Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

November 27, 2009 09:00 ET

Iberian Minerals Reports Third Quarter 2009 Results

TORONTO, ONTARIO--(Marketwire - Nov. 27, 2009) - Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating results for the three and nine months ended September 30, 2009, with comparative figures for the three and nine months ended September 30, 2008. The unaudited interim consolidated financial statements for the three and nine months ended September 30, 2009 and related notes, along with the Management Discussion and Analysis, may be found on www.sedar.com. The Company reported a net loss of $75.20 million for Q3 2009, representing a loss per share of $0.22.

Highlights for the Third Quarter Ended September 30, 2009

During the three months ended September 30, 2009:

  • Iberian reported a net loss of $75.20 million for the three months ended September 30, 2009, compared with net income of $173.29 million for the corresponding period in 2008. 
  • the main reason for the consolidated loss in the current quarter was an unrealized loss on derivative financial instruments of $82.57 million. This loss is a notional loss that must be recorded in accordance with Canadian GAAP. It is not an economic obligation of the Company and it does not estimate future losses to be realized.

  • the Company announced the successful completion of the acquisition by MATSA of its former underground mining contractor such that the total labour force at MATSA now stands at approximately 420 employees.

Overview of the Three Months Ended September 30, 2009

During the three months ended September 30, 2009, the Company completed ramp-up at Aguas Tenidas, and maintained steady state operations at Condestable.

Iberian reported a net loss of $75.20 million for the three months ended September 30, 2009, compared with net income of $173.29 million for the corresponding period in 2008. The main reason for the consolidated loss in the current quarter was an unrealized loss on derivative financial instruments of $82.57 million. This loss is a notional loss that must be recorded in accordance with Canadian GAAP. This loss is not an economic obligation of the Company and it does not estimate future losses to be realized. The loss was partially offset by CMC's gross margin of $5.30 million, future tax recovery of $4.11 million and a foreign exchange gain of $6.72 million.

Condestable Mine

The following are the highlights of Condestable for the third quarter of 2009:

  • Revenues were approximately $29.32 million.

  • Production for the three months ended September 30, 2009 was:

Production            Unit Three months ended
    September 30, 2009
ConcentrateDMT                       23,650
Contained copper t                         6,051
Fine gold oz                         4,386
Fine silver oz                       61,004
  • An average copper head grade of approximately 1.21%, and a recovery rate of 91%.

  • Operating costs for Q3 (C1 and C3) were US$0.95 and US$1.33 per payable pound of copper. 

During the quarter, the Company determined to change the basis of calculation of C1 cash operating costs to include TC/RC charges (treatment charges/refining charges), as being more consistent with industry practice. The C1 cash operating cost per pound of payable copper includes cash operating costs, TC/RC, freight and distribution costs, and is net of by-product metal credits.

As described in Note 3 of the September 30, 2009 unaudited interim consolidated financial statements, the results for the third quarter ended September 30, 2008 have been restated to recognize the future tax asset related to CMC's unrealized losses on its derivative instruments due to a change in Peruvian tax law.

Aguas Tenidas Mine

Aguas Tenidas produced 14,480 tonnes of copper concentrate and 6,207 tonnes of zinc concentrate for revenues of US$27.9 million during the third quarter of 2009. Since the Mine had not achieved commercial production, for accounting purposes in the third quarter, all expenses and sales have been capitalized. Commercial production was declared in October 2009 subsequent to the period end. As such, sales and costs and expenses of mining operations for MATSA will be recognized in the operating statement of the Company in the fourth quarter of 2009 and beyond.

Outlook

Iberian expects a continuing uncertain global environment, as the effects of the recent global recession and financial sector crisis continue to impact while the world economy moves to correction. The Company's operations are subject to the demand for, and fluctuations in the market prices of copper, zinc and lead and to some extent those of gold and silver.

While short term commodity demand and prices have remained surprisingly strong, in the face of apparent fundamentals indicating the contrary, the Company does expect continuing and strong recovery in the base metals sector, and as such considers itself well positioned for the future.

CMC continues to achieve expected operational and financial results. It continues to meet its debt repayment obligations. It is expected to continue to produce copper concentrates that contain gold and silver at similar levels for the balance of 2009 and 2010.

MATSA achieved a significant milestone when the Company declared commercial production in October 2009. Both circuits at the processing plant are operational, and processing results continue to improve.

With further enhancements to the polymetallic circuit, that are currently underway to produce separate copper and lead concentrates, rather than a bulk concentrate, and the planned process plant expansion to increase capacity to the equivalent of 2.2 million tonnes per annum, 2010 will be a pivotal year in the further growth and maturation of the Aguas Tenidas Mine.

In the remainder of 2009 and into 2010, the Company must address three significant short term priorities.

First, in the Company's prior MD&A, a potential funding shortfall at MATSA was identified. This expected cash shortfall arose mainly due to the acquisition of the Insersa underground contractor, pending receipt of the approved government grant and foreign exchange fluctuations. In addition, delays in production due to modifications to the polymetallic circuit, together with on-going ramp-up issues affected the financial condition at MATSA.

Based on current information, the Company has now further quantified the extent of the Company's projected cash shortfall between approximately US$ 40.00 and US$ 45.00 million, which includes funding for required corporate operations. This is higher than the prior estimate due to an increase in the capital budget at MATSA for the balance of 2009 and 2010 for the planned processing plant expansion, and also due to a declining US dollar. The Company must meet this funding requirement.

While the Company has arranged a bridge funding of US$ 21.00 million, and while the Company is in the process of finalizing a mandate with a group of banks for a possible US$ 50.00 million senior debt financing to cover the required funding and provide additional working capital, there can be no assurance that any financing will be finalized, or the terms on which any financing will be obtained. In addition, the timing for closing, and necessary arrangements with the current senior MATSA lender, Dundee Resources Limited, may impact the Company's funding requirements.

Second, MATSA must successfully complete and implement the current enhancements to the polymetallic circuit. The modular installation is proceeding on schedule and is due to be operational in Q1 2010. The effective use of this circuit is dependent on additional reagents being used, and the Company has applied to the appropriate authorities for such authorizations with expected authorization in Q1 2010. However, there can be no assurance as to the fact or timing of, or conditions attached to any government permits or authorizations. The impact of any negative development in this regard would be solely to reduce revenue for the Company – the polymetallic circuit will still process at capacity, but continue with a saleable bulk copper/lead concentrate, so impacting potential revenue that could have been achieved from separate concentrates.

Third, during 2010, MATSA must successfully complete and implement the planned processing plant expansion. The capital cost estimate for the expansion is expected to be between US$ 13 and US$ 15 million and consists of mine and processing equipment that is comparable in nature to those currently employed in the operations. The ability to operate at the increased level will depend on added employment, successful completion of certain labour arrangements, and applications to the government authorities for the necessary permits to allow operations at the increased level of 2.2 Mtpa. There can be no assurance as to the fact or timing of, or conditions attached to any government permits or authorizations. The impact of negative developments in this regard would be the inability to expand the processing plant.

About Iberian Minerals Corp.

Iberian Minerals Corp. is a Canadian listed global base metals company with interests in Spain and Peru. The Condestable Mine, located in Peru approximately 90 km south of Lima operates at 2.2 million tonnes per year producing copper, and associated silver and gold in a concentrate. The Aguas Tenidas Mine is in the Andalucia region of Spain approximately 110 km north-west of Seville and operates a 1.7 million tonnes per year underground mine and concentrator that produces copper, zinc and bulk copper/lead concentrates that also contain gold and silver.

C1 costs are cash costs including mining, processing, site administration, and refining and treatment charges, net of by product credits, and C3 costs are total costs being C1 costs plus depreciation and amortization charges, royalties, interest costs and financing charges.

FORWARD LOOKING STATEMENTS:

This news release contains certain "forward-looking statements" and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward-looking statements are frequently characterized by words such as "plan", "except", "project", "intend", "believe", "anticipate", "estimate", and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are based on a number of assumptions and subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Assumptions upon which such forward-looking statements are based included that all required third party regulatory and governmental approvals will be obtained. Many of these assumptions are based on factors and events that are not within the control of Iberian and there is no assurance they will prove to be correct. Factors that could cause actual results to vary materially from results anticipated by such forward-looking statements include changes in market conditions and other risk factors discussed or referred to in the management information circular of Iberian dated November 20, 2007 and in the annual Management's Discussion and Analysis for Iberian filed with the applicable securities regulatory authorities and available at www.sedar.com. Although Iberian has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Iberian undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

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

Contact Information

  • Iberian Minerals Corp.
    Laura Sandilands
    Investor Relations and Corporate Communications
    416-815-8558