MBMI Resources Inc. Successfully Defended Against Palawan Alpha Lawsuit

Markham, Ontario–(Newsfile Corp. – June 27, 2019) – MBMI Resources Inc. (TSXV: MBR.H) (the “Company” or “MBMI“) is pleased to announce that it has successfully defended against certain legal proceedings initiated by Palawan Alpha South Resource Development Corporation (“Palawan Alpha“) in 2012 in a regional trial court in the Philippines (the “Court“). For more details relating to the initial complaint filed by Palawan Alpha (the “Complaint“), please refer to the Company’s press release dated October 31, 2012 filed on SEDAR at www.sedar.com.

In the Complaint, Palawan Alpha alleged that, under (i) the Royalty Agreement dated March 12, 2008 between Palawan Alpha and Narra Nickel Mining and Development Corporation (“Narra Nickel“), an operating subsidiary of MBMI, and (ii) the Call Option Agreement dated April 27, 2007 between Palawan Alpha and MBMI, Narra Nickel and/or MBMI purportedly had the obligation to pay royalties equivalent to 5.5% of net revenue returns (the “Net Revenue Returns“) on the Narra Nickel mining operations. Palawan Alpha further alleged that no royalty payments were made and that such non-payment constitutes a material breach to the aforementioned agreements.

In its ruling, the Court granted the Motions for Reconsideration filed by the defendants and dismissed the Complaint for failing to establish that Narra Nickel earned any positive Net Revenue Returns which would give rise to an obligation or a demandable right on Palawan Alpha’s part to claim any royalties.

About MBMI Resources Inc.

MBMI Resources Inc. is a Canadian-based mining company which operates 7 nickel mineral properties in the Philippines, which include the Alpha Property, Bethlehem Property and Northern Rio Tuba Property located in Palawan Philippines covering an area of 12,560 hectares (collectively, the “Palawan Properties”), and the Borongan-Maydolong Property, Gen. Mcarthur-Llorente Property, Balangiga-Giporlos Property and Homohon Island Property in Samar, Philippines covering an area of 10,150 hectares (collectively, the “Samar Properties”).

The Company’s principal properties, the Palawan Properties, have been subject to a dispute (the “FTAA Dispute”) which led to a decision by the Office of the President of the Philippines on April 19, 2011 (the “OP Decision”) that cancelled a Financial and Technical Assistance Agreement (the “FTAA”) granted in April 2010 for the Palawan Properties. The FTAA, if reinstated, would allow large-scale exploration, development and utilization of minerals on the Palawan Properties.

Through a series of transactions from September 2012 to March 2014 involving the sale of the company’s ownership in the operating companies (the “Operating Company“) that own and control the Palawan Properties and their respective holding companies, the Company’s ownership in the Palawan Properties have been sold to DMCI Mining Corporation, a Philippines based mining company (the “Purchaser”) for an aggregate purchase price of US$25.2 million (the “Sale Transactions”). The closing of Sale Transactions is subject to a number of closing conditions which include, among other things, the reinstatement of the cancelled FTAA.

As a result of the Sale Transactions and the FTAA Dispute, the Company has suspended its exploration and development operations in all of its properties to focus its efforts and resources on the reinstatement of the cancelled FTAA in order to conclude the Sale Transactions.

On December 9, 2015, the First Division of the Philippine Supreme Court issued a favourable decision (the “SC Decision”) declaring null and void the decision of the Philippine Court of Appeals which affirmed the OP Decision without prejudice to any other appropriate remedy the parties may take against each other. It is important to note, however, that while the SC Decision is the final court decision with respect the FTAA Dispute, it is not a direct ruling with respect to the re-instatement of FTAA that would allow the Company to meet the closing conditions of the Sale Transactions. Therefore, following the SC Decision, the Operating Companies have commenced work on the documentation required to re-engage the Office of the President regarding the reversal of the OP Decision and reinstatement of the FTAA pursuant to the SC Decision. Since there is no assurance that the Office of the President of Philippines will reinstate the FTAA, the Company, the Operating Companies and the Purchaser are concurrently evaluating other recourses including, but not limited to, binding arbitration proceedings in accordance with the dispute resolution mechanism set out in the FTAA as sanctioned by the SC Decision.

Disclosure regarding forward-looking statements

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance of the Company. These risks and uncertainties could cause actual results and the Company’s plans and objectives to differ materially from those expressed in the forward-looking information. Actual results and future events could differ materially from those anticipated in such information. These and all subsequent written and oral forward-looking information are based on estimates and opinions of management on the dates they are made and expressly qualified in their entirety by this notice.

For more information, please contact:

Joseph Chan, Interim CEO
Phone: (647) 299-9203
Email: [email protected]

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press release.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/45947

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