VANCOUVER – Petaquilla Minerals Ltd. (TSX:PTQ) says it has lined up US$140 million of financing that will enable the mining company to advance projects in Spain and Panama.
The funds from Red Kite Mine Finance Trust I will be used to get the Lomero-Poyatos gold project in Spain into production in mid-2014 and sets the stage for Petaquilla to spin off a subsidiary in Panama as a separate company.
The Red Kite financing will allow Petaquilla to extricate itself from existing gold and silver contracts and a convertible loan with Deutsche Bank AG, effectively freeing US$30 million of annual cash-flow.
The payout to Deutsche Bank would also free Petaquilla’s infrastructure division, Panama Desarrollo de Infraestructuras, SA (PDI), for spun out as a separate company during the first quarter of 2013.
Petaquilla had been the target of a takeover attempt by Inmet Mining Corp. (TSX:IMN), which dropped the bid after getting less than the required 50.1 per cent of Petaquilla shares.
Inmet’s offer was seen as a move to consolidate the area around its Cobre Panama project, largest-ever mine development in Panama. Petaquilla’s Molejon project neighbours the Inmet development.
The first $90 million of the Red Kite loan will become available to Petaquilla when the agreement closes, expected about Jan. 15, and the remaining US$50 million will be released when certain milestones are passed.
The loan will mature in five years, with an option to extend one year. The interest rate will be variable and linked to one of the LIBOR benchmarks.