Black Birch Capital Acquisition I Corp.
TSX VENTURE : BBC.P

March 04, 2011 15:30 ET

Black Birch Capital Acquisition I Corp. Enters Into LOI With Oremex Resources Inc.

TORONTO, ONTARIO--(Marketwire - March 4, 2011) - Black Birch Capital Acquisition I Corp. ("Black Birch") (TSX VENTURE:BBC.P), a capital pool company (as defined in Policy 2.4 (the "CPC Policy") of the TSX Venture Exchange Inc. (the "Exchange")), is pleased to announce that, it has entered into a letter of intent ("LOI") dated February 28, 2011 with Oremex Resources Inc. ("Oremex") and a wholly owned subsidiary of Oremex, 7678576 Canada Inc. ("Oremex Gold") in respect of a proposed Qualifying Transaction (as defined in the CPC Policy), (the "Proposed Transaction"). Pursuant to the CPC Policy, the Proposed Transaction is not a Non-arm's Length Qualifying Transaction as such term is defined in the CPC Policy.

If the Proposed Transaction is completed (the "Closing"), Black Birch will acquire all of the issued and outstanding common shares in the capital of Oremex Gold (the "Oremex Gold Shares") in exchange for the issuance to Oremex of an aggregate of 14,000,000 common shares in the capital of Black Birch (the "Black Birch Shares") at a deemed price per Black Birch Share equal to $0.25. In addition to the share consideration, Black Birch will pay $250,000 in cash to Oremex over a 24 month period and issue on closing of the Proposed Transaction a total of 2,000,000 warrants exercisable for a period of 24 months into 2,000,000 common shares at a price of $0.50 per share. Immediately after the Closing, (i) Oremex Gold will be a direct, wholly-owned subsidiary of the Resulting Issuer (the "Resulting Issuer" being Black Birch immediately after the Closing), and (ii) Oremex will hold approximately 48% of the outstanding common shares of the Resulting Issuer on a non-diluted basis (assuming completion of the minimum Equity Financing (as defined below)).

About Oremex Gold:

Oremex Gold is a wholly owned subsidiary of Oremex. Oremex Gold holds certain assets comprising the gold properties of Oremex which includes the San Lucas, Santa Catarina, Maco and Navidad properties located in Mexico, all of which are considered by Oremex to be promising greenfield, early-stage mineral properties. At this stage, very little exploration or development work has been done on these properties and there can be no assurances that any significant mineralization will be discovered on any of these properties. Oremex Gold was recently incorporated to facilitate this transaction and as such has not yet compiled its financial results.

FOR THE PURPOSE OF PROVIDING INFORMATION RELATING TO THE SAN LUCAS PROPERTY, BLACK BIRCH IS RELYING ON INFORMATION PROVIDED TO IT BY OREMEX. ALL INFORMATION PERTAINING TO THE SAN LUCAS PROPERTY WAS DERIVED FROM HISTORICAL GEOLOGICAL REPORTS AND DO NOT PRESENTLY CONFORM TO THE STANDARDS AS OUTLINED IN NATIONAL INSTRUMENT 43-101.

San Lucas is expected to be the material property of the Resulting Issuer, and will be the subject of a National Instrument 43-101 technical report. The San Lucas property is located 86 kilometres north of the city of Durango and accessed via paved highway, consists of 7 mineral concessions covering 1,235 hectares. San Lucas consists of a series of northeast trending mineralized shear zones in volcanic and sedimentary rocks. In fiscal 2009 Oremex re-evaluated this property to examine the potential for a gold deposit. As part of that project, 39 chip samples were collected and analyzed. These samples returned gold values up to 0.77 g/t. In 2010 Oremex followed up these results in order to implement a first pass drilling program. Field work has been focused to define drill targets to test the gold mineralization present in a silicified dacite dike, which outcrops extensively on the concessions. A total of 220 samples have been collected along the silicified dacite dike, which also has cross cutting mineralized dikes, significantly adding to tonnage potential. The dike has three more intensely mineralized segments; the 330m long North zone reports silver grades to 1,856 g/t and gold grades to 1.06 g/t, the 800m long Central Zone reports gold grades to 1.68 g/t and the 180m long South Zone reports gold grades to 0.82 g/t. The mapped strike length of the silicified dacite dike is 2.0 km. Also during the year Oremex secured access rights to the San Lucas property for a period of 30 years, renewable at its option for another 30 years.

Terms of the Proposed Transaction:

As stated above, the LOI provides that on the Closing, Black Birch will acquire all of the outstanding securities of Oremex Gold in exchange for the issuance to Oremex of an aggregate of 14,000,000 Black Birch Shares (the "Share Consideration") at a deemed price per Black Birch Share equal to $0.25 plus staged payments totaling $250,000, consisting of two equal payments on the 12 and 24 month anniversary of closing of the Qualifying Transaction, and the issuance of 2,000,000 warrants convertible into 2,000,000 Black Birch Shares at an exercise price of $0.50 per share and expiring 24 months from the closing of the transaction.

Immediately after the Closing, Oremex Gold will be a direct, wholly-owned subsidiary of the Resulting Issuer and the Oremex Gold Shareholders will collectively exercise control over the Resulting Issuer. The Agreement also provides that on Closing, the founders of Black Birch shall make 500,000 seed shares available for purchase by Directors and Officers of the Resulting Issuer at a price of $0.15 per share.

It is expected that on Closing, the Resulting Issuer will be a Tier 2 Mining Issuer pursuant to the policies of the Exchange, subject to the Resulting Issuer meeting the listing requirements of the Exchange.

Mr. Paul Haber is an officer and/or director of Oremex and Black Birch. Mr. Haber is the Chief Financial Officer of Oremex and owns 220,000 shares in the capital of Oremex (which represents less than 1% of the issued and outstanding capital of Oremex) and is a director and the President, Chief Executive Officer and Chief Financial Officer of Black Birch and owns 500,000 common shares in the capital of Black Birch (which represents approximately 15% of the issued and outstanding capital of Black Birch). Pursuant to the terms of the LOI, Mr. Haber is not receiving any consideration or compensation in his position of director and/or officer of Oremex and Black Birch. Pursuant to securities regulation, the Proposed Transaction is exempted from the provisions of Multilateral Instrument 61-101.

There are currently 3,342,520 Black Birch Shares issued (of which, 1,000,002 are subject to escrow requirements pursuant to the policies of the Exchange). Immediately after the Closing and after payment of the Share Consideration, (but before giving effect to the Equity Financing discussed below) there will be 17,342,520 issued common shares of the Resulting Issuer (the "Resulting Issuer Shares"). Oremex will own approximately 81% of the Resulting Issuer Shares on a non-diluted basis, and the current holders of Black Birch Shares (the "Black Birch Shareholders") will collectively own approximately 19% of the Resulting Issuer Shares on a non-diluted basis.

After giving effect to the Equity Financing, Oremex will own approximately 48% of the Resulting Issuer and Black Birch shareholders will own approximately 11% of the Resulting Issuer on a non-diluted basis.

Immediately after the Closing, Oremex will be the only person known to Black Birch that will beneficially own or control, directly or indirectly, Resulting Issuer Shares carrying more than 10% of the voting rights attached to all Resulting Issuer Shares.

Equity Financing:

As a condition to Closing, Oremex Gold will be required to complete an equity financing for not less than $3,000,000 at a price of $0.25 per share (the "Equity Financing"). Black Birch will issue further updates on the Equity Financing as the information becomes available.

Proposed Directors and Executive Management Team:

It is currently expected that following completion of the Proposed Transaction, the Resulting Issuer's board of directors would be comprised of four (4) members and is expected to be comprised of John Carlesso, Michael R. Smith, Chris Marcus and Henry Tse, each of which have agreed to serve as director if elected.

It is also expected that the executive officers of the Resulting Issuer will be comprised of John Carlesso, Executive Chairman, Michael R. Smith, President and Chief Executive Officer and Paul Haber, Chief Financial Officer.

John Carlesso. Mr. Carlesso, Executive Chairman, (age 46) is President of a private merchant bank with extensive experience as a founder, director and executive with several junior resource companies throughout Latin America. Mr. Carlesso is also Executive Chairman of Oremex Resources Inc., and previously was Chairman of Explorator Resources Inc., and Chief Executive Officer of Apogee Minerals Ltd. Mr. Carlesso has a Bachelor of Arts, Economics degree from the University of Western Ontario.

Michael R. Smith. Mr. Smith, President and Chief Executive Officer (age 55) has a Bachelor's degree in Geology from Arizona State University and a Master's Degree in Geology from the Mackay School of Mines (University of Nevada – Reno). Mr. Smith is currently the President and Chief Executive Officer of Oremex Resources Inc. Mr. Smith was previously the Chief Mine Geologist at Barrick Gold's Goldstrike mine, as well as President/CEO of Continental Gold Ltd.

Paul Haber. Mr. Haber (age 41) is currently the Managing Director of Haber and Co. Ltd. which provides corporate finance and capital market services to various companies. In this capacity Mr. Haber provides Chief Financial Officer services to Oremex Resources Inc. as well as a number of other publicly listed companies. Mr. Haber is a Chartered Accountant and holds an undergraduate degree from the University of Toronto.

Chris Marcus. Mr. Marcus (age 28) is the Chief Executive Officer and founder of Fyre Marketing LLC, a marketing and investor relations firm specializing in establishing long-term strategic relationships with companies identified as having significant growth potential. 

Henry Tse. Mr. Tse (age 48) is a Chartered Accountant who has chaired audit committees of several public companies and has served as the Chief Financial Officer of several public companies. Mr. Tse has a Masters of Business Administration from McMaster University.

Conditions to Completion of the Proposed Transaction:

The Closing is subject to satisfaction or waiver of terms and conditions, customary or otherwise, including but not limited to satisfactory completion of a definitive agreement as well as the Equity Financing, acceptance by the Exchange of the Proposed Transaction and other applicable shareholder and regulatory approvals. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Completion of the Proposed Transaction is subject to a number of conditions, including but not limited to, Exchange acceptance and, if applicable pursuant to Exchange requirements, majority of the minority approval. Where applicable, the Proposed Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Proposed Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the Proposed Transaction, any information released or received with respect to the Proposed Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative. The Exchange has in no way passed upon the merits of the Proposed Transaction and has neither approved nor disapproved the contents of this press release.

Completion of the Proposed Transaction may be subject to Black Birch retaining a sponsor unless an exemption is obtained. To date, Black Birch has not retained a sponsor nor has it made an application to the Exchange to exempt the Proposed Transaction from the sponsorship requirement. It is anticipated that an exemption application will be made.

Black Birch and Oremex plan on issuing additional press releases and updates as the definitive agreement is signed, due diligence is completed and other milestones are achieved. The shares of Black Birch will remain halted until the completion of the Qualifying Transaction or until otherwise determined by the Exchange and its Regulation Service Provider.

Cautionary Note Regarding Forward-looking Statements

Certain statements contained in this news release may constitute forward-looking information, within the meaning of Canadian securities laws. Forward-looking information may relate to this news release and other matters identified in Oremex' and Black Burch's public filings, Forward-looking information and anticipated events or results and can be identified by terminology such as "may", "will", "could", "should", "expect", "plan", "anticipate", "believe", "intend", "estimate", "projects", "predict", "potential", "continue" or other similar expressions concerning matters that are not historical facts and include, but are not limited in any manner to, those with respect to capital and operating expenditures, economic conditions, availability of sufficient financing, receipt of approvals, satisfaction of closing conditions and any and all other timing, development, operational, financial, economic, legal, regulatory and/or political factors that may influence future events or conditions. Such forward-looking statements are based on a number of material factors and assumptions, including, but not limited in any manner, those disclosed in any other public filings of Oremex and Black Birch, and include the ultimate availability and final receipt of required approvals, sufficient working capital for development and operations, access to adequate services and supplies, availability of markets for products, commodity prices, foreign currency exchange rates, interest rates, access to capital markets and other sources of financing and associated cost of funds, availability of a qualified work force, availability of manufacturing equipment, no material changes to the tax and regulatory regime and the ultimate ability execute its business plan on economically favorable terms. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect. Actual results may vary from such forward-looking information for a variety of reasons, including but not limited to risks and uncertainties disclosed in other Oremex and Black Birch filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, neither Oremex nor Black Birch intends, and neither undertake any obligation to update any forward looking information to reflect, among other things, new information or future events.

Neither the TSX Venture nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture) accepts responsibility for the adequacy or accuracy of this release.

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