Panamanian government OK’s Petaquilla mine plan (September 26, 2005)

Vancouver – With Panamanian government approval in hand, Petaquilla Minerals (PTQ-T, PTQMF-Q) has marched through a significant milestone towards development of its mineral projects in the north-central portion of the Central American country.

The Ministerial Resolution green lights a multi-phase mine development plan (through a contract law termed “Ley Petaquilla”) initially tabled by the company, and partners Teck Cominco (TEK.SV.B-T, TCKBF-Q) and Inmet Mining (IMN-T, IEMMF-Q) in 1997.

Foremost in Ley Petaquilla is guaranteed 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, there will be no withholding tax on interest or dividend payments to foreign lenders or shareholders respectively.

The agreement also insulates the project’s owners against future changes in legislation that are “inconsistent with Ley Petaquilla”.

The company initially plans to push forward with development of its Molejon gold deposit in 2006. Exploration at Molejon has targeted expanding the 1995, SRK Consulting calculated probable open pit resource of 5 million tonnes grading 2.8 grams gold 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 per tonne, 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, enroute 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 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 holding 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.