East Africa Metals Updates Financing


VANCOUVER, British Columbia, Nov. 10, 2017 (GLOBE NEWSWIRE) -- East Africa Metals Inc. (TSX-V:EAM) (“East Africa” or the “Company”) is pleased to provide the following update on the financing announced October 2, 2017.

Private Placement

After the signing of the binding memorandum of understanding (“MOU”) with Luck Winner Investment Limited (“LW”), both parties have been conducting their due diligence review, and have agreed to extend the due diligence review period for 30 days.

Under the MOU, LW has committed to purchase, on a private placement basis, 52,100,000 units at a price of $0.26 per unit for aggregate gross proceeds of approximately C$13,550,000. Each unit will consist of one common share and one-half of one share purchase warrant, with each whole warrant exercisable for $0.45 and expiring 24 months from closing. 

The securities issued under the private placement will be subject to a hold period of four months.  The proceeds will be used to continue exploration programs on the Company’s projects in Ethiopia and general working capital.

Upon completion of the private placement and conversion of the C$2,000,000 loan described below, LW will own approximately 28.8% of the Company’s outstanding shares (37.8% on a diluted basis).  Also upon completion of the private placement, the Company will cause three of its directors to resign and appoint three LW nominees to fill those vacancies, and the Company may make certain changes to management positions.

$2 Million Loan

Pursuant to the loan agreement between LW and the Company, LW has agreed to lend C$2,000,000 to East Africa. The loan will be repayable in six months and will accrue interest of 2% per annum.  The loan is convertible into units of East Africa at a deemed price of $0.26 per unit.  Each unit will consist of one common share and one-half of one share purchase warrant, with each whole warrant exercisable for $0.45 and expiring six months from issuance. The securities issued under the loan will be subject to a hold period of four months.  LW has the right to apply the loan towards cash consideration payable to East Africa towards a joint venture for the development of the Magambazi project.

Subject Conditions

The project development funding, the loan agreement and private placement are subject to certain conditions, including but not limited to, the establishment of JVCo, receipt of mining license for the Harvest project, Harvest agreement to develop the project, completion of satisfactory due diligence reviews by both parties, execution of definitive agreements, East Africa’s shareholder approval of the creation of a new control person and any transactions as required by the TSX Venture Exchange, and receipt of approval of the TSX Venture Exchange.  The Company intends to call a shareholders meeting upon completion of East Africa’s and LW’s satisfactory due diligence review. 

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" or variations of such words or similar words or expressions. Forward-looking information is based on reasonable assumptions that have been made by East Africa 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 East Africa to be materially different from those expressed or implied by such forward-looking information, including but not limited to: early exploration; the closing of the agreement with the exploration and development company to advance  the Magambazi Project or identify any other corporate opportunities for the Company;  mineral exploration and development; metal and mineral prices; availability of capital; accuracy of East Africa's projections and estimates, including the initial mineral resource for the Adyabo, Harvest  and Magambazi Projects; estimated timing of receipt of the Terakimti Oxide Gold mining licence and/or exploration licence extensions, interest and exchange rates; competition; stock price fluctuations; availability of drilling equipment and access; actual results of current 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; the speculative nature of strategic metal exploration and development including the risks of diminishing quantities of grades of reserves; 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 East Africa’s management’s discussion and analysis for the year end December 31, 2016, management’s discussion and analysis for the three and six months ended June 30, 2017 and East Africa’s listing application dated July 8, 2013. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to the timely closing of the financing; the timely closing of the Handeni Property definitive agreement; the ability of the Company to repay the loan by the required date; the price of gold, silver, copper and zinc; the demand for gold, silver, copper and zinc; 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 regarding environmental matters, the renewal or extension of exploration licences, and such other assumptions and factors as set out herein. Although East Africa 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 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.

East Africa Metals Inc.