VANCOUVER, BC, Sept. 13, 2021 /CNW/ – East Africa Metals Inc. (TSXV: EAM) (“East Africa” or the “Company”) is pleased to announce that it has received the first reconciliation calculation from the “Magambazi Transaction” in accordance with the terms of the Company’s agreement with PMM Mining Company Limited (“PMM”).
EAM’s share from production of the tailings (see news release dated April 9, 2021) is 160 ounces for projected net revenues of approximately US$275,000.
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’s subsidiary 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, at least 20,000 ounces in the second year, at least 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 if minimum production is not met PMM will pay US$200,000; in the second year if the minimum production is not met PMM will pay US$400,000; in the third year if the minimum production is not met PMM will pay US$600,000; and in the fourth year and any other years if minimum production is not met PMM will pay US$700,000.
Andrew Lee Smith, President & CEO of East Africa, commented; “The receipt by EAM of the Q2 production reconciliation from Magambazi marks a milestone for EAM and a new beginning for the Company’s business in Tanzania and East Africa. With Magambazi transitioning from tailings production to hard rock mining operations and three mining projects in Ethiopia also permitted for mining operations, EAM’s management believes the potential to grow cashflows in the future can create an opportunity for the Company to gain a competitive advantage and fund growth without dilution to shareholders.”
The Q2 production accounts for 9,721 tonnes from an estimated 32,000 tonnes of stockpiled tailings.
As previously disclosed, the stockpiled tailings currently being processed at Magambazi have not been sampled by EAM. However, samples of the tailings assayed in November 2007 indicated unrecovered gold remained in the tailings left behind by artisanal miner’s deposit (see press release April 9, 2021). The gold tailings at Magambazi amount to an estimated 32,000 tonnes at undetermined grade and metallurgical recoveries. These tailings are historic in nature and have never been established as a National Instrument 43-101 compliant resource.
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.
About East Africa Metals
The Company’s principal assets include a 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 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 half 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 half of 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.
