Int'l PBX arranges $600,000 private placement

2012-12-10 19:36 ET - News Release


Mr. Terry Lynch reports


International PBX Ventures Ltd. has provided its shareholders with the following update.

At a shareholder meeting on Oct. 25, 2012, shareholders of PBX overwhelmingly supported a new vision for PBX. The new board of directors has been working hard to progress toward achieving the six objectives for 2013 outlined in the dissident information circular dated Oct. 16, 2012. Set forth herein is a summary of what the company is doing in respect of each of these objectives:

Board objective No. 1: value-enhancing financing alternatives -- secure sufficient working capital in the least dilutive manner possible to ensure PBX can operate in a manner conducive to achieving fair value for the assets it has accumulated

PBX needs to demonstrate to the market that the company can operate until the end of the initial option period under the joint venture option agreement with Oz Exploration Chile Ltda. The purpose of this is to avoid any perception that PBX will issue equity at lower and lower prices, as has been done in the past. The company needs to address and solve this problem as quickly and resolutely as possible. In particular, it believes that issuing convertible preferred shares is a potential means to provide to the company the financing needed to last through the OZ initial option period, with the least detriment to shareholders. The preferred shares would be redeemable out of proceeds of the initial OZ payment, giving the optionholder a potential doubling on the investment in two years. While giving an investor a potential double return over two years may be a steep price, in the company's view, this alternative provides an attractive return and is far less expensive than issuing stock at current levels.

Progress toward objective No. 1

The company is currently engaged in discussions with several parties regarding a proposed preferred share financing in the amount of approximately $2-million. The company has incurred approximately $500,000 in costs in connection with the recent meeting of shareholders of PBX, and additionally the company requires a cash injection to continue operations.

The company also announces that it will seek to complete a private placement of up to 10 million units at a price of six cents per unit for gross proceeds of up to $600,000. Each unit shall be composed of one common share of the company and one common share purchase warrant. Each warrant shall entitle the holder to purchase one common share at an exercise price of seven cents per common share for a period of 12 months following the closing of the unit private placement. It is expected that closing of the unit private placement will occur on or around Dec. 14, 2012. The unit private placement is subject to the approval of the TSX Venture Exchange.

The company anticipates that the unit private placement and the proposed preferred share financing will assist the company in stabilizing its balance sheet and will be used for general working capital purposes.

Board objective No. 2: assess potential at Palo Negro -- increase focus on the company's Palo Negro property in Chile

A China-based company has built an operating iron and copper mine in the last 18 months on 400 hectares, not owned by the company, but within its 7,000-hectare landholdings -- a development of which former management was questionably reported as unaware. The company's plan would be to employ experts, already identified, to the region to do a thorough assessment of this opportunity.

Progress toward objective No. 2

As announced in the company's press release dated Nov. 6, 2012, Dr. Chris Hodgson has been appointed vice-president, exploration, of PBX. Mr. Hodgson is an experienced and successful exploration geologist. Dr. Hodgson served as chief geologist at Amax Exploration and vice-president of exploration at Canamax Resources and completed successful tours as exploration manager at each of Canada Tungsten and Minera Inmet in Chile. He has most recently served as VP, exploration, for a Canadian junior mining company exploring a historical silver district in central Mexico. Dr. Hodgson speaks fluent Spanish and has regularly worked in Chile over the past 20 years. One of the highlights of his work in Chile was his early recognition of the Santo Domingo iron oxide-copper-gold deposit, which was subsequently developed by Farwest Resources and ultimately sold for $700-million to Capstone Mining.

The Palo Negro project is also believed to be an exciting IOCG prospect, and the company is pleased to announce that Dr. Hodgson is already at Palo Negro in Chile and is meeting with potential financial partners. The company expects to issue further updates on the Palo Negro property early in 2013.

Board objective No. 3: pursue joint venture opportunities

The company intends to seek interested parties for potential acquisition and joint venture opportunities for the company's Tierra De Oro and Sierra Pintada properties. It is the company's view that a comprehensive assessment of these projects, put together by a highly credible geologist and experienced mine finder, has not been done to date and is urgently needed. The company is secured an expert with a considerable record of success in Chile, who is fluent in Spanish and who is willing to complete such a review for the company, which will lead to an assessment of the projects' potential. With the benefit of such a review, the company can explore value-maximizing partnerships.

Progress toward objective No. 3

Dr. Hodgson will use his experience and contacts to review the company's other main projects, being the Tierra De Oro and Sierra Pintada properties, and to develop a work program and profile for each project. The company anticipates using this information to develop a strategy to finance the development of these projects. The company anticipates that drilling on these projects and the Palo Negro project will occur in 2013.

Board objective No. 4: responsible tax and financial planning -- establish appropriate and timely tax plans so that the company is prepared if, as and when OZ exercises its option on Copaquire

There are a number of different scenarios that could unfold as the company evaluates and pursues ways to deliver maximum value to shareholders. The company does not believe that the current deal with OZ adequately addresses this serious issue.

Progress toward objective No. 4

As currently constituted, any payments by OZ pursuant to the Copaquire option will be made directly to the company's wholly owned Chilean subsidiary. The company's use of such funds will determine whether a significant amount of taxes will be payable. The company is currently evaluating options to alleviate such costs and will continue to do so in 2013.

Board objective No. 5: commitment to shareholder communication and outreach

Once investors are aware that there is no need for additional equity financing, the company can seek to create an atmosphere wherein investors can appreciate and value the underlying worth of PBX's properties. This requires a commitment to regular communication with the existing shareholder base and a professional outreach program to introduce PBX to new shareholders.

Progress toward objective No. 5

The company intends to provide regular updates to shareholders, within both North American and abroad, regarding PBX's progress on key initiatives and programs. To assist the company in this respect, the services of Baystreet Connect have been retained to provide investor relations services. Baystreet is a leading provider of investor relations services to public companies in Canada. The Toronto-based company has over 10 years of experience in assisting corporations in gaining exposure and recognition within the global investment community. Baystreet will establish and maintain a targeted marketing and informational campaign to distribute information to current shareholders and to the investment community through its network of institutions, brokers, analysts and other financial corporations.

In consideration of the services to be provided by Baystreet, the company has agreed to pay a monthly fee of $7,500 (plus HST) per month for the six-month term of the consulting agreement after which such agreement will continue on a monthly basis until 30 days notice is provided by either party. The board shall grant Baystreet an incentive stock option to purchase up to 400,000 common shares of PBX for a term of five years. Such option shall be exercisable at the following prices: (i) an option for 200,000 shares is exercisable at eight cents per common share; (ii) an option for 100,000 shares is exercisable at 16 cents per common share; and (iii) an option for 100,000 shares is exercisable at a price of 24 cents per common share. One-quarter of this option vests on the date of grant, and a further one-quarter will vest every three months thereafter.

It is management's view that the company presents a compelling investment proposition. As fellow shareholders, the board believes that the company's stock is significantly undervalued and intends to communicate this message aggressively to both current and future shareholders.

Board objective No. 6: support exploration at Copaquire -- assist OZ in its exploration efforts on the Copaquire property and disclose its drilling results in a timely manner to the marketplace

Shareholders will expect that to the extent OZ has successful drill results, there is a greater chance the option will be exercised, and, as a result, the remaining 10 per cent of Copaquire becomes worth even more. With a current market cap of approximately $10-million, the company believes investors will see significant shareholder value in PBX stock, provided they believe the company will last long enough to see the end of the option period.

Progress toward objective No. 6

As announced on Nov. 7, 2012, OZ has commenced its drilling program in Copaquire as part of its option to acquire 90 per cent of the Copaquire project for payments aggregating $90-million. OZ and its team of professionals are also engaged in outreach to the local communities and developing productive relationships with the various Chilean mineral authorities, as well as planning and executing its comprehensive exploration drill program. The company anticipates receiving the first monthly report from OZ in early 2013 and subsequent monthly reports going forward.

The board has granted incentive stock options to buy a total of 5.4 million shares to certain members of management and to certain directors under the terms of the company's stock option plan. The options are exercisable at a price of eight cents per common share and expire in five years. Options are always a contentious issue, and the company understands that, especially in light of the recent proxy battle. It is, however, in a small microcap stock like PBX, one of the few ways to motivate key individuals to work aggressively when cash must be conserved and cannot be paid. The company is committed to improving the value of PBX for the benefit of all shareholders.

The board wishes to thank all those shareholders who supported its efforts to bring change to PBX. It truly was a broad program, one where the company's biggest shareholders led by Jintian Copper were supported by shareholders big and small. The board also wishes to thank the many shareholders who reached out directly to communicate with the company and who have expressed their support of the company as it moves forward.

The board and the company's management team believes that 2013 will be an extremely exciting one for the company and looks forward to continuing to build the PBX team, assets and shareholder value. The board and management also invite shareholders to reach out to them to provide any feedback and advice they feel would be helpful as the company rebuilds and rebrands International PBX.

We seek Safe Harbor.