China-based Zijin Mining Group Company has signed a non-binding letter of intent with East Africa Metals (EAM) to acquire a majority ownership stake in the Harvest Project in the Tigray Region of Ethiopia.

The Harvest Project is located in the highly prospective Asmara Mineral Belt, located in the southern part of the Arabian Nubian Shield (ANS).

Located 600km north of Addis Ababa, the project comprises multiple trends of copper-gold-silver-zinc rich volcanogenic massive sulphide (VMS) systems.

EAM, through its wholly-owned subsidiary Tigray Ethiopia Holdings (TEHI), owns a 70% stake in Harvest Mining, which has a 100% stake in the Harvest Project.

The remaining 30% interest in Harvest Mining is held by Ethiopian mining firm Ezana Mining Development.

Zijin Mining intends to acquire a 55% interest in the Harvest Project by paying $900,000 in cash.

The Chinese mining firm will also develop and operate the Terakimti Oxide Mine, considered to be the most advanced prospect of the Harvest Project, as well as fund TEHI’s commitments related to the development and operation of the Harvest Project.

Ezana will contribute 30% to the costs related to developing and operating the Harvest Project.

Upon completion of the proposed transaction, Zijin Mining and EAM will have 55% and 15% rights, respectively, to post-tax profits/government distributions of Harvest Mining.

Zijin Mining will also be provided with a ‘Right of First Offer’ for the acquisition of EAM’s current or future Ethiopian assets. This is subject to existing rights granted by EAM.

The proposed transaction is subject to the signing of a definitive agreement and the necessary regulatory approvals.

In a press statement, EAM said: “Negotiations respecting consideration for the acquisition of future Harvest exploration assets will be based on terms similar to those agreed to for the acquisition of the current resources: i) cash payment; ii) funding of 100% of the capital costs; and iii) allocated % of post-tax profits of the new mineral resources.”