East Africa Metals closes $5.2 million non-brokered private placement
East Africa Metals Inc has announced the closing of a $5.2M private placement with Shandong Tyan Home Co., Ltd. , a Chinese listed public company. The private placement will finance ongoing exploration and project development activities at the Company's Harvest and Adyabo projects, located in the Tigray region of the Federal Republic of Ethiopia.
The Company also announced the appointment of Mr. Yongwen Wang to the Company's Board of Directors. STH is a Chinese listed public company on the Shanghai Stock Exchange (stock code: 600807), with an integrated business range including real estate, mining, finance and venture capital investment. The total assets of STH cumulate to more than RMB￥8 billion Chinese Yuan.
Gold is one of the key business sectors of STH. Andrew Lee Smith, EAM's CEO commented, "The Company is grateful for the partnership and support received from STH as a result of this financing. This partnership increases EAM's capacity to provide the capital, equipment, operational and exploration expertise required to advance the Company's Ethiopian projects, and realize full potential of the tremendous mineral endowment on behalf of all stakeholders."
In addition to the private placement, STH and EAM also have a non-binding letter of intent to provide US$10,000,000 line of credit to support the development of the Terakimti Oxide Gold Project (see news release dated November 2, 2016). Alternatively, STH can choose to identify a third party to provide or participate in the debt financing.
As a result of this placement STH owns approximately 14.3% of the outstanding shares of the Company. Mr. Yongwen Wang has been a Director and General Manager of STH since 2007, and Vice President of Shandong Tianye Real Estate Development Group Co., Ltd. since 1999.
Mr. Wang holds a master degree of Business Administration from Shandong University and has rich experience in enterprise management and capital operation. He devotes himself to improve the competitiveness and profitability of the enterprise.
As a result of the financing, the Company issued 20,000,000 units at a price of $0.26 per unit, for gross proceeds of $5,200,000. Each unit consists of one common share of the Company and one-half of one common share purchase warrant.
Each whole warrant entitles the holder thereof to purchase one common share at an exercise price of $0.45 for a period of 18 months from the date of closing. If at any time after July 8, 2017 the Company's common shares have a closing price of $0.65 or greater for a period of 10 consecutive trading days, the Company will be entitled to accelerate the expiry date of the warrants upon 20 days' notice given by news release and the warrants will then expire on the 20th day after the date of such notice.
The Company will pay finders' fees in connection with the subscription in an aggregate amount of $208,000 in cash. All of the securities issued in connection with this placement are subject to a hold period expiring on July 8, 2017.
