AMN - ETHIOPIA: DMAs issued for two gold projects

East Africa Metals has received Draft Model Agreements (DMAs) from Ethiopia's Ministry of Mines, Petroleum and Natural Gas for its Mato Bula and Da Tambuk gold projects. The projects are in the Tigray National Regional State of the Federal Democratic Republic of Ethiopia.

The delivery of the DMAs indicates that the Ministry has approved the permit application and advanced the permitting process to the next stage.

The DMAs set out the rights and obligations of both parties with respect to the development and operation of the Mato Bula and Da Tambuk projects and, once executed, will result in the issuance of the mining licence for each project.

East Africa Metals CEO Andrew Lee Smith said, “This is another important milestone for East Africa Metals and our efforts to establish mining operations in Ethiopia.

"The issuance of the DMAs for the Mato Bula and Da Tambuk projects by the Ministry represents an important permitting milestone and the company looks forward to further discussions with the Ethiopian government to conclude the process.

"Once issued, the company will have three permitted mining projects within a 15-kilometre area of influence.”

The company is reviewing the DMAs and expects to respond to the Ministry after compiling an assessment of the documents.

In anticipation of the pending development program, the company is engaged in project financing discussions with potential financiers and development partners.

A post-tax NPV of US$56.6 million has been estimated for the base case at Mato Bula Gold-Copper Project using US$1,325 per ounce gold price, US$3.00 per pound copper and US$17.00 per ounce silver, at an 8% discount rate.

Average annual metal production has been estimated at about 34,750 ounces of gold, 1.67 million pounds of copper and 4780 ounces of silver.

Other Mato Bula factors include:

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

- Daily processing rate of 1,400 tonnes 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 approximately 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.

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

Da Tambuk Gold Project factors:

- Post-tax NPV of US$13 million and IRR of 28.6% for base case using US$1,325 /ounce gold and US$17.00/ounce silver, at 8% discount rate.

- Average annual metal production of around 24,000 ounces gold and 6000 ounces of silver.

- Underground trackless mining utilising ramp access, cut and fill and open stope mining.

- Daily processing rate of 550 tonnes 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.

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

www.eastafricametals.com