Blackburn Ventures Corp.
TSX VENTURE : BBV.P

August 27, 2009 18:35 ET

Blackburn Ventures Corp. Announces Proposed Qualification Transaction

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Aug. 27, 2009) - Blackburn Ventures Corp. ("Blackburn" or the "Corporation") (TSX VENTURE:BBV.P) is pleased to announce details concerning its proposed qualifying transaction involving a business combination (the "Business Combination") with Morumbi Capital Inc. ("Morumbi"). Morumbi is a private company that was formed to participate in the exploration and development of oil and gas assets. Upon completion of the Business Combination, Blackburn will be an oil and gas exploration and development company (the "Resulting Issuer").

Blackburn entered into a letter agreement with Morumbi dated August 12, 2009 (the "Letter Agreement"), pursuant to which the parties intend for Blackburn to acquire all of the outstanding shares of Morumbi in accordance with the following: (i) each of the holders of common shares of Morumbi (the "Morumbi Common Shares") will receive one common share in the capital of Blackburn (the "Blackburn Common Shares") for each Morumbi Common Share held; and (ii) each of the holders of preferred shares of Morumbi (the "Morumbi Preferred Shares") will receive $1.00 cash for each Morumbi Preferred Share held. As at the date hereof, Morumbi has 3,100,000 Morumbi Common Shares and 175,000 Morumbi Preferred Shares outstanding. The final structure of the Business Combination is subject to receipt of definitive tax, corporate and securities law advice satisfactory to both Blackburn and Morumbi.

It is intended that the Business Combination, when completed, will constitute the qualifying transaction of the Corporation pursuant to the policies (the "Policies") of the TSX Venture Exchange Inc. (the "TSX Venture"). The Business Combination will be negotiated and carried out by parties dealing at arm's length and therefore will not be a Non-Arm's Length Qualifying Transaction, as such term is defined under the Policies, and is not subject to shareholder approval of Blackburn.

Business of Morumbi

Morumbi is a private Alberta company focused on the exploration and development of oil and gas assets. Morumbi is headquartered in Toronto, Ontario, Canada. Morumbi's operations are focussed on developing an asset base in the McKinley area of northwest Alberta. A summary of Morumbi's holdings in the McKinley area is set forth below.

McKinley Property

Morumbi owns various working interests in 3,200 (2,589 net) acres of land in the McKinley area (the "McKinley Property"). Morumbi owns a 52.3% working interest in a horizontal well (the "Well") that is currently shut-in due to a rod break. Morumbi has identified additional horizontal development locations, one of which it intends to pursue, subject to the availability of sufficient financing, following the completion of the Business Combination. Morumbi has also identified a natural gas re-completion opportunity (52.3% working interest) that will be pursued when natural gas markets recover. Morumbi also owns a 100% working interest in three sections of undeveloped lands, which Morumbi believes may be prospective for oil and natural gas in the Dunvegan formation.

Chapman Petroleum Engineering Ltd. ("Chapman") of Calgary, Alberta, has prepared a reserve and economic evaluation, dated June 1, 2009, of the McKinley Property in compliance with National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities (the "McKinley Property Report"). The McKinley Property Report has been filed with TSX Venture and once accepted, a further detailed press release with respect to the McKinley Property Report will be issued.

Conditions

Completion of the Business Combination will be subject to certain conditions including, without limitation: (a) receipt of all necessary regulatory approval, including the approval of TSX Venture; (b) receipt of any necessary shareholder approval of Morumbi or Blackburn; (c) completion of the Private Placement (as defined below) for minimum gross proceeds of CDN$750,000; (d) reconstitution of the directors of the Resulting Issuer to consist of six nominees of Morumbi; (e) the concurrent transfer within escrow of 2,100,000 Blackburn Common Shares to the principals of Morumbi at a price of $0.0667 per share; (f) the name of the Resulting Issuer being changed to "Morumbi Oil & Gas Inc."; and (g) certain other usual conditions.

Directors, Officers and Principal Shareholders

The principal shareholders of Morumbi are Mark Brennan, Stephen Shefsky and Thomas Loch who together own over 67% of the outstanding Morumbi Common Shares. Messrs. Brennan and Shefsky reside in Toronto, Ontario and Mr. Loch resides in Calgary, Alberta.

Upon completion of the Business Combination, the board of directors of the Resulting Issuer will consist of six (6) directors, all of whom are nominees of Morumbi, namely Stephen Shefsky, Thomas Loch, Mark Brennan, David Robertson, Anthony Croll and Leonard Foreht. After the closing of the Business Combination, the officers of the Resulting Issuer will be Stephen Shefsky as Chairman, Mark Brennan as Chief Executive Officer, Thomas Loch as President and Chief Operating Officer, and Eric Szustak as Chief Financial Officer. Set forth below is biographical information regarding the anticipated directors and officers of the Resulting Issuer.

Stephen Shefsky - Mr. Shefsky is the Co-Founder of Brasoil do Brasil Exploracao Petrolifera S.A., a private oil & gas producing exploration company in Brazil, Founder of Silver Bear Resources Inc., President of Cancap Investments Limited, a private merchant bank providing venture capital and project financing for public and private companies, President & CEO of James Bay Resources Limited and President & CEO of Castle Resources Inc. He is the former President & CEO of Verena Minerals Corp.

Mark Brennan - Mr. Brennan has been the President and Chief Executive Officer of Largo Resources Ltd., a public mining company listed on TSX Venture, since March 2005. Previously he was the Chief Executive Officer of Admiral Bay Resources Inc., a public oil and gas company listed on TSX Venture, from September 2003 to October 2005. He is the Co-Founder of Brasoil do Brasil Exploracao Petrolifera S.A., a private oil & gas producing exploration company in Brazil. In addition, he has been President of Linear Capital Corporation, a private merchant bank, since February 1998, Founder and Chairman of Castle Resources Inc. and a director of James Bay Resources Limited since November 2007.

Thomas Loch - Mr. Loch has been the President and Chief Executive Officer of Braveheart Oil & Gas Ltd., a private oil and gas company focused on the S.E. Saskatchewan basin since July 2008. Previously he was the President & C.E.O, of Quarry Oil & Gas Ltd., a public oil and gas company listed on the TSX Venture, from January 2000 to October 2002. Mr. Loch is the President of Rowdeston Capital Corp., a private company engaged in providing financial advisory and strategic planning advice to both public and private companies, since January 1996.

David Robertson - Mr. Robertson has enjoyed a long career with the Royal Bank Financial Group. He has held senior positions in San Francisco, New York, London, England and Toronto. He has served as Chief Executive Officer of Royal Bank Venture Capital Corporation (1987 - 1990), RoyLease Corporation (1987 - 1991) and Deputy Head of Global Corporate Banking. From 1991 to 1999 he was Senior Vice President & General Manager of the Royal Bank in the U.S.A., responsible for the bank's operations and strategy. Since then he has advised companies on their overall strategic and business plans, including merger and acquisitions and financing. David brings a global perspective to his analysis.

Anthony Croll - Mr. Croll has been a director of Castle Resources Inc. since May 2004, and a Vice-President at Individual Investment Corporation since January 2006. Previously he was a Partner at Linear Capital Corporation from March 2004 to December 2005, and a Partner at Goodrich Capital Canada from December 2000 to March 2004.

Leonard Foreht - Mr. Foreht has been a partner of Linear Capital Corp., a merchant bank with a focus on financing, developing and advising emerging growth companies, since 2003. He is also Business Development Manager for Castle Resources Inc. and James Bay Resources Ltd., both public mining companies listed on the TSX Venture.

Eric Szustak, C.A. - Mr. Szustak has been President of Deca Global Advisors Inc. since July 2007. Mr. Szustak is a Chartered Accountant with over 24 years of experience including 14 years experience at national brokerage firms holding various positions in sales, management and securities compliance. Mr. Szustak is currently Chief Financial Officer of the following public companies: Castle Resources Inc. (TSXV: CRI), James Bay Resources Limited (TSXV: JBR), and Northern Gold Mining Inc. (TSXV: NGM).

Private Placement

Concurrent with the Business Combination, Blackburn intends to complete a private placement of common shares, which shares are to be issued on a "flow-through" basis pursuant to the Income Tax Act (Canada) (the "Flow-Through Shares"), for gross proceeds of up to CDN$750,000 at a price per share of not less than CDN$0.20 (the "Private Placement"). Blackburn may engage third parties to act as agents in connection with the Private Placement. The net proceeds of the financing will be used to incur qualifying expenditures.

Other Matters

Trading of the Blackburn Common Shares will not resume until TSX Venture has: (i) accepted the sponsorship exemption or a sponsor has been engaged; (ii) reviewed the McKinley Property Report; and (iii) all other documents required by TSX Venture have been filed. Blackburn will issue a further news release when TSX Venture has accepted the McKinley Property Report, the other necessary documentation has been filed with TSX Venture, and the trading of the Blackburn Common Shares is to resume.

Sponsorship

Sponsorship of a qualifying transaction of a capital pool company is required by the TSX Venture unless exempt in accordance with the Policies of the TSX Venture. Blackburn intends to apply to the TSX Venture for an exemption from the Sponsorship requirements of the TSX Venture, but there is no assurance that such an exemption will be granted.

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

Investors are cautioned that, except as disclosed in the management information circular or filing statement to be prepared in connection with the Business Combination, any information released or received with respect to the Business Combination may not be accurate or complete and should not be relied upon. Trading in the securities of the Corporation should be considered highly speculative.

The TSX Venture has in no way passed upon the merits of the Business Combination and has neither approved nor disapproved the contents of this press release.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties that may cause actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Readers are cautioned that the assumptions used in preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The forward-looking statements contained herein are made as of the date hereof and Blackburn does not undertake any obligation to update publicly or revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Blackburn.

The securities of Blackburn being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

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

Contact Information

  • Blackburn Ventures Corp.
    Colin Watt
    Director
    (604) 684-6535
    or
    Morumbi Capital Inc.
    Mark Brennan
    Chief Executive Officer
    (416) 364-2266