Mr. John Zang reports

MORRO BAY ANNOUNCES PROCEEDING WITH A PRIVATE PLACEMENT

Morro Bay Resources Ltd. is arranging a non-brokered private placement for a minimum of one million and a maximum of 40 million units. Each unit will comprise one common share of the company and one common share purchase warrant.

Subject to regulatory approval, the units will be offered at a price of five cents per unit for gross proceeds of between $50,000 to $2-million. Each warrant will be exercisable for one common share of the company for a period of 24 months from the closing date of its issuance at an exercise price of five cents per share for the first 12 months and at an exercise price of 10 cents for the second 12 months. The warrants will not be listed for trading.

The proceeds from the above financing (assuming the maximum amount of $2-million is raised) will be used to finance the company's 2015 exploration program at the Penoles project upon exercise of the option, including anticipated drilling and exploration work of approximately $1.5-million, as well as ancillary obligations on its lands and an updated technical report thereafter, and approximately $500,000 for general corporate purposes. Assuming the minimum amount is raised, the proceeds will be used for general corporate purposes.

Recently most securities commissions across Canada have passed policies which allow shareholders to subscribe to a company's private placement (see, for example, amendments to the Ontario Securities Commission Rule 45-501 and Alberta Securities Commission Rule 45-513). For subscriptions by shareholders relying on the shareholder exemption, Morro Bay advises as follows:

• Only shareholders who held Morro Bay shares as of July 28, 2015, may participate in the private placement under the shareholder exemption.
• A maximum of 20 million of the offered shares are available under the shareholder exemption. In the event that the maximum is exceeded, the shareholders' subscription amount will be reduced pro rata in accordance with the amount of their subscription.

The private placement may be closed in one or more tranche.

The common shares and warrants under the units will be subject to a four-month hold period in accordance with policies of the TSX Venture Exchange and applicable Canadian securities legislation, as well as such other restrictions as may apply under foreign securities laws, if applicable. The private placement remains subject to acceptance by the TSX Venture Exchange.

We seek Safe Harbor.