Dia Bras Exploration Inc.
TSX VENTURE : DIB

Dia Bras Exploration Inc.

May 25, 2011 17:52 ET

Dia Bras Announces Closing of $137.4 Million Private Placement and Extension of Sociedad Minera Corona S.A. Letter Agreement

TORONTO, ONTARIO--(Marketwire - May 25, 2011) -

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR RELEASE, PUBLICATION, DISTRIBUTION OR DISSEMINATION DIRECTLY, OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES.

Dia Bras Exploration Inc. (TSX VENTURE:DIB) ("Dia Bras" or the "Company") is pleased to announce that it has closed its previously announced non-brokered private placement of 48,067,103 subscription receipts for aggregate gross proceeds of Cdn.$137,471,914.

The proceeds of the offering will be used to fund a portion of the US$285.79 million aggregate purchase price for its proposed acquisition (the "Acquisition") of approximately 92% of the voting shares (representing approximately 82% of the total equity) of Sociedad Minera Corona S.A. ("Corona") from a group of shareholders (the "Selling Shareholders") pursuant to a binding agreement dated March 3, 2011, as amended (the "Letter Agreement"). The balance of the purchase price, plus fees and expenses associated with the Acquisition, are expected to be satisfied through a US$150 million debt facility and the Company's existing cash resources.

Each subscription receipt entitles the holder to receive, for no additional consideration, one common share of Dia Bras (each a "Dia Bras Share") upon the satisfaction of the escrow release conditions described below.

The gross proceeds have been deposited into escrow with a trust company and will be released from escrow to the Company upon the occurrence of all of the following events:

  1. all conditions required to complete the Acquisition (other than payment of the purchase price therefor) having been satisfied or waived by the Company, acting reasonably, including, without limitation, the execution by the Company of a debt facility with a third-party lender providing the Company with not less than US$150,000,000 principal amount of debt financing to be used by the Company to finance the Acquisition;

  2. the TSX Venture Exchange (the "TSXV") having conditionally approved the Acquisition, including the listing on the TSXV of any Dia Bras Shares issuable in connection with the Acquisition and pursuant to the exercise of the subscription receipts; and

  3. the Company having delivered a notice to the trust company confirming that (i) all regulatory and other approvals required in respect of the Acquisition have been obtained, and (ii) all other escrow release conditions have been satisfied or waived (collectively, the "Escrow Release Conditions").

If the Escrow Release Conditions are not satisfied or waived on or before the earlier of: (i) 4:30 p.m. (Toronto time) on June 30, 2011, and (ii) the time and date, if any, that the Definitive Agreement governing the Acquisition is terminated pursuant to its terms, the escrowed funds will be returned to the subscribers and all subscription receipts will be cancelled.

In connection with the private placement, Arias Resource Capital Fund II L.P. ("ARCF II") has purchased 16,647,713 subscription receipts for an aggregate purchase price of Cdn.$47,612,459. Arias Resource Capital Fund L.P. ("ARCF I") currently owns 49,079,261 Dia Bras Shares or approximately 58.5% of the issued and outstanding Dia Bras Shares and holds warrants exercisable to acquire an additional 3,099,429 Dia Bras Shares at an exercise price of Cdn.$0.70 per share. ARCF I and ARCF II are entities indirectly controlled by Alberto Arias, a director of Dia Bras. Accordingly, the purchase by ARCF II of subscription receipts constitutes a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions. Following the purchase of the subscription receipts by ARCF II, assuming the closing of the Acquisition and the issuance of 16,647,713 Dia Bras Shares pursuant to the exercise of the subscription receipts in connection with the Acquisition, ARCF I and ARCF II will own, in the aggregate, 65,726,974 Dia Bras Shares or approximately 47.7% of the number of Dia Bras Shares outstanding immediately following the Acquisition and will also hold warrants exercisable to acquire an additional 3,099,429 Dia Bras Shares at an exercise price of Cdn.$0.70 per share. The purchase of subscription receipts by ARCF II was approved by the Board of Directors of Dia Bras, with Mr. Arias declaring his interest and abstaining from voting.

Dia Bras is also pleased to provide an update regarding the status of the Acquisition. As disclosed in its press release of May 17, 2011, an addendum to the Letter Agreement required the parties to execute the definitive agreements necessary to complete the Acquisition (the "Definitive Agreements") on or before May 24, 2011. Dia Bras and the Selling Shareholders have executed a second addendum to the Letter Agreement (the "Addendum") extending the deadline for the execution of the Definitive Agreements to not later than May 31, 2011.

Pursuant to the Letter Agreement, closing of the Acquisition is to occur no later than June 1, 2011 or such later date as may be agreed to by the parties.

About Dia Bras

Dia Bras is a Canadian exploration mining company focused on precious and base metals in Chihuahua State and other areas of northern Mexico. The Company is pursuing the development and exploration of its most advanced assets – the Bolivar Property (copper‐zinc‐silver) and the Cusi Property (silver). Dia Bras is also exploring several precious metal targets such as La Cascada project at the Bolivar Property, the Las Coloradas project at Melchor Ocampo (Zacatecas State), the Bacerac Property (Sonora State) and the Corralitos, Satevo and La Verde projects at the Batopilas Property (Chihuahua State).

The Company's shares trade on the TSX Venture Exchange under the symbol "DIB".

For further information on Dia Bras Exploration Inc. visit www.diabras.com

Forward-Looking Statements

This press release and other documents filed by the Company contain "forward-looking information" within the meaning of applicable Canadian securities legislation, which is also referred to as "forward-looking statements", which may not be based on historical fact. Wherever possible, words such as "will", "plans," "expects," "estimates," "anticipates," "believes," "intends," "may," and similar expressions or statements that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved, have been used to identify forward-looking information. These forward-looking statements include, without limitation, statements regarding the execution of the Definitive Agreements and the completion of the Acquisition, future results of operations, performance and achievements of the Company, including potential property acquisitions, the timing, content, cost and results of proposed work programs, the discovery and delineation of mineral deposits/resources/reserves, geological interpretations, proposed production rates, potential mineral recovery processes and rates, business and financing plans, business trends and future operating revenues. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. and other factors.

Such statements reflect the Company's current views with respect to future events and are subject to a number of risks and uncertainties. Actual results may differ materially from results contemplated by the forward-looking statements. Prospective investors and others should not place undue reliance on such forward-looking statements, as they reflect the Company's current views with respect to future events and are subject to risks and uncertainties and are necessarily based upon a number of estimates and assumptions that, while considered reasonable by the Company, are inherently subject to significant business, economic, regulatory, competitive, political and social uncertainties and contingencies. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including among others the failure to execute the Definitive Agreements or to complete the Acquisition, variations in the nature, quality and quantity of any mineral deposits that may be located, significant downward variations in the market price of any minerals produced, the Company's inability to obtain any necessary permits, consents or authorizations required for its activities, to produce minerals from its properties successfully or profitably, to continue its projected growth, to raise the necessary capital or to be fully able to implement its business strategies and the risks detailed from time-to-time in the Company's quarterly filings, annual information forms, annual reports and annual filings with securities regulators. Forward-looking information will be updated as required pursuant to the requirements of applicable securities laws.

The TSX Venture Exchange (the "Exchange") does not accept responsibility for the adequacy or accuracy for this release. Completion of the Acquisition is subject to a number of conditions, including but not limited to, Exchange acceptance. There can be no assurance that the Acquisition will be completed as proposed or at all.

Contact Information

  • Daniel Tellechea
    President & CEO
    Dia Bras Exploration Inc.
    1 (866) 493-9646

    Karl J. Boltz
    Vice President, Corporate Development
    Dia Bras Exploration Inc.
    1 (866) 493-9646