Petaquilla Signs Convertible Loan and Prepaid Forward Silver Purchase Agreements
Petaquilla Minerals Ltd. ("Petaquilla" or the "Company") (TSX: PTQ.TO - OTC.BB: PTQMF.OB - News ) today announced that it has entered into a Convertible Loan Agreement (the "Loan Agreement") and a Forward Silver Purchase Agreement (the "Silver Agreement") with Deutsche Bank, AG, London Branch. Subject to satisfaction of all closing conditions, Deutsche Bank will fund a CAD$6,000,000 loan and a US$11.3 million silver prepayment facility.
The combined facilities will be used to (i) complete the expansion of Petaquilla's Molejon gold plant (e.g. the addition of a fourth ball mill, two leach tanks, two CIP tanks, and mining and crushing equipment); (ii) fully redeem the outstanding balance of the Company's Notes and Convertible Notes; and (iii) fund drilling, development and construction costs of the Company's concessions in Spain and Portugal.
The Loan Agreement bears an interest rate of 6.35% per annum over a four year term with interest payable every three months. The principal portion of the Loan Agreement is convertible at Deutsche Bank's option into common shares of the Company at a conversion price equal to the five (5)-day volume weighted average price of Petaquilla's common shares on the Toronto Stock Exchange immediately prior to the effective date of the Loan Agreement plus a 15% premium.
The Company has the right, following the second anniversary of the Loan Agreement, to prepay the outstanding amount of the loan plus any accrued and unpaid interest without penalty.
The Loan Agreement and the Silver Agreement, together with the gold prepayment agreement signed with Deutsche Bank in 2010, will be secured by all of the assets of the Company and its subsidiaries.
The Silver Agreement is a forward contract to deliver 525,500 ounces of silver over a five year term of April 2012 to February 2017, inclusive. The schedule of silver payments is as follows: during the first seven (7) months of the term, 8,100 ounces per month; for the next twelve (12) months of the term, 15,200 ounces per month; for the next twelve (12) months of the term, 14,200 ounces per month; for the next twelve (12) months of the term, 7,800 ounces per month; and for the final sixteen (16) months of the term, 1,400 ounces per month.
Certain components within the Silver Agreement, such as the silver strike prices, will be finalized at the time of prepayment anticipated to occur on March 20, 2012. As such, a subsequent news release regarding the Silver Agreement will be issued upon the date of prepayment with the minimum and maximum silver prices per ounce expressed.
Joao C. Manuel, Chief Executive Officer of the Company, commented, "We are very pleased to have secured these facilities with Deutsche Bank. The facilities will assist the Company and its shareholders in meeting future goals with respect to exploration and production in Panama and Europe".
About Petaquilla Minerals Ltd. Petaquilla is a growing, diversified gold producer committed to maximizing shareholder value through a strategy of efficient production, targeted exploration and select acquisitions. The Company operates a surface gold processing plant at its Molejon Gold Project, located in the south central area of its 100% owned 842 square kilometre concession lands in Panama - a region known historically for gold content. In addition, the Company has acquired 100% of the Lomero-Poyatos project located in the northeast part of the Spanish/Portuguese (Iberian) Pyrite Belt and several other exploration licenses in Iberia.
