Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

September 19, 2007 11:32 ET

Iberian Minerals Announces Agreement to Acquire Producing Copper Mine in Peru and $20 Million Loan from Trafigura

Analyst and Investor Conference Call at 10:00 a.m. EST Thursday, September 20, 2007

TORONTO, ONTARIO--(Marketwire - Sept. 19, 2007) - Iberian Minerals Corp. ("Iberian" or the "Company") (TSX VENTURE:IZN) is pleased to announce that it has entered into a Letter of Intent (the "LOI") with Trafigura Beheer B.V. Amsterdam ("Trafigura") under which Iberian has agreed to acquire approximately 92% of the issued and outstanding shares of Compania Minera Condestable ("CMC"). Under the terms of the LOI, Trafigura has also agreed to provide Iberian with an unsecured loan of C$20 million for the continued development of the Company's Aguas Tenidas project. Trafigura currently holds approximately 20% of the issued and outstanding shares of the Company and is considered a related party under OSC Rule 61-501.

CMC is the owner and operator of the Condestable mine and lessee of the Raul Mine (collectively the "Condestable Mine") located 90 km south of Lima in Peru. The Condestable Mine has been in continuous production since 1998 and has produced copper and gold in concentrates as outlined in the table below.



---------------------------------------------------------------------------
Produc 2007
-tion Unit 2001 2002 2003 2004 2005 2006 (June)
---------------------------------------------------------------------------
Ore MT 639,871 713,633 867,845 1,006,435 1,319,704 1,500,154 739,560
Treated
---------------------------------------------------------------------------
Ore MT 1,753 1,955 2,378 2,757 3,616 4,110 4,063
Treated /D
(daily
average)
---------------------------------------------------------------------------
Concent MT 33,921 37,306 43,518 48,136 60,912 68,954 33,775
-rate
produced
---------------------------------------------------------------------------
Fine MT 9,101 9,531 11,295 12,590 15,922 18,267 8,456
copper
produced
---------------------------------------------------------------------------
Fine OZ 5,269 7,493 8,263 9,767 11,360 13,501 5,918
gold
produced
---------------------------------------------------------------------------
Fine OZ 76,152 102,631 124,149 130,683 152,550 153,500 72,552
Silver
produced
---------------------------------------------------------------------------

Source: CMC annual report and interim filings made in compliance with
Peruvian securities laws.


"This transaction transforms Iberian into an immediate copper producer and improves the Company's ability to develop the Aguas Tenidas project. It also increases Iberian's operational expertise as well as further improves our opportunities for future growth. Our relationship with Trafigura has been substantially enhanced." said Peter Miller, President of the Company.

Jeremy Weir, Executive Director of Trafigura, commented: "This transaction further substantiates Trafigura's commitment to Iberian. Our intention is to work closely with the Company to provide the necessary support and deal flow for further growth in the base metal sector through the acquisition and development of new mining projects."

Key Terms of the Transaction

- Iberian will purchase approximately 92% of the issued and outstanding shares of CMC for consideration of US$115 million by issuing approximately 66 million shares of Iberian to Trafigura at a deemed issue price of C$1.80 per Iberian share. This deemed price per share represents a 38% premium to the trailing 20-day volume-weighted average trading price of Iberian on September 18th, 2007 of C$1.30 (the "Condestable Acquisition").

- Trafigura will provide Iberian with an unsecured loan of C$20 million which will be used for the continued development of the Aguas Tenidas project (the "Loan").

- Trafigura has also agreed that in certain circumstances it will provide up to an additional C$60 million in debt financing on the same terms and conditions as the Loan for the development of the Aguas Tenidas project as requested by Iberian.

- As a condition to closing the Condestable Acquisition, Trafigura will arrange for a pre-export finance contract in an amount of up to C$85 million to repay the Loan and to fund development of the Aguas Tenidas project.

- Trafigura retains a 46% net profit interest ("NPI") in the Condestable project commencing January 1, 2011 and ending December 31, 2014.

- Execution of the LOI has been approved by the Board of Directors of Iberian, upon recommendation of a special committee of the Board.

- Completion of the Condestable Acquisition is subject to Iberian minority shareholder approval.

Highlights of the Transaction

- Iberian becomes an immediate base metal producer, providing immediate cash flow and additional financial strength.

- Management's analysis demonstrates that the transaction is accretive to net asset value and to cash flow and earnings per share.

- Expected cash flow from the Condestable Mine during the construction of the Aguas Tenidas project, together with available financing from Trafigura and anticipated project financing, is expected to be sufficient to complete the development of the Aguas Tenidas project.

- Development and operational expertise from Condestable can be leveraged for Aguas Tenidas.

- Upon closing of the Condestable Acquisition, Trafigura will become an approximate 40% shareholder of Iberian, a relationship Iberian will use to provide mining expertise and financial support for the continued growth of the Company.

- The parties have agreed that the effective date of the Condestable Acquisition shall be September 30th, 2007. Cash flows generated at the Condestable Mine following the effective date will accrue for the benefit of Iberian and its shareholders.

About Condestable

On closing of the Condestable Acquisition, CMC's sole material asset will be the Condestable Mine. Iberian has engaged SRK Consulting Chile S.A. to prepare a NI 43-101 compliant technical report to confirm Condestable's internal reserve and resource estimates as well as evaluate the expansion of the processing plant throughput capacity to 6,000 tpd, which is nearly complete. Completion of the technical report is expected prior to the end of September 2007. Once completed, the technical report will be filed on SEDAR.

Trafigura assists CMC with the management of its hedging program at the Condestable Mine. Trafigura has agreed to continue this assistance following completion of the Condestable Acquisition and has guaranteed the CMC hedge program currently in place with the Condestable Mine. CMC has entered into forward sale contracts for approximately 185 million lbs of copper production from the Condestable Mine, representing approximately 80% of expected production between 2007 and 2011. This production has been hedged at an average price of approximately US$1.90 per pound.

Details of the Transaction

Condestable Acquisition

The Company will acquire Trafigura's indirect 92% interest in CMC. The purchase price of US$115 million for the Condestable Acquisition shall be satisfied by the issuance of 65,990,833 common shares of the Company at a deemed price of C$1.80 per share. This deemed price per share represents a 38% premium to market based on the trailing 20-day volume-weighted average trading price of Iberian on September 18th, 2007 of C$1.30. Following the completion of the Condestable Acquisition it is expected that the Company shall make a follow-up offer to the minority shareholders of CMC and de-list CMC from the Lima Stock Exchange. It is contemplated that concurrent with closing of the Condestable Acquisition, Trafigura will assist CMC in arranging for a pre-export financing facility. Trafigura has agreed to provide limited credit support and it is anticipated that the facility will be non-recourse to Iberian. No finder's fees will be paid in connection with the Condestable Acquisition.

The completion of the Condestable Acquisition is subject to certain terms and conditions including the execution by CMC of the pre-export financing facility to repay the Loan, termination of Iberian's shareholder rights plan and other customary conditions including completion of legal and financial due diligence; execution of definitive agreements; minority shareholder approval; and receipt of all regulatory approvals and consents including the approval of the TSX Venture Exchange.

The Loan

The Loan agreed to in the LOI is an unsecured facility of up to C$20 million which will be used to fund development requirements at the Company's wholly owned Aguas Tenidas project. The Loan will be non-recourse during the five month term following the drawdown. The Loan provides for a single drawdown on demand and shall bear interest at LIBOR + 1% per annum and repayable in cash upon the maturity date. The Loan is not convertible and is repayable on the earlier of (i) the completion of the Condestable Acquisition; and (ii) one year following the drawdown under the Loan. Iberian shall have the right to prepay any amount outstanding under the Loan without penalty. Trafigura has also agreed that it will provide up to an additional C$60 million in debt financing for the development of the Aguas Tenidas project on the same terms as the Loan in certain circumstances as requested by Iberian.

Execution of the definitive agreements and closing of the Loan are expected on or before September 30th, 2007. As a condition to the closing of the Condestable Acquisition, Trafigura has agreed to arrange for a pre-export financing facility to repay the Loan. On execution of the pre-export financing facility, Trafigura will receive a structuring fee equal to 0.75% of the amount drawn down under the Loan. Based upon the current capital costs and working capital requirements of the Company's business plan and the expected completion of a project finance facility for the Aguas Tenidas project, the Company does not anticipate a requirement for additional financing in the near term.

Approval of the Transaction

Trafigura currently holds approximately 20% of the issued and outstanding shares of the Company, and is considered a related party under OSC Rule 61-501. Accordingly, the Condestable Acquisition will require the approval of the majority of the disinterested shareholders at a special meeting of shareholders to be called for this purpose. Upon execution of definitive agreements, it is expected that a management circular would be sent to Iberian shareholders prior to the end of October, 2007.

In considering the transaction, the Board of Directors of the Company formed a special committee comprised of independent directors. The special committee, in conjunction with its advisors, reviewed the terms of the transaction and carried out discussions with management. The Company, together with its consultants, has also completed due diligence on the Condestable Mine that included site visits on two occasions. Based on this advice and these discussions, the special committee recommended that the Board of Directors of Iberian approve the signing of the LOI. Jeremy Weir, the Trafigura nominee on the Board of Directors of the Company, abstained from voting on the execution of the LOI.

Orion Securities Inc. acted as the sole financial advisor to Iberian. Cassels Brock & Blackwell LLP acted as Iberian's legal advisor. Stikeman Elliott LLP acted as legal advisor for Trafigura.

Conference Call

Interested parties can call in to a conference call with Mr. Peter Miller, President and CEO of Iberian, Mr. Norman Brewster, Executive Chairman of Iberian and Mr. Jeremy Weir, Executive Director of Trafigura, on Thursday September 20th 2007. This conference call can be accessed with the toll free dial-in number 1 (866) 542-4238 or (416) 641-6127. If you are unable to listen live, the conference call will be archived until September 27, 2007 and can be accessed via the following toll-free replay number: (800) 408-3053 followed by pass code: 3236920#.

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. The Company has also signed a long-term offtake agreement with Trafigura Beheer AG 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.

Mr. Michael Newbury, who is a director of the Company and is a "qualified person" as such term is defined under National Instrument 43-101, has reviewed and verified the technical information contained in this press release and has approved the contents of this press release.

About Trafigura Beheer B.V. Amsterdam

Trafigura is one of the largest independent commodities traders worldwide today, with 1500 people operating 50 offices in 35 countries. Incorporated in the Netherlands and privately owned by management and personnel, Trafigura is the 3rd largest independent oil trader and 2nd largest base metal trader in the world. Company turnover in 2006 was $45 billion.

FORWARD LOOKING STATEMENTS:

This news release contains certain "forward-looking statements" and "forward-looking information" under applicable securities laws concerning 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