Aim-listed investment company Armadale Capital, which holds mine investments in Africa, has entered into an agreement to earn a 50% interest in Africa American Incorporated (AAI), the holding company of the Canyon Silver lead/zinc/silver exploration asset, in Idaho, in the US.

Armadale has an option to acquire an initial 25% interest in AAI through the purchase of new shares for $500 000 in cash before December 31.

If this initial option is exercised, Armadale has a further option to increase its interest to 43.8% in AAI, through the purchase of new shares for $1-million in cash. Once this second option is exercised, Armadale has a further, final option to acquire an additional 7% interest in AAI, taking its total holding to 50.8%, for $280 000.

If Armadale exercises the final option to gain greater than 50% of the Canyon Silver project, the seller of AAI has the right to sell the remaining stake to Armadale for about $1-million.

The directors of Armadale believe silver is a highly strategic resource with a range of medical, electronic and industrial applications.

It is in line with Armadale's strategy to build a portfolio of high-growth, low-cost and near-term resource projects.

“The opportunity to invest in a controlling stake of a precious metal project in one of the richest and well-known silver regions in North America, is a significant step for Armadale.

“Furthermore, Idaho has a mining-friendly economy with a well-established, secure mining code. Not only are there significant historical records in the Canyon Silver project, but it lies within very close proximity to a number of North America's large silver deposits and producers, which have been proven to be profitable,” the investment company states.

Armadale will raise about £650 000 through the issue of 91.43-million shares to fund the acquisition of the initial 25% interest in AAI, as well as to start work on the Canyon Silver project and to advance its Mahenge graphite project, in Tanzania.

The company will work on identifying known resources, realising near-term production and improving the understanding of the orebody at Canyon Silver.

The operation has several adits on a large mountain, a previously mined underground vertical shaft and six levels that are accessible at little cost, it points out.