TORONTO - Iberian Minerals Corp. (TSXV:IZN), a junior mineral explorer based in Toronto, has made a major deal to become a metals producer, paying about $119 million in shares to acquire a copper mine in Peru from a Dutch metals trader.
Iberian, whose shares were halted on the TSX Venture Exchange, pending news of the deal, said Wednesday it had signed a letter of intent with Trafigura Beheer B.V. Amsterdam, to acquire 92 per cent of Compania Minera Condestable and its copper mine south of Lima.
Under the deal, Iberian will buy the mine by issuing about 66 million shares to Trafigura at a deemed issue price of C$1.80 per share. That will give the Dutch metals trading company a 40 per cent stake in Iberian, up from 20 per cent.
In a related measure, Trafigura has also agreed to provide Iberian with an unsecured loan of $20 million and another possible $60 million in debt financing so the Toronto miner can develop its Aguas Tenidas copper-zinc project in Spain.
Trafigura already owns 20 per cent of Iberian and is considered a related party under Ontario Securities Commission rules.
The deal is expected to provide cash and debt from the Peruvian mine to help pay for development of the Spanish project, which will sell its metals output to Trafigura.
"This transaction transforms Iberian into an immediate copper producer and improves the company's ability to develop the Aguas Tenidas project," Peter Miller, Iberian's president, said in a release.
"It also increases Iberian's operational expertise as well as further improves our opportunities for future growth. Our relationship with Trafigura has been substantially enhanced."
The Condestable mine has been operating since'98 and produced 68,954 tonnes of copper concentrate and-,501 ounces of gold and 153,500 ounces of silver last year.
Jeremy Weir, executive director of Trafigura, said the transaction "further substantiates Trafigura's commitment to Iberian.
"Our intention is to work closely with the company to provide the necessary support and deal flow for further growth in the base-metal sector through the acquisition and development of new mining projects."
As part of the deal, Trafigura will keep a 46 per cent net profit interest in the Condestable project, beginning in 2011 and ending in 2014.
The agreement in principle has been approved by the Iberian board after a recommendation of a special committee, but the transaction requires Iberian minority shareholder approval, the companies said.
Iberian Minerals, which has other operations in the Iberian mineral belt in Spain, plans to reopen the Aguas Tenidas project in the country's southwestern region and has signed a long-term deal to sell metals produced from the mine to Trafigura.
The Dutch company is one of the world's largest independent commodities traders, with 1,550 employees operating around the world. The company is privately owned by management and employees and is the third-largest independent oil trader and second-biggest base metal trader in the world.
In trading Wednesday on the TSX Venture Exchange, Iberian shares rose 10 cents to $1.60, a gain of nearly 6.7 per cent.
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