Resource Intelligence Interviews Dia Bras Exploration's Dr. Thomas Robyn

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RI: You've got two operating projects right now in Mexico and Chihuahua and you just announced the acquisition of a new project in Peru, can you tell us about that deal?

TR: We are acquiring 92 percent of the voting shares of Minera Corona which is operating the Yauricocha mine in Peru.

In 2010 it milled 790,000 tonnes at an average grade of 6.5 % lead plus zinc, 1.6% copper and 5 ounces per tonne of silver. They generated $128 million US in revenues and had $48 million in operating free cash.

RI: When we look at all three of your projects — Bolivar, Cusi and Minera Corona — it sounds like Minera Corona could be your new cornerstone project?

TR: Yes. Our strategy is not only to grow organically with our own projects but also to acquire properties that are already lucrative.

RI: What did you have to pay to acquire Minera Corona?

TR: The purchase price is $285 million for 92 percent of Minera Corona and it will be $150 million in debt and rest in Dia Bras equity.

RI: The Bolivar project until now has been your main project, what is going on there?

TR: Since 2005, when we started pilot mining, we have been trucking rock 50 kilometers to a rail-head and then sending it 270 kilometers by rail to our 100 percent-owned mill at El Paso. We are now constructing what we call the Piedras Verdes mill, which is six kilometres South of the Bolivar mine. This will allow us to cut our operating costs in half and, with the development of the El Gallo deposit, the La Narizona deposit and the Increible deposit at 1,000 tonnes per day, which is the current production design rate of the new mill, that gives us a fifteen year mine life.

RI: Until now you've been producing at 300 tonnes per day. What were your cash flows looking like and what do you think they are going to jump to with this huge increase?

TR: We think that in 2013 when we have finally completed the development of the mill, we will have generating operating free cash of about $28 to $30 million a year and our operating costs will be about $46 to $47 per tonne.

RI: Your Cusi project in Chihuahua is an operating mine bringing cash flow into the company, how is that going and do you plan on increasing throughput there as well?

TR: Yes. Right now we are processing about 2,000 tonnes per month, which is about 70 to 80 tonnes a day at an average grade of 300 g/t silver. Our operating costs will be about $60 per tonne. It's an underground mine and a low sulfidation epithermal prospect which is very silver rich. This will leverage us up to be well within the mid-tier range. Between Bolivar and the Minera Corona property we would have operating free cash of $60 to $70 million a year.

RI: So we're looking at the potential for more acquisitions in the future?

TR: We are working on another acquisition now in Mexico that the due diligence is dragging out because we keep finding little things that need to be clarified but we hope to close that deal soon.

RI: What has to happen in the next few months to year to take you to the next stage?

TR: The big thing is the completion of the acquisition. We have a mining agreement with Minera Corona but the exchange will not approve the acquisition until we have a 43-101 report. We have commissioned that we will be working on that over the next few weeks.

The other thing is the commission of the new mill at Bolivar which is scheduled for late June or early July and we'll start that mill at 500 tonnes per day because we are going to have a whole newly trained local staff to operate it, other than the engineers and metallurgists, and we intend to ramp up to 1,000 tonnes per day by the end of the year.

That is the big aspect in Mexico and the other is that Cusi right now is paying for its mine development, mining, transportation and milling cost. It's not paying for exploration yet but by the end of the year we expect to get production up to the point where it is completely self-supporting and expand it over the years. Bolivar mine has been supporting Cusi since 2006 but now Cusi is close to the break even point.