MBMI Resources has entered into an agreement with DMCI Mining Corporation with respect to the shares it holds in three Philippines-incorporated development companies (collectively, the DevCos). As part of this agreement, MBMI has agreed to transfer to DMCI all its interest in the DevCos.

MBMI is currently the direct shareholder of approximately 40% of the shares of each of the three DevCos companies. DMCI and another party effectively own the remaining interests in those properties, and all properties of DevCos are subject to a 5.5% net revenue returns royalties.

Pursuant to a memorandum of agreement entered into with DMCI, the parties have agreed to a transaction whereby MBMI would divest itself of all ownership of the DevCos, such that DMCI would acquire an effective interest of approximately 84% in the DevCos, with the other shareholder retaining an effective interest of about 16%.

DMCI has agreed to pay US$12 million to MBMI for the purchase of MBMI’s 40% interest in the DevCos. In the agreement, DMCI has also agreed that a downpayment of US$1 million could be withdrawn from an escrow account established in October and November of 2012 pursuant to agreements signed at that time for the sale to DMCI of 33% of the shares of the parent companies of the DevCos; and a call option over an additional 40% of the shares of the Holding Companies.

From the downpayment, US$750,000 would be immediately released to the company, and the balance released upon satisfaction of certain conditions specified in the agreement. The balance of the purchase price would be payable upon receipt of favourable court decisions that would allow the DevCos to engage in/or resume mining operations in the Philippines and satisfaction of certain other conditions.

MBMI’s subsidiaries in the Philippines are engaged in legal proceedings challenging actions and decisions in the Philippines that, if maintained and not reversed, prevent MBMI from conducting exploration and mining on the company’s Alpha, Bethlehem, and Rio Tuba properties in Palawan province. If MBMI is not successful with these proceedings, the transaction would be rescinded and the DevCos shares sold to DMCI returned to MBMI free and clear of any or all encumbrances, and without MBMI having any obligation to refund the downpayment.

MBMI also advises that it is proceeding with the finalization and audit of its financial statements for the year ended January 31, 2013, as well as the completion of interim financial statements for the quarters ended April 30, July 31 and October 31, 2013. One of the most significant factors contributing to the delays with these reports was the need for the company to obtain a qualified report from the Philippines regarding the financial impact of the company’s asset retirement obligations in that country.

That report has now been finalized and transmitted both to the company and to its auditors, thereby allowing MBMI to move ahead with the completion of its outstanding financial statement (and related) filings.

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