VANCOUVER, BC, Oct. 22, 2020 /CNW/ - East Africa Metals
Inc. (TSXV: EAM) (Frakfurt: EA1) ("East Africa", "EAM" or the
"Company") is pleased to announce that subject to the approval of
the Fair Competition Commission (FCC) of Tanzania, the Company is expected to sign a
binding Share Purchase Agreement and Gold Purchase Agreement with
an arm's length Tanzanian private company, PMM Mining Company
Limited ("PMM" or the "Developer"), to develop the Magambazi Mine
in Tanzania.
Highlights:
- Government mandated mediation to resolve the current legal
issues in Tanzania has cleared the
way for EAM to form a partnership with PMM for the development of
commercial mining operations at Magambazi;
- PMM will pay East Africa US$2
million in cash for a 100% interest in Canaco Tanzania
Limited ("CTL"), East Africa's
wholly owned subsidiary;
- PMM will provide East Africa
with the right to purchase 30% of gold produced from operations on
the Mining Assets and Exploration Assets (collectively the
"Assets") for production cost plus 15%; and,
- East Africa will not be
required to contribute to capital or exploration expenditures with
respect to the construction and development of any of the
Assets.
The Magambazi Transaction:
The consideration for the
transaction includes:
- PMM will pay to EAM the sum of US$2,000,000, being consideration for the the
acquisition of 100% ownership stake in CTL. EAM's Tanzanian
subsidiary company, which owns the Magambazi and Handeni Mining
Licenses (the "Mining Assets" or "Magambazi Mine") and all other
properties owned by East Africa in
Tanzania (the "Exploration
Assets").
- During the lifetime of the mine respecting the Mining Assets,
PMM will sell 30% of the Gold produced to EAM at the price of
production cost plus 15% of production cost, pursuant to a Gold
Purchase Agreement. Gold production costs means actual mining costs
and milling costs as well as costs associated with third party
smelting, refining, transportation and royalties, minus byproduct
credits.
- PMM undertakes to produce at least 10,000 ounces in the first
year of commissioning of operations, 20,000 ounces in the second
year, 30,000 ounces in the third year and at least 40,000 ounces
per year thereafter.
- In the event PMM does not meet the minimum production in a
year, it will compensate EAM as follows: In the first year
minimum production is not met PMM will pay US$200,000; US$400,000 in the second year; US$600,000 in the third year; and, US$700,000 per year for any other years' where
the minimum production in any subsequent years is not
acheived.
- If at any time the Seller wishes to Transfer to any third party
(the "Buyer"), or following an offer by a Buyer for the Seller to
Transfer to such Buyer, any of the Properties and/or the Projects,
East Africa will have the right of
first offer to re-acquire the properties.
The Agreement is subject to a requirement for certain conditions
to be met or waived prior to closing, including, but not limited
to: (i) the completion of satisfactory due diligence by
East Africa on the Developer; (ii)
the finalization of the structure of the transaction, including tax
considerations; (iii) the entering into definitive and gold
purchase agreements; and, (iv) the receipt of the US$2,000,000 cash payment, and (v) all requisite
government, ministerial and regulatory approvals, including
acceptance by the TSX Venture Exchange.
Andrew Lee Smith, President &
CEO of East Africa, commented: "We
are very grateful to the government of Tanzania for their leadership in resolving the
legal issues which have prevented the development of the Magambazi
Mine. EAM's Board and management are pleased to be partnering with
PMM for the development of commercial mining operations at
Magambazi. The successful conclusion of the mediation process and
the new partnership between EAM and PMM will unlock the benefit to
EAM's shareholders and all stakeholders."
The Magambazi Mine:
The Magambazi Mine is located in
the emerging Handeni gold district in eastern Tanzania, 180
kilometres northwest of Dar es Salaam and 140 kilometres southwest
of the port city of Tanga. The Magambazi property consists of
two mining licenses (which cover 9.9 square kilometres) and two
prospecting licenses, for an aggregate total of approximately 93
square kilometres. An initial mineral resource estimate for
Magambazi was announced on May 15,
2012. Using a cut-off grade of 0.5 grams per tonne
gold, Magambazi is estimated to contain an indicated mineral
resource of 15.2 million tonnes grading 1.48 grams per tonne gold
and containing 721,300 ounces, as well as an inferred mineral
resource estimate of 6.7 million tonnes grading 1.36 grams per
tonne gold and containing 292,400 ounces.
The pit shells and cut-off grade of 0.50 grams per tonne gold
used to calculate the maiden resource at Magambazi applied a
2012 gold price forecast of US$1,250
per ounce.
Qualified Person
Technical information
included in this news release was approved by Andrew Lee Smith, P.Geo., the Company's
President and CEO, is a Qualified Person as defined by National
Instrument 43-101.
About East Africa Metals
The Company's
principal assets include both the 70% owned Harvest polymetallic
VMS exploration Project and the 100% owned Magambazi Mine in the
Tanga region of Tanzania. In
addition, the Company owns 30% Net Profits Interest in the Adyabo
and Da Tambuk mines in the Tigray region of Ethiopia. The Mato Bula and Da Tambuk mines
are four-kilometres apart and will be developed
simultaneously. The development of the mining operations is
scheduled to begin during the fourth quarter of 2020.
East Africa retains exploration
rights on areas of the properties outside the Mato Bula, Da Tambuk
and Terakimti mining licenses in all Ethiopian projects and
anticipates the commencement of exploration drilling to test
priority targets during the last quarter of calendar 2020.
EAM has invested USD$66.8M in
African exploration since 2005 and identified a total of 2.8
million ounces of gold representing an average discovery cost per
ounce of US$24.
The Global Mineral Resources – EAM Projects:
EAM Project
Resources (Au + Aueqv Metal ounces)
|
Project
|
Category
|
Au +
Aueqv ounces
|
Adyabo
Project
|
Indicated
|
446,000
|
Inferred
|
551,000
|
Harvest
Project
|
Indicated
|
469,000
|
Inferred
|
426,000
|
Handeni
Project
|
Indicated
|
721,000
|
Inferred
|
292,000
|
*See East Africa
Metals Project Resource Table attached for additional
detail
|
More information on the Company can be viewed at the Company's
website: www.eastafricametals.com.
On behalf of the Board of Directors:
Andrew Lee Smith, P.Geo., CEO
Cautionary Statement Regarding Forward-Looking
Information
This news release contains "forward-looking information"
within the meaning of applicable Canadian securities legislation,
including information with respect to the terms of the letter
agreement, the timing and amounts of payments, the expected
completion dates for due diligence and approvals, the
structure of the proposed transaction and the listing of the
Developer's common shares on the London Stock Exchange's AIM.
Generally, forward-looking information can be identified by
the use of forward-looking terminology such as "anticipate",
"believe", "plan", "expect", "intend", "estimate", "forecast",
"project", "budget", "schedule", "may", "will", "could", "might",
"should" or variations of such words or similar words or
expressions. Forward-looking information is based on reasonable
assumptions that have been made by East
Africa as at the date of such information and is subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of East Africa to be
materially different from those expressed or implied by such
forward-looking information, including but not limited to risks
related to: the negotiation of a definitive agreement reflecting
the anticipated structure and timing outlined herein; delays with
respect to required payments and regulatory approvals; results of
the due diligence review; early exploration; the ability of
East Africa to identify any other
corporate opportunities for the Company; mineral exploration
and development; metal and mineral prices; availability of capital;
accuracy of East Africa's
projections and estimates, including the initial mineral resource
for the Adyabo, Harvest and Magambazi Projects; interest and
exchange rates; competition; stock price fluctuations; availability
of drilling equipment and access; actual results of current
exploration activities; government regulation; political or
economic developments; foreign taxation risks; environmental risks;
insurance risks; capital expenditures; operating or technical
difficulties in connection with development activities; personnel
relations; the speculative nature of strategic metal exploration
and development including the risks of diminishing quantities of
grades of reserves; contests over title to properties; and changes
in project parameters as plans continue to be refined, as well as
those risk factors set out in East
Africa's management's discussion and analysis for the three
months ended March 31, 2015,
East Africa's listing application
dated July 8, 2013 and Tigray
Resources Inc. Management Information Circular dated March 28, 2014. Forward-looking statements are
based on assumptions management believes to be reasonable,
including but not limited to the terms of the definitive agreement
reflecting the anticipated structure and timing outlined herein;
completion of satisfactory due diligence; receipt of all required
payments and regulatory approval; the price of gold, silver, copper
and zinc; the demand for gold, silver, copper and zinc; the ability
to carry on exploration and development activities; the timely
receipt of any required approvals; the ability to obtain qualified
personnel, equipment and services in a timely and cost-efficient
manner; the ability to operate in a safe, efficient and effective
manner; and the regulatory framework regarding environmental
matters, and such other assumptions and factors as set out herein.
Although East Africa has attempted
to identify important factors that could cause actual results to
differ materially from those contained in forward-looking
information, there may be other factors that cause results not to
be as anticipated, estimated or intended. There can be no assurance
that such information will prove to be accurate, as actual results
and future events could differ materially from those anticipated in
such information. The Company does not update or revise forward
looking information even if new information becomes available
unless legislation requires the Company do so. Accordingly, readers
should not place undue reliance on forward-looking information
contained herein, except in accordance with applicable securities
laws.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE East Africa Metals Inc.