Iberian Secures Bridge Loan For Aguas Tenidas Plant

Iberian Minerals (IZN-V, IMINF-O) is turning to a deep-pocketed investor to tide it over until it can secure senior debt financing.

The company, which is looking to complete a major upgrade to the mill at its Aguas Tenidas copper, lead and zinc mine in Spain, is turning to one of the world’s largest metal trading houses and its largest single shareholder, Trafigura Beheer, for a bridge loan of up to US$21 million.

The money will go a long ways towards meeting Iberian’s need of US$20 to US$30 million in cash. The company will use the funds for costs related to its recent $6-million purchase of its underground mining contractor and to ramp up production at its plant, 110 km northwest of Seville.

Toronto-based Iberian is looking to bring production up to 2.2 million tonnes per year from its current level of roughly 1 million tonnes. Production is split between two different circuits, with 60% of total production coming from the copper circuit, while the remaining 40% comes from the polymetallic circuit.

The underground operation currently has a projected life of 11 years, with three distinct areas being mined.

In the cupriferous zone, measured and indicated resources stand at 9.43 million tonnes grading 2.4% copper, 0.9% zinc, 0.2% lead, 28.3 grams silver and 0.4 gram gold per tonne.

In the polymetallic zone, measured and indicated resources stand at 10.12 million tonnes grading 1.1% copper, 8.2% zinc, 2.5% lead, 77.8 grams silver and 0.9 gram gold per tonne.

In the copper stockworks zone, measured and indicated resources are 1.4 million tonnes grading 2.35% copper, 0.25% zinc, 0.06% lead, 7.1 grams silver and 0.06 gram gold.

Iberian says the bridge facility is for working capital purposes, is non-revolving, and is open for one year, but will close early if the company secures the senior debt financing it is after. It plans to have that financing in place by the end of this year.

Traf igura currently holds roughly 155 million shares of Iberian, or 46% of the total shares outstanding.

The new loan, however, could see Trafigura picking up 22 million warrants. Such warrants will be issued as draws from the loan occur and have a strike price of 52¢ for one year. If all were exercised, they would bring Trafigura’s stake up to 49%.

Iberian will pay interest on the loan to the tune of 7%.