East Africa Metals and Sino Union Energy Group agree to move forward on Harvest Project acquisition and a $3,000,000 Private Placement

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VANCOUVER, Feb. 24, 2020 /CNW/ - East Africa Metals Inc. (TSX-V: EAM - "East Africa" or the "Company") is pleased to announce that it has reached agreement with Hong Kong-based Sino Union Energy Group Limited ("Sino Union") on a binding letter of intent to acquire a majority ownership stake in the Harvest Project ("Harvest Transaction") currently held by EAM's wholly owned subsidiary, Tigray Ethiopia Holdings Inc. ("TEHI"). TEHI holds a 70% interest in Harvest Mining PLC. with Ezana Mining Development PLC.  Harvest Mining PLC owns 100% of the Harvest Project, which is located in the Tigray National Regional State of the Federal Democratic Republic of Ethiopia ("Ethiopia").

Harvest Letter of Intent
The terms of the binding LOI indicate Sino Union and EAM (the "Parties) will enter into a Definitive Agreement whereby Sino Union will acquire 55% interest of the Harvest Project by making a cash payment of USD$500K , developing and operating the Terakimti Oxide Mine and funding 100% of TEHI's obligations related to the development and operation of the Harvest Project (Ezana Mining PLC holds a 30% interest in the Harvest Project and is responsible for contributing 30% to the development and operating costs).

 On completion of the proposed transaction:

• Sino Union will hold the rights (interest) to 55% post tax profits/Government distributions of Harvest Mining PLC; and
• EAM will hold the rights (interest) to 15% post tax profits/Government distributions of Harvest Mining PLC.

Closing conditions include:

• Receipt of required approvals, including and not limited to Board, Regulatory and Government;
• Execution of the definitive agreement; and
• EAM receiving the cash payment of US$500,000.

Once the Harvest acquisition is complete, EAM will provide Sino Union with a "Right of First Offer" for any current or future Ethiopian assets EAM makes available for acquisition (excluding any exploration assets associated with the Adyabo project). Negotiations respecting consideration for the acquisition of future Harvest exploration assets will be based on terms similar to those agreed to for the acquisition of the current resources: i) cash payment; ii) funding of 100% of the capital costs; and iii) allocated % of post-tax profits of the new mineral resources. Sino Union and EAM will use best efforts to finalize all conditions precedent and finalize the definitive agreement.

Private placement

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 (a "Warrant"). Each whole Warrant will entitle the holder thereof to purchase one common share at an exercise price of $0.35 for a period of 24 months from the date of closing.

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. Of the $3,000,000 placement, EAM and Sino Union have agreed that $1,800,000 of the gross proceeds will be segregated for exploration expenses on EAM's African assets. Funds will be wired to EAM 20 days after the definitive agreement is complete.

All of the securities issued in connection with this placement are subject to resale restrictions which expire four months and one day from closing. The financing remains subject to certain conditions including, but not limited to, to receipt of approval from the TSX Venture Exchange.

The securities offered have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act") or any U.S. state securities laws, and may not be offered or sold in the United States or to, or for the account or benefit of, United States persons absent registration or any applicable exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws. This news release shall not constitute an offer to sell or the solicitation of an offer to buy securities in the United States, nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

About East Africa Metals
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 performance of the exploration programs designed and implemented by East Africa are notable, not only due to short time-frame it has taken to achieve the milestone of this past week, but also by the low discovery costs.

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.

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", "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: closing of the Sino Union Transaction; obtaining all required approvals for the Sino Union Transaction; the ability of Sino Union and Tibet Huayu to develop and operate the Ethiopia Projects and Properties within the required laws and agreements; the outcome of the arbitration case with the developer for the Tanzanian Projects; if the arbitration case is successful that the Company can occupy the site and advance the Tanzanian Projects; if the arbitration is successful the Tanzanian Definitive Agreement payments are not refundable; 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; 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; availability of drilling equipment and access; actual results of exploration activities; 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 listing application, East Africa's financial statements and management's discussion and analysis for the nine months ended September 30, 2019 and for the year ended December 31, 2018, and East Africa's listing application dated July 8, 2013. 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. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the price of precious and base metals; the demand for precious and base metals; the ability to carry on exploration and development activities; 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 including and not limited to license approvals, social and environmental matters, and such other assumptions and factors as set out herein.  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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