Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

April 12, 2010 09:03 ET

Iberian Minerals Signs Facility Agreement for Senior Financing at Aguas Tenidas, and Refinances Existing $25 Million Convertible Debenture

TORONTO, ONTARIO--(Marketwire - April 12, 2010) - Iberian Minerals Corp. (TSX VENTURE:IZN) is pleased to announce that its wholly-owned subsidiary, Minas de Aguas Tenidas, S.A.U. ("MATSA"), has signed a facility agreement dated March 30, 2010 (the "Facility Agreement") with BNP Paribas, Natixis and Societe Generale for a senior debt financing for US$ 50 million (the " Senior Facility") for the Aguas Tenidas Mine, with the first advance expected on or around April 15, 2010. Iberian will act as guarantor under the Facility Agreement.

The proceeds of the Senior Facility will be used to repay the US$ 21 million Trafigura Beheer B.V. ("Trafigura") bridge facility and for working capital purposes.

Daniel Vanin, President of Iberian, stated: "The completion of the Senior Facility is a significant achievement for MATSA. It provides further validation of the Aguas Tenidas mining operation and provides stability for the company as it moves forward. We would like to take this opportunity to thank the lending banks and Trafigura for its continued support of Aguas Tenidas and Iberian."

The key features of the Senior Facility are as follows:

  Amount: US$ 50 million
  Type of Facility: Revolving
  Rate: LIBOR plus 3%
  Term: 3 years
  Mandatory Reductions: Reduces to US$ 47 million after 12 months, US$ 42 million after 18 months, US$ 30 million after 24 months, and US$ 9 million after 30 months
   
   

The required commodity hedging program under the terms of the Senior Facility requires the restructuring of existing hedge positions and additional hedging of 22,500 FMT of copper and 9,675 FMT of zinc. The counterparty to hedges for Aguas Tenidas Mine is BNP Paribas, Natixis and Societe Generale.

Additional commodity hedging has been executed and, together with the restructured commodity hedges, the new MATSA hedging program is set out in the following table.

    2010 2011 2012 2013 TOTAL
 
Restructured Hedging Volumes          
 
Zn Forwards FMT 4,959 16,848 4,896   26,703
Zn Price USD/t 1,630 1,601 1,579   1,603
 
Cu Forwards FMT 4,104 16,002 396   20,502
Cu Price USD/t 4,300 4,216 4,160   4,232
 
Zn Short Call FMT 4,900       4,900
Zn Strike Price USD/t 1,500       1,500
 
Cu Short Call FMT 6,100       6,100
Cu Strike Price USD/t 4,200       4,200
 
New Hedging Volumes            
 
Zn Forwards FMT     8,550 1,125 9,675
Zn Price USD/t     2,307 2,272 2,303
 
Cu Forwards FMT   3,600 17,100 1,800 22,500
Cu Price USD/t   7,768 7,471 7,319 7,507
Zn % Hedged   29% 39% 33% 2% 25%
Cu % Hedged   44% 66% 58% 6% 44%

There shall be no margin calls or other collateral delivery obligations under the required hedging program.

Also in connection with the terms of the Senior Facility, MATSA has restructured its Euro/USD foreign exchange forward contracts, summarized as follows:

  • 2010 – sale of US$ 84 million at 1.43;
  • 2011 – sale of US$ 34 million at 1.43;
  • 2012 – sale of US$ 34 million at 1.43;
  • 2013 – sale of US$ 6 million at 1.43

As required by the Senior Facility, Trafigura has entered into a standby facility (the "Standby Facility") with MATSA for US$ 20 million. In addition, Iberian has refinanced an existing CDN$ 25 million convertible debenture held by Dundee Resources Limited (the "Debenture Re-Financing").

The Facility Agreement is posted on SEDAR at www.sedar.com.

The Standby Facility:

The purpose of the Standby Facility is to fund any additional cash flow requirements at MATSA pending satisfaction of the Completion Test mandated in the Facility Agreement, being MATSA completing production ramp-up and reaching a steady state of operations.

The terms of the Standby Facility are:

  Amount: US$ 20 million
  Rate: LIBOR plus 6%
  Term: Earlier of Completion (as defined in the Credit Agreement) or Term of the Senior Facility
  Availability: Immediately
  Security: Unsecured

There is no conversion feature, and there are no warrants attached to the Standby Facility.

Debenture Refinancing:

Dundee Resources Limited ("Dundee") is the holder of a convertible debenture issued by the Corporation in the amount of CDN$ 25 million. The debenture bears interest at 6%, payable semi- annually, matures July 26, 2011, and is convertible at CDN$ 1.38 into units, each unit comprising one registered share and one-half of a warrant, with each full warrant being exercisable for one registered share at CDN$ 2.00 for a period of two years. The debenture grants contractual security to Dundee.

In connection with the Senior Facility, the Corporation has refinanced the Dundee debenture with two private investors (the "New Debentures") and Dundee will be repaid in full, with accrued interest, on or around April 13, 2010.

The New Debentures, totalling CDN$ 25 million, bear interest at 7% payable quarterly in arrears and mature on December 31, 2011. In connection with the New Debentures, the Corporation has granted to the investors an aggregate of 44,642,856 non-transferable warrants to purchase registered shares of the Corporation (the "Warrants"). Each Warrant is exercisable at a price of CDN$ 0.56 (the "Exercise Price") per registered share until December 31, 2011. The Warrants, if exercised, shall reduce the outstanding indebtedness of the Corporation under the New Debentures by an amount equal to the Exercise Price multiplied by the number of Warrants exercised. The New Debentures are subordinate to the Senior Facility but in priority to any advances under the Standby Facility. The New Debentures are unsecured, and will close on or around April 12, 2010.

The issuance of the New Debentures has been conditionally approved by the TSX Venture Exchange.

Related Party Transactions

Pursuant to Multilateral Instrument 61-101 ("MI 61-101"), the entering into of the Standby Facility and the provision of services by Trafigura regarding the Senior Facility, are "related party transactions" as Trafigura currently holds 154,582,163 registered shares representing approximately 45.93% of the issued and outstanding registered shares of the Corporation. Iberian is exempt from the formal valuation requirement of MI 61-101 in connection with entering into of the Standby Facility and the provision of services regarding the Senior Facility in reliance on section 5.5(b) of MI 61-101 as no securities of the Corporation are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange, the NASDAQ Stock market or a stock exchange outside of Canada and the United States. Additionally the Corporation is exempt from obtaining minority shareholder approval in connection with entering into of the Standby Facility and the provision of services regarding the Senior Facility in reliance on section 5.7(1)(f) of MI 61-101 as the Standby Facility and the provision of services regarding the Senior Facility are on reasonable commercial terms that are not less advantageous to the Corporation than if obtained from an arm's length party, the Standby Facility is not convertible into registered shares and no amount is payable in registered shares of the Corporation.

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.

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 annual Management's Discussion and Analysis and Annual Information Form 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