Mr. Andrew Smith reports
EAST AFRICA METALS ENGAGES WITH JINJIU FOR THE DEVELOPMENT OF THE MAGAMBAZI/HANDENI MINING PROJECT IN TANZANIA
East Africa Metals Inc. is currently working to develop a memorandum of understanding (MOU) with JinJiu Hong Kong International Investment Ltd. for the development of the Magambazi mining project in Tanzania.
In October, 2020, the company signed a share purchase agreement and gold purchase agreement an with a Tanzanian private company, PMM Mining Company Ltd., to develop the Magambazi mining project. In December, 2022, due to PMM's lack of performance, non-compliance with the terms and conditions of the mining licence agreement and a litany of breaches to PMM's agreements with the company, the Tanzanian Ministry of Mines suspended PMM's operations at the project site and the renewal of the mining licences. Since that time, East Africa's management has been engaged with the Tanzanian government and PMM to resolve issues inhibiting the development of commercial mining operations at Magambazi.
In July, 2024, the Minister of Mines announced formal action would be taken to intervene to resolve the issues, recognizing the government's obligations to participate based on the government mediation that resulted in East Africa's partnership with PMM.
Following meetings with East Africa management and the Minister of Mines on June 20, 2024, the minister called for a meeting of all parties to discuss the non-compliance of mining operations at Magambazi and the significant breaches to PMM's agreements with the company for the acquisition and development of the project.
At the conclusion of that meeting, the minister announced the government would intervene to mediate a resolution of the issues to allow the development of the project to move forward. To that end, a ministerial hearing was held from July 10 to 13, 2024, to determine the best way forward. This hearing included inspection of the site by government representatives of the Ministry of Mines.
The formal directives of the ministry based on the results of the hearings are pending but the hearings concluded with the government foreshadowing a request for the parties to develop and present a rescue plan for the project.
East Africa has engaged with JinJiu to develop an MOU in anticipation of meeting the ministry's request to present a rescue plan for the project.
The terms of the proposed MOU are based on a previous MOU drafted in January, 2023, after the suspension of PMM's mining operations. In this expired MOU, JinJiu agreed to acquire a 100-per-cent interest in the project through the purchase of shares of Canaco Tanzania Ltd. (CTL) held by East Africa for a total consideration of $2-million (U.S.). East Africa has invested approximately $60-million (U.S.) in exploration, resource establishment and mine planning.
Additionally, JinJiu committed to producing a minimum of 10,000 ounces of gold in the first year increasing to at least 40,000 ounces annually from the fourth year onward. East Africa will receive 30 per cent of the gold produced from the project at the production cost plus 15 per cent pursuant to a gold purchase agreement to be signed by the parties. JinJiu will be responsible for all investment funds required for mine development and production and CTLs operating costs of until the project becomes self-sustaining.
The terms of any transaction between EAM and JinJiu will be subject to approval by the Tanzanian Mining Commission and other relevant government authorities.
Andrew Lee Smith, chief executive officer of East Africa Metals, commented: "We are excited by the possibility to partner with JinJiu on the development of commercial mining operations at the Magambazi project. The proposed MOU represents a significant step forward in unlocking the value of our Tanzanian assets and establishing commercial production at Magambazi. JinJiu's commitment to invest and develop the project aligns with our strategic objectives, and we look forward to working together to realize the full potential of the Magambazi mining project for all stakeholders."
About East Africa Metals Inc.
The company's principal assets include a 30-per-cent net profits interest in the Mato Bula and Da Tambuk mines (Adyabo property) and a 70-per-cent project interest in the Harvest polymetallic VMS (volcanic massive sulphide) exploration project in the Tigray region of Ethiopia. In addition, the company has a 30-per-cent net streaming interest in the Magambazi mine in the Tanga region of Tanzania.
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