BOLIVAR
[Development]
In early 2005, Dia Bras launched a pilot-mining program at the Bolivar Mine to continue copper-zinc production initiated by the previous owner.
Material from the Bolivar Mine is transported by truck and by railroad to the Malpaso mill, which is situated approximately 270 km by road from Bolivar ("Malpaso mill"). The Malpaso mill is a processing plant, equipped with crushers, ball mills and flotation circuits, and independent circuits such as vat leach systems, which can produce copper, zinc and silver-lead concentrates and silver doré.
The Corporation produced 89,577 tonnes of material from the Bolivar Mine in 2009 at an average grade of 1.81% Cu and 10.06% Zn. In 2008, the Corporation processed a total of 126,489 tonnes of material from the Bolivar Mine at an average grade of 1.65% Cu and 8% Zn. Bolivar Mine production in 2007 totaled 127,106 tonnes of material at average grades of 1.49% Cu and 6.92% Zn. For the year 2006, 96,595 tonnes of material were treated at the Malpaso mill at average grades of 2.03% Cu and 10.63% Zn.
In January, 2009, the Corporation announced its intention to construct in stages a 1,000 tonne per day mill at the Bolivar Property just six km from the mine, with the goal to significantly reduce its operating cash costs, and to optimize the life of mine ore grades to be processed at the Bolivar Mill. Management of the Corporation has produced its own estimate for the construction of this mill, which has not been independently validated.
The Corporation estimates the overall cost in this scenario to be approximately $12.8 million (US$12.1 million), including $1.7 million (US$1.5 million) for preliminary studies and initial works such as engineering, permitting, site preparation, tailings dams and water and energy facilities. Following the preliminary studies, the Corporation could revise its cost estimate for some of the elements, if necessary.
During the first half of 2009, the Corporation commenced works for the construction of the Bolivar mill, such as permitting, water and energy studies, and environmental studies. The work associated with the detailed engineering of the mill is complete and was conducted by Ingenieria VICA of Mexico. Site preparation for the new mill and tailings is underway.
In order to finance the construction of the Bolivar mill, the Corporation will have to issue additional equity and borrow funds from third parties. There can be no assurance that sufficient funding will be available to the Corporation or available on terms that will not adversely affect the projected economic return of the development of the Bolivar project.
The Corporation cautions that although economic viability of the mineral resources on the Bolivar property has not been determined, the Corporation and Management intend to move forward with the construction in stages of a 1,000 tpd mill six km from the the Bolivar Mine.
Until the economic viability of the Bolivar project 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.