Chairman David Sheepshanks has confirmed that the Blues are continuing talks with Málaga regarding the permanent signing of centre-half César Navas.
Sheepshanks says the club are negotiating with both the Spanish club and Navas himself: "No deal has been done, but we are in discussions with Málaga and the player.”
Cash-strapped Málaga are keen to rid themselves of Navas's La Liga-sized wages and last week dropped their valuation of the 27-year-old to €200,000 (£135,000) plus another €100,000 (£68,000) after the 6ft 4in tall central defender has made his fifth appearance for Town.
As reported by TWTD last Wednesday, chief executive Derek Bowden travelled to Spain to meet with Málaga where the Blues offered €150,000 (£100,000) for the Madrid-born player.
The Spanish papers continue to say that talks are ongoing and expect the Real Madrid B player to join the Blues before the transfer window closes.
Navas is out of action until late September or early October after fracturing the third metatarsal of his right foot in the friendly at Crawley Town during his trial with the Blues.
Meanwhile, Town could look for a loan defender as cover while Fabian Wilnis serves a three-match ban for his red card at Plymouth. Wilnis was banned from talking to the media by boss Jim Magilton after Saturday's sending off, the fourth of his Town career and his third against the Pilgrims.
The Blues are reported to have dismissed links with West Ham's Calum Davenport.
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