East Africa Metals has executed a definitive share purchase agreement and joint venture contract with Silk Road Resources Investments Co Limited for development and operation of the Adyabo project’s Mato Bula and Da Tambuk deposits in the Federal Republic of Ethiopia.
Silk Road Investments is a wholly-owned subsidiary of Tibet Huayu Mining Co Limited (THM).
East Africa will receive a cash payment of US$1.2 million on the closing of the transaction which will entitle THM to a 70% interest in the Adyabo project, which is in the Tigray region.
THM will finance 100% of the capital costs and will carry out the mine development program and mining operations.
The estimated capital costs for construction are US$54 million for Mato Bula and US$34 million for Da Tambuk.
East Africa will retain a 30% net profit interest and will retain the exploration rights to all prospective mineralization on its concession areas outside of the current resource.
The company has agreed to transfer to THM, 70% of its equity interest in Ethiopian subsidiary company Tigray Resources Inc, 100% owner of the Adyabo project.
East Africa’s CEO Andrew Lee Smith said: “With the share purchase agreement and joint venture contract, East Africa and Tibet Huayu have agreed on terms and are now committed to closing the transaction prior to August 9, 2019, that will see the financing for the development of the Mato Bula and Da Tambuk projects finalized.”
The two parties continue to develop a separate share purchase agreement and joint venture contract for the financing and development of the Harvest project, 11km east of the Adyabo project and also in the Tigray region. Negotiations are proceeding and are expected to be concluded soon.
East Africa’s assets include four, fully permitted, development-ready gold and base metal projects in Africa.