Dia Bras Reports Record Production and Financial Results in the Second Quarter 2011 due to the Acquisition of Sociedad Minera Corona in Peru
TORONTO, ONTARIO -- (Marketwire) -- 08/30/11 -- Dia Bras Exploration Inc. (TSX VENTURE: DIB) ('Dia Bras' or the 'Company') is pleased to present the Company's Second quarter 2011 Financial Statements and Management's Discussion & Analysis. 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 RECORD production and financial results due to the acquisition of Sociedad Minera Corona, S.A. ('Corona') achieved during both the second quarter ('Q2-2011') and first half ('H1-2011') ended June 30, 2011. Dia Bras has significantly improved its production, revenues, EBITDA and liquidity, versus the same periods in 2010. The main driver is the acquisition of Corona in Peru which has significantly impacted the Company's metrics due to the scale of Yauricocha Mine ('Yauricocha') relative to that of Bolivar and Cusi. However, given that the closing date of the acquisition was May 26, 2011, the consolidating period that includes Yauricocha covers only the period from May 26 to June 30, 2011. Consequently, the impact of Yauricocha in Q2 2011 figures is partial and its full impact will be registered in Q3 2011.
Second Quarter 2011 Highlights
-- On May 26, 2011, the Company announced that its wholly owned subsidiary,
Dia Bras Peru S.A.C., closed the acquisition of Corona for an aggregate
purchase price of $275.5 million.
-- The Company funded the cash portion of the purchase price of the
acquisition through a combination of net proceeds from 1) a new $144,645
credit facility with Banco de Credito del Peru ('BCP'); 2) a Private
Placement of 53.7 million additional shares, issued at a price of $2.86
per share; and 3) existing cash resources.
-- Total revenues increased 259% to $18,337 in the second quarter compared
to $5,110 in Q2-2010, and 105% to $22,283 compared to $10,906 in the
first half of 2010 ('H1-2010').
-- EBITDA increased 2406% to $9,248 compared to $369 in Q2-2010, and 323%
to $8,076 compared to $1,911 in H1-2010.
-- Net cash flow generation increased by 202% to $36,335 in H1-2011
compared to $12,044 in H1-2010.
-- Total production as at end of Q2-2011 was 268,000 ounces of silver, 2.58
million pounds of copper, 3.75 million pounds of lead and 7.64 million
pounds of zinc, and as at end of H1-2011 total production was 326,000
ounces of silver, 3.15 million pounds of copper, 3.89 million pounds of
lead and 11.27 million pounds of zinc.
-- Consolidated Operating Cash Costs decreased 22% to $63.11 per tonne
compared to $80.61 per tonne in Q2-2010, and 6% to $73.50 per tonne
compared to $78.88 per tonne in H1-2010.
-- Cash and Cash Equivalents increased 243% to $51,292 in Q2-2011 compared
to $14,957 in FYE 2010.
-- The Company registered net losses of $5,156 and $6,606 for Q2-2011 and
H1-2011 ended in June 30, 2011, respectively. These results were mainly
due to 1) non-recurrent expenses of $4,443 related to the acquisition of
Corona; and 2) non-cash expenses of $5,851 associated with the
amortization of mineral assets. The net results excluding the non-cash
expenses and the non-recurring expenses will be a net income of $3,688.
-- The new Piedras Verdes Mill in Mexico is on schedule to commence
processing Bolivar mineralized rock during the third quarter of 2011.
Bolivar`s production is currently transported 283 kilometres to the
Malpaso Mill. Management expects the new mill to reduce Bolivar's
operating costs by more than 45% as the result of decreasing
transportation costs and increasing economies of scale. Transportation
costs are expected to decrease by 86.6% from $35.74 (US$36.94) per tonne
to $4.79 (US$4.95) per tonne, once the plant commissioning is finished.
Table 1: Consolidated Production figures
Q2-2011 H1-2011
Production (1) Q2-2010 Var % (1) H1-2010 Var %
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Silver (oz 000s) 268 67 297% 326 123 164%
Copper (lbs 000s) 2,586 807 221% 3,145 1,601 96%
Lead (lbs 000s) 3,751 48 7790% 3,887 73 5259%
Zinc (lbs 000s) 7,636 5,263 45% 11,270 10,705 5%
(1) Consolidates Corona's figures from May 26 to June 30, 2011
To provide an indication of the full impact of the acquisition had it occurred on January 1, 2011, please see Table 2 which includes pro-forma numbers with Yauricocha's production figures for the first half of 2011.
Table 2: Consolidated Pro-forma production figures including
Yauricocha for H1-2011
Production H1-2011 H1-2010 Var %
pro-forma(1) actual
------------------------------------------------------------
Silver (oz 000s) 1,163 123 842%
Copper (lbs 000s) 9,266 1,601 479%
Lead (lbs 000s) 16,673 73 22885%
Zinc (lbs 000s) 23,640 10,705 121%
Table 3: Key Balance Sheet Figures
Balance Sheet Jun 30, 2011 Dec 31, 2010 Var %
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Cash & Equivalents 51,292 14,957 243%
Assets 551,446 101,136 445%
Liabilities 290,366 6,753 4200%
Equity 261,080 94,383 177%
The Company has significant revenue growth versus 2010 in both Q2-2011 and H1-2011 as a result of the increase in production driven by the acquisition (see Table 4). In addition, higher copper and silver prices have also contributed to these improvements. Moreover, the increase in EBITDA versus 2010 is higher than the increase in revenues because Yauricocha has significantly higher operating margins than the Bolivar and Cusi projects.
Table 4: Key Income Statement Figures
Income Q2-2011 H1-2011
Statement (1) Q2-2010 Var % (1) H1-2010 Var %
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Revenues 18,337 5,110 259% 22,383 10,906 105%
EBITDA 9,248 369 2406% 8,076 1,911 323%
Net Loss (5,156) (1,472) 250% (6,606) (752) 778%
(1) Consolidates Corona's figures from May 26 to June 30, 2011
To provide an indication of the full impact of the acquisition in the Income Statement had it occurred on January 1, 2011, please see Table 5. The pro-forma EBITDA growth of $42,466 registered during H1-2011 versus H1-2010 reflects the substantial improvement in the Company's cash flow generating capacity. Pro-forma net losses for H1-2011 are also mainly driven by non-recurrent expenses and non-cash amortization expenses associated with the transaction.
Table 5: Key Income Statement Figures (Including Corona's pro-
Forma figures for H1 2011)
Income Statement H1-2011 (1) H1-2010 Var %
-----------------------------------------------------------------
Revenues 87,604 10,940 701%
EBITDA 44,377 1,911 2222%
Net Loss (5,880) (752) 682%
(1) Consolidates Corona's figures from January 1 to June 30, 2011
The Company has increased its operating cash flow significantly during H1 2011. This improvement is mainly driven by higher EBITDA due to the partial incorporation of Corona's production. The latter not only provides higher tonnage but also higher operating margins. The cash inflows from financing during H1-2011 mainly result from the $144,645 (US$150,000) credit facility with BCP and the $153,737 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 $36,335 during H1 2011 to $51,292 as shown in Table 3.
Table 6: Key Cash Flow Figures
Cash Flow H1-2011 (1) H1-2010 Var %
-------------------------------------------------------------------
Operating 15,883 (435) (3751)%
Financing 285,520 19,216 1384%
Investing (264,798) (6,737) 3830%
Net Cash Flow 36,335 12,044 202%
(1) Consolidates Corona's figures from May 26 to June 30, 2011
Daniel Tellechea, President and CEO of Dia Bras Exploration Inc. comments, 'Our strong 2Q-2011 financial results were driven mainly by the acquisition of Sociedad Minera Corona which has transformed Dia Bras into a new geographically diversified silver, copper, zinc, lead and gold producer with an attractive growth profile and cash flows available for its exploration potential.' Additionally, Mr. Tellechea commented, 'The integration of both companies has been a success and the synergies of both management teams will generate several benefits for the Company and ultimately for our shareholders'
Mr. Philip Renaud, Chairman of Dia Bras Exploration Inc. stated, 'The milestones achieved 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.'
Options Granted
The Board of Dia Bras has granted 100,000 options to an Officer of the Company at an exercisable at a price of $3.40 that vest over a two-year period and have an exercise period of five years ending July 27, 2016.
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' 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
Robert Hirsh
Diector of Corporate Development
Dia Bras Exploration Inc.
1 (866) 493-9646