AMN - ETHIOPIA: East Africa granted two mining licences

East Africa Metals has received government approval of mining licences for the Mato Bula gold-copper and Da Tambuk gold deposits in the Federal Democratic Republic of Ethiopia. Both deposits are within the company's 100%-owned Adyabo project in the Tigray National Regional State.

With the granting of these licences, East Africa's assets now include four, fully permitted gold and base metal mining projects in Africa with total indicated and inferred resources of 2.8 million gold and gold-equivalent ounces and exploration upside.

The mining licence agreements for Mato Bula and Da Tambuk have been formally approved by the Ministry of Mines Petroleum and Natural Gas (MoMPNG), the Prime Minister's Office and the Council of Ministers.

The company will now focus on closing its project financing and proceed with the development of the Ethiopian projects.

East Africa's CEO Andrew Lee Smith said: "The awarding of the Mato Bula and Da Tambuk mining licences marks an important milestone for East Africa, the Government of Ethiopia and the MoMPNG.

"East Africa's management will now focus on negotiations with development partners to advance all of the company's assets in Ethiopia and Tanzania and engage further exploration programs to continue the growth of the company's mineral resources and shareholder value."

A preliminary economic assessment (PEA) for Mato Bula outlines:

• Post-tax NPV of US$56.6 million for base case using US$1,325 per ounce of gold, US$3.00 per pound of copper and US$17.00 per ounce of silver, at an 8% discount rate;

• Payback of pre-production capital in three years from start of production;

• C1 cash operating cost of US$412 per ounce of gold including all on-site costs and AISC cost of US$620 per ounce calculated with all on-site and off-site costs, TCRC charges, sustaining costs and net of by-product credits;

• Average annual metal production of 34,750 ounces of gold, 1.67 million pounds of copper and 4,780 ounces of silver;

• Pre-production capital cost of US$54.2 million including contingency of 38% on direct costs and 26% on total of direct and indirect costs;

• Open pit mining utilising drill blast, trucks and shovels, waste stripping ratio of 9/1;

• Processing rate of 1,400 tonnes per day using conventional crush/grind comminution, gravity concentration and flotation to produce a copper-gold concentrate. In addition, a gold bearing pyrite concentrate will be produced and treated off-site by carbon in leach (CIL) technology;

• Life-of-mine metal recoveries of 86.4% for gold, 87.4% for copper and 50% for silver;

• Concentrate grades average 132 g/t gold, 25.5% copper and 28 g/t silver;

• Minimum 8-year mine life based on proposed open pit depth of 190 metres; and

• Significant potential exists to extend mine life as drilling has identified mineralisation along strike and to 370 metres down dip.

The Da Tambuk project PEA outlines:

• Post-tax NPV of US$13.0 million and IRR of 28.6% for base case using US$1,325 per ounce gold and US$17.00 per ounce silver, at an 8% discount rate;

• Payback of pre-production capital in 1.9 years from start of production;

• C1 cash operating cost of US$420 per ounce of gold including all on-site costs and AISC cost of US$642 per ounce calculated with all on-site and off-site costs, TCRC charges, sustaining costs and net of by-product credits;

• Average annual metal production of 24,000 ounces of gold and 6,000 ounces of silver;

• Pre-production capital cost of US$34.1 million including contingency of 36% on direct costs and 26% total of direct and indirect costs;

• Underground trackless mining utilising ramp access, cut and fill and open stope mining;

• Processing rate of 550 tonnes per day using crush/grind comminution, gravity concentration and CIL technology;

• Average life-of-mine metal recoveries of 93% for gold and 50% for silver;

• Minimum 4-year mine life based on mining plan depth to 200 metres below surface; and

• Excellent potential to extend mine life as drilling has intersected significant mineralisation to 260 metres down dip.

The company is holding an annual general and special meeting this Friday to seek shareholder approval for the sale of approximately 70% interest in the company's Ethiopian assets to Tibet Huayu Mining Co Ltd.

The company also recently announced the closing of a non-brokered private placement, raising $2,511,360.

www.eastafricametals.com