OVERVIEW

In conjunction with the Acquisition, Tembo has entered into a binding letter of intent (“LOI“) with Taifa for a financing commitment of C$11,520,000 (48,000,000 shares) (the “Financings“). Taifa, owned by Tanzanian tycoon Rostam Aziz, was founded in 1987 as a civils and earth-moving operation in Mbeya, Tanzania. It has since grown into the largest locally-owned civils and mining contracting business in Tanzania with prominent companies such as Petra, De Beers, Barrick, and AngloGold Ashanti as partners. The agreement with Taifa reinforces Taifa’s growing influence in Tanzania’s mining sector and provides Tembo with a local partner with extensive mining expertise.

TAIFA is the largest locally-owned civils and mining contracting business in Tanzania with prominent companies such as Petra, De Beers, Barrick, and AngloGold Ashanti as partners.

TERMS OF THE INVESTMENT

Under the terms of the LOI, Taifa’s investment will take place in three stages, as follows:

• Prior to completion of the Acquisition, Taifa (or related persons) will initially subscribe for 16 million shares of Tembo at C$0.22 per share for gross proceeds of C$3,520,000. On closing of this initial investment, Tembo will enter into a mining services contract with Taifa outlining conditions upon which Taifa will provide mining services work for the Project. Such services will be provided on industry competitive terms. Taifa will obtain the right to nominate one member to the Tembo Board of Directors.
• Upon completion of final engineering and closing of Acquisition, Taifa will have 20 days to complete a second private placement of 16 million units (“Units“) at a price of C$0.24 per Unit (subject to TSXV pricing rules) for gross proceeds of C$3,840,000. Each Unit will consist of one common share of Tembo and one warrant (“Warrant“) exercisable to purchase one additional common share of Tembo for 2 years at a price of C$0.26 per share. On closing of this investment, Tembo will enter into an additional mining services contract with Taifa pursuant to which Taifa will provide mining services for Tembo’s Tembo project. Such services will be provided on industry competitive terms.
• On the date that is six months after Tembo breaks ground on the Project, Taifa will have 20 days to exercise the Warrants which will result in the issuance of an additional 16,000,000 shares of Tembo for gross proceeds to Tembo of C$4,160,000. On closing of this investment, Tembo will enter into a third mining services contract with Taifa outlining conditions upon which Taifa will provide mining services for the Tembo projects including all future projects. Such services will be provided on industry competitive terms.