Vancouver — With government approval in hand,
Through contract law termed “Ley Petaquilla,” the Ministerial Resolution green lights a multi-phase mine development plan initially tabled by the company and partners
Foremost in Ley Petaquilla is a guarantee of stable land tenure for an initial term of 20 years with renewal options for two additional 20-year terms, for a total of 60 years.
Additionally, a favourable tax structure has been tabled. The plan allows for accelerated depreciation and depletion allowances along with an import duty exemption for essentially all equipment and supplies necessary for the project. The operation will also enjoy an income tax holiday (except for a mineral production royalty) until all of the construction financing costs are retired. Further, no tax on interest to foreign lenders or on dividend payments to shareholders will be withheld.
The agreement insulates the project’s owners against future changes in legislation that are “inconsistent with Ley Petaquilla.”
The company plans to push forward with development of its Molejon gold deposit in 2006. Exploration at Molejon has targeted expanding the probable open-pit resource identified in 1995 by SRK Consulting of 5 million tonnes grading 2.8 grams gold per tonne plus an additional 956,000 tonnes of possible resource at 3.7 grams gold (conducted prior to implementation of National Instrument 43-101).
Recent trenching encountered significant high-grade gold mineralization in the Molejon Main zone. At the 244 area (defined by a 45-metre-diameter silicified hill), trench 205B returned 51.5 metres grading 16.9 grams gold, including 25.4 metres of 28.3 grams gold. Two consecutive 1.5-metre intervals in the trench averaged 106 grams gold and 101 grams gold, respectively. Exploration indicates the area is completely mineralized with good extension potential both to the northwest and southeast.
Additional sampling on the Central, Main and Northwest zones have also successfully tested extensions to known mineralization. Petaquilla plans a drill program to test depth potential of the zones, en route to a revised resource estimate.
In late 2004, the company (previously known as Adrian Resources) formalized its letter of intent with partners Inmet Mining and Teck Cominco to acquire a 100% interest in the Molejon gold deposit, subject to royalties.
Molejon forms a portion of the 135-sq.-km Minera Petaquilla project area, in which Petaquilla Minerals holds a 52% interest and Inmet holds 48%. Teck Cominco has an option to earn half of Petaquilla’s interest by completing a final feasibility study (done in 1998) and funding the company’s entire share of costs to place the main copper project into production.
The government approval enticed investors, who pushed up Petaquilla Minerals’ share price by over 55% to the 70 level on high volume. The company posts a $38-million market capitalization based on its 53.8 million shares outstanding.
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