MBMI Resources Inc.

TSX VENTURE : MBR.H


MBMI Resources Inc.

March 24, 2014 18:19 ET

MBMI Signs Memorandum of Agreement With Partner in Philippines

RICHMOND HILL, ONTARIO--(Marketwired - March 24, 2014) - MBMI RESOURCES INC. ("MBMI" or the "Company") (TSX VENTURE:MBR.H) is pleased to announce that it has entered into an agreement with DMCI Mining Corporation ("DMCI") with respect to the shares the Company holds in three Philippines-incorporated development companies (collectively, the "DevCos"). As part of this agreement, MBMI has agreed to transfer to DMCI all MBMI's interest in the DevCos (the "Transaction").

MBMI is currently the direct shareholder of approximately 40% of the shares of each of the three DevCos companies. DMCI and another party effectively own the remaining interests in those properties, and all properties of DevCos are subject to a 5.5% net revenue returns royalties (the "Royaelties").

Pursuant to a memorandum of agreement (the "Agreement") entered into with DMCI (together, the "Parties"), the Parties have agreed to a transaction whereby MBMI would divest itself of all ownership of the DevCos, such that DMCI would acquire an effective interest of approximately 84% in the Devcos, with the other shareholder of the Devcos retaining an effective interest of approximately 16% in the DevCos.

DMCI has agreed to pay US$12,000,000 to MBMI (the "Purchase Price") for the purchase of MBMI's 40% interest in the DevCos. In the Agreement, DMCI has also agreed that a downpayment of US$1,000,000 (the "Downpayment") could be withdrawn from an escrow account established in October and November of 2012 pursaunt to agreements signed at that time for the sale to DMCI of (i) 33% of the shares of the parent companies of the DevCos (the "HoldingCos") and (ii) a call option over an additional 40% of the shares of the HoldingCos. (For further information regading that transaction, please see the Company's press releases of September 21, 2012 and November 2, 2012.) From the Downpayment, US$750,000 would be immediately released to the Company, and the balance of US$250,000 would be released upon satisfaction of certain conditions specified in the Agreement.

The balance of the Purchase Price (or US$11,000,000) would be payable upon receipt of favourable court decisions that would allow the DevCos to engage in/or resume mining operations in the Philippines and satisfaction of certain other conditions (the "Completion Conditions").

As MBMI has previously disclosed, its subsidiaries in the Philippines are engaged in legal proceedings challenging actions and decisions in the Philippines that, if maintained and not reversed, prevent MBMI from conducting exploration and mining on the Company's Alpha, Bethlehem, and Rio Tuba properties in the Palawan province of the Philippines (the "Legal Proceedings"). If MBMI is not successful with the Legal Proceedings, the Transaction would be rescinded and the DevCos shares sold to DMCI returned to MBMI free and clear of any or all encumbrances, and without MBMI having any obligation to refund the Downpayment.

The Agreement is subject to the approval of the TSX Venture Exchange (the "Exchange") and it is contemplated that shareholder approval would be obtained. Once those conditions have been satisfied, the Agreement will take effect and the Parties would then negotiate and enter into a definitive agreement giving effect to the terms of the Agreement.

In the meantime, MBMI is responsible for all expenses relating to the continued operations of the DevCo, while DMCI has provided funding of US$1,800,000 (net of the Downpayment) to fund MBMI's costs in pursuing the Legal Proceedings.

The Agreement has been approved by the board of directors of MBMI but remains subject to the approval of the Exchange. MBMI will therefore issue a further press release once the Exchange has completed its review of MBMI's application for approval.

Other Matters

The Company is also advising that it is proceeding with the finalization and audit of its financial statements for the year ended January 31, 2013, as well as the completion of interim financial statements for the quarters ended April 30, 2013, July 31, 2013 and October 31, 2013. One of the most significant factors contributing to the Company's delays with these reports was the need for the Company to obtain a qualified report from the Philippines regarding the financial impact of the Company's asset retirement obligations in that country. That report has now been finalized and transmitted both to the Company and to its auditors, thereby allowing MBMI to move ahead with the completion of its outstanding financial statement (and related) filings.

Also, the Company advises that pursuant to five unsecured loans concluded in November and December of 2013 and January, February and March of 2014, MBMI has borrowed a total of $300,000 to fund its operations and those of its subsidiaries in the Philippines. Interest of 6% per annum is payable on these loans. The loans mature six months after the loan dates. The following is a summary of the loan amounts, dates and maturity dates.

Loan Date Principal Amount Maturity Date
November 27, 2013 $50,000 May 27, 2014
December 17, 2013 $50,000 June 17, 2014
January 13, 2014 $60,000 July 13, 2014
February 14, 2014 $80,000 August 14 2014
March, 11 2014 $60,000 September 11, 2014

Cautionary Statement:

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. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

The foregoing information may contain forward-looking statements relating to the future performance of MBMI Resources Inc. Forward-looking statements, specifically those concerning future performance, are subject to certain risks and uncertainties, and actual results may differ materially from MBMI's plans and expectations. These plans, expectations, risks and uncertainties are detailed herein and from time to time in the filings made by MBMI with the TSX Venture Exchange and securities regulators. MBMI Resources Inc. does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

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