Quadra Mining Ltd.
TSX : QUA

Quadra Mining Ltd.

October 05, 2005 17:00 ET

Quadra to Purchase Carlota Copper Project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 5, 2005) - Quadra Mining Ltd. (TSX:QUA) ("Quadra") is pleased to announce that it has signed a binding letter of intent with Cambior Inc ("Cambior") for the purchase of Cambior USA Inc., owner of the Carlota copper project ("Carlota") for a total consideration of US$37.5 million. Carlota is a development ready SX-EW copper project which could be brought into production in 2007. Based on a September 2005 NI 43-101 compliant Technical Report, the project is expected to have an eleven year mine life with an average production rate of approximately 66 million pounds of LME grade cathode copper per year. Included in the purchase price are ten used 190 ton trucks, one used P&H 2800 shovel and a solvent extraction plant.

Quadra has agreed to pay Cambior the following payments:

- On closing of the transaction, US$15 million in cash;

- Eight quarterly gold payments commencing on March 31, 2006 of 6,250 ounces of gold, representing in the aggregate US$22.5 million based on a reference gold price of $450 per ounce

An additional US$4.0 million in cash may be payable following an agreed-upon drilling program of approximately 3,000 meters to confirm the status of certain material currently included in the reserves of the Carlota deposit.

Quadra has entered into a commitment letter for a bridge loan facility (the "Bridge Facility") with a Canadian chartered bank in order to provide access to the funds necessary to pay the initial installment of the purchase price. The Bridge Facility is in the amount of US$15M, has a six month term, is secured by the assets of the company and will bear interest at LIBOR plus 3.5%. The Company may draw down under the Bridge Facility only upon entering into definitive agreements for the Bridge Facility, closing of the acquisition and on other terms and conditions typical for a transaction of this nature. Quadra intends to refinance this facility in the future, either through a project debt facility, new debt, or equity.

The acquisition is subject to finalizing a definitive purchase agreement acceptable to the parties, which will include a number of conditions typical for a transaction of this nature.

All primary permits related to the Carlota Project have been approved. Additional normal course approvals within the permit system are required in order to commence development. Two of the existing permits are subject to final appeals court litigation and the final four quarterly gold payments may be deferred if Quadra can not begin construction by the first quarter of 2007.

Carlota is a primarily oxide copper deposit, located in the historic Globe/Miami mining camp in Arizona. Mining will be by open pit. Run-of-mine ore will then be heap leached and the solutions processed in an SX-EW plant to produce LME grade cathode copper at the mine. Construction of Carlota is expected to commence in 2006 with first cathode production in 2007. Currently, Quadra operates the 38,000 tonne per day Robinson Mine in Nevada where it expects to produce 120-127 million pounds of copper in concentrate form and 75,000 ounces of gold in 2005.

Quadra expects many positive benefits to its shareholders from the acquisition of the Carlota Project.

- Near term production growth

- Lowers cash cost profile

- Increases copper leverage

- Diversifies from single mine status

- Production of cathode eliminates exposure to smelters and refining charges and reduces transportation costs

- U.S. produced cathode should attract a premium to the LME copper price

- 100% US$ denominated cost exposure provides a natural currency hedge

- Strengthens Quadra's position as a leading mid tier copper producer

Bill Myckatyn, CEO of Quadra, said, "We are very pleased to have reached an agreement on the Carlota project, which is an exact fit to our strategic growth plan and plays to our strengths of mine development and operations. Cambior has worked hard over the years to bring Carlota to feasibility and to line up the necessary permits and we anticipate moving rapidly forward to construction with potential production in 2007. A further benefit to Quadra is that the project is located in the western United States, potentially offering a number of synergies with the Robinson Mine in Nevada."

The Carlota Technical Report was prepared by Independent Mining Consultants, Inc. ("IMC") of Tuscon, Arizona during September 2005 in accordance with NI 43-101. Mr. Mike Hester of IMC is a Qualified Person and is 'independent' of Quadra as defined by NI 43-101. The Technical Report is based on the 2005 Carlota Project Final Feasibility Study which utilizes data from both the 1996 Carlota Final Feasibility Study and the 2003 - 2004 Feasibility Study conducted by Carlota and BHP Copper to consolidate the adjoining Carlota and Pinto Valley mine sites. The Technical Report provides a detailed review of the Carlota project as a stand-alone project as of January 2005 to justify a production decision. Mr. Mike Hester has reviewed and approved the content of this press release. The NI 43-101 Technical Report will be available at www.quadramining.com and at www.sedar.com.

The transaction is expected to close in November 2005.

Orion Securities is acting as financial advisor to Quadra and BMO Nesbitt Burns is acting as financial advisor to Cambior.

Senior Management will host a webcast/conference call regarding this transaction tomorrow, October 6, 2005 at 11.00am EDT (8.00 am PST).

The North American toll free number for this conference call is 1-877-888-4210 while the international number is 1-416-695-9757. To access the simultaneous webcast and slide presentation, visit Quadra's website at www.quadramining.com. The playback version of the call will be available until October 13, 2005 at 1-416-695-5275 or North American toll free 1-888-509-0082.

About Quadra Mining Ltd. (TSX:QUA)

Quadra is headquartered in Vancouver, British Columbia and is a mining company whose principal asset is the Robinson Mine in Nevada. The Company has a goal of becoming a mid-tier base metals development and operating company with interests in a number of advanced exploration, development and producing properties.

This press release may contain some forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ from those expressed or implied by such statements. Statements relating to revenues, growth, profits, construction timelines, production, operating expenses and prospects of closing the Acquisition depend on, among other things, future market conditions and risks, including risks ordinarily associated with mining, and are considered forward-looking thereby providing no guarantee that they will be realized. Quadra disclaims any intent or obligation to update or revise publicly any forward-looking statements, whether a result of new information, future events or otherwise.


Contact Information

  • Quadra Mining Ltd.
    Bill Myckatyn
    CEO and Director
    (604) 689-8550, ext. 102
    or
    Quadra Mining Ltd.
    Sophie Taylor
    Manager, Investor Relations
    (604) 689-8550, ext.110
    www.quadramining.com