Business: Exploration and development of gold deposits in Ethiopia. Early production from high grade oxides anticipated in 2016.

Traded Toronto:            EAM

USOTC:                         EFRMF

Price 1/29/16:                US0.039

Shares Outstanding:     102.8 million

Institutional Holdings ¹: 30%

Management:                10%

Market Cap:             US4.1 million

Cash and Short term receivables:  $4.5 million

Gold Equiv. Resources ²:               1.6 million oz.

Progress Rating:                               A3

Telephone:                                       604-488-0822

Website:                                           www.EastAfricaMetals.com

¹ Sino Tech is a Chinese company with ties to the Chinese and Canadian embassy. ²  See the following table for a breakdown of East Africa�s reserves at both of its Adyabo and Terakimti deposits.

Rising out of the ashes of one of the greatest gold bear markets in my lifetime will be some stellar companies that absolutely no one is currently paying any attention to. One potential �stellar� company is East Africa Metals (EAM).  Initially when I heard this name, I was not inclined to pay much attention to it, given my well founded bias against Africa. And while it would be foolish to compare political risk in Africa with that of Canada or the U.S., Ethiopia, where this company operates, is far better than most African countries, given its political and legal system as well as the excellent infrastructure in the area where EAM is operating.

The East African Shield, colored in red as pictured on your left is the geological area of interest. It covers Saudi Arabia, Egypt, Sudan, a bit of South Sudan and parts of Ethiopia. EAM has without any fanfare or investor relations efforts been quietly building gold and gold-equivalent resources totaling 1.6 million ounces. But as we shall see, it has barely scratched the surface in terms of its potential.  As with most exploration companies, EAM has been exercising frugality in this wretched market such that its focus has been on near surface, oxide gold mineralization. One of its targets, namely the Mato Bula prospect, has great potential at depth. Its geological look alike is the multi-million oz. Bousquet-LaRonde deposit in Quebec. But with 1.5 million ounces outlined mostly from surface, even the potential surface ounces likely to be calculated are still in their early stages.

Target Production 2016

Small scale production is expected to commence this year from open pit mining and heap leach recovery from the Terakimti Zone, one of three areas currently included in the company�s 1.6 million ounce resource.  A cross section of this deposit, which averages open pit oxide grades 3.4 g/t. or nearly 0.11 oz./ton, is shown on your left. By the looks of this geometry, I�m guessing it should be a relatively low stripping ratio meaning that mine dilution should be low. So a high grade combined with the fact that infrastructure includes a low cost hydro electric power (3..5 cents/kwh) should enable low cost gold production. The company is applying for a small mine permit which it expects to have by June and it is currently carrying out what amounts to a PEA. As part of that economic study it is having metallurgical work carried out. It expects to be able to recover 

upwards to 70% via heap leaching, but at present it is assuming a 55% recovery rate for the sake of remaining conservative.

Most mining projects slip at least a little in terms of scheduled start up dates. But a combination of World Bank pressure and a 30% joint-venture interest in the project by EZANA, may provide a political push to enable small scale heap leaching to take place by the fall of this year. Managements 

strategy of using early cash flows is of course pleasing to me. There are a number of such companies on my list and there is no doubt that in the current economic environment that approach is important to preserve shareholder value. The ultimate goal of EAM is to use cash flow to explore for an elephant-sized deposit that will prompt major gold producers to pay up for the asset and generate windfall profits for early shareholders. We should know over the coming months whether EAM succeeds in that respect, but I�m betting they will.

Massive Potential for a World Class Gold Discovery  

The yellow star next to the Terakimti deposit as well as yellow stars next to Da Tambuk and Mato Bula, denote the locations from which the resource of 1.6 million ounces have been calculated to date.

It is unimaginable that the 1.6 million ounce deposit won�t grow into something much, much larger for two reasons. First, as noted in the illustration on your left, those 1.6 million ounces are calculated only from three of 20 mineralized zones because six 

of those zones shown in orange, have not had enough drilling to calculate a resource and 11 of those zones (red stars) have had no drill holes)

Secondly, drilling has been carried out only to the 200-meter level where low cost heap open pit oxides exist. There is also a very strong likelihood that these mineralized structures shown on surface, also 

extend to very great depth.  In fact, management is convinced that the geological model is akin to the great Bousquet-LaRonde gold rich volcanogenic deposit in Quebec from which Agnico Eagle is producing. A cartoon showing the Bousque-LaRonde zones at depth compared to the areas drilled thus far on the EAM property should give you a sense of the potential magnitude of depth that may exist on EAM�s deposits.

Ethiopian Political Risk

At a time in world history when there are wars and rumors of wars, Christians, Jews and Muslims have lived together for centuries in Ethiopia though each religion has been largely separated geographically. The country has a long Judeo Christian history dating back to the days of a diplomatic relationship between King Solomon and the Queen of Sheba followed by the Treasurer eunuch who became a Christian as noted in the book of Acts (Chapter. 8, verses 26-39).  It is also believed that the Arch of the Covenant still exists and rests in Aksum, Ethiopia. In 341 AD, King Ezana converted to Christianity and from that time until the present, Ethiopia has been predominantly Christian. However in 

certain areas close to Somalia, there are concentrations of Muslims and some of those areas are considered not to be entirely safe for Christians.

But Ethiopia is considered to be relatively safe. Here is how the UK government spoke of political risk in Ethiopia in November 2015: https://www.gov.uk/government/publications/overseas-business-risk-

ethiopia/overseas-business-risk-ethiopia

�Ethiopia continues to be a relative �island of stability� in the volatile Horn of Africa, helping to enjoy impressive economic growth over the past decade.

�Ethiopia is a federal democratic republic with its separate regions demarcated on ethnic lines. The Ethiopian Peoples� Revolutionary Democratic Front (EPRDF) has held power since it overthrew the Derg military regime in 1991. The EPRDF established the current constitution in 1994 and held 

the first multiparty election in 1995. National elections recently took place in May 2015.

�Under Prime Minister Hailemariam Desalegn, the government has become less centralised than it was under the late PM Meles Zenawi. There has been a greater role for collective decision-making in cabinet, and a more prominent role for parliament in scrutinizing the government�s performance. There is, however, insecurity in parts of Ethiopia�s Somali Region, particularly in the Ogaden. In the western Gambella and Benishangul-Gumuz Regions, competition over land and other resources can lead to occasional inter-communal clashes. Information on political risk, including political demonstrations, is 

available in the FCO Travel Advice. https://www.gov.uk/foreign-travel-advice/ethiopia/safety-and-security�

MANAGEMENT

Andrew Lee Smith President & CEO & Member of the Board - Mr. Smith is a Professional Geologist. He has over 25 years of experience successfully exploring, developing, and operating African and North American base and precious metals mining projects. He also holds Directorships and management positions with a number of other junior exploration companies.  Mr. Smith holds a BSc in Earth Sciences from the University of Waterloo and is a professional geologist and a member of the Association of Professional Engineers and Geoscientists of British Columbia. He received the Mining Entrepreneur of the Year Award in 1994 from the Quebec Prospectors Association for his role in mine development with Aurizon, and was named Outstanding Alumnus of 2009 by the Science Faculty of the University of Waterloo for his contributions to mineral exploration. In 2015, he competed the International Corporate Directors Education Program and received the ICD.D accreditation, the only professional designation for Canadian directors recognized both nationally and internationally.

Jeff Heidema Vice President Exploration - Mr. Heidema is a Professional Geologist with over 25 years of exploration experience with the Cominco, Teck Cominco and Teck exploration groups. Mr. Heidema's career has largely focused on exploration project management for programs ranging from grass roots to near mine exploration, and also includes EHS, agreement, and tenure management. He predominantly specializes in VMS and Archean gold exploration. Mr. Heidema is also Vice President Exploration of Tigray Resources Inc.

Peter Granata - Chief Financial Officer - Mr. Granata is currently Chief Financial Officer of East Africa Metals and Tigray Resources Inc. Mr. Granata is a Chartered Accountant with over 10 years of accounting and financial reporting experience in Canada and Australia. Prior to joining EAM and Tigray, Mr. Granata was at PricewaterhouseCoopers since 2005 specializing in statutory reporting audits, IFRS conversion projects, SOX404 projects, equity offerings and mergers and acquisitions. Whilst at PwC Mr. Granata's client portfolio comprised of mining companies including producing and exploration entities with both local and international operations, manufacturing companies and government entities including First Nations local governments. Mr. Granata is a member of the Institute of Chartered Accountants Australia and holds a Bachelor of Business from Griffith University, Australia.

Nick Watters - Business Development - Mr. Watters is a co-founder of Canaco, Tigray and several other successful Mining enterprises since 1996. Mr. Watters has raised of nearly $260 million in his career. Beginning in the corporate communications field, he has worked with several public and private companies in a wide variety of sectors including mining, high-tech and the biotech industries. Mr. Watters helped create the corporate identities for a number of small start-ups as well as heading up their corporate communications departments. Mr. Watters is also serving as a Director to other Public Companies.

Denis Dillip - President Canaco Tanzania - Mr. Dillip has over 10 years of experience in gold exploration, including planning and execution of both regional and detailed exploration programs. He is a graduate of the University of Dar es Salaam with a BSc Honours degree in Geology. Mr. Dillip began his career with Anglo Gold Ashanti as a Mine Geologist, and later joined a regional exploration team where he worked as Project Geologist managing two projects, Mkurumu and Njoge. He joined Canaco in the role of Project Geologist, and now serves as Chief Geologist and President of Canaco Tanzania Limited.

Lingling Yang - Corporate Communications - Ms. Yang is Deputy Manager of the Overseas Development Department of Sinotech of Sinotech Minerals Exploration Co., Ltd. She is experienced in corporate communications for her skills in corporate culture publication, corporate promotion, info diffusion and internal and external coordination. Since joining Sinotech in 2008, she has been playing an active and beneficial role in the promotion of the image and core competitiveness of the company. Ms. Yang is also Director Corporate Communications for Tigray Resources Inc.

Board of Directors

Dr. Jingbin Wang Chairman - Dr. Wang is Executive Director of China Nonferrous Metals Resource Geological Survey, a position he has held since 2003. He has also held the title of Vice-President of the China Nonferrous Metals Industry Association since 2008. Dr. Wang is a leader in the non-ferrous metals industry in China with great expertise in mineral exploration and mining amassed over his 28 years of experience. He has been granted the title of National Youth Expert for Outstanding Contribution in China in recognition of his success in prospecting results and scientific research. In addition, he is the Chief Scientist of National 973 Program. Dr. Wang has been President of the Beijing Institute of Geology for Mineral Resources since 2002, and is currently Chairman of Sinotech Minerals Exploration Co., Ltd.

Andrew Lee Smith Director � President & CEO of EAM (see above)

Dr. Antony (Tony) Harwood Director - Dr. Antony Harwood (Tony) is an economic geologist with over 30 years of experience in the mining industry, he graduated from the University of Wales, Cardiff, in the UK with a BSc (Hons) cum laude and a PhD degree in Economic Geology. Tony is currently President and Chief Executive Officer of Montero Mining and Exploration (TSX-V) a rare earth element focused company with its flagship property, the Wigu Hill Rare Earth Project in Tanzania. In addition Tony is a non-executive Director of Endeavour Mining Corporation (ASX/TSX)  Prior to joining East Africa Metals, Tony was President and CEO of Africo Resources, which he took to the TSX, raising $124 million during his tenure from 2006 to 2009, prior to this Tony was Vice President Global Generative Exploration for Placer Dome Inc. from 1998 to 2006. Tony was founder of Harwood International, a geological consulting company, which he operated for 10 years and prior to this he held the position of lecturer at Cardiff University, UK and Natal University, Durban, South Africa.

David Parsons Director - Mr. Parsons is Vice-President, Insurance of Goldcorp Inc. where he is responsible for corporate risk including mining operations loss control, business continuity planning and insurance. Prior to this appointment in 2010, he was Director, Corporate Services and Financial Analysis from October 2004 to 2010. He was employed by Wheaton River in 2001, serving as Controller until October 2004 and was directly involved in the acquisitions by Wheaton River and the subsequent merger with Goldcorp in 2005. He holds a Bachelor of Arts degree from the University of British Columbia and is a Certified General Accountant with over 27 years of experience in the gold mining industry, having served in the roles of Controller, Chief Financial Officer, and Director of public companies.

Ge (Anna) Mao Director - Ms. Mao is Vice-President Sinotech Minerals Exploration Co., Ltd. She has 19 years of experience and knowledge in finance and operations and co-founded and developed several businesses both in China and Canada.. She also serves on the board of directors of several Public Companies on both the TSX-V and the Australian Stock Exchange. Ms. Mao graduated from Beijing Institute of Technology University in 1991, and obtained her MBA from the Richard Ivey Business School of the University of Western Ontario in 2001.

THE BOTTOM LINE � EAM has a resource of 1.6 million ounces of gold and working capital that is close to its current market cap. Simply on the basis of its balance sheet this stock is undervalued. Obviously, the 1..6 million ounces of gold in the ground is of value only to the extent it can be extracted at a profit. Toward that end, the company is moving toward what amounts to a PEA and early small scale production, and I understand management will be adding technical operating talent in the near future to ensure efficient gold production. If metallurgical work provides evidence of heap leach recoveries closer to 70% than the 55% management has conservatively built into its preliminary assumptions, that would be a considerable plus, but given its higher open pit grade of 3.4 g/t and other cost factors suggested above, even 55% recoveries may allow for robust economics from the Terakimti deposit.

The company expects to bring $2 million to its balance sheet from the sale of its Tanzanian project which should help to fund small scale mine construction in the second half of this year. As well, there are some very strong assays which should increase the number of resource ounces if not the grade. Receipt of a small mining permit expected during the first half of this year should be another driver for this company�s shares.

The relationship with Sino Tech which holds a 30% equity interest in EAM as well as with it 30% joint-venture partner, EZANA, with its ties to the ruling party in Ethiopia, should provide political incentive to ensure the permitting process is not duly obstructed. Sino Tech, a Chinese company, also has strong connections to the Ethiopian government through its relationship with the Chinese and Canadian embassies. Those connections should help move the permitting process forward, hopefully during the first half of this year.

The main risk I see for buying these shares now is political risk, given rising global tensions between Christians and Muslims. However, because Ethiopia is not an oil rich country and thus less prone to be the center of the rising conflicts relating to the petrodollar, religious conflict is likely to be much less an issue in Ethiopia than in other countries in the region.

Clearly most market participants are discounting anything positive for this stock or it would not be where it is currently trading at. EAM has a solid management team capable of funding exploration organically starting after raising a modest amount of capital later this year from the Terakimti deposit.  On balance, given its miniscule market cap relative to its strong balance sheet, strong management team with a successful track record, massive exploration potential, and near term possible cash flow potential, I view EAM to be a highly attractive speculation. From its current price, a 10-fold increase in this company�s valuation within the next 12 to 18 months, given a turn in the gold price along with continued exploration, development success, and near term profitable production is certainly within the realm of possibilities..

J Taylor�s Gold, Energy & Tech Stocks (JTGETS), is published monthly as a copyright publication of Taylor Hard Money Advisors, Inc. (THMA), Tel.: (718) 457-1426. Website: www.miningstocks.com. THMA provides investment ideas solely on a paid subscription basis. Companies are selected for presentation in JTGETS strictly on their merits as perceived by THMA. No fee is charged to the company for inclusion. The currency used in this publication is the U.S. dollar unless otherwise noted. The material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. The information contained herein is based on sources, which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available information. Any opinions expressed are subject to change without notice. The editor, his family and associates and THMA are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the company mentioned above.  Under copyright law, and upon their request companies mentioned in JTGETS, from time to time pay THMA a fee of $250 to $500 per page for the right to reprint articles that are otherwise restricted solely for the benefit of paid subscribers to JTGETS.

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