East Africa Metals Concludes Tanzanian Government Mediation; Forms New Partnership for the Development of the Magambazi Mine and Gold Stream Transaction with Tanzanian Development Company, PMM
East Africa Metals Concludes Tanzanian
Government Mediation; Forms New
Partnership for the Development of the
Magambazi Mine and Gold Stream Transaction
with Tanzanian Development Company, PMM
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:
1
.
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").
2
.
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.
3
.
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.
4
.
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.
5
.
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 + 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
Indicated
721,000
Handeni Project
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.
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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 16:05e 22-OCT-20