BACKGROUND

The Adyabo project (Adi Dairo and West Shire concessions) covers 195.5 square kilometres west of East Africa Metals' Harvest Project and is located in an underexplored part of the Arabian Nubian Shield in Northern Ethiopia. East Africa Metals acquired the Harvest Project from Tigray Resources Inc. in 2014. In December 2011 Tigray entered into an agreement to acquire up to an undivided 80% interest in the Adyabo property in two phases over a three-year period. In November 2012, Tigray received TSX Venture Exchange approval for the acquisition of the Adyabo property in Ethiopia and advanced the first phase of the earn-in (see below). In February 2016, East Africa Metals obtained 100% interest in Adyabo by converting the remaining 20% ownership to a 2% NSR. The area is highly prospective for high sulphidation gold rich volcanogenic massive sulfide (VMS) - submarine porphyry related high-grade Au-Cu +/- Zn, and orogenic (structurally controlled) gold deposits, and contains numerous alluvial, eluvial, and bedrock artisanal gold workings.

The project area includes several major linear NNE trending shear (suture?) zones which truncate rocks of the Zager Mafic and Ultramafic Belt in the centre of the project area, with the Adi Hageray Block to the west and the Adi Nebrid Block to the east. Known high sulphidation gold rich VMS - submarine porphyry related high-grade Au-Cu +/- Zn related mineralization in the east of the project includes the Mato Bula and Da Tambuk Prospects, and multiple gold prospects are present along the regional structures of the Zager Mafic and Ultramafic Belt. Multiple generations of intrusions throughout the project include gabbro, pyroxenite, granite, and granodiorite.

Previous work (prior to 2011) on the concessions included stream sediment sampling, 300 metre spaced airborne electromagnetic and magnetic surveys, traverse rock-chip sampling, and reconnaissance mapping. Recent work has been focussed on defining drill targets through follow-up and first pass exploration. Over 50,000 geochemical soil, stream, and rock chip samples have been completed, defining numerous gold and base metal anomalies. These anomalies have been followed-up with trenching, rock chip sampling, detailed mapping, and logistical preparation for drilling.

Developing targets include the Mato Bula Au-Cu (Zn-Ag-Mo) and Da Tambuk Au (Pb, Mo) deposits. Orogenic gold targets include Adi Gozomo and Sentraley.

MATO BULA Au-Cu-Pb-Zn TREND


The Mato Bula trend is a greater than 8 kilometre long zone of alteration characterized by sericite, pyrite (10%), carbonate (generally dolomite), and silica mineralization, which has undergone strong shearing. This assemblage comprises many elements consistent with high sulphidation gold rich VMS - submarine porphyry-related systems. The trend hosts additional geochemical targets at surface, and possesses significant upside to further discoveries both along strike and at depth. Higher grade gold core shoots are recognized at Mato Bula Main, Mato Bula Silica Hill, and at Da Tambuk. Potential resource extraction is supported by favourable topography over the mineralized shoots.

Adyabo Resource
  • Indicated Mineral Resources of 3,215,000 tonnes containing 408,000 ounces of gold at an average grade of 3.92 g/t gold, 16,800,000 lbs copper at an average grade of 0.24% copper, and 132,000 ounces silver at an average grade of 1.4 g/t silver.
  • Inferred Mineral Resources of 5,930,000 tonnes containing 273,000 ounces gold at an average grade of 1.43 g/t gold, 65,700,000 lbs copper at an average grade of 0. 50%, copper, and 559,000 ounces silver at an average grade of 2.9 g/t silver.
  • In the mineral resource update published June 2016, the gold grade for the Indicated portion of the resource increased to 3.92 grams per tonne gold, compared with the initial overall Inferred Resource grade of 2.26 grams per tonne gold, an increase of 73%.
  • In complement to this increased grade, over 95% of the Indicated equivalent gold ounces are recoverable via the near surface Pit Constrained model.
Adyabo Project Mineral Resource Estimate David Thomas, P. Geo. (Effective Date: May 31, 2016)

    Gold Copper Silver Gold Equivalent Gold Metal Copper Metal Silver Metal Gold
Equivalent
Metal
Category Tonnes (Au g/t) (Cu %) (Ag g/t) ( Au g/t) (Au Oz) (Cu Mlbs) (Ag Oz) (Oz)
Indicated 3,215,000 3.92 0.24 1.4 4.29 408,000 16.8 132,000 446,000
Inferred 5,930,000 1.43 0.50 2.9 2.27 273,000 65.7 559,000 434,000

Adyabo Resource Highlights
  • The Mineral Resource is defined to a vertical extent of 450, 200, and 170 metres for Mato Bula, Da Tambuk, and Mato Bula North respectively, with potential for lateral and depth extension within this large altered system.
  • Copper concentrate grades ranged from 23% to 27% Cu, 170 to 850 g/t Au, and 27 to 240g/t Ag. Total gold recoveries, inclusive of copper floatation and cyanidation tests, ranged from 77% to 97%*
  • Whole mineralization cyanidation of Da Tambuk and intensive leaching of a Da Tambuk pyrite scavenger concentrate both returned gold recoveries of 97% suggesting that the gold within this composite is not refractory and the flotation-only recovery of 57% could be improved by cyanidation of flotation products.
  • Additional metallurgical optimization is possible through regrind work, collector dosage variation, and comminution testwork.
  • Synergies available as Resources are spatially aligned on a corridor of infrastructure (including the national power grid transmission corridor and paved highway) with the company's adjacent Terakimti deposit at the Harvest project, with direct connection to a planned rail network link at Shire.
    *Da Tambuk whole mineralization leach test and pyrite scavenger concentrate test both returned gold recoveries of 97%.
    1 Base Case - Au $1,400/oz, Cu $3.20/lb, Ag $20/oz
The Resource incorporates data from 15,295.8 metres of drilling in 84 drill holes, and 2,808 metres of trenching. It further builds upon the metal asset base East Africa is defining and accumulating on the Adyabo and Harvest projects in Ethiopia, as a complement to the Terakimti resource announced on January 27, 2014 and update announced October 27, 2015.

The current Resources at Adyabo and Harvest straddle an infrastructure corridor, with projects being located within 11 and 7 kilometres respectively of a paved highway and a high-tension power corridor (Figure 2).

Adyabo Project Indicated Mineral Resource Estimate David Thomas, P. Geo. (Effective Date: May 31, 2016)

Pit Constrained     Gold Copper Silver Gold
Equivalent
Gold
Metal
Copper
Metal
Silver
Metal
Gold
Equivalent
Metal
Area Cut-Off
($/t)
Tonnes (Au g/t) (Cu %) (Ag g/t) ( Au g/t) (Au Ozs) (Cu Mlbs) (Ag Ozs) (Ozs)
Da Tambuk 23.9 775,000 4.51 0.11 2.4 4.65 112,000 1.9 59,000 116,000
Mato Bula 23.9 2,280,000 3.74 0.28 1.1 4.18 278,000 14.0 70,000 310,000
Sub-Total Pit 23.9 3,055,000 3.94 0.24 1.4 4.30 390,000 15.9 128,000 426,000
                     
Underground Mineral Resource     Gold Copper Silver Gold
Equivalent
Gold
Metal
Copper
Metal
Silver
Metal
Gold
Equivalent
Metal
Area Cut-Off
($/t)
Tonnes (Au g/t) (Cu %) (Ag g/t) ( Au g/t) (Au Ozs) (Cu Mlbs) (Ag Ozs) (Ozs)
Mato Bula 63.9 160,000 3.57 0.25 1.0 3.96 18,000 0.9 3,000 20,000
Total PC + UG N/A 3,215,000 3.92 0.24 1.4 4.29 408,000 16.8 132,000 446,000

Adyabo Project Inferred Mineral Resource Estimate David Thomas, P. Geo. (Effective Date: May 31, 2016)

Pit
Constrained
    Gold Copper Silver Gold Equivalent Gold
Metal
Copper
Metal
Silver
Metal
Gold
Equivalent
Metal
Area Cut-Off ($/t) Tonnes (Au g/t) (Cu %) (Ag g/t) ( Au g/t) (Au Ozs) (Cu Mlbs) (Ag Ozs) (Ozs)
Da Tambuk 23.9 35,000 4.30 0.08 3.0 4.42 5,000 0.1 3,000 5,000
Mato Bula 23.9 3,010,000 2.13 0.34 2.4 2.67 207,000 22.2 237,000 259,000
Mato Bula North 23.9 2,470,000 0.27 0.70 3.2 1.49 22,000 38.3 252,000 119,000
Sub-Total Pit
Constrained
23.9 5,515,000 1.31 0.50 2.8 2.15 233,000 60.6 493,000 383,000
                     
Underground Mineral Resource     Gold Copper Silver Gold Equivalent Gold
Metal
Copper
Metal
Silver
Metal
Gold
Equivalent
Metal
Area Cut-Off ($/t) Tonnes (Au g/t) (Cu %) (Ag g/t) ( Au g/t) (Au Ozs) (Cu Mlbs) (Ag Ozs) (Ozs)
Da Tambuk 63.9 75,000 3.92 0.05 2.9 4.00 9,000 0.1 7,000 10,000
Mato Bula 63.9 330,000 2.77 0.65 5.4 3.82 30,000 4.7 58,000 41,000
Mato Bula North 63.9 15,000 0.75 0.79 2.6 2.10 400 0.3 1,000 1,000
Sub-Total Underground 63.9 420,000 2.91 0.55 4.8 3.80 39,000 5.1 66,000 51,000
Total PC + UG N/A 5,930,000 1.43 0.50 2.9 2.27 273,000 65.7 559,000 434,000

Footnotes to mineral resource statement:
  • Fladgate reviewed EAM's quality assurance and quality control programs on the mineral resources data. Fladgate concludes that the collar, survey, assay, and lithology data are adequate to support mineral resources estimation.
    Domains were modelled in 3D to separate mineralised rock types from surrounding waste rock. The domains were modelled based on copper and gold grades.
    Raw drill hole assays were composited to 2 m lengths broken at domain boundaries.
    Capping of high grades was considered necessary and was completed for each domain on assays prior to compositing.
    Block grades for gold and silver were estimated from the composites using a combination of ordinary kriging and inverse distance weighted (power of three) interpolation method into 5 (along strike) x 2m (across strike) x 5 m (vertical) blocks coded by domain.
    Dry bulk density varied by deposit area. The dry bulk densities are based on 559 specific gravity measurements at Da Tambuk, 1,755 specific gravity measurements at Mato Bula and 231 specific gravity measurements at Mato Bula North.
    Blocks were classified as Indicated and Inferred in accordance with CIM Definition Standards 2014.
    Indicated resources are classified on the basis of blocks falling within a drill hole spacing of 40 m x 40 m. The results of comparison with the previous mineral resource model, a drill hole spacing study and conditional simulation of gold grades were used to support the classification of Indicated mineral resources.
    Inferred resources are classified on the basis of blocks falling within the mineralised domain wireframes (i.e. reasonable assumption of grade/geological continuity) with a maximum distance of 100 m to the closest composite
    The mineral resource estimate is constrained within an optimised pit with a maximum slope angle of 50◦. Metal prices of $1,400/oz, $3.20/lb and $20.0/oz were used for gold, copper and silver respectively. Metallurgical recoveries of 97% for gold, 72% for copper and 50% for silver were applied at Da Tambuk. Metallurgical recoveries of 88.5% for gold, 87.5% for copper and 50% for silver were applied at Mato Bula and Mato Bula North.
    A pit constrained $/t cut-off was estimated based on a total process and G&A operating cost of $23.9/t of ore mined. An additional mining cost of $40/t was used to estimate a $/t cut-off of $63.9/t for reporting underground mineral resources.
    The contained gold, copper and silver figures shown are in situ. No assurance can be given that the estimated quantities will be produced. All figures have been rounded to reflect accuracy and to comply with securities regulatory requirements. Summations within the tables may not agree due to rounding.
    Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues.
    The quantity and grade of reported inferred resources in this estimation are conceptual in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.
Metallurgy
Positive preliminary metallurgical results have been received from composites derived from key mineralized zones at Mato Bula, Silica Hill, and Da Tambuk. Conventional copper floatation was successful in producing encouraging saleable copper gold concentrates, with additional gold recovery realized from cyanidation of gold bearing flotation products.

The metallurgical work was conducted on three diamond drill hole composite samples derived from gold intervals at Mato Bula, Silica Hill, and Da Tambuk, and samples were tested at the Blue Coast Research metallurgical facility in Parksville, BC. Coarse reject diamond drill hole material was utilized from 6 drill holes at Da Tambuk (Da Tambuk composite), and 11 drill holes (7 for the Mato Bula Main composite and 4 for the Silica Hill composite) from Mato Bula. A total of 151 samples were utilized for the composites, with composite grades averaging 11.1g/t Au and 0.3% Cu(Silica Hill), 6.6g/t Au and 0.99% Cu(Mato Bula Main), and 9.5g/t Au and 0.2% Cu(Da Tambuk).

Metallurgy summary
Composite Flotation Performance Cyanidation Total
Cu Recovery, % Cu Grade, % Au Recovery, % Py Scav Au Rec, % Cu Clnr 1 Tail Au Rec, % Au Extraction, % Au Recovery, %
Da Tambuk 72 24 57 4 16 Not Tested *97
Silica Hill 82 23 38 12 43 91 77
Mato Bula 93 27 83 8 3 52 85

The metallurgical work conducted to date is considered preliminary and more detailed testing will follow, to exploit opportunities that remain for more enhancements in overall metallurgical performance.

ZAGER GOLD TREND


Multiple zones of gold mineralization are present along a structural corridor of approximately 37km in strike on the Adyabo Project. The Corridor is centred on the Zager Mafic Ultramafic Belt, a thrust belt of ophiolite rocks containing multiple generations of felsic to ultramafic intrusive rocks, strong zones of shearing and numerous bedrock artisanal gold workings. The gold exploration model favoured for the trend is quartz vein-related intrusion-hosted gold mineralization associated with regional shear zones, similar to the Sukari and Koka-Zara mineralization styles.

320 by 40 metre to 320 by 80 metre spaced soil sampling covering much of the Adyabo project, in conjunction with regional reconnaissance, mapping, rock chip sampling and trenching has defined the following gold prospects, from south to north,
  • Hanbassa - 3.8 km long Au and Cu anomaly (open north) at the southern end of the West Shire Concession.
  • Zelazle (previously Mato Bula West) - 4km long soil Au anomaly open north 4.7km west of Mato Bula
  • Mugnae Andi - 2.5 km long Au soil anomaly associated with a granodiorite intrusion and peak rock chip values of 15.1 and 2.85 grams per tonne gold. Minor artisanal mining is present at Mungnae Andi which is 8km west of Mato Bula.
  • Awahi- is a 2.8km long soil anomaly on a flexure in the regional shear zone.
  • Adi Gozomo and Adi Gozomo East (see below)
  • Sentraley (see below)
  • Adi Kashu - 4.5km long gold soil anomaly on sheared ultramafic rocks
  • Adi Zerensky - 2km long gold soil anomaly on sheared ultramafic rocks

Adi Gozomo and Adi Gozomo East

The Adi Gozomo artisanal gold workings occur in an altered and quartz-veined granodiorite intrusion, within a zone of sheared ultramafic rocks. The workings are 120 metres long, up to 27 metres wide and are focussed on cubic pyritic mineralization possibly associated with stockwork to sheeted quartz veins in a granodiorite intrusion (dyke or series of dykes). Pyritic granodiorite is present over a 330 metre strike length, with half the trend under cover (farmland and alluvium). Results include up to 67.6 grams per tonne gold from selected sampling of pyrite-rich mineralization. Channel samples of the biggest pit assayed 13 metres at 1.32 grams per tonne gold, including 4 metres at 3.43 grams per tonne gold and open to the north. Soil sampling results have highlighted an anomaly over 420 metres long at more than 50 parts per billion gold.

One short diamond drillhole was targeted below the main artisanal workings, and encountered gold mineralization associated with the upper contact of a granodiorite hosted within mafic volcanics. This hole intersected 7.50 metres of 2.04 grams per tonne gold from 15.10 metres (AD001). As gold mineralization in the showings appears directly proportional to the amount of pyrite present, additional ground exploration will be required prior to further drill testing at Adi Gozomo.

A second larger soil anomaly is present 400m to the east of Adi Gozomo, and is approximately one kilometre long at greater than 100 parts per billion gold. Two low hills of massive quartz-tourmalinite are located on the edge of this anomaly.

Sentraley

A 6km long soil gold anomaly up to 800 metre wide defines the Sentraley Prospect, making this the largest soil geochemical target on the Adyabo property. The anomaly is defined by 160 by 40 metre spaced soil sampling and is related to mineralized quartz veins in sheared mafic and sedimentary rocks in the west-central region of the Adi Dairo Concession. This area is mainly covered by thin colluvium with approximately 20% outcrop. Several areas of eluvial artisanal gold workings are present in the northeastern part of the target area, including minor bedrock workings.

Bedrock workings identified on the eastern part of the anomaly include two clusters of pits about 100 metres apart in sheared black shale. Rock chip sampling yielded results of up to 7.96 grams per tonne gold. Sampling of sulphidic quartz veins approximately 2.6 kilometres southwest yielded peak values of 6.54 grams per tonne gold. In 2014, significant new artisanal bedrock workings were started, and have provided an area of focus to re-examine at Sentraley

ADYABO AGREEMENT


Under the terms of the agreement, Tigray has the option to acquire up to an undivided 80% interest in the Adyabo property in two phases. The first phase allows Tigray to earn a 55% interest in exchange for (a) the payment of $300,000 in cash and the issuance of 300,000 Tigray shares on receipt of TSX Venture Exchange (the "Exchange") approval, and (b) an additional payment of $300,000 in cash and the issuance of an additional 300,000 Tigray shares on the first anniversary of the Exchange approval date. The second phase will allow Tigray to earn an additional 25% interest in exchange for (a) the payment of $300,000 in cash and the issuance of an additional 1,000,000 Tigray shares on the second anniversary of the Exchange approval date, and (b) the issuance of an additional 1,000,000 Tigray shares on the third anniversary of the Exchange approval date. Further, on receipt of a positive feasibility study, Tigray will issue an additional 1,000,000 shares to the optionor, and upon commencement of commercial production, Tigray will issue an additional 500,000 shares to the optionor. The optionor may elect to convert the remaining 20% interest into a 2% net smelter royalty (NSR), and Tigray will have the option to buy back 1% of the NSR for $5 million in cash.



Technical information included on this webpage was reviewed and approved by Jeff Heidema, P.Geo., the Company's Vice President Exploration. Mr. Heidema is a Qualified Person as defined by NI 43-101.