Iberian Minerals Corp. – IZN:TSXV, $1.25

CMC Acquisition Living Up to Expectations; Material Catalysts in the Offing

Stephen Parsons, P. Eng 416-864-2608 sparsons@mgisecurities.com March 6, 2008

Ryan Walker, M.Sc., Geol., Associate 416-864-2623 rwalker@mgisecurities.com

Stock Rating: BUY Target Price: $2.15

$000,

Year-end Dec. 31 F06A F07E F08E

Revenue - - 116,912

EBITDA (3,793) (4,318) 60,747

Net Income (4,736) (6,023) 39,020

EPS f.d, fully financed (0.03) (0.02) 0.13

CFPS f.d, fully financed (0.02) (0.02) 0.16

P/E nm nm 9.6x

P/CF nm nm 7.8x

Payable copper production, 000 lbs na na 56,900

Total cash costs (US$/lb of Cu) na na 0.70

Projected return 72%

Shares outstanding - mm (basic) 252.3

Shares outstanding – mm (f.d., fully financed)1 296.8

Market capitalization – mm (f.d.) 371.0

52-week high/low 1.98/0.92

Balance sheet as of Sept 30, 2007

Working capital 20,141

Long-term debt2 357

All figures in C$, unless otherwise stated.

(1) Assumes full conversion of debentures to IZN shares.

(2) The project debt facility for Aguas Teñidas has not been finalized, but the

mandate letter with Investec calls for a term of approximately US$160 mm.

Source: MGI Securities Inc, Iberian Minerals Corp.

Yesterday, IZN announced that between September 30,

2007 and December 31, 2007, its newly acquired Raul

mine in Peru produced 11.70 mm lbs of copper, 3,814 oz

of gold, and 57,160 oz of silver.

The company also reported that plant throughput has

increased significantly to 5,990 tonnes per day (tpd) in

January 2008, close to the design level of 6,000 tpd.

CMC operating results are of particular importance since

cash flow generated from the mine is to be used to

finance part of the residual development capital at the

company’s flagship project in Spain, Aguas Teñidas.

Positive is that the operating results are substantially in

line with expectations. As such, mine cash flow, too,

should be in line, thereby keeping the company on track

with its financing effort.

Two material catalysts exist that could drive IZN shares

higher in the coming months: (1) appointment of a new

President; and (2) closing of the project debt package

with Investec.

We expect these catalysts to help IZN shares close the

gap on a P/NAV basis with its peers. IZN trades at 0.53x

our $2.35/share NAV estimate, whereas Farallon

Resources (FAN-TSX), another polymetallic development

story at a similar stage of development, trades at 0.75x

our $1.05/share NAV estimate. Maintain BUY rating

and $2.15 target price.

Operating Results Showcase the Potential of Recently Acquired Peruvian Assets

On March 5, 2008, Iberian Minerals (IZN-TSXV), an emerging copper producer and explorer, reported

operating results for the recently acquired Raul and Condestable underground mines in Peru. IZN assumed

control of the mines following the acquisition of a 92% stake in Compania Minera Condestable (CMC) from

commodities trader Trafigura Beheer BV for stock. Trafigura hold a 42% interest in IZN and have three

representatives on the board.

CMC operating results are of particular importance since cash flow generated from the mines is to be used

to finance a portion of the residual capital requirements for the company’s flagship project in Spain, Aguas

Teñidas. We expect commissioning to commence at Aguas Teñidas in August 2008.

Between September 30, 2007, being the effective date of the acquisition of CMC, and December 31, 2007,

the Raul mine has produced 22,160 tonnes of copper concentrates containing 5,295 tonnes (11.70 mm

lbs) of copper, 3,814 oz of gold fines and 57,160 oz of silver fines. The company also reported that plant

throughput has increased significantly to 5,990 tonnes per day (tpd) in January 2008, close to the design

level of 6,000 tpd.

While the NI 43-101 report released in November 2007 provided historical production information and

forecasts for the CMC assets, proof is in the pudding and yesterday’s operating results are just that. In our

view, the results attest to the forecasts made in the 43-101 report and importantly lend credence to the

CMC acquisition.

CMC Spins Cash; Proceeds to be used for Aguas Teñidas

Positive is that the operating results are substantially in line with our expectations, albeit they are only for

a three month period. Nevertheless, the implication is that mine cash flow, too, should be in line, which is

particularly important since cash flow from the company’s Peruvian assets is earmarked for IZN’s financing

effort at Aguas Teñidas. Aguas Teñidas is the company’s flagship asset and value driver.

We estimate that for the period approximately $7 mm of free cash flow was generated. We expect the

quarterly run-rate for cash flow to increase in 2008 as a result of the recently completed mill expansion to

6,000 tpd. As indicated above, these rates were already being achieved in January. Prior to commercial

production at Aguas Teñidas we estimate that Condestable will contribute approximately $43 mm towards

the development capital, as presented in Figure 1.

Figure 1: Aguas Teñidas Project Financing Requirements – with cash flow from Condestable

$, mm

Capital cost, incl. working capital (1) 270.6

Capital cost overrun guarantees (2) 27.1

Financing requirements 297.7

Bank Project Loan 160.0

Equity Financing (3) 30.0

Equity Financing (4) 15.0

Equity Financing (5) 17.4

Equity Financing (6) 4.4

Convertible Debt @ 7% payable annually 25.0

Trafigura unsecured loan 20.0

FCF from Condestable for 2008 43.4

Total 315.2

(1) MGI Estimate.

(2) 10% of development capex.

(3) Equity financing at $0.75/share, net of fees (closed May 16, 2006).

(5) Equity financing at $1.30/share to Trafigura (announced Sept 19, 2006).

(6) IZN special warrants to Trafigura and Dundee (closed Nov. 9, 2006).

(4) Equity financing at $1.00/share, net of fees

Source: MGI Securities Inc.

Two Material Catalysts in the Offing

At present, IZN shares are trading at 0.53x our NAV estimate of $2.35/share. This is substantially below

the valuation afforded to producers, which typically trade at 1.0x NAV, and even below the valuation of

some of its development company peers. For example, Farallon Resources (FAN-TSX), another

polymetallic development story at a similar stage of development, trades at 0.75x our $1.05/share NAV

estimate. Both companies offer comparable exploration potential, in our view.

We believe there are two material catalysts in place that have the potential to drive IZN shares

substantially higher in the near to medium term and enable it to close the gap on a P/NAV basis with its

development company peers.

1. Management changes. 2008 marks a transition year for IZN - the year in which it transitions

from developer to producer. Not surprising to us is that this transition has also brought about

changes to senior management. Indeed, markedly different skill sets are needed to manage a

producing concern than an explorer or development company. We believe that with the departure

of Mr. Miller IZN’s board has paved the way for an operations-minded senior executive to join the

company. Given IZN's favorable valuation, Trafigura's access to deal flow and publicly stated

objective to grow IZN's production base, we believe that the upside is sufficiently compelling to

warrant consideration by quality candidates. We also believe that Trafigura would not settle for

anything less given its equity investment in the company. We expect news on this front to be the

impetus for share price appreciation, particularly if the candidate has a solid track record of mine

operating and mine development.

2. Closing of debt deal with Investec. Equally significant could be near-term news on the closing

of the project loan for Aguas Teñidas with Investec. The loan is expected to be for approximately

$160 mm plus capital costs overun guarantees, bringing the total to about $200 mm. While few, if

any, significant debt deals have closed for junior mining companies in recent months, we view as

favorable IZN chances. Again, success hinges on Trafigura’s involvement and their motivation to

see the deal close in the near-term so that it does not impinge on the development efforts at Aguas

Teñidas.

Maintain BUY recommendation and $2.15 target price

Following the release of operating results for IZN’s Peruvian assets that were substantially in line with

expectations, we are reiterating our BUY recommendation and $2.15 target price. We arrive at our

target price using a blended multiple with an equal weighting given to our 8% NAV estimate of

$2.35/share and to a 4.5x multiple to our 2009 CFPS estimate of $0.42.

MGI Securities Inc (‘MGI’) Research Disclosures

MGI Securities Rating System:

BUY - The stock is expected to outperform the analyst’s coverage universe over the next 12 months.

SPECULATIVE BUY - Rating applies to certain situations where a significant potential return to MGI Securities’ target price exists

contingent on the company reaching important financial/production goals.

HOLD - The stock is projected to perform in line with the analyst’s coverage universe over the next 12 months.

SELL - The stock is expected to underperform the analyst’s coverage universe over the next 12 months.

UNDER REVIEW – Pending additional review and or information. No rating presently assigned.

TENDER TO OFFER – The stock has an offer to purchase and the analyst recommends tendering to the offer.

The percentage of recommendations that fall into each of the above ratings categories will be displayed and updated quarterly on the

MGI Securities website.

Equity Research Disclosures

3. The analyst has visited the issuers principal asset, Aguas Teñidas. No payment or reimbursement was received from the

issuer for the associated travel costs.

8. MGI Securities has managed or co-managed a public offering of securities for this company in the past 12 months.

13. The analyst has relied in the preparation of the recommendation on material provided by a third party which will be

disclosed on request.

14. The equity securities of this company are restricted voting shares.

16. The equity securities of this company are non-voting shares.

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