Mr. John Zang reports

MORRO BAY ANNOUNCES RELEASE OF THIRD QUARTER FINANCIAL RESULTS

Morro Bay Resources Ltd. has released its third quarter 2014 consolidated financial statements, and management discussion and analysis (these can be found on SEDAR).

The third quarter saw Morro Bay incur approximately $750,000 of expenditures at Penoles. The incurring of such expenditures was one of the prerequisites to Morro Bay exercising the option to acquire at least a 51-per-cent (and up to a 65-per-cent) interest in the Penoles project. Results of the exploration program were previously announced on June 9, 2014, and June 23, 2014, and included the discovery of a new zone of near-surface mineralization to the south of Jesus Maria.

Subsequent to the end of the third quarter, Morro Bay entered into an agreement whereby the date for the exercise of the option on the Penoles project was extended to be the later of Nov. 30, 2014, and the date which is 75 days after the completion of the additional work program, and in any event not later than Dec. 31, 2014. In addition, subsequent to the end of the third quarter, Morro Bay delivered 10,135,135 common shares (at a deemed value of 7.4 cents per share) to Riverside in satisfaction of the $750,000 advance payment required under the amended option agreement (see news release dated July 7, 2014). Morro Bay and Riverside have agreed that 7,094,595 of these shares will not be traded until Dec. 31, 2014. As a result of having made the advance payment, the previously required $1.5-million cash or share payment required under the option agreement has been reduced to $750,000. As a result, in order to exercise the option (and thereby acquire a 51-per-cent interest in the Penoles project), Morro Bay must:

• Incur exploration expenditures totalling not less than $500,000;
• Pay to Riverside $1.25-million (U.S.) and $100,000;
• Deliver to Riverside Morro Bay common shares having a value of $750,000 (or pay cash in lieu of all or a portion thereof).

We seek Safe Harbor.