DEBT FACILITY

19 March 2020

London, England- Eastinco Mining & Exploration PLC ("Eastinco") (NEX:EM.P) the pan-African mining company announces that it has arranged to enter into a U.S. $200,000 working capital facility agreement (the "Facility) with Augustin Corp.  Augustin Corp. is a U.S. investment company owned by a trust benefitting family members of Charles Bray, the Executive Chairman of Eastinco; and as such, the transaction is considered a related party transaction. 

The Facility is secured against the physical assets of Eastinco Limited. The funds, if utilised, will be used for working capital purposes and to allow the Company to pursue its exploration of Huye and new investment targets. The Facility is provided for a term of up to 18 months and an interest rate equal to 6% above commercial lending rates.

Executive Chairman, Charles Bray stated, "This transaction will enable Eastinco to pursue new and valuable exploration licenses at an opportune time. I am pleased that my family can support the company at such a critical juncture."

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A LETTER TO SHAREHOLDERS

Dear Shareholder,

I write to update you as to the progress and certain key developments to be made over Q2 2020 of Eastinco Mining and Exploration PLC ("Eastinco") and to request your participation in a warrant conversion.

Macro Environment

Over the past several weeks the news has been dominated by the expansion of COVID-19 infections globally and the national responses to the growing pandemic. In China, the Purchasing Manager's Index (PMI) - dropped precipitously to 35.7 from 50 in January.  Given China accounts for a third of world manufacturing and is the world's largest exporter, this PMI drop will have a significant global impact on production and supply chains. Further, the U.S has recently joined Europe and Iran as locales with dramatically increasing infection rates. Simultaneously, efforts by OPEC to shore up the oil price led to efforts to inflict pain the U.S. shale gas operators and a correspondingly dramatic drop in crude oil and gas prices.  The market was already concerned over the serious demand shock from COVID-19, so this additional oil shock has added to the headwinds to global economic expansion. So, while the likely direct economic impact from COVID-19  would appear to be minimal to demand, the corollary and secondary impacts are massively impactful on world supply chains and consumer confidence and ultimately GDP. 

In Rwanda, the government  has issued a series of instructions for residents and COVID-19 screening for visitors as a preventive measures against the outbreak. The Rwandan Ministry of Health on the 8th of March issued six new instructions for COVID-19 screening at all points of entry to the country and the government continues to update preventive measures. These measures are aimed at protecting all residents and visitors to Rwanda and effectively subjects all visitors to screening and self-isolation and surveillance procedures. 

Market Environment

With this macro environment in mind, management are actively communicating with tantalum market buyers and participants to gauge their intentions and to gain an understanding of potential price dynamic for the ore.  Generally, we see a commitment in the short term on the part of buyers to maintain the supply chains and avoid disruption, but we are aware this could change dramatically and quickly given the global backdrop.

Our approach at Eastinco has been to examine each project and identify, understand, and minimise risks while maximising the potential returns. Simultaneously, we seek to build a portfolio of projects with low initial capital requirements while the potential returns for each project are maximised.  This "portfolio of options" approach is intended to maximise the value to Eastinco's shareholders. The risks to our business are actively reviewed by management and the board of directors on a regular basis. Given this approach we are looking to put the company in a position to take advantage of any market changes while maintaining viability at minimal cost.

Projects

Our initial project Kuaka, is nearing completion of the development of the wash plant.  The wash plant was fortunately sourced and shipped from China in November with delivery in January prior to supply chain disruption. Nevertheless, the wash plant completion is approximately four months behind schedule with the resulting lack of four months of corresponding revenue. Ultimately the wash plant will allow for us to process approximately 25 metric tonnes of ore per hour and produce significant amounts of ore. This lack of revenue has consumed a significant portion of our cash reserves and necessitated us to arrange a borrowing facility to maintain adequate liquidity.  Once operational the wash plant should provide cash flows for the business as originally planned.

We recently announced a second joint-venture project called Huye. This project is very exciting, and we have begun early exploration of the 600 hectare greenfield site. This site offers an enormous potential for tantalum, tin, and tungsten minerals. Again, with minimal capital expenditure we will either prove or disprove the viability of the site for a detailed drilling programme and full-scale mining.

While the macro environment poses many risks, as stated it is also providing many medium to long term valuable opportunities. To fully take advantage of the opportunities, Eastinco has applied for an additional two exploration licenses for sites in excess of 3,000 hectares total. We hope to hear from the Rwanda Mines, Petroleum and Gas Board (the "RMB") before the end of the calendar year.  Both sites have been inspected by our geologists and offer strong potential for significant resources.

Capital

Given the late development of the wash plant, our cash levels are relatively low and as a result we have arranged to secure debt. To alleviate the relatively poor cash situation and to secure our long term prospects, we seek new equity capital in the first instance from the shareholder exercise of the existing warrants held by warrant holders. The warrants allow for the acquisition of equity for a pre-money valuation of approximately £5.5 million. We are seeking conversion of 30% of the outstanding warrants which would raise £827,000 on or before 15 April 2020.

Shareholders who exercise warrants will be offered new three year warrants, in replacement of any exercised, with a 2.0 pence exercise price for each warrant converted.  Should we witness greater than 20% of the existing warrants converted, we will not seek any additional capital from outside equity providers. Existing shareholders, without warrants but who have interest or seek to participate in the conversion process, can also participate in the capital raise by contacting management. Those existing shareholders on the register will be offered some warrants to exercise. We will announce the result of the warrant conversion exercise by the end of the month. Approximately £250,000 of the funds raised will be designated for use for the further exploration of the Huye and Kuaka sites, £400,000 for Kuaka related working capital, and the balance £177,000 to acquire new licenses and land from stressed sellers in Rwanda. We believe that this exercise will allow for sufficient capital for us to fully exploit available opportunities in Rwanda while giving us sufficient capital to ride out any potential supply shock or extended recessionary period.

Charles Bray

Executive Chairman

charles.bray@eme-plc.com

Follow us on twitter:  @eastinco

The directors of Equatorial Mining and Exploration Plc accept responsibility for this announcement.

Equatorial Mining & Exploration Plc:                                    charles.bray@eme-plc.com

Charles Bray, Executive Chairman

NEX EXCHANGE CORPORATE ADVISER:

Alexander David Securities Limited

David Scott -Corporate Finance

James Dewhurst - Corporate Broking 

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