Manhattan eyes financing (August 20, 2001)

Vancouver — Last year, investors were so enamoured by Manhattan Minerals (MAN-T) that the company had little trouble selling 4.7 million special warrants priced at $3.25 each. Today, with its shares trading around $1, the company is offering up to 6 million special warrants at an undisclosed price.

Each special warrant holds one share and one half of a purchase warrant. A full purchase warrant entitles the holder to buy another share in the company for a period of two years. National Bank Financial will act as agent on a best-efforts basis.

The net proceeds will be used to complete a draft environmental impact statement for the Tambo Grande base metal project in Peru, as well as for community-relations activities in the town of Piura.

Last June, a proposed $10-million financing by Manhattan was oversubscribed, resulting in an increase to $15.3 million. However, since then, local strife has forced the junior to extend its timeline for the promising project.

In February, the project came under attack during a protest involving townspeople from Tambogrande. This turned violent and lasted several days. Local police say the protests were orchestrated by leaders of the Defense Front of the San Lorenzo Valley and the Urban Defense Front of Tambogrande.

Manhattan says the actions of these groups are not representative of the town’s 15,000 residents, but are politically motivated and are part of a country-wide campaign aimed at disrupting government and industrial activities during the country’s presidential elections.

Tambo Grande ranks among the world’s largest volcanogenic massive sulphide projects. Total sulphide mineralization in the district is estimated to exceed 300 million tonnes.

In response to the February protests, the Peruvian government granted Manhattan a one-year extension on its option agreement, which now lasts till May 2003.

The key business terms of this agreement require that the company complete a feasibility study and financing plan. The feasibility study was originally scheduled for completion in June of this year and has been rescheduled for completion by June 2002. Most aspects of the study are already completed, so the extension will give Manhattan time to advance its community relations.

The company is seeking a joint-venture partner or partners to help develop Tambo Grande. Manhattan spent US$16.4 million on the project in 2000, primarily on exploration drilling, feasibility work and community relations.

At the end of 2000, Manhattan had US$4.4 million in cash.