East Africa Metals and Sino Union Energy Group agree to move forward on Harvest Project acquisition and a $3,000,000 Private Placement
East Africa Metals and Sino Union Energy
Group agree to move forward on Harvest
Project acquisition and a $3,000,000 Private
Placement
/NOT FOR DISTRIBUTION TO
UNITED STATES
NEWS WIRE SERVICES OR FOR RELEASE,
PUBLICATION, DISTRIBUTION OR DISSEMINATION, DIRECTLY OR INDIRECTLY, IN WHOLE
OR IN PART, IN OR INTO
THE UNITED STATES
/
VANCOUVER
,
Feb. 24, 2020
/CNW/ -
East Africa Metals Inc.
(TSX-V: EAM - "East Africa" or the
"Company") is pleased to announce that it has reached agreement with
Hong Kong
-based Sino
Union Energy Group Limited ("Sino Union") on a binding letter of intent to acquire a majority
ownership stake in the Harvest Project ("Harvest Transaction") currently held by EAM's wholly
owned subsidiary, Tigray Ethiopia Holdings Inc. ("TEHI"). TEHI holds a 70% interest in Harvest
Mining PLC. with Ezana Mining Development PLC. Harvest Mining PLC owns 100% of the Harvest
Project, which is located in the Tigray National Regional State of the Federal Democratic Republic of
Ethiopia
("Ethiopia").
Harvest Letter of Intent
The terms of the binding LOI indicate
Sino Union
and EAM (the "Parties) will enter into a Definitive
Agreement whereby
Sino Union
will acquire 55% interest of the Harvest Project by making a cash
payment of
USD$500K
, developing and operating the Terakimti Oxide Mine and funding 100% of
TEHI's obligations related to the development and operation of the Harvest Project (Ezana Mining
PLC holds a 30% interest in the Harvest Project and is responsible for contributing 30% to the
development and operating costs).
On completion of the proposed transaction:
Sino Union
will hold the rights (interest) to 55% post tax profits/Government distributions of
Harvest Mining PLC; and
EAM will hold the rights (interest) to 15% post tax profits/Government distributions of Harvest
Mining PLC.
Closing conditions include:
Receipt of required approvals, including and not limited to Board, Regulatory and Government;
Execution of the definitive agreement; and
EAM receiving the cash payment of
US$500,000
.
Once the Harvest acquisition is complete, EAM will provide
Sino Union
with a "Right of First Offer"
for any current or future Ethiopian assets EAM makes available for acquisition (excluding any
exploration assets associated with the Adyabo project). Negotiations respecting consideration for
the acquisition of future Harvest exploration assets will be based on terms similar to those agreed to
for the acquisition of the current resources: i) cash payment; ii) funding of 100% of the capital costs;
and iii) allocated % of post-tax profits of the new mineral resources.
Sino Union
and EAM will use
best efforts to finalize all conditions precedent and finalize the definitive agreement.
Private placement
As part of the Harvest transaction,
Sino Union
has agreed to subscribe to a private placement to
acquire equity in East Africa Metals Inc. through a non-brokered private placement financing of
23,076,923 units (the "Units") at a price of
$0.13
per Unit, for gross proceeds of
$3,000,000
. Each
Unit consists of one common share of the Company and one non-transferable common share
purchase warrant (a "Warrant"). Each whole Warrant will entitle the holder thereof to purchase one
common share at an exercise price of
$0.35
for a period of 24 months from the date of closing.
The private placement is fully subscribed based on committed interests received in the private
placement.
Proceeds from the private placement will be used to advance the Company's Harvest Project, as
well as fund exploration work on EAM's other African assets and for working capital purposes. Of
the
$3,000,000
placement, EAM and Sino Union have agreed that
$1,800,000
of the gross proceeds
will be segregated for exploration expenses on EAM's African assets. Funds will be wired to EAM
20 days after the definitive agreement is complete.
All of the securities issued in connection with this placement are subject to resale restrictions which
expire four months and one day from closing. The financing remains subject to certain conditions
including, but not limited to, to receipt of approval from the TSX Venture Exchange.
The securities offered have not been, and will not be, registered under the U.S. Securities Act of
1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws, and may not be
offered or sold in
the United States
or to, or for the account or benefit of,
United States
persons
absent registration or any applicable exemption from the registration requirements of the U.S.
Securities Act and applicable U.S. state securities laws. This news release shall not constitute an
offer to sell or the solicitation of an offer to buy securities in
the United States
, nor shall there be
any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be
unlawful.
About East Africa Metals
East Africa's
assets include four fully permitted, development ready gold and base metal projects in
Africa
. Over the past seven years
East Africa
has been able to advance the Company's exploration
assets through the discovery phase, resource definition and permitting through to development
phase at a pace that is seldom seen in emerging resource sectors. The performance of the
exploration programs designed and implemented by
East Africa
are notable, not only due to short
time-frame it has taken to achieve the milestone of this past week, but also by the low discovery
costs.
The current Global Project Resources discovered by EAM include:
Project Resources (Au + Au
eqv
Metal ounces)
Project
Category
Au + Au
eqv
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
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
.
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. 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: closing of the Sino Union Transaction; obtaining all
required approvals for the Sino Union Transaction; the ability of
Sino Union
and Tibet Huayu to
develop and operate the Ethiopia Projects and Properties within the required laws and agreements;
the outcome of the arbitration case with the developer for the Tanzanian Projects; if the arbitration
case is successful that the Company can occupy the site and advance the Tanzanian Projects; if
the arbitration is successful the Tanzanian Definitive Agreement payments are not refundable;
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; 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; availability of drilling equipment and access;
actual results of 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 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 listing application,
East Africa's
financial statements and
management's discussion and analysis for the nine months ended
September 30, 2019
and for the
year ended
December 31, 2018
, and
East Africa's
listing application dated
July 8, 2013
. 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.
Forward-looking statements are based on assumptions management believes to be reasonable,
including but not limited to the price of precious and base metals; the demand for precious and
base metals; 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 including and not limited to license approvals, social and environmental
matters, and such other assumptions and factors as set out herein. 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.
View original content to download multimedia:
http://www.newswire.ca/en/releases/archive/February2020/24/c1946.html
%SEDAR: 00034410E
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 24-FEB-20