Petaquilla Minerals Ltd. Enters Letter of Intent with Iberian Resources Corp.
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 04/06/11 -- Petaquilla Minerals Ltd. (TSX: PTQ)(OTCBB: PTQMF)(FRANKFURT: P7Z) ('Petaquilla' or the 'Company') is pleased to announce that it has entered into a binding letter of intent ('LOI') with Iberian Resources Corp. ('Iberian'), pursuant to which the Company proposes to acquire all of the outstanding shares of Iberian (the 'Proposed Transaction').
Iberian is a private British Columbia company that owns 100% of the Lomero Poyatos mine through its wholly-owned Spanish affiliate Corporacion de Recursos Iberia S.L. Lomero Poyatos is located about 110 kilometres northeast of Seville, in the heart of the Iberian Pyrite Belt. Iberian also owns several other exploration licenses in Iberia through its wholly-owned Spanish and Portuguese affiliates, and soon expects to receive a small scale mining license for its Banjas concession in Portugal.
Pursuant to the terms of the LOI, it is proposed that each common share of Iberian will be exchanged for 1.3 common shares of Petaquilla, which will result in 39,205,906 additional shares being issued by the Company, valuing the transaction at approximately US$41 million. This corresponds to the low-end value of Behre Dolbear's independent valuation of Lomero Poyatos. Petaquilla currently has 176,379,501 common shares issued and outstanding.
Iberian currently has 1,511,248 warrants outstanding, each of which is exercisable for one common share of Iberian at exercise prices in the range of US$0.14 to US$0.60 per common share. Subject to the terms of the warrants and applicable law, the LOI provides that each Iberian warrant issued to (i) non-insiders of Iberian, being 430,576 warrants, will be exchangeable for a warrant of Petaquilla, which in turn will be exercisable for 1.3 common shares of Petaquilla; and (ii) insiders of Iberian, being 1,080,672 warrants, will be exchangeable for a warrant of Petaquilla, which in turn will be exercisable for one common share of Petaquilla, all for the same exercise price provided under the original Iberian warrant.
Iberian currently has options outstanding for the purchase of an aggregate of 3,357,313 common shares of Iberian at exercise prices in the range of CDN$0.10 to US$0.60 per common share. Following the closing of the Proposed Transaction, subject to obtaining all necessary approvals, it is anticipated that such options will become options to purchase an aggregate of 3,357,313 common shares of the Company at the exercise prices provided under the current Iberian options.
The Proposed Transaction is subject to, among other things, negotiating and entering into definitive agreements between the parties and obtaining appropriate approvals from the Toronto Stock Exchange and shareholders of both Petaquilla and Iberian.
This Proposed Transaction is part of a previously defined strategy for geographical diversification of the Company, particularly focused on building a strong presence in mining-friendly jurisdictions of recognized mineralization potential, such as the Iberian Pyrite Belt, where the Lomero Poyatos deposit stands out as an exceptional opportunity.
The Company is committed to the development of Lomero Poyatos and will be working with Behre Dolbear, SGS and the University of Madrid to complete a report on the project compliant with National Instrument 43-101, which the Company expects to be finalized during the fourth quarter of the current calendar year. The Lomero Poyatos project already holds a production license.
By approving the LOI, the Board of Directors of Iberian has recognized the benefits of joining a world class gold producer and its privileged access to management expertise, technological know-how and capital markets.
BEHRE DOLBEAR'S PRELIMINARY REPORT ON THE LOMERO-POYATOS MASSIVE PYRITE (Au-Ag-Cu-Pb-Zn) MINE IN ANDALUSIA, SPAIN
The Lomero Poyatos mine formerly mined about 2.6 million tonnes of massive pyrite for use as raw material for the manufacture of sulphuric acid. The mine closed in 1992 and since then has been investigated by several companies as a possible gold-silver-copper-lead-zinc deposit.
Iberian commissioned Behre Dolbear International Ltd, in association with Gemcon Software International Ltd, to carry out a review of the available data pertaining to the Lomero Poyatos mine in order to confirm the previous mineral resource estimates (by SRK, 2002 and WAI, 2007).
As there have been no feasibility studies carried out and there has been no decision made as to whether the deposit would be mined by open-pit or underground methods, there is no basis for deciding what would be an appropriate cut-off grade, nor any basis for estimating the likely mining and processing costs. Therefore, the deposit has been treated as an exploration stage project.
Mineral Resource Estimate
The mineral resource estimate was based on the following assumptions:
-- A data-base of existing drill hole data was compiled from previous
exploration records comprising about 50 surface drill holes and a
similar number of underground drill holes.
-- The deposit was defined as all mineralisation assaying greater than 25%
sulphur and a computer generated block model was constructed using
Gemcon© software to define the shape and size of the deposit.
-- Based on Ordinary Krigging methods the tonnage and the average gold,
silver, copper, lead and zinc grades of this 25%S deposit were
estimated.
-- The tonnage was based on an assumed bulk density (SG) of 3.3.
-- No cut-off grade was applied.
-- The resources were assigned an Inferred classification (JORC Code,
2004).
The total Inferred Mineral Resource was estimated at 30.4Mt at 2.31 g/t of gold, 46.56 g/t of silver, 0.67% copper, 0.67% lead and 2.35% zinc containing 2.26 Moz Gold and 45.51 Moz Silver when applying a 25%S cut-off only.
This preliminary assessment is preliminary in nature. It includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the preliminary assessment will be realized.
Qualified Person
Richard James Fletcher is qualified to act as a 'qualified person' as defined in National Instrument 43-101 and accepts responsibility for the information on Exploration Results and Mineral Resource Estimate in this report. Behre Dolbear affirms that Mr. Fletcher:
-- is a Fellow of the Australasian Institute of Mining and Metallurgy; and
-- has more than 40 years experience in the estimation, assessment and
evaluation of mineral resources and ore reserves that is relevant to the
styles of mineralization and the types of deposits under consideration.
About Petaquilla Minerals Ltd.
Petaquilla is a gold producer operating its gold processing plant at its 100% owned Molejon Gold Project in Panama. The Molejon mine site is located in the south central area of the Company's 100% owned 842 square kilometre concession lands, a region known historically for gold content.
Disclaimer
This press release includes forward-looking statements. All statements, other than statements of historical fact, contained in this news release, including, but not limited to, statements regarding the Proposed Transaction, the estimation of mineral resource estimate and the realization of mineral resource estimate, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond Petaquilla's control that would cause the actual results, performance or achievements of Petaquilla to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements including that the Proposed Transaction may not be completed for any reason. Such forward-looking statements are based on numerous assumptions regarding successful completion of the Proposed Transaction, Petaquilla's present and future business strategies and the environment in which Petaquilla will operate in the future. Any forward-looking statements speak only as at the date of this document. Petaquilla expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Petaquilla's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except to the extent required by applicable law. As a result of these factors, the events described in the forward-looking statements in this press release may not occur either partially or at all.
On behalf of the Board of Directors of
PETAQUILLA MINERALS LTD.
Richard Fifer, Director and Chairman of the Board
No stock exchange has approved or disapproved the information contained herein.
Contacts:
Petaquilla Minerals Ltd.
Richard Fifer
Director and Chairman of the Board
(604) 694-0021 or Toll free: 1-877-694-0021
(604) 694-0063 (FAX)
www.petaquilla.com