Business
East Africa Metals Executes Definitive Agreement for Development of Magambazi and Gold Stream Transaction
VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 7, 2016) - East Africa Metals Inc. (TSX VENTURE:EAM) ("East Africa" or the "Company") wishes to announce that,
About this update from East Africa Metals, Inc.
[{"type":"text","content":"VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 7, 2016) - East Africa Metals Inc. (TSX VENTURE:EAM) (\"East Africa\" or the \"Company\") wishes to announce that, further to the news release dated October 27, 2015 and December 10, 2015, the Company has completed the execution of the Definitive Agreement with an arm's length private exploration and development company (the \"Developer\") to develop East Africa's Magambazi project in Tanzania. As outlined in its June 15, 2015, news release: Under the terms of the letter agreement, the Developer will: pay East Africa US$1 million in cash for a 100% interest in the Handeni property, which includes the Magambazi project, and all properties owned by East Africa in Tanzania (the \"Assets\") - US$0.5 million on completion of the Definitive Agreement (US$200,000 received) and US$0.5 million within twelve-months of the Effective Date (March 7, 2016); pay East Africa approximately US$1 million in cash for the book value of the camp, equipment and other assets within twelve-months of the Effective Date (March 7, 2016); convey to East Africa the right to receive a 1.6% Net Smelter Royalty on production, capped at US$1.8 million; convey to East Africa the right to acquire a gold stream equal to 30% of the life of mine gold production from all of the Assets; issue treasury shares of the Developer that is expected to represent 9.9% of the Developer's outstanding shares. The Developer intends to list on the London Stock Exchange's AIM and expects to issue such shares to East Africa before the listing; and offer East Africa a seat on the Board of Directors of the Developer and a seat on the Management Committee of the Magambazi project. The transaction will provide East Africa with the right to purchase 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. Further, the Developer will provide a completion guarantee under which, if within 48 months of the effective date the project fails to produce a minimum of 8,000 ounces of gold in any quarterly period, the Developer will pay East Africa an advanced cash payment of US$592,000 for every quarter after 48 months from the effective da...