VENTURES RESOURCE CORPORATION

March 04, 2005 22:13 ET

Pre-Merger Agreement Signed By Ventures Resource Corporation And Resource Holdings & Investments Inc.


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: VENTURES RESOURCE CORPORATION

TSX VENTURE SYMBOL: VRC

MARCH 4, 2005 - 22:13 ET

Pre-Merger Agreement Signed By Ventures Resource
Corporation And Resource Holdings & Investments Inc.

TORONTO, ONTARIO--(CCNMatthews - March 4, 2005) - Ventures Resource
Corporation (TSX VENTURE:VRC) ("VRC") and Resource Holdings &
Investments Inc. ("RHI") announced that they have entered into a
pre-merger agreement dated March 4, 2005 (the "Pre-Merger Agreement")
under which they will merge the companies under the laws of the British
Virgin Islands pursuant to a Plan of Consolidation (the "Merger"). The
name of the merged company will be BrazMin Corp. ("MergeCo"). The
closing of the Merger is expected to occur on or about April 5, 2005
(the "Merger Closing Date").

RHI

RHI is a corporation incorporated in the British Virgin Islands and owns
a number of mineral resource properties in Brazil, including, the Sao
Jorge Project. The 10,000 hectare Sao Jorge exploration permit is
located in western Para State, approximately 250 km south of Itaituba,
within the eastern part of the Tapajos Gold Camp. This gold camp has a
history of both garimpo and conventional mining and on-going exploration
by international mining companies. It is also one of the richest grade
gold camps in Brazil. Original mining activity in the region started in
the 1960s and continues at approximately 300,000 ounces (9.5 tonnes)
annually, with an estimated total production of 64 million ounces (2,000
tonnes) since 1960 from all sources. The Sao Jorge Project is described
in detail in a technical report dated September 1, 2004 prepared by MPH
Consulting Limited (the "Technical Report") and is summarized in the
management proxy circular (the "Circular") of VRC to be mailed to
shareholders of VRC in connection with the annual and special meeting of
shareholders (the "Meeting") called to, among other things, consider the
proposed transactions, to be held on April 5, 2005. A copy of the
Technical Report will be made available on SEDAR following completion of
the Merger.

RHI was established to engage in the acquisition, exploration,
development and operation of mineral properties in Brazil. Upon the
Merger, the properties and assets of RHI will become those of BrazMin
Corp., which will carry on the business of RHI. Given that RHI was
recently incorporated, RHI has a limited operating history from which
its business and prospects can be evaluated. Unaudited interim financial
statements of RHI for the period from its incorporation (July 8, 2004)
to November 30, 2004 as well as unaudited pro-forma financial statements
of MergeCo dated as at November 30, 2004 will be included in the
Circular.

RHI currently has over 75 shareholders and no person, as of the date of
this release, beneficially owns, directly or indirectly, or exercises
control or direction over shares of RHI (the "RHI Shares") carrying more
than 10% of the voting rights attached to all RHI Shares.

Conditions to Merger

The Pre-Merger Agreement provides that the completion of the Merger is
subject to a number of conditions. The material conditions in favour of
RHI include: (i) the Merger will have been approved by the shareholders
of VRC; (ii) the Toronto Stock Exchange ("TSX") or the TSX Ventures
Exchange ("TSX-V") will have conditionally approved the listing of the
common shares of MergeCo ("MergeCo Shares"), subject only to the
ordinary requirements of such exchange; (iii) all of the consents and
approvals required for the completion of the Merger, including the
consent of the TSX, will have been obtained; (iv) the conversion of all
of the debt of VRC (the "Debt Conversion) (as described below) will have
been completed; (v) the Private Placement (as defined below) will have
been completed; (vi) the continuance of VRC into the British Virgin
Islands (the "Continuance") shall have been completed; (vii) all options
to purchase common shares of VRC ("VRC Shares") shall have been
terminated; (viii) the dissolution of VRC's subsidiary, Ventures
Resource Alaska Corporation ("VRAC"), including the termination of all
agreements to which VRC and VRAC are a party to or otherwise bound shall
have been completed; (ix) holders of VRC Shares representing in excess
of 7.5% of the number of VRC Shares issued and outstanding prior to date
of the Meeting will not have exercised any applicable rights of dissent
with respect to the Continuance and the Merger; (x) VRC shall have no
material assets other than cash and no liabilities other than
liabilities approved by RHI at the time of the Merger Closing Date; and
(xi) there will not have been any material adverse change in the
business, operations, properties, assets or conditions, financial or
otherwise, of VRC.

The material conditions in favour of VRC include: (i) the Merger will
have been approved by the shareholders of RHI; (ii) the TSX or the TSX-V
will have conditionally approved the listing of the MergeCo Shares,
subject only to the ordinary requirements of such exchange; (iii) all of
the consents and approvals required for the completion of the Merger,
including the consent of the TSX, will have been obtained; (iv) the
Private Placement will have been completed; and (v) there will not have
been any material adverse change in the business, operations,
properties, assets or conditions, financial or otherwise, of RHI.

On March 2, 2005, the TSX conditionally approved the listing of the
MergeCo Shares, subject to MergeCo meeting certain conditions by May 31,
2005.

Exchange Ratios

Upon the Merger, the holders of the VRC Shares and the holders of
securities of RHI will receive securities of MergeCo in the following
proportions:

(i) all outstanding VRC Shares (including the VRC Shares to be issued
in connection with the Debt Conversion) will be converted into MergeCo
Shares on the basis that each VRC Share will be converted into 0.020 of
a MergeCo Share;

(ii) all outstanding common shares in the capital of RHI (the "RHI
Shares") (including the RHI Shares to be issued in connection with the
Private Placement) will be converted into MergeCo Shares on the basis
that each RHI Share will be converted into one (1) MergeCo Share;

(iii) each Warrant (as defined below) issued in connection with the
Private Placement will be converted into one (1) purchase warrant of
MergeCo entitling the holder thereof to purchase one (1) MergeCo Share
at an exercise price of $1.35 expiring on the same date as the Warrants;
and

(iv) each Compensation Warrant (as defined below) issued in connection
with the Private Placement will be converted into one (1) compensation
warrant of MergeCo, which will expire on the same date as the
Compensation Warrants and will be exercisable at a price of $1.25 and
will entitle the holder thereof to acquire, upon exercise, one (1)
MergeCo Share and one-half (1/2) of one warrant of MergeCo having the
same attributes as the Warrants described in (iii) above.

As a result, upon the completion of the Debt Conversion and the Merger,
VRC shareholders will hold approximately 7% of the outstanding MergeCo
Shares and RHI shareholders will hold approximately 93% of the
outstanding MergeCo Shares. These percentages will decrease as a result
of a proposed private placement by RHI (the "Private Placement") (as
described below).

Pending the completion of the Private Placement, it is not possible to
precisely calculate the relative portions of MergeCo which will be
received by shareholders of VRC and RHI after completion of the Private
Placement. However, taking into account the completion of the Debt
Conversion and assuming that a total of $7,000,000 in gross proceeds is
raised from the Private Placement (assuming the exercise of the
Greenshoe (as defined below)), resulting in the issuance of 5,600,000
RHI Shares, shareholders of VRC would receive 882,150 MergeCo Shares,
representing approximately 4.85% of the outstanding MergeCo Shares and
shareholders of RHI (other than holders of shares issued in connection
with the Private Placement) would receive 11,720,000 MergeCo Shares,
representing approximately 64.38% of the outstanding MergeCo Shares. The
balance of the MergeCo Shares will be held by the subscribers under the
Private Placement, representing approximately 30.77% of the outstanding
MergeCo Shares.

Sponsorship

Haywood Securities Inc. ("Haywood Securities") has agreed, subject to
the terms of an engagement agreement with RHI, to act as sponsor with
respect to the listing of the MergeCo Shares.

Private Placement

In addition to serving as sponsor, Haywood, along with Loewen, Ondaatje,
McCutcheon Limited, have agreed to act as placement agents (the
"Agents") in connection with the Private Placement. Pursuant to the
terms of the Private Placement, RHI will issue up to 4,000,000
subscription receipts (each, a "Receipt") at a price of $1.25 per
Receipt for gross proceeds of up to $5 million. Each Receipt will
entitle the holder thereof to receive upon exchange, without payment of
additional consideration, one (1) RHI Share and one-half (1/2) of one
RHI Share purchase warrant (each whole purchase warrant, a "Warrant"),
each Warrant entitling the holder thereof to purchase one (1) RHI Share
at an exercise price of $1.35 for a period of 18 months commencing on
the date of issuance of the Receipts. The Receipts will be automatically
exchanged immediately prior to the effective time of the Merger.

RHI also agreed to grant to the Agents an over-allotment option
("Greenshoe") for the purpose of covering over-allotments, if any. The
Greenshoe will entitle the Agents to sell up to an additional 1,600,000
Receipts for gross proceeds of up to $2 million. The Greenshoe will be
exercisable at any time up to 24 hours prior to the Private Placement
Closing Date at the offering price.

In consideration for their services, the Agents will receive 8% of the
gross proceeds from the Private Placement and will be granted that
number of compensation warrants (the "Compensation Warrants") equal to
7% of the number of Receipts sold pursuant to the Private Placement. The
Compensation Warrants will be exercisable for a period of 18 months
following the Private Placement Closing Date at a price of $1.25 per
Compensation Warrant. Each Compensation Warrant will entitle the Agents
to acquire, upon exercise, one (1) RHI Share and one-half (1/2) of one
Warrant.

RHI raised gross proceeds of $5,357,500 by the sale of 4,286,000
Receipts pursuant to the initial closing of the Private Placement on
March 3, 2005. RHI expects to close the second tranche (of up to an
additional 1,314,000 Receipts) on or about March 8, 2005.

The net proceeds of the Private Placement will be used to fund the
recommended exploration program relating to the Sao Jorge Project,
option payments and government fees, fixed overheads and working capital
as well as for general corporate purposes.

The Receipts issued pursuant to the Private Placement will be subject to
an indefinite hold period. The MergeCo Shares and warrants of MergeCo
issued upon conversion of the RHI Shares and Warrants underlying the
Receipts pursuant to the Merger will not be subject to any statutory
hold period in Canada upon completion of the Merger.

Debt Conversion

Sea Shell Limited ("Sea Shell"), the controlling shareholder of VRC, has
been the primary source of financing to VRC since 1999. Sea Shell, which
is controlled by Frank J. Crothers, a director of VRC, is not prepared
to continue funding VRC. The ability of VRC to continue as a going
concern is dependent upon the management of VRC finding strategic
options available to VRC and arranging for their implementation.
Following discussions with RHI with regards to the possibility of
entering into a reverse take-over transaction, VRC entered into the
Pre-Merger Agreement.

VRC's total debt as of February 28, 2005 was US$2,761,954.60. The debt
includes: (i) promissory notes in the aggregate amount of
US$2,495,721.99, bearing interest at 10% per annum, and pursuant to
which US$218,951.50 of interest has accrued as at February 25, 2005 (the
"Promissory Notes"); and (ii) other debt amounting to approximately
US$47,281.11 owing to certain shareholders (the "Other Debt"), bearing
interest at 10% per annum.

As at April 5, 2005, the amounts outstanding under the Promissory Notes
and the Other Debt are expected to be approximately US$2,787,028.85,
with interest accrued to that date.

In order to fulfil one of the conditions to the completion of the
Merger, VRC has entered into debt settlement agreements with its
creditors dated March 4, 2005, pursuant to which it has agreed to settle
US$2,787,028.85 of outstanding debt, with interest accruing to April 5,
2005, in consideration of the issuance of 29,843,011 VRC Shares at a
deemed price of $0.115 per share. The dollar amounts of the Promissory
Notes and the Other Debt have been converted at a rate of US$1 =
$1.2314. The debt settlement is subject to the acceptance of the TSX-V
and approval of disinterested shareholders of VRC. Pursuant to Policy
4.3 - Shares for Debt of the TSX-V, VRC must not issue, as part of a
debt settlement plan, more than 100% of the number of outstanding VRC
Shares unless the plan is approved by disinterested shareholders of VRC.
Accordingly, each of Sea Shell, Peter N. Thomson and Power Corporation
of Cayman Limited will not be entitled to vote in respect of the Debt
Conversion if, on the date of the Meeting, such person owns Promissory
Notes or Other Debt and owns, directly or indirectly, or exercises
control or direction over VRC Shares.

Additional information regarding the Debt Conversion is set out below:



Amount of Debt At
at April 5, 2005 Percentage
(Including Accrued VRC Shares to Ownership of VRC
Interest) Be Received Following the
Name of Debtholder (US$) on Conversion Conversion (1)
------------------ ------------------ ------------- ----------------
Sea Shell Limited US$2,637,875.37 28,245,902 82.8%

Peter N. Thomson US$74,756.16 800,476 4.9%

Power Corporation
of Cayman Limited (2) US$74,397.32 796,633 3.27%



Notes:

(1) The information as to voting securities beneficially owned,
controlled or directed, not being within the knowledge of VRC, has been
furnished by the respective nominees individually.

(2) Power Corporation of Cayman Limited is a company controlled by Peter
A. Thomson, a director of VRC. Peter A. Thomson will beneficially own,
directly or indirectly, or exercise control or direction over 6.3% of
the Common Shares following the Debt Conversion.

The VRC Shares issued pursuant to the Debt Conversion will be subject to
a four month hold period. However, the MergeCo Shares issued upon
conversion of the VRC Shares will not be subject to any statutory hold
period in Canada upon completion of the Merger.

Officers and Directors of MergeCo

The board of directors of MergeCo (the "Board of Directors") will
initially consist of the following five individuals: Luis Mauricio F. de
Azevedo, Sandra S. Cowan, Gregory S. Kinross, Donald W. T. Lewis and
Warren Newfield. Sandra S. Cowan will initially serve as non-management
Chair of the Board of Directors. Senior management of MergeCo will
include: Anthony H. Ransom as Chief Executive Officer, Nelson F.M.
Pfaltzgraff as Chief Financial Officer, Luis Mauricio F. de Azevedo as
Chief Operating Officer and Secretary and Paulo Ilidio de Brito as Vice
President Exploration. A profile of each of the proposed directors and
officers of MergeCo (including their occupations for the previous five
years) is set out below:

Luis Mauricio F. de Azevedo is a lawyer and geologist in Brazil with
over 20 years of experience in the mining industry, dealing primarily
with gold, industrial minerals, copper and nickel.

Paulo Ilidio de Brito is a geologist and has been Consultant Geologist
of BRASGEO Mineracao Ltda. since 2002. From 1986 to 2001, he was Senior
Geologist of WMC Mineracao Ltda.

Sandra S. Cowan has been Executive Vice President, Partner and General
Counsel of EdgeStone Capital Partners since 2002 and prior thereto was a
partner in a Toronto based law firm.

Gregory S. Kinross has been a self-employed chartered accountant since
1998. Prior to 1998, he spent three years at PricewaterhouseCoopers in
South Africa as a Manager.

Donald W. T. Lewis is a geologist and has been the Assistant Director,
Geologic Survey at the State of Oregon since October 2004. He was the
Vice President of Homestake Mining Co. from 1997 to 2002 as well as its
Director, Exploration from 1992 to 1997.

Warren Newfield is the President and CEO of Tau Capital Corp. since
2000. Prior to 2000, he was a director and VP Corporate Development of
Platexco Inc. from 1997 to 2000.

Nelson F.M. Pfaltzgraff is an accountant and has been a partner with PS
Contax & Associados Auditores e Consultores S/C Ltda. since 1995 and
with PS Contax & Associados Auditores Independentes S/C since 1998. He
has over 35 years of experience as an auditor. Mr. Pfaltzgraff is also
currently the President of the Instituto dos Auditores Independentes do
Brasil (Institute of Independent Auditors of Brazil).

Anthony H. Ransom is a retired geologist with more than 30 years
experience in several countries dealing with corporate financing and
mineral exploration from grassroots projects to discovery of several
deposits and reserve additions at producing mines, includingemployment
with Anglo American Corporation, Falconbridge Group, Pamour Group,
International Corona Corporation, Homestake Mining Company and AfriOre
Limited.

Share Option Plan

Conditional on the approval of the Merger by shareholders of VRC and
RHI, such shareholders will be asked to adopt a share option plan of
MergeCo (the "Share Option Plan"). Pursuant to the Share Option Plan,
options to purchase MergeCo Shares may be granted to certain directors,
senior officers, employees and consultants of MergeCo. Subject to the
provisions thereof, the aggregate number of MergeCo Shares that may be
issued under the Share Option Plan will not exceed 10% of the aggregate
number of MergeCo Shares issued and outstanding from time to time. The
exercise price of options granted under the Share Option Plan will not
be lower than the closing market price of MergeCo Shares on the stock
exchange where the majority of the trading volume and value of the
MergeCo Shares occurs, on the trading day immediately preceding the date
of the grant. Options will not be granted for a term exceeding eight
years.

Further information concerning RHI and the proposed transactions will be
provided to VRC shareholders in the Circular.

Completion of the transactions is subject to a number of conditions,
including but not limited to, Exchange acceptance and Shareholder
approval. The transactions cannot close until the required Shareholder
approval is obtained. There can be no assurance that the transactions
will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management
Proxy Circular to be prepared in connection with the transactions, any
information released or received with respect to the transactions may
not be accurate or complete and should not be relied upon. Trading in
the securities of VRC should be considered highly speculative.

Haywood Securities, subject to completion of satisfactory due diligence,
has agreed to act as sponsor to RHI in connection with the transaction.
An agreement to sponsor should not be construed as any assurance with
respect to the merits of the transaction or the likelihood of completion.

-30-

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    Ventures Resource Corporation
    Kelly Dodge
    Investor Relations
    (416) 364-0270 or Toll Free: (800) 711-4145
    (416) 364-9782 (FAX)
    info@venturesresource.com
    or
    Resource Holdings & Investments Inc.
    Alan Friedman
    (416) 361-9636
    (416) 361-0330 (FAX)
    friedman@taucapital.com
    The TSX-V has in no way passed upon the merits of the proposed
    transaction and has neither approved nor disapproved the contents of
    this press release.