East Africa Metals has been issued a draft model agreement for its Terakimti Oxide Gold Project, in the Tigray region of Ethiopia.
The company reported that delivery of the draft model agreement is an indication that Ethiopia's Ministry of Mines, Petroleum and Natural Gas has approved the permit application and advanced the permitting process to the next stage.
The draft agreement contains provisions relating to the rights and obligations of both parties with respect to the development and operation of the Terakimti Oxide Gold Project.
Once the agreement is implemented, the mining licence will be issued.
East Africa Metals CEO Andrew Lee Smith said: "This is an important milestone for East Africa Metals and the Ethiopian resources sector.
"We anticipate the Terakimti Oxide Gold Project will be the first heap leach operation in the country and will be an important basis for the future development of the highly prospective copper-gold VMS systems in the Tigray region."
As an anticipatory move towards the pending development programme, the company has secured the services of South Africa-based SENET to start detailed engineering for the project.
Regarding securing financing for the project, the company has reported that its representatives will travel to China in the coming weeks to finalise the terms for a $10m line of credit with Shandong Tyan Home.
The Terakimti Oxide Gold Project has 1,125,000t grading 3.2g gold and 24g silver per tonne containing 107,000oz of gold and 812,000oz of silver.