Morumbi Resources Inc.
TSX VENTURE : MOC

Morumbi Resources Inc.

October 13, 2016 18:17 ET

Morumbi Closes $19.5 Million Subscription Receipt Financing

TORONTO, ONTARIO--(Marketwired - Oct. 13, 2016) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES. FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF UNITED STATES SECURITIES LAW.

Morumbi Resources Inc. (TSX VENTURE:MOC) ("Morumbi" or the "Company") is pleased to announce the closing of its previously announced private placement financing of subscription receipts of the Company ("Subscription Receipts") at a price of $0.50 per Subscription Receipt for aggregate gross proceeds of approximately $19.5 million (the "Offering"). The Offering was led by Dundee Securities Ltd. ("Dundee").

The Subscription Receipts were issued pursuant to a subscription receipt agreement dated October 13, 2016 (the "Subscription Receipt Agreement") between the Company, Dundee and Computershare Trust Company of Canada, as subscription receipt agent. Pursuant to the Subscription Receipt Agreement, the gross proceeds from the Offering (less 50% of the Agent's cash commission and all of the Agent's expenses) have been placed in escrow pending delivery of a notice (the "Release Notice") that the escrow release conditions set out in the Subscription Receipt Agreement (the "Escrow Release Conditions") have been met. The Escrow Release Conditions include the satisfaction of all conditions precedent to the closing by the Company of its acquisition of the shares of American Pacific Honduras SA de CV ("AMPAC") and its flagship asset, the producing El Mochito Zinc Mine (collectively "El Mochito") in Honduras (the "Acquisition"). If the Escrow Release Conditions are satisfied by 5:00 p.m. (Toronto time) on November 30, 2016 (or, if the sole remaining Escrow Release Condition at such time is the approval of the Honduran Commission for the Defense and Promotion of Competition, January 31, 2017), then the escrowed funds (less the balance of the Agent's cash commission) will be released to Morumbi. The Company will use such funds towards the purchase price for the Acquisition, operational improvements and for general working capital purposes. If either (i) the Escrow Release Conditions are not satisfied by such time, or (ii) Morumbi advises the Agent or announces to the public that it does not intend to satisfy any of the Escrow Release Conditions, then at the earlier of such time (the "Termination Time"), the Subscription Receipts will be deemed to be cancelled and holders of Subscription Receipts will receive a cash amount equal to the offering price of the Subscription Receipts. Any shortfall will be funded by the Company.

Each Subscription Receipt will automatically convert into one post-consolidation (on a 5 to 1 basis) common share of the Company (each, a "Share"), without any further payment or action on the part of the holder thereof, provided that the Escrow Release Conditions having been satisfied, at the time (the "Qualification Time") that is the earlier of (i) 4:59 p.m. (Toronto time) on February 14, 2017; and (ii) 12:01 a.m. (Toronto time) on the third business day after the issuance of a final passport decision document evidencing a receipt on behalf of each of the securities regulatory authorities in each of the provinces of Canada in which Subscription Receipts have been sold (the "Qualifying Provinces"), pursuant to Multilateral Instrument 11-102 - Passport System (the "Final Receipt") for a final prospectus (the "Prospectus") qualifying the issuance of the Shares underlying the Subscription Receipts.

The Agent is entitled to a cash commission equal to 6% of the gross proceeds of the Offering, 50% of which was paid on closing of the Offering and the other 50% of which will be payable upon satisfaction of the Escrow Release Conditions. The Agent has also been issued 2,340,000 compensation warrants (a "Compensation Warrants"). Each Compensation Warrant will be automatically converted to a compensation option (the "Compensation Option") at the earlier of the Termination Time and the Qualification Time. Each Compensation Option will entitle the holder to acquire one post-consolidation (on a 5 to 1 basis) common share of the Company at a price of $0.50 for a period of 24 months provided that, if after six months of the issuance of the Compensation Options, the Company's share closing price for 10 consecutive trading days on the TSX Venture Exchange (or such other stock exchange upon which the common shares are listed) exceeds $1.00 per common share, the Company may give notice to the holders of the Compensation Options that the Compensation Options will expire 20 days from the date of receipt of the notice.

All securities issued in the Offering are subject to a four months resale restriction period expiring February 14, 2017. The Company has agreed to use its reasonable commercial efforts to file the Prospectus qualifying the Shares to be issued upon the automatic conversion of the Subscription Receipts in each of the Qualifying Provinces and qualifying the Compensation Options to be issued upon the automatic conversion of the Compensation Warrants. The Offering is subject to the final approval of the TSX Venture Exchange.

This press release is not an offer of subscription receipts or common shares for sale in the United States. The subscription receipts and common shares may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. The Company has not registered and will not register the subscription receipts or common shares under the U.S. Securities Act of 1933, as amended. The Company does not intend to engage in a public offering of common shares in the United States. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

About Morumbi Resources Inc.

Morumbi is a public company historically focused on evaluating resource opportunities. The Company is currently evaluating producing or advanced development stage mineral resource opportunities principally in Latin America. It also has a legacy light oil property in northwest Alberta. The Company trades on the TSX Venture Exchange under the symbol "MOC".

Cautionary Note Regarding Forward-Looking Information

This press release contains certain forward-looking statements or information (collectively, "forward-looking statements") as defined by applicable securities laws that involve substantial known and unknown risks and uncertainties, many of which are beyond Morumbi's control, including the timing and ability (if at all) of the Company to satisfy the conditions precedent to closing the Acquisition; the timing and ability (if at all) of the Company to satisfy the Escrow Release Conditions; the timing and ability (if at all) of the company to obtain a Final Receipt for a Prospectus; the timing and ability of the Company to fund any shortfall amount to the holders of Subscription Receipts at the Termination Time; the completion of definitive documentation with respect to the Acquisition; the use of proceeds of the Offering; the timing and ability (if at all) for the Company to consolidate the common shares of the Company on a 5 to 1 basis; the timing and ability (if at all) of the Subscription Receipts to automatically convert into Shares; the timing and ability (if at all) for the Company to obtain the necessary regulatory and other third party approvals to complete the Offering and the Acquisition (including the final approval of the TSX Venture Exchange); fluctuations in commodity prices, foreign exchange or interest rates; changes in general global economic conditions; increased competition; the availability of qualified operating or management personnel; changes in laws and regulations including, without limitation, the adoption of new environmental and tax laws and regulations and changes in how they are interpreted and enforced; and stock market volatility. The Company cautions that the foregoing list of assumptions, risks and uncertainties is not exhaustive. As such, undue reliance should not be placed on forward-looking statements.

All statements, other than those of historical fact, which address activities, events, outcomes, results or developments that Morumbi anticipates or expects may, or will occur in the future (in whole or in part) should be considered forward-looking statements. In some cases, forward-looking statements can be identified by terms such as "forecast", "future", "may", "will", "expect", "anticipate", "believe", "potential", "enable", "plan", "continue", "contemplate", "pro-forma", or other comparable terminology. In particular, this press release makes reference to the timing and completion of the Acquisition; timing for satisfaction of the Escrow Release Conditions; release of the escrowed proceeds; the satisfaction of the Escrow Release Conditions; the timing and ability of the Company to fund any shortfall amount to the holders of Subscription Receipts at the Termination Time; the filing of the Prospectus and the issuance of a Final Receipt for the Prospectus; and the use of proceeds of the Offering. Readers are cautioned that there is no assurance that the transactions or occurrences referenced in this press release will be completed or the timing thereof. Certain conditions must be met before the Acquisition and the satisfaction of the Escrow Release Conditions, as the case may be, may be completed. Such conditions include the receipt of all necessary regulatory approvals, including the approval of the TSX Venture Exchange, and the completion by Morumbi of the Acquisition (other than the payment of the purchase price thereof). There is no assurance that the required approvals will be received and there is therefore no assurance that the Acquisition will be completed in the time frame anticipated or at all. Many factors could cause the performance or achievement by Morumbi to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. These factors include the failure to obtain the required approvals, including approval of the TSX Venture Exchange and changes to economic conditions that prevent Morumbi from satisfying the Escrow Release Conditions. Readers are cautioned that the foregoing list of factors is not exhaustive. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The Company is not under any duty to update any of the forward-looking statements after the date of this press release or to conform such statements to actual results or to changes in the Company's expectations and the Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

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.

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