Oremex Commits to Increased "Pure Silver" Focus
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.
Contacts:
Oremex Resources Inc.
John Carlesso
Executive Chairman
416.309.4320
info@oremex.com