Quadra Mining Ltd.

Quadra Mining Ltd.
Centenario Copper Corporation

Centenario Copper Corporation

March 26, 2009 08:30 ET

Quadra Mining Ltd. and Centenario Copper Corporation Agree to Terms for Interim Financing and Announce Plans for the Franke Mine

VANCOUVER, BRITISH COLUMBIA and TORONTO, ONTARIO--(Marketwire - March 26, 2009) - Quadra Mining Ltd. ("Quadra" or the "Company") (TSX:QUA) and Centenario Copper Corporation ("Centenario") (TSX:CCT) are pleased to announce they have settled the terms of a convertible loan agreement to provide interim financing of up to US$12.5 million to assist Centenario with funding requirements for the completion of the Franke Mine construction. Key details are:

- Available for drawdown until the completion or termination of the Arrangement Agreement

- Principal and interest convertible at Quadra's option into common shares of Centenario at a conversion price of Cdn$1.03 per share but subject to Quadra not exceeding a 20% shareholding in Centenario

- The loan will bear interest at LIBOR plus 4.75%

- The loan will be unsecured until there is a refinancing of Centenario's current debt facilities

- The loan will be subject to settlement and execution of definitive loan documentation and:

- Approval by the Toronto Stock Exchange

- Centenario entering into appropriate documentation with its existing lenders and obtaining a waiver from the existing lenders to Quadra's satisfaction

The interim financing arrangements were re-negotiated by the parties as a result of the limited availability of senior debt financing. The original pre-closing US$3.5 million loan and US$6.5 million private placement contemplated in the Arrangement Agreement will be replaced by the convertible loan described above. With this interim funding in place, Centenario is able to continue the work necessary to move the Franke Mine towards completion of construction and commence commissioning and ramp-up, pending completion of the proposed acquisition of Centenario by Quadra.

At December 31, 2008, Centenario had approximately US$60 million of obligations to the construction and operations contractors as well as other trade payables. Quadra estimates that an additional US$30 million will be required to complete the development and bring the Franke Project to a cash flow positive position. In addition, Quadra estimates that based on a $1.75 copper price the cost of retiring Centenario's senior debt (net of hedge proceeds and cash on hand) is approximately US$ 20 million. Assuming that the acquisition is completed, these funding requirements will be met by Quadra's previously announced equity financing and new loan arrangements.

There are a number of core activities required for production to commence which have been delayed by the project funding issues, including opening up of mining areas and building up the leach pad inventory, as well as testing and commissioning. Quadra expects first production to be delayed from Centenario's original plan.

Paul Blythe, President and CEO of Quadra says, "The original interim financing arrangement was conditional upon achieving satisfactory restructuring of Centenario's existing loan facilities. Now that we have in place alternative financing and more clarity with respect to overall funding requirements, we are comfortable advancing these interim funds which will allow progress to continue at the Franke Mine and in particular, for mining to commence."

About Quadra:

Quadra Mining Ltd. is a Vancouver based copper mining company. Quadra was launched as a public company in 2004 with a business plan of becoming a mid-tier base metals development and operating company. Quadra's strategic plan is to grow by acquiring assets, accessing and developing attractive projects held by exploration focused companies and seeking merger opportunities within the small to mid-tier sector. The plan was launched with the acquisition and restart of the Robinson Mine ("Robinson") in Nevada in 2004 and has continued with the purchase and construction of its second producing asset, the Carlota Mine ("Carlota") in Arizona. Robinson produced a record 159.7 million pounds of copper and 137,628 ounces of gold in concentrate during 2008. Quadra also owns Sierra Gorda, an advanced and potentially world class development copper project in Region II, Chile.

About Centenario

The Company was founded in 2004 with the goal of becoming a mid-tier copper producer and consolidator, active in regions of low sovereign risk. Centenario currently operates exclusively in Regions II and III of Chile.

Its principal asset, the Franke Property ("Franke"), located in Region II, is currently in construction and is projected to produce 30,000 tonnes of cathode copper per year, starting in early 2009. The Company believes that the contiguous Pelusa Property is highly prospective for developing additional leachable copper resources for processing at the Franke plant. The Pan de Azucar Property, located 45 km from the Franke Property, is currently being evaluated as a possible nucleus for a second property cluster. The Company continues to evaluate other "in region" clustering opportunities which could reinforce its existing property portfolio.

Forward-Looking Information

This Press Release contains "forward-looking information" within the meaning of applicable securities laws. This forward-looking information includes, but is not limited to, the expectations of Quadra and Centenario with respect to the Debt Financing, the satisfaction of the conditions to complete the Debt Financing, the proposed acquisition of Centenario by Quadra, information regarding the business, operations and financial condition of Centenario, statements with respect to the funds required to bring the Frank Project into positive cash flow and statements with respect to future production at the Franke Project that are based on Centerario's published expectations, estimates, forecasts and projections. Quadra has not independently established this forward-looking information regarding Centenario or assessed the assumptions underlying it. Forward-looking information contained in this Press Release also includes the expectations of Quadra with respect to the proposed acquisition of Centenario by Quadra, and information regarding the business, operations and financial condition of Quadra. Centenario has not independently established this forward-looking information regarding Quadra or assessed the assumptions underlying it.

Forward-looking information contained in this Press Release is subject to known and unknown risks, uncertainties and other factors that are not within the control of Quadra or Centenario and which may cause actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including, but are not limited to:

- Uncertainties related to the satisfaction of the conditions required to complete the Centenario Debt Financing.

- Uncertainties related to whether the shareholders of Centenario will approve the Transaction.

- Uncertainties related to whether all required third-party, court, regulatory and governmental approvals to the Transaction will be obtained, or other conditions to the completion of the Transaction will be satisfied or waived.

- Uncertainties with regards to the anticipated synergies and other benefits resulting from the Transaction.

- Uncertainties related to the accuracy of the reserve and resource estimates at the Franke Project and the geotechnical and density factors and diminishing quantities or grades of reserves.

- Uncertainty that there is sufficient water and acid supply to adequately accommodate the amount of mine production estimated.

- Uncertainties related to expected mining production rates, timing of production and the associated metal recoveries in the current heap leach piles and future ore phases.

- Unusual or unexpected formations, seismic activity, cave-ins, flooding, pressures, pit wall failures and other similar incidents (and the risk of inadequate insurance or inability to obtain insurance to cover these risks).

- Operating and technical difficulties in connection with mining development or production activities.

- Uncertainties related to judicial or regulatory proceedings.

- Changes in, and the effects of, the laws, regulations and government policies affecting mining operations, particularly laws, regulations and policies relating to:

- mine expansions, environmental protection and associated compliance costs arising from exploration, mine development, mine operations, reclamation and mine closures;

- expected effective future tax rates in Chile where the Franke Project is located;

- the protection of the health and safety of mine workers; and

- mineral rights ownership in Chile, where the Franke Project is located.

- Changes in general economic conditions, the financial markets and in the demand and market price for commodities, such as diesel fuel, petroleum, steel, concrete, electricity and other forms of energy, mining equipment, operating supplies, and fluctuations in exchange rates, particularly with respect to the value of the U.S. dollar and Chilean Peso.

- Environmental issues and liabilities associated with mining including processing and stock piling ore and spent ore.

- Labour strikes, work stoppages, or other interruptions to, or difficulties in, the employment of labour in markets in Chile, or extreme weather conditions, environmental hazards, industrial accidents or other events or occurrences, including third party interference that interrupt the production of minerals in Chile.

This list is not exhaustive of the factors that may affect forward-looking information contained in this Press Release. All forward-looking information contained in this Press Release is subject to the assumptions, disclaimers and risks contained in the public disclosure of Centenario and Quadra available at www.sedar.com, including, but not limited to, the Annual Information Form for the year ended December 31, 2007 for each of Centenario and Quadra. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. Each of Centenario and Quadra disclaims any intent or obligations to update or revise publicly any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise.

Contact Information

  • Quadra Mining Ltd. - Media and Investor Relations Contact:
    Paul Blythe
    President, CEO and Director
    (604) 689-8550
    Quadra Mining Ltd.
    Sophie Taylor
    Manager, Investor Relations
    (604) 689-8550
    Website: www.quadramining.com
    Centenario Copper Corporation
    Richard Colterjohn
    President, CEO and Director
    (416) 360-0059
    Website: www.centenariocopper.com