Iberian Minerals Corp.
TSX VENTURE : IZN

Iberian Minerals Corp.

May 01, 2009 08:30 ET

Iberian Reports 2008 Results-Profit After Hedge Close-Out

TORONTO, ONTARIO--(Marketwire - May 1, 2009) - Iberian Minerals Corp. (TSX VENTURE:IZN) today announced financial and operating results for the year ending December 31, 2008, with comparative figures for the year ending December 31, 2007. The 2008 audited consolidated financials statements and related notes, and Management Discussion and Analysis may be found on www.sedar.com. The Company reported a net income of $ 47.8 million for fiscal 2008, representing $0.19 per share.

In addition, the Company has filed an Annual Information Form for the year ended December 31, 2008.

Highlights for the Year Ended December 31, 2008

During the year ended December 31, 2008, the Company and its subsidiaries accomplished the following:

- Acquired approximately 91.9% of Compania Minera Condestable S.A. ("CMC") effective January 31, 2008. As a result of this acquisition, Iberian became a producing company.

- Completed through CMC a US$ 70 million loan facility which was used to fund construction at the Aguas Tenidas project ("MATSA").

- Completed a US$ 210 million project finance facility to fund construction at the Aguas Tenidas project. As part of this facility, the Company was required to hedge a percentage of planned production. This was completed effective June 24, 2008. As a result of the significant decline in the prices of copper, zinc and silver in the fourth quarter of 2008, the Company closed out all of the MATSA hedges. This resulted in a net realized gain of approximately US$ 225 million. This gain was used to repay the MATSA project finance facility amounting to approximately US$ 159.87 million.

- Acquired a further 6.7% interest in CMC on November 5, 2008, pursuant to a tender offer made to the minority shareholders of CMC to own approximately 98.7% of CMC. As part of this acquisition process, CMC was delisted and privatized.

- Entered into a joint venture agreement with Cadillac Ventures Inc., a Canadian junior exploration company (CNSX:CDC). The agreement relates to 14 properties comprising all or part of 24 mining concessions plus 6 investigation permits (one at application stage) totalling 231.9 adjacent to the Aguas Tenidas project. This agreement was not closed as at December 31, 2008, pending satisfaction of certain conditions.

- On December 22, 2008, the Company announced that production began at Aguas Tenidas with the start-up of the copper circuit. The plant produced its first concentrate on December 21, 2008. MATSA is ramping-up the process plant and continues completion of construction.

Overview

Construction at Aguas Tenidas continued during 2008 and the plant was substantially completed at December 31, 2008. On December 21, 2008, MATSA produced its first concentrate. Project expenditure for the year ended December 31, 2008 totalled approximately $256.91 million, with $91.31 million being spent in the fourth quarter, $53.79 million in the third quarter of 2008, $73.40 million in second quarter of 2008, and $40.63 million in first quarter of 2008. The construction of the new Santa Barbara ramp was completed in December 2008.

At December 31, 2008, MATSA had 203 employees with an additional 687 contractors on site, most of which were related to construction activities.

At the end of 2008 the Company completed an impairment calculation using a discounted cash flow methodology which resulted in the Company recording an impairment charge in the amount of $199.81 million.

Effective January 31, 2008, the Company completed the acquisition of Condestable from Trafigura. In consideration for the acquisition, 65,990,833 of the Company's common shares valued at $101,194 were issued to Trafigura. CMC is the owner of the Condestable Mine which has been in continuous production since 1998.

On November 5, 2008, pursuant to a tender offer made to the minority shareholders of CMC, the Company paid approximately $11.34 million for 2,927,723 shares of CMC at a price of new soles 9.67 (approximately $3.77) per share, this price having been established in accordance with the requirements of the Lima Stock Exchange and the Peruvian securities authorities. Trafigura provided a bridge loan to facilitate the completion of this transaction. As a result of this acquisition, the Company now owns 42,404,752 shares of CMC (approximately 98.73%) with 546,565 shares outstanding as minority shares.

Operations continued in a steady state at the Condestable Mine in Lima Peru, and revenue, net earnings and cash flow from operations of the Company are attributable to the Condestable Mine.

The following are the highlights of CMC for the period February 1, 2008 to December 31, 2008:

- Revenues were approximately $97.87 million of which $22.40 million is for the fourth quarter of 2008.

- Production for the three and eleven months ended December 31, 2008 was:



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Production Unit Three months ended Eleven months ended
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December 31, 2008
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Concentrate MT 26,744 94,425
Contained copper MT 6,390 23,288
Fine gold Oz 4,790 16,088
Fine silver Oz 72,015 259,679
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- The 2008 cash cost of production "C3" at CMC is estimated at $31.28 per ton of ore produced. This is computed using all of the cash costs for the Peruvian operations. (C3 costs are total production costs, including mining, processing, site administration and refining, depreciation and amortization, royalties, related head office and interest costs net of by-product credits). Cash cost is a non-GAAP measure. Non-GAAP measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other companies. There is no direct comparable GAAP measure to this measure.

- CMC has a recovery rate of 92.7% and an average copper grade of approximately 1.24%

Outlook

Iberian expects a number of challenging quarters ahead as the effects of the global recession play out in the world economy. The Company's operations are subject to the fluctuations in the market prices of copper, zinc and lead and to some extent that of gold and silver. CMC has been in continuous production since 1998. The outlook for CMC is positive in that it will continue to produce copper at similar levels to 2008. CMC is approved to produce 2.2 million tonnes of ore per year.

MATSA is continuing with the completion of the mine project. Piping, electrical and instrumentation installations were well advanced on the polymetallic process circuit at the end of the fourth quarter and the polymetallic process circuit was expected to ramp-up in the first quarter of 2009 with the production of the first saleable copper and zinc concentrates (from the polymetallic circuit) in the same quarter.

Construction activities were nearing completion at the end of the fourth quarter with Aker Solutions beginning reductions in onsite personnel in December in anticipation of completing major construction activities by the end of the first quarter of 2009. The paste fill plant, which will provide cemented paste fill for the underground operations was the remaining project to be completed at the end of the fourth quarter, and is expected to be completed and fully commissioned during the second quarter of 2009.

An application for a grant for approximately 10 million Euros made to the regional government authorities was awarded during the first quarter of 2009. These funds will be accessible to MATSA during 2009 upon satisfying certain employment and financial conditions which the Company is expected to meet.

At the end of 2008 the construction of the plant was substantially completed and the cupriferous circuit started with the first production of concentrate on December 21, 2008. In early 2009 the polymetallic circuit and the paste plant will be completed as the project continues its ramp-up phase.

With the close out of the hedge contracts, the Company fully repaid the US$ 159.87 million Investec loan and generated surplus cash of US$ 65.1 million. MATSA is in the ramp-up phase in 2009, and may need some additional funding. The Company is planning to obtain any required funding either from debt or equity financing, sufficient to meet its future requirements.

The Company expects to release Q1 operating results for the Condestable Mine, an update on the Aguas Tenidas Mine, and Guidance for 2009 and 2010 shortly.

About Iberian Minerals Corp.

Iberian Minerals Corp. is a Canadian-based global copper and zinc 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 a copper-zinc project in the Andalucia region of Spain approximately 110 km north-west of Seville. Commissioning is underway on a 1.7 million tonnes per year underground mine and concentrator (1.5 million tonnes during ramp up) that will produce copper, zinc and 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 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