The Board of Directors and all directors of the Company guarantee that there are no false records, misrepresentations or major omissions in the announcement and take individual and joint responsibilities for the authenticity, accuracy and completeness of the contents of the announcement.
●The "Subscription Agreement" is signed by a wholly-owned subsidiary, Tianye Jirui Gold (Hong Kong) Limited ("Jerry Gold (Hong Kong)"for short), and East Africa Metals Inc. ("EAM Company" for short). Jerry Gold (Hong Kong) will subscribe for 20 million securities units issued by EAM at $ 0.26 / unit, $ 5.2 million in total, and each unit comprises a common stock and half of subscription rights with the price of 0.45 Canadian dollars / shares. 18 months after the completion of the delivery period, if the rights exercised, the company will need to pay 4.5 million Canadian dollars to subscribe for the above subscription under the corresponding 10 million shares of EAM common stock.
● The Company's shareholding company Tiandi International Mining Co., Ltd. ("Tiandi Mining" for short) acquired 100% stake interest in Manas Holdings (Kyrgyz) Pty Ltd held by Manas Resources Limited, and the payment is at a consideration of USD 10 million.
I. Transaction Overview
In order to further enhance the investment capacity of overseas mining industry and expand the development space of the company's mining industry, the company's subsidiary, Jerry Gold (Hong Kong) have signed the "Subscription Agreement" with EAM Company to subscribe to 20 Million securities units issued by EAM at $ 0.26 / unit, $ 5.2 million in total, and each unit comprises a common stock and half of a call warrant with the price of 0.45 Canadian dollars / shares. 18 months after the completion of the delivery period, if the rights exercised, the company will need to pay 4.5 million Canadian dollars to subscribe for the above subscription under the corresponding 10 million shares of EAM common stock. After this subscription, Jerry Gold (Hong Kong) will hold about 14.3% stake in EAM Company in the future; if all of the rights are exercised in the future, Jerry Gold (Hong Kong) will hold about 20.0% stake in EAM.
The matter has been approved by the company's authorities and is to be approved by the EAM Board of Directors and the Toronto Stock Exchange GEM as well as their authorities. The transaction does not constitute a connected transaction or major asset restructuring.
● The Company's shareholding company "Tiandi Mining" acquired 100% stake interest in Manas Holdings (Kyrgyz) Pty Ltd. held by Manas Resources Limited, and the payment is at a consideration of USD 10 million.
II. Basic information of the Parties of the Transaction
1, Jerry Gold (Hong Kong), Registered Capital: HKD 10,000. The wholly-owned subsidiary of Shandong Jirui Mining Co., Ltd. holds 100% of its stake; Registration Number: 2442304; Registered Address: Room 10, 28 / F, Wealth Center, No. 25 Chong Yip Street, Kowloon Kwun Tong, Hong Kong; Business Scope: Industrial investment; investment management; investment information consultation; gold and silver jewelry, gold and jewelry, precious metals sales.
2, Tiandi International Mining Co., Limited, Address: Room B 201, 14 / F, Huaxuan Commercial Center, 383 Hennessy Road, Wanchai, Hong Kong; Registered capital: USD 20 million, among which the company invested USD 9.8 million, accounting for 49% of registered capital, Guizhou Geological and Mineral Resources Development Company Limited invested USD10.2 million, accounting for 51% of registered capital; Organization : limited liability company; Business Scope: mineral resources risk exploration, mineral resources development (mining, election, metallurgical) mineral processing and sales.
3, EAM Company, Registered Address: Suite700-1055 West Georgia Street Vancouver, British Columbia Canada V6 E3P3; Registration No.: 837397-3; Registration Date: December 7, 2012; Shares Amount: 119,647,013 shares, of which SinoTech (Hong Kong ) Corporation Limited holds 28,839,433 shares, accounting 24.1%, and Goldrock Resources Corporation Limited holds 7,568,512 shares, accounting 6.3%.
EAM corporation went public at TSX VENTURE of Toronto, Canada, the stock code is EAM, it's a mineral exploration company and the project is mainly in Africa, their main mining assets including Ethiopia's Harvest project 70% equity, Adyabo project 100% equity and Tanzania Handeni Properties project 30% equity, it's main business includes identification of target areas, acquisitions, exploration, development and/or sale of the precious metal and base metal resources in Ethiopia and Tanzania.
Auditing by Price Waterhouse Coopers Vancouver, till December 31, 2015, the total asset of EAM Corporation was CAD 28,828,096, the net asset is CAD 22,975,024; its business income is CAD 0 and net margin is -CAD 8,723,930 in 2015. The corporation has no incidence relation with it.
4. Manas Resources Limited company was founded in 2007, registered in Western Australia, it's a mining company which listed on the Australian Securities Exchange (ASX) in 2008, and the stock code is MSR. Their office address is Suite 9, Level 2,389 Oxford St, Mount Hawthorn, Western Australia 6016, and the business license number is 128042606, Phil Reese is their legal representative. The corporation has no incidence relation with it.
III, The basic information of trade object
1. 20 million securities units in EAM company
Every security unit includes a common stock and half of subscription rights (exercise price is CAD 0.45 per share), the price is CAD 0.26 per unit and the total is CAD 5.2 million; during the 18 months' exercise period after taking delivery, if the company wants to execute right, they need to pay additional CAD 4.5 million to subscribe corresponding 10 million shares of EAM's common stock under above call warrant.
The different project resources reserves of EAM company as follows:
(1) Harvest Project
EAM company owns 70% equity of Harvest Project and this project is located at the northern place, 600 miles far from the Addisababa, the capital of Ethiopia, it owns an exploration licenses and three exploration warrants, Hamlo, Terakimti and lgub.
Among them, according to the NI43-101 Technical Report on a Mineral Resource Estimate at the Terakimti Prospect, Harvest Property (centred at 38°21'E, 14°19'N), TigrayNational Region, Ethiopia, the mineral reserve of Terakimti which has been explorated as follows:
(2) Adyabo Project
EAM has a 100% interest in the Adyabo project, which is located 600 kilometers away from the north of Addis Ababa, Ethiopian capital, and is consisted of two exploration licenses, West Shire covering about 225 square kilometers and AdiDairo, both of which are adjacent to the Ethiopian Harvest project.
In accordance with NI 43-101 Technical Report on a Mineral Resource Estimate at the MatoBula Trend, Adyabo Project (centered at 38°05’E, 14°33’N),Tigray National Region, Ethiopia and EAST AFRICA METALS INC.MANAGEMENT’S DISCUSSION AND ANALYSIS, the mineral resources of the Adyabo project are as follows as of May 31, 2016:
(3) Handeni Properties Project
EAM has a 30% interest in the Handeni Properties project, which is located in the 173 km away from northwest of Tanzania, Dares Salaam, and 35 km away from south of Hendney. Handeni assets consist of two adjacent mineral resources, totaling approximately 83.5 square kilometers and obtaining two mining licenses covering an area of 9.9 square kilometers.
In accordance with EAST AFRICA METALS INC.MANAGEMENT＇S DISCUSSION AND ANALYSIS, the mineral resources of the Handeni Properties project are as follows as of May 31, 2016:
2. Manas Holdings (Kyrgyz) Pty Ltd
Manas Holdings (Kyrgyz) Pty Ltd was established on October 17, 2007 with registered capital of AUD 0.2 in Western Australia. Target companies have legally owned three wholly-owned subsidiaries registered in Z-Explorer CJSC, Landmark CJSC and Savoyardy CJSC of Kyrgyz Republic, (of which Savoyardy CJSC will be sold to third parties by Manas Resources Limited prior to the commencement of this transaction). By the Z-Explorer CJSC, Landmark CJSC these two subsidiaries, the target company legally owns one gold mining and three gold prospecting rights.
According to the "Result of Shambesai Gold Project Bankable Feasibility Study" issued by Manas Resources Limited on the Australian Stock Exchange on May 27, 2013 and its update announcement published on February 25, 2015, as the core assets of the transaction, Shambesai gold mining rights have been found in line with the Australian JORC standard (2012 version); "proven + indicated + speculated" ore resources are 8.1 million tons, with average grade of 2.7 g/t and gold metal content of 697,000 ounces (about 21.6 tons), of which more than 95% are the "proven" and "indicated" resources; "confirmed" + "rough" ore reserves are 2.4 million tons, with average grade of 3.7 g/t and gold metal content of 279,000 ounces (about 8.6 tons). Shambesai Gold Project can meet service life of at least 4.5 years of stable production.
Four Transaction Price
1. Since EAM is a listed company for the Toronto Stock Exchange, the subscription price should be based on the average price of its common stock pricing, which is in line with overseas investment practices; at the same time, taking into account the company's mining rights and future good development prospects, both parties, through communication and consultation, ultimately determine the transaction price.
2. Tiandi Mining has successively submitted to the counterparty a non-binding offer and a binding offer through relevant checks and assessment reports, subject to assessment price, and both parties, through consultation, ultimately determine the purchase price and tender assets.
V Main Content of Relevant Agreements
1. Main content of Subscription Agreement signed by Jirui Gold (Hong Kong) and EAM
(1) Subscription quantity, price and sum: Jerry Gold (Hong Kong) subscribes to EAM 20 million securities units, CAD 0.26 per unit, with subscription sum of CAD 5,200,000. The price of CAD 0.26 per unit is allocated as follows: CAD 0.2599 per subscription unit of the subscription price is allocated to the shares as part of this unit, and CAD 0.0001 per subscription unit of the subscription price is allocated to half of the subscription rights as part of this unit.
(2) Each securities unit includes one share of common stock and 1/2 share of common stock. In accordance with early termination terms and adjustment terms on subscription rights, after delivery, the vesting period of each complete subscription right is 18 months, which will make the right holder be entitled to purchase the company's common stocks at the price of CAD 0.45 per stock when exercising the right.
(3) Early termination of subscription rights. At any time during four (4) months after awarding the subscription right, if the common stock of EAM Company is traded at the price of CAD 0.65 or above when the exchange (or other exchanges that trade common stocks at that time) is closed for 10 continuous trading days, after EAM Company issues notices twenty (20) days in advance, EAM Company is entitled to bring forward the termination day of subscription rights, and the subscription right terminates on the twentieth (20) day after issuing the notice, unless Tianye Jirui Gold (Hong Kong) Limited performs its rights before the early termination day.
(4) Adjustment of subscription rights. The certificate representing the subscription right will particularly write terms to appropriately adjust the awarded level, quantity and price of subscription right stock based on the performance of subscription right after occurring a specific matter, and the specific matter includes division, merge or reclassification of EAM Company's common stock, stock interest payment and company merge.
(5) Tianye Jirui Gold (Hong Kong) Limited and EAM Company agree that provided that the stock and subscription right are not issued and rated within subsequent 12 months, Tianye Jirui Gold (Hong Kong) Limited may notify EAM Company to issue and rate the stock and subscription right or refund the subscription fund to Tianye Jirui Gold (Hong Kong) Limited in written. Before EAM Company issues and rates the stock and subscription right to Tianye Jirui Gold (Hong Kong) Limited, EAM Company is not required to issue and rate, and reserves the right to refund the subscription fund to Tianye Jirui Gold (Hong Kong) Limited. EAM Company can only issue and rate a part of stocks and refund the rest of subscription funds to the purchasing party.
2. Main contents of 100% Stake Agreement of Manas Holdings (Kyrgyz) Pty Ltd
(1) Transfer and Transferee of Stake
The transferor, Manas Resources Limited, intends to transfer 100% of the stake in the held target company, Manas Holdings (Kyrgyz) Pty Ltd to the transferee, Tiandi Mining, at a transaction price of USD10 million (including the purchase price of USD 1 and the transfer price of USD 9,999,999).
(2) Tax burden
As a result of this transaction, the reasonable costs or other similar nature of the taxes and fees from the Australia's stamp duties, customs duties, industrial and commercial alteration registration procedure shall be borne by Manas Resources Limited.
If the seller appears to breach the agreement (including breach of the seller's warranty and commitment), the buyer may file a claim within 30 working days after getting buyer noticed for the first time and no later than 18 months after the completion of the transaction. The buyer may claim compensation from the seller at no more than 100% of the purchase price.
VI. The Impact and Risk Analysis of the Transaction on the Company
Through the above-mentioned transactions, the Company will further enhance the scale and strength of the Company's mining business, effectively increase the Company's gold resources reserve and enhance the sustainable development capability of the Company's mining business, and conform to the development plan of the Company to increase the investment layout in the mining industry. The above-mentioned transactions are conducive to enhancing the investment capacity of overseas mining companies, further expanding the development space of the Company's mining industry, improving the market competitiveness of the Company, and enhancing the Company's sustainable management ability and profitability to maximize the interests of shareholders. The transaction has no significant impact on the Company's annual results in the current year.
As the target company is the oversea company, it may face risk factors in the aspects such as operational management, internal control and market policy in the management process. The company will pay close attention to target company's management and management Situation, strengthen risk control to ensure that the investment safety and income of the company. Draw the attention of investors on the invest risk.
Shandong Tyan Home Co., Ltd.
Board of Directors
December 22 2016