Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

November 08, 2007 15:40 ET

Iberian Receives NI 43-101 Report on the Condestable Mine From SRK Consulting

TORONTO, ONTARIO--(Marketwire - Nov. 8, 2007) - Iberian Minerals Corp. ("Iberian" or the "Company") (TSX VENTURE:IZN) is pleased to announce it has received a technical report prepared by SRK Consulting of Santiago, Chile ("SRK") entitled "Mineral Resources and Reserves Estimation Condestable and Raul Deposits" (the "SRK Technical Report"). As announced in the press release of September 19th 2007, subject to certain conditions including shareholder and the approval of the TSX Venture Exchange, the Company intends to purchase Trafigura Beheer's ("Trafigura") 91.9% equity interest in Compania Minera de Condestable SA ("CMC"). The SRK Report was commissioned by Iberian as part of its due diligence process and to report mineral resources and mineral reserves at Condestable in compliance with National Instrument 43-101 guidelines.

"The SRK Report confirms our initial due diligence findings in respect of the Condestable and Raul deposits," said Peter Miller, President of Iberian. "The report confirms the positive economics, which should generate significant annual cash flows for Iberian while the Company develops Aguas Tenidas and thereafter."

Iberian's board continues to firmly believe the CMC acquisition will benefit Iberian shareholders. In addition, independent evaluation has demonstrated the acquisition is accretive to Iberian shareholders from a net asset value, cash flow and earnings per share perspective.

A copy of the SRK Report will be filed within the next 45 days under the Company's profile on SEDAR at www.sedar.com.

Highlights of the SRK Report are:

- Measured and indicated resources of 6.1 million tonnes grading 1.76% copper and an additional 8.8 million tonnes of inferred resources grading 1.55% copper.

- Proven and probable reserves of 7.7 million tonnes grading 1.28% copper.

- Mine expansion expected to be completed from 1.45 to 2.19 million tonnes per annum around the beginning of 2008.

- Mine life of 4 years based solely on proven and probable reserves.

- Annual payable production averaging 25,000 tonnes copper, 17,500 oz gold and 205,000 oz silver at full production.

- An after-tax net present value for the Condestable Mine of US$123.5 million at a 10% discount rate for the period to December 31st, 2010, including the impact of forward selling (hedging) of most copper, plus some gold and silver.

- Operating costs, including royalties, are projected to average US$19.70 per tonne milled once the Condestable Mine reaches full production. The variable costs are: for mining US$7.72/t, processing US$4.47/t and exploration US$1.76/t. Other Fixed cost (administrative, training, land rent, closure & royalties) are in average US$7.75/t.

- Capital costs are projected to be: US$7.6 million for the latter half of 2007, US$3.0 million in 2008 and US$1.5 million annually thereafter.

Project Description

CMC is the owner and operator of the Condestable mine and lessee of the Raul Mine (collectively the "Condestable Mine" or "Condestable") located 90 km south of Lima's capital city Lima. Mining at Condestable began in 1978 and it has been in continuous production since 1998.

Other aspects of Condestable are as follows:

- The port of Callao is located approximately 90 km to the north of the mine. Unlike most mines in Peru, the Condestable Mine is located at low altitude, next to the narrow coastal plain and the North-South Pan American Highway.

- The principal mining methods used by Condestable are: room and pillar, shrinkage stoping and sub level open stoping with long hole drilling.

- Condestable controls, or has petitioned for, 46,541 hectares of tenements. 6,600 hectares of these tenements are subject to an owner's royalty, 63 exploration and exploitation concessions comprise 13,677 hectares of these tenements.

- Condestable's processing plant consists of: a four stage crushing process, six ball mill lines, a rougher-scavenger primary circuit, a regrind-cleaner flotation circuit, and concentrate filtration facilities.

- SRK validated CMC's forecast copper recoveries of 91.7% to produce a 26.2% Cu dry concentrate. There are payable precious metal credits in the concentrates of 0.18oz/t Au and 2.08oz/t Ag. The concentrates contain very low amounts of deleterious elements and no smelter penalties are anticipated.

- Underground rock conditions are generally good but more systematic support will be required particularly as the mine is deepened. Due to the shallow nature of the underground workings, the present natural ventilation will be supplemented with new main fans. These improvements have been included in the cost estimation presented in the technical report.

- All the required operating permits and authorisations are in place.

- A royalty contract extends until February 2014 and an agreement exists with the local rural community for surface rights until 2036.

- Water supply is from local water wells, electrical power is supplied from the Peruvian national grid.

Technical Report

SRK was retained to, review and audit the mineral resource, reserve estimate and financial analysis of the Condestable Mine. Drs. Neal Rigby and Jean Francois Couture of SRK are the "Qualified Persons" responsible for the Technical Report prepared in accordance with National Instrument 43-101 and are independent of the Company. The Mineral Resources and Mineral Reserves for Condestable have been estimated by CMC personnel and audited by SRK in accordance with National Instrument 43-101 guidelines. The Mineral resources and mineral reserves were classified by SRK according to the CIM Definition Standards for Mineral Resources and Mineral Reserves (December 2005). The content of the news release was derived substantially from the Technical Report. Dr. Rigby has reviewed and approved the contents of this news release.

Resources & Reserves

Audited Mineral Resource and Mineral Reserve Statement for the Condestable Mine as at August 30th 2007:



-----------------------------------------------------------
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Condestable Copper Mine
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Resource Classification Tonnage (kt) Copper Grade(%)
-----------------------------------------------------------
Measured 3,233 1.74
Indicated 2,601 1.85
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Total Measured and Indicated 5,834 1.79
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Inferred 8,773 1.55
-----------------------------------------------------------
-----------------------------------------------------------


-----------------------------------------------------------
-----------------------------------------------------------
Condestable Copper Mine
-----------------------------
Reserves Classification Tonnage (kt) Copper Grade(%)
-----------------------------------------------------------
Proven 4,133 1.25
Probable 3,320 1.34
-----------------------------------------------------------
Total Proven+Probable 7,453 1.29
-----------------------------------------------------------
Stocks (Proven) 256 0.95
Total for Mining Plan 7,709 1.28
-----------------------------------------------------------
-----------------------------------------------------------

Note 1. reported at a cut-off grade of 0.7% Cu. No consideration was given
to by-product values of gold and silver.
Note 2. The above mineral resources have been classified by SRK according
to the "CIM Definition Standards for Mineral Resources and Reserves"
(December 2005) under the supervision of SRK Consulting and endorsed
by Dr. Jean Francois Couture, P.Geo and Dr.Neal Rigby , both Qualified
Persons as defined by NI 43-101.
Note 3. Mineral resources above include mineral reserves.


Approximately 7.2% of the Condestable mine mineral reserves occur in steeply dipping veins that vary from 1 to 4 metres in thickness, and cut five 'favourable' horizons ("Mantos"). The Mantos dip at 50 degrees to the west with mining widths that vary from 2 to 15 metres.

The process of upgrading inferred resources into indicated resources and their subsequent conversion to mineral reserves requires a constant exploration program of underground drilling and development. A total of 54,000 metres is planned to be drilled over the next three years, including 6,000 metres in the latter half of 2007. A total of 3,945 metres of underground development is planned for the latter half of 2007 and 8,400 metres for 2008; these costs are included in the forecast operating cost estimates.

In addition to the measured and indicated resources, CMC estimates an inferred mineral resource of 8.773 million tonnes grading 1.55% Cu. A polygonal block is considered Inferred if it meets the following criteria: i) it intersects widely spaced boreholes (between 100 and 200m), and ii) inferred geological continuity.

SRK comments: "Clearly the geological department has been quite effective, not only in replacing the reserves that are being mined out yearly at an increasing rate, but also in growing the published year end reserves that have been constantly rising since Trafigura took over the operation ... attesting to the capacity of the geology team and demonstrating the good potential of this project."

Forecast Production

The Condestable Mine is completing an expansion program to increase mill throughput from 4,100 tpd to 6,000 tpd. CMC's forecasts of copper production validated by SRK, plus by-product metals gold and silver, are:



Forecast Production
Year 2007(i) 2008 2009 2010

Tonnes Milled ('000s) 921 2,190 2,190 2,190
Copper Grade 1.29% 1.30% 1.30% 1.29%
Contained Copper (tonnes) 11,881 28,470 28,470 28,251
Net Recovery (%) 90.5% 90.9% 90.9% 90.9%

Concentrate Produced (t '000s) 41.4 98.9 99.0 98.1
Concentrate Grade (% Cu) 26.0% 26.2% 26.2% 26.2%
Payable Cu Grade (%) 25.0% 25.2% 25.2% 25.2%
Concentrate Grade (Au g/t) 6.05 6.05 6.05 6.05
Concentrate Grade (Ag g/t) 72.00 72.00 72.00 72.00

Payable Copper (t '000s) 10.3 24.9 24.9 24.7
Payable Gold (ozs) 7,321 17,501 17,520 17,369
Payable Silver (ozs) 86,174 205,987 206,207 204,430

(i) Denotes July to December 2007


Forecast Cash Flows and NPV for Condestable

The following table illustrates the cash flow projections for the Condestable Mine.



Condestable Cash Flow Forecast (US$ '000s)

Year 2007(i) 2008 2009 2010

Net Sales $45,340 $123,837 $117,402 $108,086
Operating Costs -$15,599 -$34,820 -$34,877 -$35,000
Legal & Owners Royalties -$4,181 -$9,568 -$8,317 -$6,828
Total $25,560 $79,449 $74,208 $66,258

Financing Expenses -$72 -$144 -$25
Other Income/Expense $362 $615 $477 $374
Depreciation & Amortisation -$1,977 -$7,143 -$5,595 -$4,628
Cash Flow Before Tax $23,873 $72,577 $69,065 $62,004

Workers' Participation (8%) -$1,910 -$5,806 -$5,525 -$4,960
Income Tax (30%) -$6,589 -$30,031 -$19,062 -$17,113
Net Cash Flow $15,374 $46,739 $44,478 $39,931

Extraordinary Item(ii) $1,326
Depreciation & Amortisation $1,977 $7,143 $5,595 $4,628
Cash Flow from Operations $18,677 $53,883 $50,072 $44,558

Capital Expenditure $7,602 $2,969 $1,500 $1,500
Net Cash Flow(iii) $11,075 $50,913 $48,572 $43,058

(i) Denotes July to December (ii) Denotes sale of gold mine (iii)Denotes
before financing


From the above cash flows, SRK has determined an NPV, at a discount rate of 10% for the Condestable Mine of US$123.45 million for the period up until December 31st 2010.

On this basis the NPV of the 91.9% of Condestable to be acquired by Iberian, subject to shareholder approval, is US$113.45 million.

The majority of Condestable's future copper production has been sold forward (hedged) over the next four years. Minor amounts of copper and gold have also been sold forward:



Forecast Metal Prices & Hedging

Copper (US$/lb) 2007(i) 2008 2009 2010
Forward Sale Price $3.36 $3.15 $2.85 $2.52
Average Hedged Price $1.81 $2.00 $2.00 $2.00
Percentage Hedged 84.0% 77.0% 79.9% 83.1%
Amount Hedged (tonnes Cu) 8,675 19,150 19,900 20,525
Cu Price Achieved $2.06 $2.27 $2.17 $2.09

Gold (US$/oz)
Percentage Hedged 30.0% 13.7% 13.7% 13.8%
Amount Hedged (ozs) 2,200 2,400 2,400 2,400
Au Price Achieved $667.49 $662.55 $662.53 $662.64

Silver (US$/oz)
Percentage Hedged 197.3% 58.3%
Amount Hedged (ozs) 170,000 120,000
Ag Price Achieved $11.93 $12.94

(i) Denotes July to December 2007


Aguas Tenidas & the Proposed Condestable Purchase

Iberian's management and board of directors reviewed a number of alternative financing opportunities to place its wholly owned Aguas Tenidas project in SW Spain into commercial production. In addition to the US$200 million facility to be provided by Investec Bank (UK) Ltd, there is an additional funding requirement of approximately US$75 million, which is expected to be funded against the cash flow of the Condestable Mine.

About Iberian Minerals Corp.

Iberian Minerals Corp., through its wholly owned subsidiary MATSA, is currently proceeding with the re-opening of the Aguas Tenidas copper/zinc project located in the Region of Andalucia, SW Spain. In January 2006, a feasibility report on the project was prepared by SRK Consulting of Cardiff UK, which demonstrated the technical feasibility and economic viability of the project (press release January 20, 2006). Elements of this feasibility report have been updated by Adam Wheeler and RSG Consulting Pty Ltd. (press release of May 22, 2007), which is available at www.sedar.com. In addition to the purchase of approximately 92% of the issued and outstanding shares of Compania Minera Condestable ("CMC") from Tafigura Beheer B.V. Amsterdam ("Trafigura") the Company has also signed a long-term offtake agreement with Trafigura for the sale of all its metal concentrates from Aguas Tenidas.

In addition to the Aguas Tenidas project the Company, through MATSA, holds an extensive land position of exploration properties within the Iberian Pyrite Belt.

FORWARD LOOKING STATEMENTS

This news release contains certain "forward-looking statements" and "forward-looking information" under applicable securities laws concerning, among other things, Iberian's transactions with Trafigura. 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 transactions will be completed, that all required third party regulatory, governmental and shareholder approvals for transactions will be obtained and all other conditions to completion of the transactions will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Iberian or Trafigura 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 the Iberian shareholders failing to obtain minority shareholder approval in respect of the Condestable Acquisition, failure to reach definitive agreements in respect of the contemplated transactions, as well as changes in market conditions and other risk factors discussed or referred to 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.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Iberian Minerals Corp.
    Peter Miller
    (416) 815-8558
    or
    Iberian Minerals Corp.
    Norm Brewster
    (416) 815-8558