As announced in December 2008, Iberian's 100% owned subsidiary MATSA entered into a joint venture agreement with Cadillac Ventures Inc. ("Cadillac") concerning 14 properties in the Iberain Pyrite Belt in Spain. The properties, totalling 232 km2 are in various stages of exploration and are many are contiguous with the Aguas Tenidas property. Under the joint venture, Cadillac owns 1% of the properties, with MATSA holding the remaining interest. By expending $3 million in exploration expenditures at the Properties within two years, Cadillac may earn a 90% participating interest, with MATSA then holding a 10% carried interest; failing such expenditure, Cadillac will hold no interest in the Properties.
Once Cadillac has earned a 90% interest, all future exploration expenditures continue to be funded by Cadillac (with an obligation to always maintain all of the properties in good standing). Cadillac will be the operator of all exploration programs. If the any of the properties or part thereof are brought to the point of a feasibility study, that property is to be transferred to a new operating company, with a new agreement to be entered into between Cadillac (90%) and MATSA (10%). MATSA will then have the option to increase its interest to 35% (Cadillac 65%) by paying an amount equal to the expenditures of Cadillac at such property plus two times the cost of the feasibility study. In the case of the Santo Angel property (which includes the Angelita deposit), MATSA may, on paying those amounts, increase its percentage to 65% (Cadillac 35%).
If any party's interest reduces below 10%, it automatically converts to a 1% net smelter royalty. Both parties have granted the other rights of first offer in the event of any proposed transfers of interest. The joint venture agreement contains other usual terms for transactions of this type.
For updated information on the joint venture, please see Cadillac's press release of July 7, 2009.