Capital has the potential to signicantly reward shareholders and even in price ranges above 0.25 %0.25'0.35& we still see the potential for reasonable prot margins on ones investment over a medium to long term period:! Of the three main projects underway, the Mpokoto Gold Project seems to be especially undervalued within the current trading range of Armadale Capital and signicant short term news of scoping studies and mining licences could be expected before the end of the month. ! The 40" portion of Mine Restoration Investments also seems to be undervalued in the current price range although we do not believe that this project has as much revenue generating potential as the Mpokoto Gold Project. ! Finally, the Mbesi Copper Project will likely do very well in the long term, but at the present time we believe that the market is not aware of it to an extent where upon its value can be accurately estimated compared to the current trading range of Armadale Capital.!

Armadale Capital looks set to take advantage of the projections of all of these commodities, with all three relevant commodities looking set to rise steadily over the medium to long term. In particular, the steady fall of the dollar against its major foreign currency pairs will help the commodities market as a whole. Although coal has seen a fall from grace recently, it looks likely to make signicant gains over the long term as Africa continues its power expansion through coal powered stations. Gold also has been restoring its value in the short term and over the medium term price estimates in the range of $1500-1700 are realistic. Although many analysts see more downside potential for copper in the short term, we feel that from a longer term perspective copper will perform well over the next ten years as African nations continue their industrialisation process and as technological enhancements continue throughout the BRIC nations and in particular South America.

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