Hydroelectric plant for mine

PANAMA. Petaquilla Minerals Ltd. has announced that its wholly-owned subsidiary Panama Central Electrica, S. A. ("PCE") has signed an agreement with Generadora Hidroelectrica Santa Maria, S. A. ("Santa Maria") to develop a 25MW hydroelectric plant in Veraguas, province.

The agreement establishes the general framework within which the partners PCE and Santa Maria will work to advance the hydro project to the stage of a bankable feasibility study.

The partners will also work on updating the 1998 Environmental Impact Study which was previously approved by the National Environmental Authority in November of 1998.

Upon obtaining a positive feasibility study, the partners intend to commence construction in the fourth quarter of 2010 and ownership of the hydro project will be based on capital contribution.

The companies are also planning to develop additional hydro power projects in the central provinces with a cumulative potential of up to 100 MW.

Currently, around 31 hydroelectric projects are under construction.

Petaquilla Mineral Ltd.owns all the issued shares of PCE through its subsidiary Petaquilla Infrastructure Ltd. ("PQI"). The Canadian/Panamanian owned company, which is trying to expand its operation in the isthmus has been surrounded with controversy, especially in the area of Coclesito, where indigenous groups opposed to the exploitation of the gold mine on ground that it is polluting the soil and rivers, plus harming the indigenous communities.

Last year, Petaquilla Gold was fined more than $1 million for starting to work in the development of the mine’s infrastructure although it lacked the permits to do so.

On May 21, this year, Petaquilla Mineral announced that subject to all requisite shareholder and regulatory approvals, the company will continue to advance towards completing the spin-out of Petaquilla Infrastruture by the third quarter of 2009.

According to the board of directors of Petaquilla Minerals Ltd. full commercial production is expected to start in the second half of 2009, although environmentalists and civil group are opposed to the project.

It is expected during the first year of operation the project will produce 2200 tonnes per day.

The plant will utilize three ball mills and a carbon-in-pulp processing facility.