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Dia Bras Files First Quarter 2011 Financials and MD&A

30.06.2011  |  Marketwire

TORONTO, ONTARIO -- (Marketwire) -- 06/30/11 -- Dia Bras Exploration Inc. (TSX VENTURE: DIB)('Dia Bras' or the 'Company') is pleased to present the Company's first quarter 2011 Financial Statements and Management's Discussion & Analysis. All currency in this release is in Canadian dollars unless otherwise indicated. 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.


First Quarter 2011 Highlights



-- During the three-month period ended March 31, 2011, the Company recorded
a net loss of $1,452 compared with a gain of $720 for the same period in
2010. The loss is mainly related to lower grades being processed in 2011
compared to 2010, an increase in production cost of 5%, an increase in
exploration cost of $1,078, partially offset by higher metal prices and
$678 in unrealized currency exchange gains. This will be positively
impacted by the lower costs of the Piedras Verdes Mill when it is
operational in third quarter 2011. EBITDA(1) was ($598) or ($0.01) per
share and $1,546, or $0.03 per share, respectively, for the three-month
period ended March 31, 2011 and 2010. Our definition of these non IFRS
financial measure and the reconciliation to IFRS measures can be found
in this MD&A.

-- The Company shows net working capital, of $21,445 at March 31, 2011,
compared with a working capital of $4,870 at March 31, 2010.

-- Bolivar Mine pilot-mining costs for the three-month period ended March
31, 2011, were 5.1% higher than in 2010, as a result of an increase in
costs of diesel, transportation and general items.

-- Bolivar Mine pilot-mining sales were $4,166 for the three-month period
ended March 31, 2011, down 30.0% compared with $5,954 in the same period
of 2010. The decrease from 2010 is primarily due to a significant
decrease of 29.6% in copper produced and 34.4% less zinc produced. This
reduction was due to lower ore grades in the head of the mine, of 27.3%
of copper and 29.3% in zinc, and to the stoppage of 10 days during
February because of an unusual snow storm, all of the above, offset by
stronger commodity prices, in particular copper and zinc; copper
increased from an average of USD$3.28 (CAD$3.38) per pound in the first
quarter of 2010, to an average of USD$4.38 (CAD$4.26) per pound during
2011, and zinc increased from an average of USD$1.04 (CAD$1.01) per
pound in the first quarter of 2010 to USD$1.09 (CAD$1.06) per pound in
2011.

-- During the first quarter of 2011, the Cusi advanced development mining
project (non-operating project in which revenues are offset against
capitalized cost of the project) generated net revenues of $1,000 ($454
in 2010), with operating costs totalling $779 ($689 in 2010) resulting
in a recuperation of the investment capitalized of $221 (an increase of
$235 in 2010).

-- Operating cash costs for the three-month period ended March 2011 were
$102.73 per tonne milled versus $91.38 per tonne milled for the same
period of 2010, an increase of 12.42% due mainly to an additional
maintenance to machinery & equipment damaged during the February's
unusual snow storm. The completion of the Piedras Verdes Mill during
third quarter of 2011 will have an impact on reducing these costs.
During the first quarter of 2011, the Company installed a new electric
line to the plant site, completed the site preparation for the plant,
and invested $3,049 in process equipment in the development of the
Piedras Verdes Mill.


(1) Earnings Before Interest, Taxes and Amortization


Bolivar Mine Pilot-Mining Summary for 1Q 2011


During the first quarter of 2011, the Company processed 25,980 tonnes of material from the Bolivar Mine averaging grades of 1.12% Cu (27.3% less than 1.54% in the same period of 2010) and 7.06% Zn (29.3% less than the 9.99% in same period of 2010), producing 558,811 lbs. of copper and 3,569,635 lbs. of zinc, as shown in Table 1 below. During the first quarter of 2011, the Company produced approximately 29.6% less copper and 34.4% less zinc than the first quarter of 2010 on approximately 6.6% less tonnage processed. During the month of February of 2011, the Company's operation suffered a stoppage of 10 days due to a snow storm affecting some processing equipment.



Table 1 - Bolivar Mine Pilot-mining Program
Summary of the Comparative Statistics for the first quarter of 2011 and
2010
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%
Variation
2011 vs
1Q-2011 1Q-2010 2010
--------------------------------------

Tonnes processed 25,980 27,828 (6.6)
Daily throughput 297 318 (6.6)
Copper grade 1.12 % 1.54 % (27.3)
Zinc grade 7.06 % 9.99 % (29.3)
Silver grade in grams per tonne(g/t) 39 36 8.3
Copper recovery 86.94 % 84.25 % 3.2
Zinc recovery 88.39 % 88.80 % (0.5)
Silver recovery in flotation 67.61 % 64.97 % 4.1
Copper concentrates produced (tonnes) 929 1,341 (39.8)
Zinc concentrate produced (tonnes) 2,750 4,212 (34.7)
Total production of copper (pounds) 558,811 794,000 (29.6)
Total production of zinc (pounds) 3,569,635 5,442,100 (34.4)
Total production of silver (oz) 22,078 20,459 7.9
Average price of copper per pound, $US 4.38 3.28 33.5
Average price of zinc per pound, $US 1.09 1.04 4.8
Average price of silver per ounce, $US 31.66 16.92 87.1
Operating cash costs, Can$/DMT 102.73 91.38 (12.42)
Foreign exchange rate, average:
Mexican Peso / US Dollar 12.07 12.78 (5.2)
Can Dollar / US Dollar 1.01 0.96 5.2

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Table 2 - Bolivar Mine Pilot-mining Program - Highlights for the previous
eight quarters.
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1Q 2011 Q4 2010 Q3 2010 Q2 2010
------------------------------------------------
Tonnes processed 25,980 22,625 25,355 29,014
Copper grade 1.12 % 1.45 % 1.34 % 1.46 %
Zinc grade 7.06 % 7.33 % 7.53 % 9.14 %
Average market prices
Copper (US$ per pound) $4.38 $3.92 $3.29 $3.19
Zinc (US$ per pound) $1.09 $1.05 $0.91 $0.92
Production volume highlights
Copper Concentrate (DMT) 929 1,075 1,117 1,315
Copper produced (pounds) 558,811 638,300 661,600 806,800
Zinc Concentrate (DMT) 2,750 2,540 2,879 4,086
Zinc (pounds) 3,569,635 3,180,200 3,671,200 5,262,600

Operating cash costs,
Can$/DMT 102.73 135.51 94.62 86.79
------------------------------------------------
1Q 2010 Q4 2009 Q3 2009 Q2 2009
------------------------------------------------
Tonnes processed 27,828 21,610 21,032 18,948
Copper grade 1.54 % 1.79 % 2.26 % 1.55 %
Zinc grade 9.99 % 10.09 % 12.48 % 7.63 %
Average market prices
Copper (US$ per pound) $3.28 $3.02 $2.66 $2.11
Zinc (US$ per pound) $1.04 $1.00 $0.80 $0.67
Production volume highlights
Copper Concentrate (DMT) 1,341 1,255 1,490 904
Copper (pounds) 794,000 764,097 934,300 548,100
Zinc Concentrate (DMT) 4,212 3,399 3,980 2,243
Zinc (pounds) 5,442,100 4,297,664 5,130,200 2,834,600

Operating cash costs,
US$/DMT 91.387 76.63 127.09 117.27
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Bolivar Property 2010 and 2011 Exploration Program


The main focus of the Company's exploration program at the Bolivar Property will be to provide a continued source of feed for the Malpaso Mill, in the short-term, and the Piedras Verdes Mill once operating. Exploration to expand underground resources in the areas of Guadalupe, San Angel, Fernandez, Selena, Rebeca, Titanic (collectively, the Bolivar Mine) and La Increible deposit, El Gallo deposit and others has been carried out and will continue.


Favorable exploration results in areas of disseminated copper-zinc mineralization prompted the exploration team to increase exploration efforts on the Bolivar NW, Bismarck, San Francisco (all part of the Bolivar Mine) and El Gallo deposit, where each of these areas could host individual open-pitable deposits of moderate tonnage.


Construction of a Mill near the Bolivar Property


The new Piedras Verdes Mill is on schedule to commence processing of Bolivar mineralized rock during the third quarter of 2011. From November 1, 2009, to the date of this MD&A, the Company has raised $30,100 for these and other projects and for general corporate purposes, through the exercise of warrants throughout the period and a Rights Offering that closed in May 2010.


The Company cautions that, although economic viability of the mineral resources at the Bolivar Property has not been determined, the Company and its Management intend to complete the construction of an up to 2,500 tpd mill (the Company is completing the first phase at 1,000 tpd, upgradeable to 2,500 tpd) near the Bolivar mining concession. Until the economic viability of the Bolivar Property has been determined and mineral resources have been converted to mineral reserves (by a least a preliminary feasibility study and confirmed in a technical report, as required by NI 43-101), there can be no assurance that the new mill will be economically viable.


Cusi Advanced Development Summary


During the first quarter of 2011, the Company continued its development of the Cusi Property and its shipments of mined material from its advanced development-scale operations at Santa Eduwiges mine, processing 4,887 tonnes averaging 1.78% lead and 277 grams silver per tonne and produced a total of 35,713 oz silver from milling and leaching processes. Advanced development during the first quarter of 2010 processed 5,403 tonnes and produced a total of 41,375 ounces of silver. During the first quarter of 2011, the Company increase recovery of lead from 36.53% to 70.84% in the first quarter of 2010, this high recovery was due to the increase in the head grades to the mill of 1.78% compared with 0.57% in the first quarter of 2010. During the month of February 2011, the Company's operations were affected for a stoppage of 10 days due to a snow storm affecting some processing equipment. Revenues and costs of this advanced development mining project are accounted as a recovery of its original investment in exploration, and development costs.



Table 3 - Cusi Advanced Development Mining Program
Summary of the Comparative Statistics for the first quarter ended March 31,
2011 and 2010.
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Actual Actual %
1Q 1Q Variation
2011 vs.
2011 2010 2010
---------------------------------

Tonnes processed 4,887 5,403 (9.6)
Daily throughput 56 62 (9.7)
Lead grade 1.78 % 0.57 % 212.3

Silver grade in grams per tonne (g/t) 277 313 (11.5)
Lead recovery 70.84 % 36.53 % 93.9
Silver recovery, flotation leach 71.72 % 70.69 % 1.5
Zinc recovery 30.07 % 0.00 % 100.0
Lead concentrate produced (tonnes) 237 154 53.9

Total production of Silver, flotation (oz),
(includes Silver dore) 35,713 41,375 (13.7)
Silver in dore, leach (oz) 4,492 2,967 51.4
Total production of Zinc (pounds) 64,463 0.00 100.0
Total production of Lead (pounds) 136,003 24,990 444.2

Operating cash Can$/DMT 116 39.55 197.2

Average price of Lead per pound, $US 1.18 1.01 16.8
Average price of Silver per ounce, $US 31.66 16.92 87.1
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Cusi Property Exploration -1Q 2011


The Company holds 60 concessions in the Cusi area covering 11,319 hectares. During the first half of 2009, the Company conducted compilation and interpretation of previous work and historical data, as well as mapping and some drilling. New targets and ore shoots of high-grade mineralization in the vein systems of the Santa Eduwiges and Promontorio mines were identified, as well as other nearby areas. Subsequent to this work, drilling in San Juan identified a previously untested area for further exploration (see Dia Bras' news releases of February 24 and May 17, 2011).


The objectives for Cusi are twofold: 1) Define and expand the resources along a) the Santa Marina and San Antonio veins, b) along the vein intersections of the Santa Marina & Rosario and Santa Marina & San Bartolo and c) the Tascates and Mexicana veins; and, 2) Evaluate and test the Promontorio vein intersections, the Santa Rosa Chimney and the structure at San Juan with the objective of defining and expanding resources in these areas. Drilling in the Santa Eduwiges and Promontorio mine areas resulted in intercepts that extended the mineralized portions of the veins laterally and to depth and guided mine exploration development.


The Company continues to develop areas underground where sufficient tonnes and headings can be established to meet the reserves and goals of production stated above. Due to the volume of water encountered in the underground workings at Promontorio, the Company has not yet established sufficient headings. Dia Bras now intends to concentrate on Santa Eduwiges, to dewater Promontorio and to develop and drill prospective areas there in 2011.


Results of Operations


During the three-month period ended March 31, 2011, the Company recorded a loss of $1,452 compared with a gain of $720 in the same period of 2010, ($0.02) per share and $0.01 per share respectively:


The results are explained as follows:



Table 6 - Variances of Significant Expenses - First Quarter 2011 vs First
Quarter 2010
---------------------------- -------- --------------------------------------
Three Three
months months
ended ended
March March Fav/(Un
31, 31, fav)
2011 2010 Variance
(000's) (000's) (000's) Explanation of Variances
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Costs were in line with
inflation, other areas
affected by increases in
operating costs were
transport of ore mineral,
during 1Q, 2011, an important
part of the Bolivar mine's
Cost of sales 2,669 2,543 (126) equipment was overhauled.
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First quarter of 2011 saw
significant strengthening in
the prices of copper and
Variation of zinc, with copper reaching an
commodity market all-time high at the end of
prices 120 158 38 March 2011.
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Transportation of copper and
zinc concentrates decreased
51% in first quarter 2011
compared to first quarter of
2010 due to a lower
production of copper
concentrates (39.8%) and zinc
concentrates (29.3%) in
Transportation of comparation with the same
concentrate 340 456 116 period of 2010.
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The Company spent $611 at the
La Cascada project and $585
at the Melchor Ocampo
Exploration project, mostly as payments
expenditures 1,322 244 (1,078) to drilling contractors.
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Administrative expense for
the first quarter of 2011 was
General and in line with expenses
administrative incurred in the same period
expenses 933 1,076 143 of 2010
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The Mexican peso and the
Canadian dollar rose against
the US dollar; this
strengthening generated
unrealized gains since most
of the assets are Canadian
Gain/(loss) on dollar and Mexican peso
foreign exchange (678) (88) 590 denominated.
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Explanation of Variances - 1Q 2011 vs 1Q 2010


Sales


For the first quarter ended March 31, 2011, revenues decreased to $4,166 compared with $5,954 in 2010. The decrease was driven by lower volumes of metals produced as a result of a decrease in the head of the ores extracted, mainly on copper and zinc, averaging grades of 1.12% Cu (27.3% less than 1.5% in the same period of 2010) and 7.06% Zn (29.3% less than the 9.99% in same period of 2010), producing 558,811 lbs. of copper and 3,569,635 lbs. of zinc, and produced approximately 29.6% less copper and 34.4% less zinc than the first quarter of 2010 on approximately 6.6% less tonnage processed. During the month of February 2011, the Company's operations were affected for a stoppage of 10 days due to a snow storm affecting some processing equipment.


Expenses


During the three-month period ended March 31, 2011, cost of sales increased 5% amounting to $2,669 versus the same period of 2010. This increase was in line with the general inflationary pressure, despite a reduction in the volume of ore milled of 1,848 tonnes. Also, transportation costs for deliveries of Bolivar mineralized rock to the Malpaso Mill increased due to higher fuel prices and increased rail charges.


During the first quarter of 2011, the market prices of the Company's products improved substantially, on average, during its quotation period, compared to the same period in 2010. Additionally, the forward prices the Company locked in, once its trading partner declared the date of the close of the quotation period, were at higher levels than the original spot price at the date of the provisional sales.


Transportation of concentrate costs decreased during the three-month period ended March 31, 2011, as compared to the same period of 2010, due to a decreased amount of concentrate shipped in 2011. Production of zinc and copper concentrates decreased 51% during the first quarter 2011, along with a general increase in freight rates and related costs at the port.


During the first quarter of 2011, the Company continued to pursue its exploration plans for its large concession holdings. The Company focused these efforts on the La Cascada target at the Bolivar concession where it spent $611 during the quarter and the Bolivar III and IV sites, where the Company spent $126. The Company also spent $460 at the EXMIN Las Coloradas project in Melchor Ocampo, with most of these expenditures related to payment of drilling contractors.


Gain/(loss) on foreign exchange - For the three-months ended March 31, 2011, the Company recorded a $678 unrealized foreign exchange gain, due to favourable strengthening of the Canadian dollar and the Mexican peso. The exchange rate of the US dollar against the Canadian dollar during first quarter 2011 varied from $0.9986 as at January 4, 2011, to $0.9718 as at March 31, 2011.


Financial Position, Liquidity and Capital Resources


Operating Cash Flow


Cash provided by operating activities before changes in non-cash assets and liabilities was ($551) and $1,633 for the three months ended March 31, 2011 and 2010, respectively.


Financing Activities


On January 7, 2011, 9,948,051 warrants were exercised at the price of $0.70 per warrant for a total cash consideration of $6,964. The warrants were exercised by shareholders and Directors of the Company. Consequently, the Company issued 9,948,051 post-consolidation common shares (see Dia Bras news release of January 12, 2011).


Investing Activities


The Company invests its excess funds in Guaranteed Investments Certificates from high quality Canadian Banks. As at March 31, 2011, the investments had various maturities upon investment of between 60 and 90 days. Accordingly, as at March 31, 2011, those investments with maturities of three months or less are classified as 'cash and cash equivalents'.


Capital Expenditures and Deferred Exploration Expenses


Capital Expenditures:


The mineral properties of the Company are at the exploration and the advanced development stages. The exploration and development of the Company's properties depend on its having sufficient funds to carry out its plans. Although it is providing a source of income from the sales of concentrates through its pilot-mining program at the Bolivar Mine and the advanced mining development project at Cusi, the Company is not yet considered as being at the commercial production stage.


Statement of work in progress investment in mining properties as of March 31, 2011:



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Accrued
December Accrued
31, March 31,
2010 1Q 2011 2011

- -

Piedras Verdes Mill $ 7,239 $ 3,049 $ 10,288
Bolivar property development 1,413 778 2,191
Cusi property development & land 2,018 201 2,219
Other 228 299 527
Total $ 10,898 $ 4,327 $ 15,225
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Exploration Expenditures


The Company plans to continue its exploration programs in La Cascada, Melchor Ocampo, Batopilas, Bacerac and other concessions during 2011 by drilling a total of 27,500 metres. During the three-month period ended on March 31, 2011 and 2010 as follows:



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Amount invested
Property Name 1Q, 2011 1Q, 2010
----------------------------------------------

La Cascada $ 611 -
Melchor Ocampo 460 -
Batopilas 62 -
Bacerac 63 -
Bolivar III y IV 126 $ 244
Total invested $ 1,322 $ 244
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Cash Resources and Liquidity


The Company's liquidity position is directly related to the amount of financing procured for its continued development as a mining enterprise, the level of concentrate production, the cost of this production, the final settlement billing adjustments recorded for zinc, copper, lead and silver in concentrate that is sold and the amount of exploration and development expenditures incurred each year, among other factors. As at March 31, 2011, the Company had cash, cash equivalents and short term investments totaling $15,115 (December 31, 2010, $14,957), and the Company's working capital amounted to $21,445.


As at March 31, 2011, sales tax and other receivables amounted to $3,334 ($3,044 as at March 31, 2010) and are mostly comprised of recoverable Mexican Value Added Tax credits ('IVA', by its initials in Spanish).


As at March 31, 2011, accounts payable and accrued liabilities amounted to $2,826 ($3,007 as at March 31, 2010) which represents balances of normal business transaction activity.


As at March 31, 2011, the Company's wholly owned subsidiary, Dia Bras Mexicana, S.A. de C.V. (DBM) had a trade receivable of $1,758 and no trade payable with the only Company's customer MRI Trading AG ('MRI') (receivable of $1,890 and payable of $763 as at March 31, 2010). The decrease in the balance of trade payables is due to the payments discounted from the provisional invoices. Actual final settlement billings will not differ significantly from the current provision due to the fact that DBM has fixed the prices for most of its unsettled lots.


The Company is fully funded and will continue with the construction of its new mill on site at the Bolivar Property that will reduce operating costs and optimize the life of mine resources.


Furthermore, the Company will continue to periodically reassess the amount and timing of its currently planned expenditures to increase operating efficiencies. At the same time, Management will continually assess its capital requirements that may require additional issuance of equity or debt.


Subsequent Events


On May 26, 2011, the Company announced that it has closed the acquisition of 29,377,015 voting shares ('Voting Shares') of Sociedad Minera Corona S.A. ('Corona') at a price of US$9.7282 per share for an aggregate purchase price of US$285,785,477. The Voting Shares were purchased pursuant to the terms of a stock purchase agreement (the 'Purchase Agreement') among the Company, its wholly-owned subsidiary, Dia Bras Peru S.A.C. ('Dia Bras Peru'), and a group of Corona shareholders (the 'Selling Shareholders'). The Voting Shares acquired by Dia Bras Peru represent approximately 92% of the issued and outstanding Voting Shares and approximately 82% of the total equity of Corona.


In connection with the Acquisition, the Company and Dia Bras Peru also entered into a credit agreement (the 'Credit Agreement') with Banco de Credito del Peru ('BCP') pursuant to which BCP has provided to Dia Bras Peru a US$150 million credit facility (the 'BCP Facility') for the purpose of funding a portion of the Acquisition purchase price. The BCP Facility has a five-year term with interest payable quarterly at LIBOR plus 4.5%. The BCP Facility is secured by a pledge of the Voting Shares acquired by Dia Bras Peru and the obligations of Dia Bras Peru have been guaranteed by the Company. The Credit Agreement also provides for the establishment of a debt service reserve of US$12 million and contains financial covenants, events of default and other provisions customary for a transaction of this nature.


Pursuant to the Purchase Agreement, certain members of the Selling Shareholders have elected to invest a portion of the consideration for their Voting Shares in common shares of Dia Bras ('Dia Bras Shares') at an effective price of US$2.92 (the US dollar equivalent of Cdn.$2.86 per share based on an exchange rate of Cdn$1.00 = US$0.98). As a result, an aggregate of 5,686,918 Dia Bras Shares have been issued to the Selling Shareholders who elected this option. An additional 48,067,103 Dia Bras Shares were issued pursuant to the exercise of an equal number of subscription receipts issued by the Company on May 25, 2011, at a price of Cdn.$2.86 per share for gross proceeds of Cdn.$137,471,914 (the 'Private Placement'). Accordingly, an aggregate of 53,754,021 additional Dia Bras Shares have been issued in connection with the Acquisition and the Private Placement.


The Company funded the cash portion of the purchase price of the Acquisition plus the associated fees and expenses of the Acquisition, through a combination of the net proceeds of the BCP Facility, the proceeds from the Private Placement and the Company's existing cash resources.


Corona's shares trade on the Bolsa de Valores de Lima (the Lima Stock Exchange). The Voting Shares trade under the symbol 'MINCORC1', and the non-voting investment shares trade under the symbol 'MINCORCI1'. According to public records and information provided by the Selling Shareholders, there are currently 31,890,365 Voting Shares and 4,087,673 investment shares outstanding. Under applicable requirements in Peru, the Acquisition will trigger a requirement for Dia Bras to make a follow-up offer for at least 92.1% of the remaining Voting Shares (but not for the non-voting investment shares) of Corona. This will effectively increase the total acquisition cost for 100% of the Voting Shares to approximately US$310.23 million.


2011 Priorities


Dia Bras' biggest current challenges are to complete the construction of the Piedras Verdes Mill at the Bolivar Property on time and on budget. In parallel, the Company's plans for 2011 include the following:



-- Increase production and recoveries from the Bolivar Property;

-- Increase the amount of resources at the Bolivar and Cusi Properties
which can be converted into reserves;

-- Increase production and recoveries at the Cusi advanced development
mining project;

-- Expand capacity of the new Piedras Verdes Mill;

-- Explore and drill promising areas at La Cascada, Melchor Ocampo,
Batopilas and Bacerac;

-- Explore the regional exploration projects, to initiate drilling;

-- Complete in-process and formulating discussions with potential JV
partners for exploration;

-- Maximize cash flow in this uncertain economic environment;

-- Reduce direct operating costs;

-- Conduct exploration programs to expand and upgrade resources at Bolivar
and Cusi projects;

-- Complete the Sociedad Minera Corona acquisition.


International Financial Reporting Standards ('IFRS')


In 2006, the Canadian Accounting Standards Board ('AcSB') published a new strategic plan that significantly affects financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five-year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly listed companies to use IFRS, replacing Canadian GAAP. The effective date is for the Company's interim and annual financial statements for the year beginning January 1, 2011. The transition date will require the restatement for comparative purposes of amounts reported by the Company for the prior year.


The Company has finalized its IFRS conversion plan, with detailed assessment ongoing. The Company has identified presentation and disclosure, stock based compensation, plant and equipment, future income taxes, asset retirement obligations and financial instruments as areas where the adoption of IFRS will have a significant effect on the Company's financial reporting, processes and controls. The Company has also assessed the available elections under IFRS to determine the effect of each election to the Company.


External advisors were engaged and a team within the finance group coordinated the implementation among the various departments of the organization. The Company obtained preliminary training on IFRS for its internal implementation team and participated in ongoing training to develop a thorough understanding of IFRS in order to finalize the assessment of accounting policies and to affect the 2011 changeover.


Basis of preparation and adoption of IFRS


a. Statement of compliance- The Company's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') and the interpretations of the International Accounting Standards Board ('IASB') applicable to the preparation of interim consolidated financial statements in accordance with IAS 34, Interim Financial Reporting('IAS 34') and IFRS 1, First-time Adoption of IFRS('IFRS 1'). These are Company's first financial statements prepared in accordance with IFRS.


Subject to certain transition elections disclosed in Note23(a), the Company has consistently applied the same accounting policies in its opening IFRS Statement of Financial Position as at January 1, 2010 (the 'transition date'),and throughout all periods presented, as if these policies had always been in effect. Note 23 discloses the impact of the transition to IFRS on the Company's reported financial position and financial performance, including the nature and effect of significant changes in accounting policies from those used in the Company's consolidated financial statements for the periods presented.


The interim consolidated financial statements should be read in conjunction with the Company's Canadian Generally Accepted Accounting Policies ('GAAP') annual financial statements for the year ended December 31, 2010. Additional disclosures describing the changes between Canadian GAAP and IFRS are included in Note 23 of the interim consolidated financial statements.


b. First- time adoption of IFRS - The Company applied IFRS 1 in the preparation of the Company's consolidated financial statements. In accordance with the provisions of IFRS 1, an entity in its first full set of financial statements under IFRS, must apply all standards in effect as of that date and for the whole period covered by those financial statements (including the transition Statement of Financial Position). Based on the provisions of IFRS 1, the Company is obliged to present at least one year of comparative financial statements in accordance with IFRS. The exemptions applied by the Company and the effects of transition to IFRS are presented in Note 23.


Consequently, the policies applicable in preparing the interim consolidated financial statements are based on IFRS issued and outstanding as of June 29, 2011, the date the Board of Directors approved the financial statements. Any subsequent changes to IFRS that are given effect in the Company's annual consolidated financial statements for the year ending December 31, 2011, could result in restatement of the interim consolidated financial statements, including the transition adjustments recognized upon the change-over to IFRS.


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 exploring several precious metals targets such as La Cascada (Bolivar Property), Las Coloradas (Melchor Ocampo, Zacatecas State), Bacerac (Sonora State) and 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 news release contains certain statements that constitute forward-looking statements. Forward-looking information includes, but is not limited to, information concerning Dia Bras' 2010 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.

Contacts:

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



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