East Africa Metals and Zijin Mining have agreed to harvest project acquisition 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 (Ezana) owning 30%. 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.
Harvest Letter of Intent
The terms of the non-binding LOI stipulate Zijin will enter into a Definitive Agreement whereby Zijin will acquire 55% interest in the Harvest Project by making a cash payment of US$900,000, 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 is responsible for contributing 30% to the development and operating costs.
On completion of the proposed transaction, Zijin 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$900,000.
Once the Harvest acquisition is complete, EAM will provide Zijin with a “Right of First Offer” for any current or future Ethiopian assets EAM makes available for acquisition, subject to existing rights granted by EAM. 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. Zijin and EAM will use best efforts to finalize all conditions precedent and finalize the Definitive Agreement.
About Zijin Mining Group Company, Ltd.
Formed in 1993, Zijin is based in Fujian, China and is a leading global mining company specializing in gold, copper, zinc and other mineral resource exploration and development. It manages an extensive portfolio, primarily consisting of gold, copper, zinc, and other metals through investments in China and overseas across eleven countries. Listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange, Zijin has a market capitalization of approximately US$35 billion.
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 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.