Oremex Resources Inc.
TSX VENTURE : ORM
OTCQX : ORXRF
FRANKFURT : OSI

Oremex Resources Inc.

March 01, 2011 08:43 ET

Oremex Commits to Increased "Pure Silver" Focus

Announces Plan to Spin Out Gold Assets and Create Oremex Gold

TORONTO, ONTARIO--(Marketwire - March 1, 2011) - Oremex Resources Inc. (TSX VENTURE:ORM)(OTCQX:ORXRF)(FRANKFURT:OSI) is pleased to announce its plan to unlock the value within its enterprise by spinning out and publicly listing its gold assets. The proposed spin-out will be accomplished through a transaction with a capital pool company (CPC) and the resulting issuer is expected to be renamed Oremex Gold Inc. Oremex Gold plans a concurrent $3 million equity financing via private placement.

Oremex Executive Chairman John Carlesso commented: "We believe this transaction underscores and highlights the unrecognized value inherent to the company's gold assets and accomplishes several objectives for the benefit of Oremex shareholders."

  • Oremex is primarily viewed for having unique and valuable silver assets in historic, well-known mining regions of Mexico. This transaction commits the company to an increase of its "pure silver" focus with respect to its operations. The value under-pinning the shares of Oremex Resources, the ownership of the 50 million oz Tejamen project and several prospective silver exploration projects, remains unchanged.
  • The proposed spin out and public listing of Oremex Gold will help crystallize the value of the gold projects in a more transparent manner than remaining in a combined entity with the silver assets.
  • Funding for the exploration and development of the gold assets will be non-dilutive to the structure and value of Oremex Resources and/or the silver assets.
  • Oremex Gold intends to raise a minimum of $3 million in conjunction with the spin-out.
  • Oremex Resources will retain significant indirect ownership in the gold assets to be held by Oremex Gold and will undertake corporate, securities, and tax advice to evaluate the possibility of distributing the shares of Oremex Gold to the shareholders of Oremex Resources. There can be no assurances that any such distribution of the Oremex Gold shares will be completed, and, if completed, there may be significant tax implications to the Oremex shareholders as a result.

Mr. Carlesso continued: "At the completion of this transaction, we intend to seek shareholder approval to rename Oremex Resources to Oremex Silver to better reflect its assets and its focus. The Oremex Gold mineral property assets will also realize the benefit of enhanced focus as well as a capital structure better suited to the development of the prospective gold assets. We believe these actions will leave both companies in stronger positions to maximize the value of their assets and be more attractive to capital markets participants".

Oremex CEO Michael R. Smith stated: "The company's gold assets, notably San Lucas and Santa Catarina, are very prospective and we look forward to highlighting their value through the ongoing exploration programs we have planned to begin in the very near term and expect to continue post-transaction. Additionally, we continually see interesting acquisition opportunities that we feel would be better suited to a gold-focused company so as not to dilute the silver emphasis that Oremex Resources enjoys." Please see Figure 1 for a location map identifying the silver and gold projects.

To view Figure 1, Property Locations Map, please visit the following link: http://media3.marketwire.com/docs/Figure1PropertyLocations.pdf.

Oremex and a wholly owned subsidiary of Oremex, 7678576 Canada Inc. ("Oremex Gold"), plan to spin out Oremex's wholly-owned gold assets. Oremex intends to sell the shares of Oremex Gold to Black Birch Capital Acquisition I Corp. ("Black Birch"), a capital pool company (as defined in Policy 2.4 (the "CPC Policy") of the TSX Venture Exchange Inc. (the "Exchange"), pursuant to a letter of intent dated February 28, 2011 between the parties (the "LOI"). The transaction will constitute a proposed Qualifying Transaction for Black Birch (as defined in the CPC Policy) (the "Proposed Transaction").

Upon completion of the Proposed Transaction (the "Closing"), Oremex will receive 14,000,000 common shares in the capital of Black Birch (the "Black Birch Shares") at a deemed price per Black Birch share of $0.25 in exchange for Black Birch acquiring all of the issued and outstanding shares in the capital of Oremex Gold (the "Oremex Gold Shares"). In addition to the share consideration, Oremex will receive $250,000 in cash over a 24 month period and receive on closing of the Proposed Transaction a total of 2,000,000 warrants of Black Birch 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, and 38% fully diluted). Upon completion of the Proposed Transaction, it is expected that Black Birch will be renamed Oremex Gold Inc., subject to receipt of all applicable regulatory, shareholder and stock exchange approvals.

About Oremex Gold:

Oremex Gold is a wholly owned subsidiary of Oremex. Oremex Gold holds certain assets comprising the gold properties of Oremex Resources which includes the San Lucas, Santa Catarina, Maco and Navidad properties located in Mexico, all of which are considered by Oremex to be promising, early-stage mineral properties. At this stage, preliminary exploration and development work has been done on these properties however there can be no assurances that any significant mineralization will be discovered on any of these properties.

San Lucas is expected to be the material property of the Resulting Issuer, and will be the subject of a technical report filed on National Instrument Form 43-101F1. The San Lucas property is located 86 kilometres north of the city of Durango and accessed via paved highway, consists of 7 (seven) mineral concessions covering approximately 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 has increased from 1.5km to 2.0 km. Also during the year Oremex secured access rights to the San Lucas property for a period of 30 years, renewable at the Company's option for another 30 years.

Terms of the Proposed Transaction:

As stated above, the LOI provides that 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 of $0.25 plus staged payments totaling $250,000, consisting of two equal payments on the 12 and 24 month anniversaries of closing of the Proposed 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 closing of the Proposed Transaction.

Immediately after 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

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. Paul Haber, the Chief Financial Officer of Oremex, is also the President & CEO and Chief Financial Officer as well as a director of Black Birch. Mr. Haber holds 500,000 shares or approximately 15% of the issued and outstanding voting securities of Black Birch.

There are currently 3,342,502 Black Birch Shares issued (of which, 1,000,002 are subject to escrow pursuant to the policies of the Exchange). Immediately after closing of the Proposed Transaction and after payment of the Share Consideration (but before giving effect to the Black Birch Shares exchanged for the securities issued pursuant to the Equity Financing discussed below ), there will be 17,342,502 issued common shares of the Resulting Issuer (the "Resulting Issuer Shares"). Oremex Gold shareholders 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 (assuming the Equity Financing is not completed and Black Birch waives the condition that it be completed prior to closing of the Proposed Transaction).

After giving effect to the Equity Financing, Oremex will own between 38% and 48% of the Resulting Issuer Shares and Black Birch Shareholders will own between 9% and 11% of the Resulting Issuer Shares on a non-diluted basis depending if the minimum or maximum amount is raised.

Immediately after closing of the Proposed Transaction, it is expected that Oremex will be the only person 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 of the Proposed Transaction, Oremex Gold is required to complete an equity financing for not less than $3,000,000 at a price of $0.25 per share (the "Equity Financing"). Depending on the final structure of the Equity Financing, Black Birch may be required to retain a sponsor to issue a sponsorship report to the Exchange. Oremex will issue further updates on the Equity Financing as 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 will be comprised of five (5) members consisting of John Carlesso, Mike R. Smith, David Terry, Chris Marcus and Henry Tse, each of whom has agreed to serve as director if elected.

It is also expected that the executive officers of the Resulting Issuer will be: 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. Mr. Tse has a MBA from McMaster University.

Conditions to Completion of the Proposed Transaction:

Closing of the Proposed Transaction 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.

Black Birch and Oremex Gold intend to issue further announcements as the definitive agreement is signed, due diligence is completed and other milestones are achieved. The Black Birch Shares will remain halted until the completion of the Proposed 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, (collectively "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' public filings, Forward-looking inforamtion 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 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 filings at www.sedar.com and other unforeseen events or circumstances. Other than as required by law, Oremex does not intend, and undertakes no 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.

Contact Information

  • Oremex Resources Inc.
    John Carlesso
    Executive Chairman
    416.309.4320
    info@oremex.com