Dia Bras Exploration (DIB-V) will temporarily stop a pilot mining program in the Cusi silver mining district near Chihuahua, Mexico, so it can build a new mill at its Bolivar copper-zinc mine, located in the Sierra Madre mineral belt.
Bolivar is located about 150 km southwest of Cusi and about 250 km southwest of Chihuahua city.
The Bolivar mill will be built using some of the equipment from the 850-tonne-per-day Malpaso mill near Cusi, where ore from both mines is processed.
Dia Bras has been shipping ore this long distance since 2005 when it began the pilot mining program at Bolivar. The company wants to lower costs by having a mill right on site. It expects operating cash costs will average about $1 per lb. copper, including exploration and development costs.
One circuit at the Malpaso mill will remain in operation to maintain some income while the new mill is being built.
Management expect to mill 108,000 tonnes grading an average 2% copper and 9% zinc over the first nine months of 2009.
Deconstruction of the old mill and construction of the new one will begin soon. The company expects to finish the Bolivar mill in the fourth quarter.
Dia Bras has reached an agreement in principle with the local Ejido community for a long term lease of the surface land that will be used for the mill and tailings dam, about 5 km from the mine. As well, an environmental impact study for the tailings dam is underway and the company expects to complete it before the end of the first quarter.
The new mill will cost the company about $5 million. Dia Bras announced a $1.7-million private placement today to help pay for the mill. The company plans to issue 28.3 million units at 6¢ each, with each unit consisting of one share and one warrant, exercisable within 18 months at 15¢ each.
About 75% of the subscribers are expected to be insiders to the company and one of those insiders will hold more than 20% of the company after the private placement.
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