Dia Bras Exploration Inc.
TSX VENTURE : DIB

Dia Bras Exploration Inc.

November 30, 2011 12:43 ET

Dia Bras Reports Another Record Production and Financial Results in the Third Quarter 2011 and Declares Commercial Production at Bolivar Mine

TORONTO, ONTARIO--(Marketwire - Nov. 30, 2011) - Dia Bras Exploration Inc. (TSX VENTURE:DIB) ("Dia Bras" or the "Company") is pleased to present the Company's third quarter 2011 Financial Statements and Management's Discussion & Analysis as well as the beginning of commercial production at Bolivar. All currency in this release is in thousands of Canadian dollars unless otherwise indicated. The Company's financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). For a full explanation of results and mining statistics, please visit the Company's website at www.diabras.com or on SEDAR at www.sedar.com.

The Company reported another production record and financial results during the three (Q3-2011) and nine month (YTD-2011) periods ended September 30, 2011. These results were achieved not only due to the acquisition of Sociedad Minera Corona, S.A ("Corona") announced in the second quarter of 2011 (see press release of May 26, 2011), but also to due to higher tonnage processed at the Company's Mexican units Bolivar and Cusi in Q3-2011.

Dia Bras has significantly improved its production, revenues, EBITDA and liquidity, versus the same periods in 2010. Given that the closing date of the acquisition of Corona was May 26, 2011, the consolidating period that includes Corona covers only the period from May 26 to September 30, 2011. Consequently, only the three month period ended September 30, 2011 reflects the true significance of this acquisition.

Third Quarter 2011 Highlights

  • The Company declared commercial production for its Bolivar Mine effective November 29, 2011, upon the Bolivar mine and Piedras Verdes mill having completed a reasonable period of testing of the mine plant and equipment, evidencing its capacity to produce metals in saleable form and to sustain expected levels of ongoing production.
  • Total revenues soared 1059% to $45,259 in Q3-2011 compared to $3,905 in Q3-2010, and 357% to $67,641 YTD-2011, compared to $14,811 in the 9 month period ended in September 30, 2010.
  • EBITDA jumped to $24,220 during Q3-2011 compared to negative EBITDA of $439 in Q3-2010, and 2,094% to $32,295 YTD-2011 compared to $1,472 in the 9 month period ended in September 30, 2010. Moreover, the Company would have reported EBITDA of $67,912 YTD-2011 if the Corona acquisition had occurred in January 1, 2011.
  • Operating cash flow generation increased $25,050 in the nine month period ended in September 30, 2011, compared to negative operating cash flow of $1,786 reported during the same period in 2010.
  • Cash and Cash Equivalents increased 180% to $41,940 by the end of Q3-2011 compared to $14,957 as of December 31, 2010.
  • Total production in Q3-2011 was 579 thousand ounces of silver, 3.9 million pounds of copper, 7.8 million pounds of lead and 14.5 million pounds of zinc, while in the nine month period ended in September 30, 2011 total production was 905 thousand ounces of silver, 7.1 million pounds of copper, 11.2 million pounds of lead and 25.8 million pounds of zinc.
  • Consolidated Operating Cash Costs decreased 40.2% to $52.32 per tonne compared to $87.48 per tonne during Q3-2010, and 25.5% to $58.63 per tonne compared to $78.73 per tonne in the nine month period ended in September 30, 2010, due to the lower operating costs of the Yauricocha mine and lower operating costs at Bolivar with the start-up of its Piedras Verdes Mill.
  • The Company registered net income of $1,255 in Q3-2011 and a loss of $5,352 during the nine month period ended in September 30, 2011. These results were mainly driven by 1) non-cash expenses of $20,724 associated with the amortization of mineral assets; 2) non-recurrent expenses of $4,776 related to the acquisition of Corona; 3) non-cash loss on currency exchange of $5,752 mainly due to the depreciation of the Mexican Peso during the period; and 3) unrealized gains of $4,292 related to commodity hedging. The Company would have reported net income of $2,455 YTD-2011 if the Corona acquisition had occurred in January 1, 2011.

Table 1 shows the production figures of the Company including Corona in the consolidating period that covers only from May 26 to September 30, 2011.

Table 1: Consolidated Production figures
3 months period ended 9 months period ended
Sep 30, Sep 30, Sep 30, Sep 30,
Production 2011 1,2 2010 Var. % 2011 1,2 2010 Var. %
Silver (oz 000s) 540 48 1098 % 905 172 427 %
Copper (lbs 000s) 3,940 667 490 % 7,087 2,287 210 %
Lead (lbs 000s) 7,787 72 10784 % 11,157 144 7634 %
Zinc (lbs 000s) 14,502 3,719 290 % 25,775 14,479 78 %
1 Consolidates Corona's figures from May 26 to September 30, 2011

To provide an indication of the full impact of the acquisition of Corona had it occurred on January 1, 2011, please see Table 2 which includes pro-forma numbers with Corona's production figures for the nine month period ended September 30, 2011.

Table 2: Pro-Forma Consolidated Production (Including Corona 's figures for the nine month period ended in September 30, 2011)
9 months period ended
Production Sep 30, 2011 1,2 Sep 30, 2010 Var. %
Silver (oz 000s) 1,719 172 901 %
Copper (lbs 000s) 13,200 2,287 477 %
Lead (lbs 000s) 24,126 144 16623 %
Zinc (lbs 000s) 38,143 14,479 163 %
1 Consolidates Corona's figures from January 1 to September 30, 2011
2 Includes 100% of Yauricocha's figures. DIB owns 81.7% of Corona, which in turn owns 100% of the Yauricocha mine

As shown in Table 3, the Company has significant revenue and EBITDA growth versus 2010 in both the three and nine month period ended in September 30, 2011. These improvements result from the increase in production driven by the acquisition of Corona (see Table 1). Moreover, the increase in the Company's EBITDA margins versus 2010 is due to the fact that Corona has significantly higher operating margins than Bolivar and Cusi because it is a high grade / low cost deposit with strong cash flow generation capacity.

Table 3: Key Income Statement Figures
3 months period ended 9 months period ended
Sep 30, Sep 30, Sep 30, Sep 30,
Income Statement 2011 2010 Var. % 2011 1 2010 Var. %
Revenues 45,259 3,905 1059 % 67,641 14,811 357 %
EBITDA 24,220 (439 ) N.R. 32,295 1,472 2094 %
Net Income (Loss) 1,255 (676 ) N.R. (5,352 ) (1,428 ) 275 %
1 Consolidates Corona's figures from May 26 to September 30, 2011

To provide an indication of the full impact of the acquisition in the Income Statement if the acquisition had occurred on January 1, 2011, please see Tables 4. The pro-forma EBITDA growth of $66,440 registered during the nine month period ended in September 30, 2010 reflects the substantial improvement in the Company 's cash flow generating capacity. Please note that pro-forma net income for the nine month period ended in September 30, 2011 includes $48,186 of non-cash amortization expenses.

Table 4: Pro-Forma Income Statement (Includes Corona's figures for the nine month period ended in September 30, 2011)
9 months period ended
Income Statement Sep 30, 20111 Sep 30, 2010 Var. %
Revenues 133,447 14,811 801 %
EBITDA 67,912 1,472 4514 %
Net Income (Loss) 2,455 (1,428 ) N.R.
1 Consolidates Corona's figures from January 1 to September 30, 2011

The Company has increased its operating cash flow significantly during the nine month period ended in September 30, 2011. This improvement is mainly driven by higher EBITDA due to the partial incorporation of Corona's production during the reporting period. As mentioned above, Corona not only provides higher production tonnage but also higher operating margins. The cash inflows from financing during the same period mainly result from the $144,645 (US$150,000) credit facility with BCP and the $144,571 Private Placement of shares of the Company. These proceeds were used to fund the Corona acquisition as shown on the investing section of the Cash Flow Statement. Consequently, the cash position of the Company has increased by $26,983 during the nine month period ended in September 30, 2011 to $41,940 as shown in Table 5.

Table 5: Key Cash Flow Figures
9 months period ended
Cash Flow Sep 30, 20111 Sep 30, 2010 Var. %
Operating 25,050 (1,786 ) N.R.
Financing 274,762 24,296 1031 %
Investing (272,829 ) (9,321 ) 2827 %
Net Cash Flow 26,983 13,189 105 %
1 Consolidates Corona's figures from May 26 to September 30, 2011

Daniel Tellechea, President and CEO of Dia Bras Exploration Inc. commented, "The third quarter results reflect another quantum leap in production and profitability as we see the full impact of the Corona acquisition in Peru and we start to see part of the benefits of the start-up of our new Piedras Verdes ore processing mill at our Bolivar Mine in Mexico. The investment in the Piedras Verdes Mill adds significant value to the Company as it enables: the significant reduction of operating costs through dilution of fixed costs due to higher production levels, the optimization of the net asset value of the Company and increase in the life of mine of Bolivar, and the advancement of the Bolivar Mine into commercial production".

Mr. Phillip Renaud, Chairman of Dia Bras Exploration Inc. stated, "The milestones achieved, including the advancement of the Bolivar Mine into commercial production, will allow Dia Bras to reach its main objective to become a low-cost, mid-tier producer of precious and base metals with a focus on creating shareholder value".

About Dia Bras

Dia Bras Exploration Inc. is a Canadian listed mining company focused on precious and base metals in Peru and Mexico. The Company owns and operates the Yauricocha Mine (Ag-Cu-Zn-Pb) in Central Peru and the Bolivar Property (Cu-Zn-Ag) in Chihuahua State, Mexico. Dia Bras is also pursuing the development and exploration of the Cusi Property (Ag) and regional exploration of several base and precious metals targets in both Peru and Mexico.

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' 2011 guidance respecting production and potential plans for the Yauricocha and Bolívar Mines, and the Cusi project. 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

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

    Fernando Piccini
    Chief Financial Officer
    Dia Bras Exploration Inc.
    (511) 251-8098
    www.diabras.com