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:
- 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.
- 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 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 + Aueqv Metal ounces)
|
Project
|
Category
|
Au
+Aueqvounces
|
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.