East Africa Metals Inc, a company that is involved in exploring, developing and operating in mining in Ethiopia, has agreed to work with Tibet Huayu Mining Co., a Chinese mining corporation.
East Africa Metals signed a binding letter of Intent with Tibet Huayu Mining so that the latter can help the company in its mining work in Ethiopia. Tibet Huayu, a Chinese mining company headquartered in Lhasa, China, is a mining company publicly listed on the Shanghai Stock Exchange.
The letter of intent, it has been disclosed, contemplates East Africa Metals transferring its equity interest in its Ethiopian subsidiary companies to Tibet Huayu. The letter also specifies that the parties entering into joint venture contract for the purpose of development and operation of the company’s Ethiopian mining assets.
East Africa Metals owns 70 percent of Harvest Mining PLC, and 100 percent of Tigray Resources Incorporated PLC. Harvest holds the Terakimti oxide gold mining license, while Tigray Resources Inc. hosts the Mato Bula and Da Tambuk deposits (Adyabo Property), which are in the final process obtaining mining permit.
According to the transaction defined in the binding letter of intent, for an exchange of 55 percent interest of Harvest Mining and 70 percent of interest of Tigray Resources Inc., Tibet Huayu will provide a cash payment of $1.7 million to East Africa Metals and also finance, develop and operate the mining projects under the two corporations.
The letter also specifies that East Africa Metals will retain the mineral rights, and all exploration obligations for the prospective targets not incorporated in the three mining licenses and will give Tibet Huayu a right of first refusal of reasonable duration to acquire its mineral resources.
Speaking regarding the agreement made, Andrew Lee Smith, East Africa’s CEO said, “The signing of the binding letter of intent with Tibet Huayu marks a significant milestone for the company and the emerging Ethiopian mining sector. Our board and management look forward to a partnership that will see mine development and exploration agendas advancing parallel with the objective to establish mining operations and grow the current resource base through diamond drilling”.
Ethiopia has recently expressed commitment to finalize reforms it started in the country’s mining industry.
Source: Mining Review