TORONTO, ONTARIO--(Marketwire - Aug. 13, 2009) - Thursday, August 13, 2009 - Iberian Minerals Corp. (TSX VENTURE:IZN) today announced operating results for the Condestable Mine for the second quarter of 2009 together with an update on ramp-up at the Aguas Tenidas Mine, hedging positions, and guidance for 2009 and 2010.
Q2 Condestable Mine Operating Results
Operations at the Condestable Mine continue in a steady state, and on plan.
The following are the highlights for the Condestable Mine operations for the period April 1, 2009 to June 30, 2009 (3 months), with total year to date figures:
- Revenues were approximately US$25.4 million (YTD US$50.0 million).
- Production was:
- An average head grade of approximately 1.23% Cu, and a recovery rate of 91% (1.23% and 92%, respectively, for year to date).
- Cash operating costs for Q2 (C1 and C3) were US$0.49 and US$1.11 per pound of copper produced (or US$11.96 and US$27.24, respectively, per tonne of ore processed).
- Cash operating costs year to date (C1 and C3) for Q2 were US$0.45 and US$1.08 per pound of copper produced (or US$11.07 and US$26.59, respectively, per tonne of ore processed).
Of the previously announced US$4.7 million in 2009 capital projects, consisting of the acquisition of two six-yard scooptrams, one diamond drill, mill spares (main power transformer and ball mill motor) which will further enhance operational stability, and completion of the automated plant monitoring and control system, the Company has completed US$3.6 million of acquisitions with US$2.9 million already onsite. It is expected that all acquisitions and projects will be final by the fourth quarter of the year.
Work has also commenced on the Karina Vein Extension as noted in the Company's press release of August 11, 2009.
The 1,500 meter surface diamond drilling exploration program on Vinchos Este is located in an area some 300-400 meters to the east of the current Condestable mine in an area not included in current reserves or resources, the program was undertaken based on surface trenching that demonstrated the extension of surface horizons. The drill program is aimed to test potential extension of horizons underground. The first of three drill holes is nearing completion, and assay results are expected to be reported after program completion by the end of September.
Q2 Aguas Tenidas Mine Update
The Company continues to ramp-up production at Aguas Tenidas, with commencement of commercial production targeted for Q4 of 2009. The previously announced acquisition of the underground mining division of Insersa was successfully completed on July 31, such that the total labour force at Aguas Tenidas now stands at approximately 420 employees and 140 contract workers. All principal permits are now in place for the Mine.
The Company continues to expect to process approximately 1 million tonnes of ore (combined copper and polymetallic ores) versus the planned 1.5 million tonnes during ramp-up in 2009, split 60%/40% as to copper ores and polymetallic ores. Exploration and delineation of copper stockwork ores, located to the east of the previously announced copper stockwork resource continues, with a view to maximizing ore reserves in proximity to the existing mine infrastructures.
A key focus at Aguas Tenidas has been, and continues to be the timely development and movement of ore for feed to the process plant. With the acquisition of the Insersa underground operation, and direct control over that aspect of the mine operation, the Company is confident of increased efficiencies and effectiveness, including some rationalization of the mine work force.
The copper processing circuit is fully operational, and metallurgical recovery for copper continues to meet or exceed expectations with June and July copper recovery measured at 80.8%, and in excess of 82%, respectively. Copper concentrate grade is meeting expectations, with 23% Cu for the month of July.
The polymetallic circuit was shutdown during most of June and all July for completion of modifications in preparation for production of a bulk copper/lead concentrate, and a zinc concentrate. The previous temporary floatation circuit changes, to demonstrate viability of concept, have now been made permanent. The polymetallic circuit restarted on August 3 and is producing copper/lead bulk concentrate as well as a zinc concentrate. The Company expects there may be periods of additional shutdown as the new modified circuit comes on line.
Work on further optimization of the polymetallic circuit continues, and the Company expects to announce additional short term modifications in the near future within the process plant to improve recovery on the polymetallic circuit, which when combined with an application for additional chemical usage, is designed to allow recovery of the three distinct concentrates from the polymetallic circuit, as planned in the feasibility study.
Asphalting of the Santa Barbara ramp which is dedicated to the haulage of production ore and waste has been completed, and has improved transport efficiencies. The Mine is currently hauling some 4000 tonnes per day of combined ore and waste, as against a planned 4500 tonnes per day of ore. Other operational improvements have been completed, the most notable being the VR3 ventilation raise which has greatly improved air quality and circulation. The paste plant is fully operational.
To date, ore processed from Aguas Tenidas is as follows for the period April 1, 2009 to June 30, 2009 (3 months), and with total year to date:
ProductionUnitAprilMayJuneYear to Date 2009Copper Ore ProcessedDMT25,56721,90047,971194,142Polymetallic Ore ProcessedDMT22,25223,63010,86886,898As noted above, during part of June and all of July, the polymetallic circuit was shutdown. During July, the copper circuit processed 46,022 DMT of ore.
The Company has now completed and will file shortly, with confirmation and certification by external auditors, all paperwork necessary for payment of the previously approved and announced grant of Euros 10,667,000 from the Junta de la Andalucia, and payment is expected in the ordinary course. Recently, there has been discussion in the press by opposing political interests regarding the awarding of the grant to the Company. It is to be emphasized that no allegation of any kind has been made or levied against the Company, its subsidiary or any of its people, and it is expected that the grant will proceed in the ordinary course, although perhaps tempered by the current political debate.
Daniel Vanin, President of Iberian commented: "We continue our efforts at Aguas Tenidas, and are making substantial progress. The purchase of Insersa is an important step and goal in our strategy at Aguas Tenidas. With one unified workforce, our team can now come together on all fronts. Our concerted efforts are to move to commercial production by the start of Q4 in 2009. We continue to focus on cost reduction, and optimization of and enhancements to our operation, as part of our ramp up process, which will all produce a concerted unified result for us during the Q3 period."
Hedging Policy and Position
The cornerstone of Iberian's Hedging Policy is the protection of the Company's assets. Hedging activity and monitoring is directed by the Company's Hedging Committee.
As of July 31, 2009, copper production at the Condestable Mine has been hedged as to approximately 89% of production until the end of 2011. The average price for 2009 and 2010 is US$4,424 per tonne and the price for 2011 is US$3,494 per tonne of copper. Gold production (2,400 oz per year) has been hedged at US$741.50 per oz for 2009-2011, while silver production for the balance of 2009 (18,900 oz) has been hedged at US$13.35 per oz. Hedging at Condestable is required pursuant to the Company's banking arrangements.
The hedging program for Aguas Tenidas Mine is continually reviewed, and as of July 31, 2009 is as follows:
- 5,000 tonnes of copper forward at US$4,989 per tonne for 2009
- 15,100 tonnes of copper forward at average price of US$3,839 per tonne for 2010
- 6,100 tonnes copper calls at a strike price of US$4,200 per tonne maturing in 2010/11
- 5,000 tonnes of zinc forward at US$1,611 per tonne maturing in 2009
- 12,350 tonnes of zinc forward at an average price of US$1,333 per tonne maturing in 2010
- 4,900 tonnes zinc calls at with a strike price of US$1,500 per tonne maturing in 2010.
The Hedging Committee continually reviews the markets in which the Company trades, and depending on circumstances, decides if any additional or altered hedging is appropriate to enhance the future cash flow of the Company's operations, and protection of the Company's assets.
2009/2010 Guidance
Iberian updates the following guidance for 2009 and 2010 for the Condestable and Aguas Tenidas Mines.
At the Condestable Mine (no change except to add C1 and per tonne figures):
- Production:
- Average head grade of approximately 1.24% Cu, and recovery rate of 91% per year.
- Cash operating costs per pound of copper produced (C1 and C3) of US$0.51 for 2009 and US$0.49 for 2010 (or US$12.55 and US$12.24, respectively, per tonne of ore processed), and US$1.07 for 2009 and US$1.08 for 2010 (or US$26.12 and US$26.65, respectively, per tonne of ore processed).
At Aguas Tenidas (no change), it is expected that, based on Iberian's projections, ore production will be 1.0 million tonnes in 2009 and in a range of 1.7 to 1.85 million tonnes in 2010. Although actual costs remain to be calculated, current budget indications are that costs, based on expected ore processed, will be as follows:
Costs2009US$/t2010
US$/t Mining 2824 Plant 2128 G&A 97
Related Party Transaction
Iberian's subsidairy, Minas de Aguas Tenidas, S.A. ("MATSA") has entered into a loan agreement (the "Loan") with Trafigura Beheer, B.V. ("Trafigura") to finance a VAT receivable of approximately Euros 6.7 million (the "Receivable"). The Loan is for US$9 million at an interest rate equal to Trafigura's cost of funds plus 4%, with a maturity date of the earlier of the date of payment of the Receivable, or December 31, 2009. The Receivable has been assigned to Trafigura as security for the Loan.
Pursuant to Multilateral Instrument 61-101 ("MI 61-101"), the entering into of the Loan is a "related party transaction" as Trafigura currently holds 154,582,163 Common Shares representing approximately 45.93% of the issued and outstanding shares of the Corporation. Iberian is exempt from the formal valuation requirement of MI 61-101 in connection with entering into of the Loan in reliance on section 5.5(b) of MI 61-101 as no securities of the Corporation are listed or quoted for trading on the Toronto Stock Exchange, the New York Stock Exchange, the American Stock Exchange,
NASDAQ Stock market or a stock exchange outside of Canada and the United States.
Additionally the Corporation is exempt from obtaining minority shareholder approval in
connection with entering into of the Loan in reliance on section 5.7(1)(f) as the Loan is on reasonable commercial terms that are not less advantageous to the Corporation than if the credit facility were obtained from an arm's length party, the Loan is not convertible into common shares, and no amount is payable in common shares of the Corporation.
Options
In a press release dated June 19, Iberian announced the granting of a total of 2,875,000 options to directors, officers, employees and insiders at a price of $0.55. The total number should in fact have been 2,775,000.
About Iberian Minerals Corp.
Iberian Minerals Corp. is a Canadian listed global base metals 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 in the Andalucia region of Spain approximately 110 km north-west of Seville. Ramp-up continues on a 1.7 million tonnes per year underground mine and concentrator that will produce copper, zinc and lead concentrates that also contain gold and silver.
All technical information in this press release has been reviewed and approved by Mike Newbury, P.Eng., who acts as Qualified Person ("QP") for Iberian.
C1 costs are cash costs including mining, processing, site administration and refining, net of by product credits, and C3 costs are total costs being C1 costs plus depreciation and amortization charges, royalties, related head office, interest costs and financing charges.
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.
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