East Africa Announces Commissioning of Tailings Re-processing Operation at Magambazi

VANCOUVER, BC, Jan. 27, 2021 /CNW/ - East Africa Metals Inc. (TSX-V: EAM) (FSE: EA1) ("East Africa" or the "Company") is pleased to announce that further to its press release dated October 22, 2020, it has received the following update from its Tanzanian partner, PMM Mining Company Limited ("PMM").

PMM Mining has informed EAM it has engaged development of a plan to re-process existing tailings from artisanal mining activities that took place between 2007 and 2016 at the Magambazi site, during which time large, active artisanal mining operations extracted gold from high-grade quartz veins within the Magambazi main zone. To date, PMM has completed the construction of the tailings re-processing plant and initiated start-up of the re-processing operation. The tailing re-processing operation is expected to be in full production prior to the end of the first quarter of  2021.

During 2018, Canaco Tanzania Limited ("CTL") surveyed the volume of the tailings, which were mined from its licenses by a group of illegal miners, who were exploiting the high-grade gold veins intercepted during a drilling program conducted in its license area.

Recent stockpiled tailings have not been sampled by CTL; however, the gold assay from different piles of tailings taken in November 2007 indicated a significant amount of gold was unrecovered in the ore mined from Magambazi deposit. 

The gold tailings totalled an estimated 32,000 tonnes at undetermined grade and metallurgical recoveries. The processing flow-sheet will see the tailings re-milled to further expose remaining free gold, followed by treatment through a gravity circuit and finally through a CIP Plant. PMM is currently on site working towards the final stages to commission the CIP Plant.

Mine and Site Development

The Handeni Property – the Magambazi Mine

The Magambazi Mine:
The Magambazi Mine is located in the emerging Handeni gold district in eastern Tanzania, 180 kilometres northwest of Dar es Salaam and 140 kilometres southwest of the port city of Tanga.  The Magambazi property consists of two mining licenses (which cover 9.9 square kilometres) and two prospecting licenses, for an aggregate total of approximately 93 square kilometres.  An initial mineral resource estimate for Magambazi was announced on May 15, 2012 (see Canaco Resources News Release dated May 15, 2012). Using a cut-off grade of 0.5 grams per tonne gold, Magambazi is estimated to contain an indicated mineral resource of 15.2 million tonnes grading 1.48 grams per tonne gold and containing 721,300 ounces, as well as an inferred mineral resource estimate of 6.7 million tonnes grading 1.36 grams per tonne gold and containing 292,400 ounces.

The pit shells and cut-off grade of 0.50 grams per tonne gold used to calculate the maiden resource at Magambazi  applied a 2012 gold price forecast of US$1,250 per ounce.

The Magambazi Transaction:
The transaction includes:

1. During the lifetime of the mine respecting the Mining Assets, PMM will sell 30% of the Gold produced to EAM at the price of production cost plus 15% of production cost, pursuant to a Gold Purchase Agreement. Gold production costs means actual mining and milling costs as well as those associated with third party smelting, refining, transportation and royalties minus byproduct credits.
   
   
2. PMM undertakes to produce at least 10,000 ounces in the first year of commissioning of operations, 20,000 ounces in the second year, 30,000 ounces in the third year and at least 40,000 ounces per year thereafter.
   
   
3. In the event PMM does not meet the minimum production in a year, it will compensate EAM as  follows: in the first year minimum production is not met PMM will pay US$200,000; US$400,000 in the second year; US$600,000 in the third year; and, US$700,000 per year for any other years' where the minimum production is not achieved.

Andrew Lee Smith, President & CEO of East Africa, commented; "With the conclusion of the Sale Purchase process and the beginning of development EAM looks forward to the initial gold production from the tailing re-processing operation during the last half of 2021."

Qualified Person
Technical information included in this news release was approved by Andrew Lee Smith, P.Geo., the Company's President and CEO, is a Qualified Person as defined by National Instrument 43-101.

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 ("SRI") 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 first quarter 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 first quarter of calendar 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.

The current Global Project Resources discovered by EAM include:

Andrew Lee Smith, P.Geo., C.E.O., a Qualified Person under the definitions of National Instrument 43-101, has reviewed and approved the technical contents of this news release.

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

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", "indicate", "confident" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by the Company 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 the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited 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; the ability of Tibet Huayu to develop and operate the Ethiopia Adyabo Project within the required laws and agreements recoverability of the Ethiopian and Tanzanian VAT receivable; early exploration; the ability of East Africa to identify any other corporate opportunities for the Company; the possibility that the Company may not be able to generate sufficient cash to service its planned operations and may be force to take other options; the risk the Company may not be able to continue as a going concern; the possibility the Company will require additional financing to develop the Ethiopian Projects into a mining operation; the risks associated with obtaining necessary licenses or permits including and not limited to Ethiopian Government approval of EAM Mineral Resources extensions for the Company's Ethiopian Properties and Projects; risks associated with mineral exploration and development; metal and mineral prices; the demand for precious and base metals; availability of capital; accuracy of the Company's Projections and estimates, including the initial and any updates to the mineral resource for the Adyabo, Harvest and Handeni Projects; realization of mineral resource estimates; interest and exchange rates; competition; stock price fluctuations; the ability to carry on exploration and development activities; actual results of exploration activities; availability of drilling equipment and access; the ability to obtain qualified personnel, equipment and services in a timely and cost-efficient manner; the regulatory framework including and not limited to license approvals, social and environmental matters; the ability to operate in a safe, efficient and effective manner government regulation; political or economic developments; foreign taxation risks; environmental risks; insurance risks; capital expenditures; operating or technical difficulties in connection with development activities; personnel relations; the speculative nature of strategic metal exploration and development including the risks of 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 the Company's filings with securities regulators.  Mineral Resources, which are not Mineral Reserves, do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.  The quantity and grade of reported inferred mineral resources as the estimation is uncertain in nature and there has been insufficient exploration to define any inferred mineral resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading inferred mineral resources to an indicated or measured mineral resource category. The contained gold, copper and silver figures shown are in situ. No assurance can be given that the estimated quantities will be produced.  Although the Company 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 to 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.

SOURCE East Africa Metals Inc.

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