Iberian secures loan to see it through

Iberian Minerals (IZN-V) is taking advantage of one of its 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, 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 stated need of US$20 to US$30 million in cash. That money is to go towards completing its recent $6 million purchase of its underground mining contractor and to ramp up production at its plant.

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 copper, zinc and lead mine currently has a projected mine life of 11 years and mines three distinct areas.

In the Cupriferous zone measured and indicated resources strand at 9.43 million tonnes grading 2.4% copper, 0.9% zinc, 0.2% lead, 28.3 grams silver and 0.4 grams 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 grams 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 grams gold.

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

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

The new loan, however, gives Trafigura the opportunity to gain 22 million warrants. Such warrants will be issued as draws from the loan occur, have a strike of 52¢ for one year and if exercised would bring Trafigura’s stake up to 49%.

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

In Toronto on Oct. 2 the company’s shares closed flat at 47¢ on roughly 35,000 shares traded. Its shares have moved between 19¢ and 67¢ over the last 52-week period.