Juina Mining Corporation (GEMM)

[sarals]

Management Report Update 15th January 2002

The Board of Directors of Juina Mining Corporation is pleased to present its new business plan, program for corporate development and expansion of its management team. The management is confident in the value of the Vente e Um Diamond Concession and optimistic about the forthcoming bulk sampling and development programs, but further recognizes the importance of expanding its productive asset base through a program of acquisitions and exploration.

Management Changes
In order to achieve these objectives, Juina Mining Corporation has invited David Bending, M.Sc., P.Geo., a professional geologist with 25 years of diamond and metals exploration and management experience, to accept the position of the President of Juina Mining Corporation. He is a specialist in portfolio development dedicated to accelerating the growth of the company through strategic acquisitions and development of the kimberlite potential of its projects. James McFadden will assume the title of Chief Executive Officer and Chairman of the Board of Directors. Richard Taulli will continue to serve as Corporate Secretary, Treasurer and a Director. Mark Hutchison will continue to serve as a Director. Additional changes will be presented for shareholder approval in the forthcoming annual general meeting of the shareholders.

As part of establishing the new direction for the company, the management team has developed a new business plan with emphasis on growth beyond the limits of the planned mining program in the Vente e Um Project. The economic projections in the business plan show that although the Vente e Um Alluvials have potential for generating healthy cash flow, the best opportunities for growth lie in an expanded agenda. The company will immediately embark on a program of acquisition of new projects in the diamond fields of Brazil with a strong preference for 100% holdings with large potential.

Mineral Title and Environmental Permits
January 8, 2002 the Diario Oficial (Official Gazette in Brazil) published notification from the DNPM that the Exploration License Numbered 866787 has been renewed and extended for three years. This provides three additional years for completion of a feasibility study and mining plan for the Vente e Um Diamond Property, held jointly by Juina Mining Corporation (49%) and EAG Inc. (CDNX) (51% and operator) through the Brazilian operating company Juina Mining Mineracao Ltda. (“JMML”).

January 14, 2002, the DNPM (Brazilian Federal Mining Authority) provided the definitive documents and operating conditions allowing JMML to mine and process 100,000 cubic meters of diamond bearing gravel in the Vente e Um Property. This test mining program is a critical stage in confirming the grade of the gravels as part of advancing the project toward commercial production. The processing plant is ready for production and the bulk sample sites are well defined. The test mining program will produce diamonds for commercial sale and is designed to confirm the reported high grades of the target zones. Activation of the program will be delayed until final publication of Brazilian Federal Environmental Management Permits.

Business Plan
The management has reviewed the business and operations for the company and developed a new, more aggressive business plan including a program of acquisition and evaluation of new diamond projects in Brazil and a renewed focus on discovery of diamond bearing kimberlite.

The Executive Summary of the new business plan is presented in the following. Management requests comments from the shareholders as the company moves toward a new and more dynamic program for developing shareholder value.




--------------------------------------------------------------------------------


Executive Summary – Juina Mining Corporation

Company

Juina Mining Corporation (OTC Pink Sheets: GEMM)

Management

David Bending, President

James McFadden, CEO and Chairman of the Board of Directors

Richard Taulli, Secretary, Treasurer and Member of the Board of Directors

Dr. Mark Hutchison, Member of the Board of Directors

Target Markets

Primary:

Diamond consumers worldwide, with specific niches for gem products for cutting facilities in Antwerp, New York and Israel and less expensive stones in India
Secondary:

Industrial diamonds are utilized as abrasives and construction of cutting tools. Certain gem and nongem diamonds have special applications in electronics, telecommunications, and defense industries, which make suitable stones exceptionally valuable.
If Juina Mining is successful in developing a diamond bearing kimberlite body with recoverable grade, the company will enjoy a strong increase in value and become an attractive target for acquisition by the major diamond mining companies.

Market Opportunity

Juina Mining holds 49% of the Vente e Um (21) Diamond property in Mato Grosso, Brazil. Exploration and development work to date has outlined a resource of one million cubic meters of gravel with indicated grades in excess of 1.5 carats per cubic meter. Juina Mining is commencing with a test mining and reserve development program to confirm the recoverable grade and value of the diamonds in this resource and expansion of the target area. The test-mining program has the potential to generate positive cash flow to finance further developments, but its primary objective is expansion and rigorous quantification of mineable reserves in preparation for a commercial scale mining operation. The business plan calls for completion of a feasibility study during late 2002 and commercial scale production in 2003. Commercial scale production at projected rates will generate robust profits and form a basis for growth in succeeding years.

The technical data available at this time provides strong evidence of the presence of one or more diamond bearing kimberlite within the land currently controlled by Juina Mining. Delineation and evaluation of the diamond content and value of these kimberlitic bodies is planned in conjunction with the test-mining program. Discovery of a kimberlitic body with diamond values sufficient for commercial mining is the most direct way of adding value to the company. Expansion of the land holdings of the company is recommended to improve the probability for new discovery.

Juina Mining has the expertise and contacts to acquire and develop other quality diamond projects in Brazil with a modest cost base and great potential for expansion of resources. The combination of profitable production from the Vente e Um (21) property and development of other targets is a solid basis for growth and profitability in the years to come.

Competition

Juina Mining faces competition from both small and large companies active in the field of exploration and mining of diamonds, some of which have substantial financial and technical resources. The company is well equipped to compete successfully in this market.

Juina Mining enjoys the cooperation of its partner Emerging Africa Gold, Inc. (EAG) in the evaluation and mining of its Vente e Um (21) property. Juina Mining is well placed to compete in the Brazilian diamond business by its strong contacts, experience in evaluation and production and familiarity with prospective areas. The Vente e Um (21) property offers special value due to the high diamond content in the gravels, the strong indications of diamond bearing kimberlitic bodies, the known occurrence of high quality fancy and colored diamonds, large stones (50 carats or more) and a high percentage of Type II diamonds

Juina Mining is well placed for rapid growth through identification and acquisition of new diamond prospects in Brazil. The management has established a strong network of contacts in the Brazilian mining agencies, the diamond mining and marketing community, technical data and experience in strategic development and advancement of diamond prospects. The team can respond rapidly to new opportunities and advance them to their true value on a cost effective basis.

Growth

The growth of the company will be addressed through development and production of the Vente e Um (21) Diamond property, acquisition and progressive development of new projects in the Juina region and other Brazilian diamond fields and in particular, through identification and evaluation of kimberlite targets in selected areas. Projected revenues from commercial production of the Vente em Um (21) property are sufficient to fund the program of acquisition and development. Alluvial operations are sufficient for sustained and robust growth in shareholder equity, but the strongest opportunity for growth is in the discovery of diamond bearing kimberlitic bodies.


Funding Needs

The Company requires two stages of financing to support specific transitions in the development of its business plan. During the first quarter of 2002, the company will undertake to raise $1 million in one or more stages. This will enable the Company to fund its share in the activation of the test mining program, preparation of a commercial scale feasibility study, acquisition and initial stages of development of new diamond projects and corporate administration. It is anticipated that in early 2003, after completion of a bankable feasibility study for the Vente e Um (21) property, the company will seek production financing for commercial scale mining of the Vente e Um (21) deposits and coincident financing for expansion of other projects. Projected expenditures totaling $5 million are considered in the financial model. On the basis of the scoping studies completed to date, the management anticipates recovery of development capital in less than six months and annual cash flow in excess of $6 million after commencement of commercial production. Development of any kimberlitic bodies discovered during these programs may lead the company to consider additional funding options through equity, joint venture or other mechanisms.



Financial Analysis:

Financial Model Base Case
2002
2003
2004
2005
2006

Profit and Loss Statements






Gross Revenue
553,219
889,294
6,122,442
6,122,442
7,122,442

Corporate Expenses
(315,000)
(133,394)
(918,366)
(918,366)
(1,068,366)

New Project (Acquisition/Eval.)
(100,000)
(200,000)
(918,366)
(918,366)
(1,068,366)

Retained Earnings
138,219
555,900
4,285,710
4,285,710
4,985,710








Balance Sheet






Assets






Cash Reserves or New Assets
358,894
2,586,669
6,872,379
11,158,088
16,143,798

New Project Valuations
500,000
1,500,000
3,500,000
5,500,000
7,500,000

21 Mine Valuation Current
1,164,325
8,400,000
5,880,000
4,116,000
2,881,200

Total
2,023,219
12,486,669
16,252,379
20,774,088
26,524,998








Liabilities






21 Property Investment
(264,325)
(2,828,125)











Projected Net Equity
1,758,894
9,658,544
16,252,379
20,774,088
26,524,998

Projected Net Equity Per Share
0.06
0.62
0.65
0.79
0.99

Projected Earnings Per Share
0.00
0.02
0.14
0.14
0.16








Financial Model With Kimberlite






Profit and Loss Statements






Gross Revenue
553,219
889,294
6,122,442
6,122,442
7,122,442

Corporate Expenses
(315,000)
(133,394)
(918,366)
(918,366)
(1,068,366)

New Project (Acquisition/Eval.)
(100,000)
(200,000)
(918,366)
(918,366)
(1,068,366)

Kimberlite Evaluation Budgets
-
(300,000)
(1,000,000)
(2,000,000)
(2,000,000)

Retained Earnings
138,219
255,900
3,285,710
2,285,710
2,985,710








Balance Sheet






Assets






Cash Reserves or New Assets
358,894
2,286,669
5,572,379
7,858,088
10,843,798

New Project Valuations
500,000
1,500,000
3,500,000
5,500,000
7,500,000

21 Mine Valuation Current
1,164,325
8,400,000
5,880,000
4,116,000
2,881,200

Kimbelite Valuation
-
1,000,000
45,000,000
300,000,000
300,000,000

Total
2,023,219
13,186,669
59,952,379
317,474,088
321,224,998








Liabilities






21 Property Investment
(264,325)
(2,828,125)











Projected Net Equity
1,758,894
10,358,544
59,952,379
317,474,088
321,224,998

Projected Net Equity Per Share
0.06
0.33
1.89
10.01
10.13

Projected Earnings Per Share
$ 0.00
$ 0.01
$ 0.10
$ 0.07
$ 0.09

http://www.juinamining.com/mgmt_rep10.html