| ||September 21, 2012|
MBMI Links with New Partner in Philippines to Develop Palawan Properties
| ||Richmond Hill, Ontario, September 21, 2012 -- MBMI RESOURCES INC. ("MBMI") (TSX-V: MBR) is pleased to announce that it has joined forces with a partner in the Philippines for the development of MBMI's Alpha, Bethlehem, and Rio Tuba properties in the Palawan province of the Philippines (the "Palawan Properties"). As part of this new partnership, MBMI has agreed to transfer to its new partner a portion of MBMI's interest in the Palawan Properties (the "Transaction").|
Through a combination of direct shareholdings in certain Philippines-incorporated development companies (the "DevCos") and indirect shareholdings in certain Philippines-incorporated holding companies (the "HoldingCos"), MBMI's current effective ownership of the Palawan Properties is approximately 60%. Another party effectively owns the remaining interests in those properties, and all properties comprising the Palawan Properties are subject to a 5.5% net revenue returns royalties (the "Royalties").
Pursuant to a memorandum of agreement (the "Agreement") entered into with the new partner and the other shareholder of the HoldingCos (together, with MBMI, the "Parties"), the Parties have agreed to a transaction whereby MBMI's effective ownership of the Palawan Properties would be reduced to 40%, the new partner would acquire an effective interest of approximately 44% of the Palawan Properties, and the other shareholder of the HoldingCos would retain an effective interest of approximately 16% of the Palawan Properties.
MBMI's aim in granting the new local partner a majority stake in the HoldingCos is to bolster its position with respect to the reinstatement that has been requested of the Financial or Technical Assistance Agreement (FTAA) and Mineral Product Sharing Agreement (MPSA) permits (the "Permits") governing the properties. Those Permits had previously been secured for the HoldingCos and DevCos (and the Palawan Properties), but were revoked in the Philippines following a change in the Office of the President. MBMI has been working towards the restoration of those Permits for some time, and has recently filed an appeal with the Supreme Court of the Philippines in that regard.
In consideration for the ownership interest it will acquire with respect to the Palawan Properties, the new partner has agreed to pay US$13,200,000 to MBMI (the "Purchase Price"). In the Agreement, the new partner has also agreed that when the Agreement is effective, it will make a payment of approximately US$120,000 (5,000,000 Philippines pesos) that will be directed towards settling capital gains taxes, documentary stamp taxes, and outstanding legal fees owing in respect of the Philippines operations, as well as provide a deposit of US$200,000. The balance of the Purchase Price is payable upon receipt of favourable court decisions restoring to the HoldingCos and DevCos the Permits that were previously withdrawn from those companies.
In the Agreement, the Parties have also agreed on a framework providing significant funding for the pursuit of legal proceedings seeking the restoration of the Permits, and they have agreed that certain liabilities relating to the Palawan Properties would be settled from the Purchase Price at the time the Purchase Price is paid. In addition, the Agreement provides that MBMI and the new partner will negotiate in good faith the buyback of the Royalties.
Once the Transaction is approved by the TSX Venture Exchange (the "Exchange") and, if required, has received shareholder approval, the Agreement will take effect. Under the Agreement, the Parties are then required to negotiate and enter into a definitive agreement giving effect to the terms of the Agreement, and that definitive agreement would include industry-standard provisions for the operation of a mining joint venture.
In the meantime, and until the Permits are restored, the shares to be transferred under the Agreement are to be held by an escrow agent selected by mutual agreement of MBMI and the new partner. Should the legal proceedings result in adverse final court decisions, the shares would be returned to MBMI.
The Agreement has been approved by the board of directors of MBMI but remains subject to the approval of the Exchange and, if required by the Exchange, to the approval of MBMI's shareholders. MBMI will therefore issue a further press release once the Exchange has completed its review of MBMI's application for approval.
For further information relating to MBMI or this release, please refer to MBMI's website at www.mbmiresources.com or contact John Wong, President and CEO by telephone at 905-886-3888 or by email at firstname.lastname@example.org.
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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