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DISTRIBUTION OR DISSEMINATION, DIRECTLY OR INDIRECTLY, IN WHOLE OR
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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 + 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
|
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.