East Africa Metals arranges financing to advance Ethiopian Projects

AAEast Africa Metals Inc. (TSX VENTURE: EAM) (“East Africa” or the “Company”) is pleased to announce the signing of a Letter of Intent with Shandong Tyan Home Co., Ltd. (the “Purchaser” or “STH”), a listed public company of China, to provide equity finance to the Company. This Agreement will allow the Company to advance its exploration assets located in the Federal Republic of Ethiopia, including the Harvest, Adyabo and Terakimti Oxide Gold Projects.

Highlights:

  • The Letter of Intent is binding on STH to subscribe to a Private Placement to acquire 20 Million Units of East Africa at a price of $0.26 per Unit for gross proceeds of $5.2 Million;
  • Units are comprised of one Common Share and one-half share purchase Warrant with an exercise price of $0.45;
  • STH also agreed to provide a US$10 Million Line of Credit to support the development of the Terakimti Oxide Gold Project, which is non-binding on the Purchaser.

Strategic Partnership with STH
Shandong Tyan Home Co., Ltd. (“STH”) is a Chinese listed public company on Shanghai Stock Exchange (stock code: 600807), with an integrated business range including real estate, mining, finance and venture capital investment. The total assets of STH cumulate to more than RMB¥5 billion Chinese Yuan. Gold is one of the key business sectors of STH, and STH recently acquired an Australian gold company, Minjar Gold Pty Ltd. in 2014, which is mainly engaged in prospecting, mining and processing of gold.

Transaction Details
By executing the letter of intent, STH has agreed to subscribe to 20 Million Units of East Africa by way of Private Placement at a price of $0.26 per unit for a total amount of $5,200,000. Each unit will consist of one common share and one half share purchase warrant. The share purchase warrants (“Warrants”) will entitle the holder to purchase one common share at an exercise price of $0.45 and will expire 18 months from closing. If at any time after the date that is four months from the date the Warrants are issued, the Company’s common shares have a closing price of $0.65 or greater for a period of 10 consecutive trading days, the Company will be entitled to accelerate the expiry date of the Warrants upon 20 days’ notice given and the Warrants will then expire on the 20th day after the date of such notice. As a result of this placement the Purchaser will own approximately 14.3% of the outstanding shares of the Company.

STH will assign a Hong Kong or offshore company to enter into a Subscription Agreement with East Africa.

The Letter of Intent is subject to certain conditions including and not limited to the Purchaser completing its due diligence review of the Company, execution of definitive agreements and receipt of approval of the TSX Venture Exchange.

Under the Letter of Intent STH also agreed to provide US$10,000,000 debt financing for the development of the Terakimti Oxide Gold Project, which is non-binding. Alternatively, STH can choose to identify a third party to provide or participate in the debt financing.

The debt financing is subject to a number of conditions, including and not limited to receiving a mining permit from the Minister of Mines, Petroleum and Natural Gas, Ethiopia. Proceeds of the debt financing will be used towards the construction of the Terakimti Oxide Gold Project.

Use of Proceeds
The proceeds will be used to continue engineering work at the Terakimti Oxide Gold Project, exploration work to further define the resource at the Adyabo Project and general working capital.

“The Strategic Partnership between STH, SinoTech (Hong Kong) Corporation Limited (“SinoTech”), the Company’s significant shareholder, and East Africa will provide the capital, equipment, operational and technical expertise required to realize the full potential of East Africa’s Ethiopian exploration assets and advance the development of the Terakimti Oxide Gold Heap Leach Project,” stated Andrew Lee Smith, East Africa’s C.E.O. “East Africa’s management looks forward to collaborating with STH and SinoTech and the Ethiopian government to create value for our shareholders and benefit for local communities.”

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