Dia Bras Exploration Inc.

Dia Bras Exploration Inc.

November 30, 2010 18:47 ET

Dia Bras Releases Third Quarter 2010 Results

MONTREAL, QUEBEC--(Marketwire - Nov. 30, 2010) - Dia Bras Exploration Inc. (TSX VENTURE:DIB) ("Dia Bras") (the Company) announces the results for the three- and nine- month periods ended September 30, 2010. All currency in this release is in Canadian dollars unless otherwise indicated. For a full explanation of results, the unaudited Interim Consolidated Financial Statements, Management Discussion & Analysis of the Company and mining statistics, please visit the Company's website at www.diabras.com or on SEDAR at www.sedar.com.

Daniel Tellechea, President and CEO, commented, "We remain encouraged with the results for the first nine months of 2010. The higher grade zones at the Bolívar Property continue to provide mill feed to sustain the Company during its next phase of growth and construction. We are excited to be moving forward with the construction of the Piedras Verdes Mill at the Bolívar Property and to having completed the warrants exercises and the Rights Offering which together provided $26,975,000 from the first of 2010 to the 25th of November for the construction of the Piedras Verdes Mill and other capital programs Dia Bras has for this year."

Q2 2010 Highlights

  1. During the nine-month period ended September 30, 2010, the Company recorded a net loss of ($300,662), which includes a non-cash, non-recurring write down of $564,490, compared with a loss of ($3,047,728) in 2009. For the three months ended September 30, 2010, the Company recorded a net loss of ($273,021) compared with a loss of ($598,009) in 2009. The loss is mainly related to the lower grades being processed in 2010 compared to 2009, which will be positively impacted by the lower costs of the Piedras Verdes Mill when it is operational in 2011.

  2. Bolívar Property pilot-mining sales were $15,100,014 for the nine months ended September 30 of 2010, up 35% compared with $11,224,341 in the same period of 2009. The increase from 2009 is primarily due to a 21% increase in production coupled with significantly stronger commodity prices. The Company produced 7.4% more zinc and 4.1% less copper.

  3. Bolívar Property pilot-mining cost of sales for the three months ended September 30, 2010 were 4.04% lower than in the second quarter of 2010, but the Company processed 12.6% less tonnage, and costs of diesel, transportation and general costs continue to rise from quarter to quarter.

  1. The Company incurred a non-cash write-down of mining assets of $564,490 and stock-based compensation expense of $298,053 during the first three quarters of 2010, with $0 and $167,413 respectively in 2009.

  2. The Company had Adjusted EBITDA(1) of $2.275 million for the nine months ended September 30, 2010 ($0.376 million for the three months ended September 30, 2010, $0.162 million for the three months ended June 30, 2010, and $1,738 million for the three months ended March 31, 2010) and of $1.944 million for the year ended December 31, 2009.

  3. The Company shows positive net working capital of $19.8, (including cash of $16.0 million at September 30, 2010 and $2.8 million at December 31, 2009), compared with a net working capital of $2.8 at December 31, 2009, showing a positive change in working capital of $17.0 million for the nine months ended September 30, 2010.

  4. Operating cash costs(2) were US$97.96 per metric tonne milled in the third quarter of 2010, as compared to US$106.29 for the third quarter of 2009, which represents a (7.84%) decrease. The Operating cash costs for the 9 months ended September 2010 were US$89.60 versus US$88.31 for the first three quarters of 2009, an increase of 1.46%. The completion of the Piedras Verdes Mill will have a fundamental impact on these costs.

  5. During the three- and nine-month periods ended September 30, 2010, copper production decreased 29.3% and 4.1% respectively, compared to the three and nine months ended September 30, 2009. Zinc production decreased by 29.5% and increased by 7.4%, over the same periods of 2009 mainly due to a decrease in the mineral grades per ton despite the increased tonnage processed.

  6. The Company has started to process the tailings from past operations at the Cusi Property in the Leaching Circuit at the Malpaso Mill, processing an initial 460 tonnes in November 2010.

  7. During the first three quarters of 2010, the Company installed a new electric line to the Piedras Verdes Mill site, completed most of the site preparation for the plant, acquired $2.6 million of process equipment, completed engineering and initiated construction for the new facilities, and initiated the work for the eventual water supply for the Piedras Verdes Mill. 2010 spending on capital projects in process amounted to –

Piedras Verdes Mill 5,020,481
Bolívar Property Development 1,983,292
Malpaso Leaching Plant and improvements 224,702
Cusi Land 854,013
Cusi Development/Exploration, net 1,884,637
(1) "Adjusted EBITDA" is a non-GAAP measure in which standard EBITDA (earnings before interest expense, taxes, and depreciation and amortization) is adjusted for stock-based compensation expense and nonrecurring items.
(2) "Operating Cash Costs" is a non-GAAP measure defined as the costs of mining, transport to the mill and milling divided by the tonnes milled.

Mr. Tellechea further commented, "The Bolívar Property pilot-mining operations continue to provide strong results and cash flow for the Company, and for its exploration and corporate responsibilities. The Sales net of Cost of sales, Transportation of concentrates and Net loss for variation of commodity market prices, for the nine months ended September 30, 2010, generated a net of $6.057 million for the Company. That, with the tremendous support of our shareholders who provided us with $27.0 million of financing in the period ended November 25, 2010, leaves us in a strong position to complete our mission of commissioning the first commercial scale operations for the Company, with the completion of the Piedras Verdes Mill. In 2011, we also look forward to investing our working capital in the exploration of the many projects we have in highly prospective areas of Mexico, from which we intend to generate discoveries and value for our shareholders. Finally, I want to acknowledge and thank our dedicated staff whose hard work and dedication has allowed us to achieve these strong results."

New Developments

Dia Bras announces that two new agreements have been entered into recently.

In October 2010, the Company entered into a contract with the Ejido (a communal organization under the Agricultural laws of Mexico, the "Cusi Ejido") for the acquisition of rights for a period of 30 years over land in the area of the Company's Cusihuiriachic Project ("Cusi"). The contract called for a payment of $220,185 (2.7 million Mexican Pesos) upon signing, with a second payment of $61,163 (750,000 Mexican Pesos) in January 2011 and a final payment of $61,163 (750,000 Mexican Pesos) in April 2011.

In October 2010, the Company exercised its option to acquire the four Oaxaca Concessions at the Company's Moris Project in Chihuahua, Mexico. The Company made a payment of $205,960 (US$200,000) to initialize the acquisition and will make payments of $51,490 (US$50,000) in April 2011 and every six months thereafter until Oct 2012, for a total purchase price of of $411,920 (US$400,000). The purchase agreement carries the obligation to pay a one percent Net Smelter Return royalty on the first three years of production from the property.

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) and is 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 La Verde project at the Batopilas Property (Chihuahua State).

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

Forward-looking Statements:

This news release contains certain statements that constitute forward-looking statements. Forward-looking information includes, but is not limited to, information concerning Dia Bras' 2009 guidance respecting pilot-mining production and potential plans for Bolivar and Cusi projects, as well as the acquisition of EXMIN Resources. Forward-looking statements are subject to a variety of risks and uncertainties, which could cause actual events or results to differ from those reflected in the forward-looking statements, including, without limitation, risks and uncertainties relating to foreign currency fluctuations; risks inherent in the mining industry including environmental hazards, industrial accidents, unusual or unexpected geological formations, ground control problems and flooding; risks associated with the estimation of mineral resources and the geology, grade and continuity of mineral deposits; the possibility that future exploration, development or mining results will not be consistent with the Company's expectations; the potential for and effects of labour disputes or other unanticipated difficulties or shortages of labour or interruptions in production; actual rocks mined varying from estimates of grade, tonnage, dilution and metallurgical and other characteristics; the inherent uncertainty of pilot-mining activities and cost estimates and the potential for unexpected costs and expenses, commodity price fluctuations; uncertain political and economic environments; changes in laws or policies, foreign taxation, delays or the inability to obtain necessary governmental permits; and other risks and uncertainties. Refer to "Risk and Uncertainties".

Forward-looking information is, in addition, based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long-term price of zinc, copper, lead and silver; the regulatory and governmental approvals for the Company's projects and other operations on a timely basis; access to financing, appropriate equipment and sufficient labour. Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements. Although the forward-looking statements contained in this MD&A are based upon what management believes to be reasonable assumptions, the Company cannot guarantee that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this MD&A, and the Company does not assume any obligation to update or revise them to reflect new events or circumstances, except as required under applicable securities regulations.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Contact Information

  • Dia Bras Exploration Inc.
    Daniel Tellechea
    President & CEO
    Dia Bras Exploration Inc.
    Karl J. Boltz
    Vice President, Corporate Development