AMN - ETHIOPIA: East Africa MOU for project financing

East Africa Metals has signed a binding memorandum of understanding (MOU) with Luck Winner Investment Limited providing for project development financing of up to US$250 million to be used for development of projects in Ethiopia. The MOU also includes a private placement for gross proceeds of approximately C$13.55 million and an unsecured loan to East Africa in the amount of C$2 million.

The MOU with Hong Kong-based Luck Winner contemplates that a joint venture company will be formed, with 70% owned by Luck Winner and 30% by East Africa.

Luck Winner will invest up to US$250 million into development of East Africa's projects in Ethiopia. East Africa will contribute a proportionate amount of gold valued with a cost price of US$70/ounce, of up to 1.5 million gold equivalent ounces for an aggregate value of US$110 million.

The parties intend to expeditiously negotiate, finalise and execute a comprehensive joint venture agreement in respect to the JV company and the development of the projects.

Upon completion of the private placement and conversion of the loan, Luck Winner will own approximately 28.8% of East Africa's outstanding shares.

The C$2 million loan will be repayable in six months and will accrue interest of 2% per annum. Under the loan agreement, East Africa is required to restructure its existing cooperation agreement with respect to the Magambazi project within 30 days.

Upon completion of the restructure, Luck Winner has the right to require the establishment of a joint venture for development of the Magambazi project, which will be 70% owned by Luck Winner and 30% by East Africa.

Until the loan is allocated for the Magambazi JV or is converted into units, East Africa is restricted to use the loan proceeds for East Africa's Harvest project mining licence application, the negotiation of an agreement respecting the Harvest project development stage, the restructure of the existing cooperation agreement respecting the Magambazi project, and the renewals of the Magambazi mining licences if required.

Luck Winner is an international mining development and investment company seeking to expand its investments throughout Africa.

www.eastafricametals.com