VANCOUVER, British Columbia, Jan. 24, 2018 (GLOBE NEWSWIRE) -- East Africa Metals Inc. (TSX-V: EAM) (“East Africa” or the “Company”) wishes to announce that, further to news releases dated October 2, 2017 and October 5, 2016, the Company has completed the updated terms (“Addendum”) for the Definitive Agreement with an arm’s length private exploration and development company, Tanzanian Goldfields Company Limited (“TzGF) a Hong Kong company (the “Developer”), to purchase and develop East Africa’s Handeni Properties, which includes the Magambazi Project, and all properties owned by East Africa (together the “Assets”) in Tanzania.

The Addendum reflects the following:

• The Developer has assigned the rights to the obligations of the Definitive Agreement, the Gold Purchase Agreement and the Addendum to the Developer’s new entity Tanzanian Goldfields Company Limited;
   
• The Developer has paid US$688,972 to settle outstanding payables owed to East Africa and provide advance payments towards the final purchase of the Assets;
   
• The Developer will pay US$500,000 to East Africa on the delivery of documents for Tanzanian Government approval;
   
• The Developer will deposit US$750,000 in a trust account when the documents to the Tanzanian Government have been submitted and the amount will be released when Tanzanian Government approvals are received;
   
• Under an interim Management Agreement, TzGF and East Africa’s Tanzanian subsidiaries will enter into Shareholders and Directors agreement providing the rights and obligations to TzGF of the day to day operations until the transaction has been approved by the Government of Tanzania;
   
• Both the Company and the Developer have the right to offer to exchange the gold stream to a net smelter return royalty;
   
• Luck Winner Investment Limited will not be investing in the Tanzanian operations.

The transaction will provide East Africa with the right to acquire a gold stream equal to 30% of gold produced during mining operations established at any of the Assets, for a per ounce payment equal to the lesser of: (i) production cost plus 15% based on the Developer’s historical and budgeted production costs, and (ii) the prevailing market price for gold. Furthermore, the Developer conveys to East Africa the right to receive a 1.6% Net Smelter Royalty, capped at US$1,800,000.

Further, East Africa and the Developer will establish a Mining Technical Committee (“MTC”) whose mandate is to provide oversight on all technical matters related to the exploration, development and operation of the Magambazi Mine including budgets, production targets and reclamation requirements.  The Developer will have three seats on the MTC with East Africa having two.  The MTC will provide guidance to achieve targeted production of 40,000 ounces per year for the calendar year 2020.

The Developer has provided a completion guarantee under which, if the Developer fails to produce 10,000 ounces a quarter for two consecutive quarters commencing in 2020, the Developer will pay East Africa an advanced cash payment equivalent to 85% of the forecasted revenue to East Africa. The remaining unpaid 15% of East Africa’s revenue will be settled once the Developer reaches 10,000 ounces of gold production in a quarterly period. Such production numbers shall be cumulative and shall be reconciled annually.

East Africa will have a right of first refusal to re-acquire the properties if commercial production is not reached during 2020, if the Developer notifies the Company of its intention to abandon the Assets or if the Developer decides to sell the Assets. If the Assets are sold to a new party East Africa rights to the Gold Purchase Agreement remains in effect.   

The transaction will not close until the Company receives the payments identified above and obtains Tanzanian Government approval. East Africa will not be required to contribute to capital or exploration expenditures with respect to the construction and development of the Assets.

More information on the Company can be viewed at the Company’s website: www.eastafricametals.com.

On behalf of the Board of Directors:
Andrew Lee Smith, P.Geo., CEO

Cautionary Statement Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "anticipate", "believe", "plan", "expect", "intend", "estimate", "forecast", "project", "budget", "schedule", "may", "will", "could", "might", "should" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by East Africa as at the date of such information and is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of East Africa to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks related to: the negotiation of a definitive agreement reflecting the anticipated structure and timing outlined herein; delays with respect to required payments and regulatory approvals; results of the due diligence review; early exploration; the ability of the Developer to meet the required production targets; mineral exploration and development; metal and mineral prices; availability of capital; accuracy of East Africa's projections and estimates, including the initial mineral resource for the Magambazi Projects; interest and exchange rates; competition; stock price fluctuations; availability of equipment and access; government regulation; political or economic developments; foreign taxation risks; environmental risks; capital expenditures; operating or technical difficulties in connection with development activities; personnel relations; the speculative nature of strategic development including the risks of diminishing quantities of grades of reserves; contests over title to properties; and changes in project parameters as plans continue to be refined, as well as those risk factors set out in East Africa’s management’s discussion and analysis for the year end December 31, 2016, management’s discussion and analysis for the three and nine  months ended September 30, 2017 and East Africa’s listing application dated July 8, 2013. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the terms of the definitive agreement reflecting the anticipated structure and timing outlined herein; receipt of all required payments and regulatory approval; the price of gold, silver, copper and zinc; the demand for gold, silver, copper and zinc; the ability for the Developer to carry on development and operational activities; the ability for the Developer to meet the 40,000 ounces production target; the timely receipt of any required approvals; the ability to obtain qualified personnel, equipment and services in a timely and cost-efficient manner; the ability to operate in a safe, efficient and effective manner; and the regulatory framework regarding environmental matters, and such other assumptions and factors as set out herein. Although East Africa has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. The Company does not update or revise forward looking information even if new information becomes available unless legislation requires the Company do so. Accordingly, readers should not place undue reliance on forward-looking information contained herein, except in accordance with applicable securities laws.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.