Iberian Minerals featured in Merger Market

Iberian Minerals looks to close deals in Spain, North America, executive says

September 11, 2015
by Zena Olijnyk in Toronto

Alberta-based miner Iberian Minerals (TSX.V:IML) will likely close on at least two deals for precious or industrial metal assets in Spain or North America over the next few months, taking advantage of current market turmoil in the industry to bulk up on assets in that country, Director of Business Development Rick Gliege told this news service.

The executive said in an interview that Iberian has “three or four” active deals it is looking to close on, and expects that at least one of these will be done within the next few weeks. He added that another can likely be completed before Christmas.

While he wouldn’t be specific what assets the company is looking to buy, the executive noted Iberian is focussed on opportunities in the precious metals space, as well as industrial and base metals. He said that at least one of the deals the company is working on is for an industrial metal. While predominantly focused on Spain, the company is also looking at assets in Canada and the United States.

The company is focusing on brownfield projects, areas that have already been mined, Gliege said, rather than greenfield exploration projects.

Most recently, Iberian acquired the Caurio project within the Rio Narcea Gold Belt, in Asturias, northern Spain. Gliege said the asset is within a region with a gold mining history that goes back to Roman times and is “considered one of the most important gold regions in all of Euorpe.”

Under terms of the deal, Iberian, through its Spanish subsidiary, made a cash payment of EUR 190,000 to seller Compania Minera Sierra De Caurio to purchase the company and assume the option agreement.

As a result, Iberian has the right to option a 95% interest during a three-year term ending 30 June 2018 by paying EUR 50,000 every eight months. After completing due diligence, Iberian can exercise the agreement for a total price of EUR 7m, less payments already made.

Gliege noted the asset is also adjacent to Orvana Mineral’s (TSX: ORV) Carles and El Valle/Boinas mines – the latter which has produced more than one million ounces of gold equivalent from a resource of 1.1 million ounces.

Currently, they are the only two operating gold mines in Spain, he said. Given El Valle is coming to the end of its production life, he said Orvana is likely targeting opportunities to extend the current mine life of El Valle and is working to replace their depleted reserves. It is currently pursuing additional exploration activities in the vicinity of the El Valle Mine, which is adjacent to the Caurio property. He would not specify if Iberian has already been in talks with Orvana.

In terms of financing acquisitions, Gliege said Iberian recently sold its Alberta-1 tin/tantalum & lithium project assets in Spain for CAD 7m to become debt-free and still have the working capital it needs to develop the assets it has, as well as look for acquisition opportunities.

At the end of the second quarter ended 30 June, Iberian had CAD 5.5m cash on hand. It has a market cap of about CAD 12m. As a result, he said, the company does not require an equity issue or debt financing in the near future to finance acquisitions.

Gliege noted that the company’s long-term strategy is to find and develop assets that can later be partnered with or sold to larger players looking to for replacement production.

For example, Gliege said, Iberian caught the attention of mining heavyweight and trading house Glencore in 2013 with its Cehegin iron ore property in Spain. This evolved into a joint venture in June 2014, with an 80:20 split between Iberian and Glencore. Past iron ore production in the region was noted for its high grade and low impurities, Gliege said, making it attractive to producers compared to low quality iron from places like China.

The JV is still in effect, Gliege said, though Iberian has made it clear that it has sufficient funds to complete the company’s upcoming work program without Glencore’s contribution. There are “ongoing negotiations” for Iberian to regain Glencore’s 20% interest and assume 100% ownership of the project, while retaining the offtake portion of the agreement.

While current market conditions for iron ore are in a downturn, Gliege noted that high-purity iron ore for the European market is “still an attractive long-term proposition.”

The company’s auditor is K.R. Margetson, and its legal advisor is DLA Piper LLP.

Gliege has been interim CFO at Iberian during the company’s search for a candidate. On Tuesday it named Don Weatherbee to the CFO position.

by Zena Olijnyk in Toronto

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