Vancouver based East African Mining has entered into an agreement with Hong Kong mineral company, Sino Union Energy Group Limited for the acquisition of the Ethiopian mineral project, the Harvest Project. Harvest project is 70%-owned by Tigray Resources, a subsidiary of EAM and is located in the Arabian Nubian Shield in northern Ethiopia.
In a statement made to the shareholders, EAM said that a binding letter of intent to acquire a majority ownership stake in the Harvest Project whereby Sino Union will acquire 55% interest of the Harvest Project by making a cash payment of five hundred thousand dollars. It will also develop and operate the Terakimti Oxide Mine and fund 100 percent of Tigray Ethiopia Holdings Inc’s obligations related to the development and operation of the Harvest Project.
As part of the Harvest transaction, Sino Union has agreed to subscribe to a private placement to acquire equity in East Africa Metals Inc. through a non-brokered private placement financing of 23,076,923 units (the “Units”) at a price of $0.13 per Unit, for gross proceeds of $3,000,000. Each Unit consists of one common share of the Company and one non-transferable common share purchase warrant.
The private placement is fully subscribed based on committed interests received in the private placement. Proceeds from the private placement will be used to advance the Company’s Harvest Project, as well as fund exploration work on EAM’s other African assets and for working capital purposes.
East Africa’s assets include four fully permitted, development-ready gold and base metal projects in Africa. Over the past seven years, East Africa has been able to advance the Company’s exploration assets through the discovery phase, resource definition and permitting through to development phase at a pace that is seldom seen in emerging resource sectors.
The Harvest project mineral resource defined to a depth of 300m indicated 2.131 million tonnes containing 89.477 million pounds copper, 86,000oz gold, 1.13 million ounces silver and 66.871 million pounds zinc. Near-surface oxide gold mineralization shows the potential for heap leach amenability.
Last year, the company announced that it had completed the sale of the 70 percent interest of another Ethiopian project to Tibet Huayu Mining Co. Ltd.
Not known for its minerals, Ethiopia has been introducing several reforms to entice investors both in the mining sector as well as in support sectors like finance and governance. Last year, Ethiopian Prime Minister Abiy Ahmed announced plans by his country to remove barriers to investment in its mining sector, focusing efforts on minerals used in agriculture and construction which will help drive its industrialization.
The country mining is mostly artisanal and the government is planning in giving incentives to investors who develop minerals used in agriculture such as potash, a key ingredient in fertilizer. Ethiopia is projecting to increase the mining sector’s contribution to GDP to 10% by 2030.
Ethiopia has different types of mineral resources ranging from gold, platinum potash, and precious stones like emerald, tantalum and other gemstones. The country also has huge untapped iron, oil and gas reserves. In the period ended July 2019, Ethiopia attracted over 3 billion birr ($106.4 million) investment in the mining sector.
Out of the total investment, 1.1 billion birr (about $38 million) is invested in exploration and production of gold, marble, iron and precious stones, according to the statement of the Ministry of Mines and Petroleum of Ethiopia (MMPE). The remaining close to 2 billion birr (around $67.6 million) investment is directed towards eleven petroleum exploration and production sharing and natural gas exploration