Manhattan exits Peru

Vancouver — Having had its fill of difficulties in Peru, Manhattan Minerals (MAN-T) is saying adios and selling its portfolio of mineral projects in the country.

The company plans to liquidate its entire package of Peruvian assets, including the Tambo Grande massive sulphide project, for US$600,000, assumption of all of its debts (about $2.4 million), and a 2% net smelter return royalty. The portfolio is being acquired by Solar Energy, (SLRE-O) Manhattan will retain the accrued tax losses for a separate sale.

Late in 2003, the government agency Centromin Peru terminated Manhattan Minerals’ 1996 option agreement to earn a 75% interest in Tambo Grande. The company has since begun arbitration proceedings on the ruling in an attempt to regain its rights.

Manhattan had completed a final feasibility study and financing plan for Tambo Grande, fulfilling what it believed were the conditions of the earn-in. But Centromin concluded the company failed to meet the terms of the agreement, and nullified it. The agreement had called for Manhattan to have the mine operating by December 2003 and US$100 million in net assets. Neither was achieved.

Tambo Grande was envisioned as a base and precious metals operation, with annual production pegged at 190 million lbs. copper and 90 million lbs. zinc over a mine life of nine years. The oxide zone would have contributed about 260,000 oz. gold and 3.2 million oz. silver annually over 3.5 years, until depleted. The first phase of development of the oxide zone was expected to cost US$180 million, with a second phase, targeting the sulphides, pegged at US$145 million.

At the end of 2003, the company wrote down its entire US$60-million investment in the Tambo Grande concessions.

Among Manhattan Minerals’ other exploration properties in Peru was Papayo, immediately south of Tambo Grande. There, the company had been earning a 51% interest from Compania de Minas Buenaventura (BVN-N). The B-5 project at Papayo had returned high-grade drill intercepts of up 4.6% copper over 53 metres. However, in July 2004, when the company went to exercise its option, partner Cedimin (a subsidiary of Buenaventura) expressed a difference of opinion on the validity of the exercise. Consequently, Manhattan decided to write down its US$2.7-million investment in Papayo.

The only property in its Peruvian portfolio that has clear and acknowledged title is Lancones, most of which Manhattan staked in 1996. Lancones adjoins Tambo Grande.

Today, Manhattan Minerals is focusing its exploration efforts on Turkey. Under an agreement with Teck Cominco (TEK-T), Manhattan can acquire 100% interests in the Tak and Corak gold projects in Artvin province. In the early 1990s, drilling and surface exploration by Teck determined that gold mineralization on the properties is hosted in vein and stockwork systems.

Subsequent to the new acquisitions, Manhattan Minerals entered into a $300,000 credit facility with Vancouver-based merchant bank Quest Capital (QC-T).

Manhattan Minerals has 62.4 million shares outstanding and a market capitalization of $5.6-million. The stock recently traded at 9.