East Africa forms Metals Trading Company in Tanzania to facilitate Streaming Agreement
East Africa forms Metals Trading Company in
Tanzania to facilitate Streaming Agreement
VANCOUVER, BC
,
June 1, 2021
/CNW/ - East Africa Metals Inc. (TSXV: EAM) (FSE: EA1) ("East
Africa" or the "Company") is pleased to announce that it has formed a metals trading Company
under the laws of
Tanzania
in order to facilitate the acquisition and commercial sales of EAM's share
of the gold produced from the Magambazi mine in accordance with the terms of the Sale-Purchase
Agreement announced
December 21, 2020
(*See Press Release).
The company, "Umoja Gold Tanzania, Ltd." (
Umoja Gold
"), will allow it to acquire by purchase or
otherwise deal in Gold in order to have EAM receive the benefits of the Magambazi Transaction with
PMM.
The Magambazi Transaction:
The transaction includes:
1
.
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 and milling costs as well
as those associated with third party smelting, refining, transportation and royalties minus
byproduct credits.
2
.
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.
3
.
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 is not achieved.
Andrew Lee Smith
, President & CEO of
East Africa
, commented "EAM has been informed by PMM
the start-up of the tailings re-processing operations at Magambazi was initiated in May and the first
small test of gold recovery was successfully completed in recent weeks. This test processing has
been engaged to establish base-line data for gold recoveries and to "dial-in" processing flow-sheet
to maximize recoveries from the 32,000 tonne tailings stockpile ".
"But further, the gold that has been produced by this first test is subject to the terms of the
Agreement and affords the first opportunity to establish empirical protocols for the chain of custody,
taxation and the commercial gold sales. It is the opportunity to establish these protocols combined
with the fact mining operations have been initiated at the Magambazi mine with the 10,000 ounce
first-year production target that has been the motivation for the formation of
Umoja Gold
at this
time."
About East Africa Metals
The Company's principal assets include 30% Net Profits Interest in the Mato Bula and Da Tambuk
mines (collectively "Adyabo Property") and a 70% project interest in the Harvest polymetallic VMS
exploration Project in the Tigray region of
Ethiopia
. In addition, the Company has a 30% Net
Streaming Interest ("SRI") in the Magambazi Mine in the Tanga region of Tanzania.
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 second
quarter of 2021.
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 second quarter of calendar 2021.
EAM has invested
USD$66.8M
in African exploration since 2005 and identified a total of 2.8 million
ounces of gold and gold-equivalent resources representing an average discovery cost per ounce of
US$24
.
The current Global Project Resources discovered by EAM include:
Project Resources (Au + Au
eqv
Metal ounces)
Project
Category
Au
+Au
eqv
ounces
Adyabo Project, Ethiopia
(
EAM 30% Net Profit Interest)
Indicated
446,000
Inferred
551,000
Harvest Project, Ethiopia
(EAM = 70% Project Interest)
Indicated
469,000
Inferred
426,000
Handeni Project, Tanzania
(EAM = 30% Streaming Royalty Interest)
Indicated
721,000
Inferred
292,000
*See East Africa Metals Project Resource Table attached for additional detail
Andrew Lee Smith
, P.Geo., C.E.O., a Qualified Person under the definitions of National Instrument
43-101, has reviewed and approved the technical contents of this news release.
More information on the Company can be viewed at the Company's website:
www.eastafricametals.com
.
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable
Canadian securities legislation. 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", "indicate",
"confident" or variations of such words or similar words or expressions. Forward-looking
information is based on reasonable assumptions that have been made by the Company 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 the
Company to be materially different from those expressed or implied by such forward-looking
information, including but not limited 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; the ability of Tibet Huayu to develop and
operate the Ethiopia Adyabo Project within the required laws and agreements recoverability of the
Ethiopian and Tanzanian VAT receivable; early exploration; the ability of
East Africa
to identify any
other corporate opportunities for the Company; the possibility that the Company may not be able to
generate sufficient cash to service its planned operations and may be force to take other options;
the risk the Company may not be able to continue as a going concern; the possibility the Company
will require additional financing to develop the Ethiopian Projects into a mining operation; the risks
associated with obtaining necessary licenses or permits including and not limited to Ethiopian
Government approval of EAM Mineral Resources extensions for the Company's Ethiopian
Properties and Projects; risks associated with mineral exploration and development; metal and
mineral prices; the demand for precious and base metals; availability of capital; accuracy of the
Company's Projections and estimates, including the initial and any updates to the mineral resource
for the Adyabo, Harvest and Handeni Projects; realization of mineral resource estimates; interest
and exchange rates; competition; stock price fluctuations; the ability to carry on exploration and
development activities; actual results of exploration activities; availability of drilling equipment and
access; the ability to obtain qualified personnel, equipment and services in a timely and cost-
efficient manner; the regulatory framework including and not limited to license approvals, social
and environmental matters; the ability to operate in a safe, efficient and effective manner
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 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 the Company's
filings with securities regulators. Mineral Resources, which are not Mineral Reserves, do not have
demonstrated economic viability. The estimate of mineral resources may be materially affected by
environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
The quantity and grade of reported inferred mineral resources as the estimation is uncertain in
nature and there has been insufficient exploration to define any inferred mineral resources as an
indicated or measured mineral resource and it is uncertain if further exploration will result in
upgrading inferred mineral resources to an indicated or measured mineral resource category. The
contained gold, copper and silver figures shown are in situ. No assurance can be given that the
estimated quantities will be produced. Although the Company 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 to 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.
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For further information:
Nick Watters, Business Development, Telephone, +1 (604) 488-0822,
Email: [email protected]; Website www.eastafricametals.com
CO: East Africa Metals Inc.
CNW 03:05e 01-JUN-21