NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES NOR FOR DISSEMINATION IN
THE UNITED STATES.
Arian Silver Corporation ("Arian" or the "Company") (TSX
VENTURE:AGQ)(AIM:AGQ)(PLUS:AGQ)(FRANKFURT:I3A), a silver exploration,
development and production company with a focus on projects in the silver belt
of Mexico, today announced the release of its Management's Discussion and
Analysis ("MD&A") and unaudited Financial Statements ("Financials") for the six
months ended 30 June 2011.
The MD&A and Financials will be available at SEDAR at www.sedar.com and on the
Company's website at www.ariansilver.com. These documents can also be obtained
on application to the Company. The following information has been extracted from
the MD&A and Financials. The financial information in this announcement does not
constitute full statutory accounts.
Arian's Chief Executive Officer, Jim Williams, commented today, "The conclusion
of Q2 has shown a gross profit with our San Jose mining and milling operation
and we continue to fine tune our operations with a view to significantly
improving on this. In addition, during July we released an updated NI 43-101 and
JORC-compliant resource estimate where we have more than doubled our in-situ
silver resources at the San Jose project; we have also significantly upgraded
resources to the "indicated" resource category. We have started yet another
drilling programme (Phase-4) at San Jose where we have outlined a 40-hole,
10,000 m programme, with the intention of drilling the entirety of the San Jose
Vein, and most of the other known associated mineralised targets within the
confines of our concession areas, which we are now more than 25% of the way
through. Our balance sheet remains strong and we continue to have no debt."
OVERVIEW OF SECOND QUARTER OF 2011 AND SUBSEQUENT EVENTS
Financial (all amounts expressed in US dollars unless otherwise stated)
-- Total assets of $18.8 million, including intangible assets of $2.4
million, property, plant and equipment of $6.4 million, trade and other
receivables of $1.8 million and cash of $7.2 million, as at 30 June
2011.
-- Consolidated pre-tax loss for the six months ended 30 June 2011 was $9.9
million including a non-cash employee share options expense of $8.0
million.
-- Working capital was $9.1 million, as at 30 June 2011.
-- Revenue of $2.7 million and a gross loss of $154,000 for the six months
ended 30 June 2011 for the San Jose mining operation.
-- Revenue of $1.5 million and a gross profit of $59,000 for the three
months ended 30 June 2011 for the San Jose mining operation.
Operations
-- San Jose production Q2:
-- 22,387 tonnes mined.
-- 18,348 tonnes milled.
-- 144 concentrate tonnes produced.
-- 59,568 silver ounces produced.
-- San Jose exploration:
-- Phase-3 drilling programme completed and new resource estimate
complete; and
-- Phase-4 drilling programme has commenced.
Post 30 June 2011
-- Independent resource estimate updated by CSA Global (UK) Limited and
announced 20 July 2011:
-- 88.45 million contained silver ounces, an increase of 105%.
-- 30.03 million ounces in the "indicated" resource category.
-- 58.42 ounces in the "inferred" resource category.
-- Plus lead and zinc.
-- Extended the mill and plant lease for up to two years.
-- Continuous upgrades made to plant and equipment at custom mill in order
to improved throughput and recoveries.
-- Independent plant audit completed and recommendations are being reviewed
and implemented.
-- As at the end of July 2011 Phase-4 drilling programme has drilled
approximately 2,200 metres.
REVIEW OF FINANCIAL PERFORMANCE
In the six months ended 30 June 2011, the Company incurred a pre-tax loss of
$9.9 million (2010 - $0.6 million) which includes a gross loss for the San Jose
mine of $0.2 million, recognising the fair value non-cash expense of share
purchase options vesting of $8.0 million (2010 - $14,000) and other
administrative expenses of $1.4 million (2010 - $0.7 million). Interest income
from cash resources was $24,000 (2010 - $4,000). Finance loss was $0.3 million
(2010 - $0.1 million).
As at 30 June 2011, the Company had working capital of approximately $9.1
million (31 December 2010 - $10.2 million). See Liquidity, Capital Resources and
Working Capital for the items of working capital. Intangible assets amounted to
$2.4 million (31 December 2010 - $1.2 million) which relate to deferred
exploration and evaluation costs in respect of the Company's Mexican projects.
Property, plant and equipment amounted to $6.4 million (31 December 2010 - $5.4
million); $6.3 million of this relates to the San Jose mine development costs.
Share capital increased by $1.9 million to $47.3 million (31 December 2010 -
$45.4 million) as a result of the issue of common shares in connection with the
exercise of share options and share purchase warrants.
REVIEW OF OPERATIONS
The Company currently owns 32 mineral concessions in Mexico totalling
approximately 8,038 hectares ("ha").
San Jose Project, Zacatecas State
The San Jose property lies 55 kilometres to the southeast of Zacatecas City and
covers 11 mining concessions totalling approximately 6,300 ha. The property has
significant infrastructure, including a 4 x 4 metre ("m") main haulage ramp ("SJ
Ramp"), which extends for nearly 3.2 km along the footwall of the San Jose Vein
("SJV") system, and a 350 m deep, 500 tonne per day ("tpd"), vertical shaft with
operational hoist. In addition, a number of shallower vertical shafts are
located in a westerly direction along the SJV.
Production Information
Production information summary for San Jose mine is as follows:
----------------------------------------------------------------------------
Q2 2011 Q1 2011 Q4 2010
----------------------------------------------------------------------------
Head grade - Ag grams per tonne 178 178 154
Tonnes mined 22,387 19,462 7,600
Tonnes milled 18,348 21,128 3,385
Concentrate tonnes produced 144 146 22
Recovery % 56.66 38.08 56.31
Ag ounces produced 59,568 46,236 9,462
Ag ounces per concentrate tonne produced 412 316 439
----------------------------------------------------------------------------
Mining Operations
The initial mining operation is limited to the Ramal Norte/Sur, San Jose 75 m
Level Central Zone and Santa Ana resource blocks. These were selected by Arian,
from seven delineated resource blocks, to support an initial four-year mining
operation with the potential to increase the mining rate to 1,500 tpd subject to
milling capacity being available.
From January to the end of June 2011 approximately 161 m were developed along
the main westerly strike of the SJ Ramp in a combination of Run-Of Mine ("ROM")
and waste material. In addition, some 73 m were developed off the main SJ Ramp,
initially in a northerly direction before running parallel and with a steeper
decline; this was to access deeper seated sulphide-rich material of the Santa
Ana Block (less oxidation) which should further increase recoveries at the mill.
Anticipated grades of silver in this area, based on diamond drilling
information, are in the order of 450 g/t.
Mining expectations remained unchanged at 500 tpd for the contract mining
operation. Mining was planned to operate 20 days per month. Total costs to mine
and deliver ore to the mill were estimated at approximately $26/tonne.
Milling Operations
Q2 recoveries increased 49% to 56.66% from the Q1 result of 38.08%. Arian is
continuing to focus on the custom mill and plant operations and is overseeing
changes in the reagents and modifications to the physical plant to increase the
recoveries. It is anticipated that recoveries will increase to the level
initially planned.
During Q2 the plant was audited and those recommendations are being reviewed and
implemented. The decisive action taken during May as a result of the previously
reported theft has, consequently, provided improved results for Q2; Arian
expects results to continue to improve. Arian has also implemented actions to
ensure that the smelter and plant results are correlated to an acceptable level.
Arian has signed a new lease with the custom mill and plant owner for a period
of up to two years at a cost of MXP 6 million (approx. US$ 0.5 million) per
month. There is an early break provision in favour of the owner of the plant in
the event that an option to purchase the plant held by a third party is
exercised on 31 October 2011. However, if this option is exercised Arian
currently believes it would be able to negotiate continued use of the plant with
the new owner. The lease also has an early break provision in favour of Arian
giving it the right to terminate the lease after twelve months. The increase in
the lease cost is due to the operation of a new 200 tpd mill which is currently
being commissioned and should allow Arian to meet its expected milling target of
400 tpd (for 30 days), with up to 125 tonnes of concentrate to be produced per
month with an anticipated silver content of between 370 and 440 ounces per tonne
("opt").
The mill is rated a 400 tpd throughput mill, however Arian only started with a
daily throughput of 120 tonnes and is currently around 250 per day. The plant is
not designed for the hardness and abrasiveness of the San Jose ROM material ore.
This issue was partially overcome with the installation of a reconditioned
impact crusher placed within the circuit to more finely grind the ROM material
before the ground rock entered the flotation stage of the plant.
This phase of milling has allowed Arian to review all the key data as it would
if it were operating a test plant and provides information for Arian to build an
optimised plant, should it decide to build one. Arian is currently reviewing
alternatives as well as continuing to work to improve the mill design and
recoveries.
Based on a contained silver content of 405 opt at $35/oz silver, a concentrate
value of $12,700/tonne, after deductions, is forecast to be achieved although
the higher the silver price, which is calculated based on a quotation period
paying the average of the second month after delivery, the greater the return.
A 2% NSR (net smelter royalty) on concentrate value is payable to the vendor of
the San Jose property.
Exploration Drilling
In May 2011 Arian completed the Phase 3 drill programme, which commenced in
November 2010, drilling over 10,000m. The purpose of the drill programme was to
delineate additional areas of high grade mineralisation and to upgrade existing
resources, between the Santa Ana and Guanajuatillo resource areas along the SJV.
The drill programme had also started to explore in detail the SJV system that
lies to the west of the village of Guanajuatillo. The results of Phase 3 are
included in the resource table under the heading 'Exploration Resource'.
In April and June 2011 the drilling results from the Phase 3 drilling programme
were released (see the Company's press releases dated 4 April 2011 entitled
"Arian Silver's continuing exploration drilling intercepts high-grade silver at
San Jose" and 27 June 2011 entitled "Arian Silver Reports Wide High-Grade Silver
and Base Metal Intercepts").
In June 2011, Phase 4 drilling programme commenced and at the end of July 2011
there were approximately 2,200 m drilled. The purpose of this drilling phase is
to drill the entire SJV combining infill and step out drilling which will
endeavour to maximise the data points in the given area and upgrade the resource
categories.
Arian's overall objective is to develop additional resources on the San Jose
property concurrently with the existing mining operation, complete a full
feasibility study, and move to large-scale independent commercial production.
Exploration Resource
On 20 July 2011 Arian announced a significant resource estimate upgrade (see the
Company's press release entitled "Arian Silver Announces Significant increase in
Mineral Resources at San Jose"). The highlights of this announcement were:
-- 86% increase in resource tonnage along the SJV over the August 2008
mineral resource estimate:
-- 10% higher average silver grade;
-- 105% increase in contained silver; and
-- 34% of gross silver mineral content now in the "indicated" category.
-- Mineral resource estimates based on all Phase-1, 2 and 3 drill holes
(152 drill holes totaling over 28,000 m); and
-- Mineralisation remains completely open along the western strike and to
depth.
Arian's new resource estimate upgrade which includes all drill programmes from
2006 along the SJV has a delineated NI 43-101 and a JORC Code compliant resource
estimate of approximately 30.03 million ounces of silver, 69.9 million pounds of
lead and 126.6 million pounds of zinc in the "indicated" mineral resource
category and 58.42 million ounces of silver, 140.1 million pounds of lead and
291.1 million pounds of zinc in the "inferred" mineral resource category. The NI
43-101 and JORC code compliant mineral resources mentioned above is summarized
in the table below:
----------------------------------------------------------------------------
Average Grade Contained Metal
----------------------------------------------
Resource Gross Tonnages
Category Contained Metal Ag Pb Zn Ag Pb Zn
----------------------------------------------------------------------------
(g/t) % % (M oz) (t) (t)
----------------------------------------------------------------------------
Indicated 8,000,000 117 0.40 0.72 30.03 31,706 57,425
----------------------------------------------------------------------------
Inferred 17,000,000 107 0.37 0.78 58.42 63,548 132,041
----------------------------------------------------------------------------
Note: The resource estimate in the table above is wholly owned by Arian.
1. Geological characteristics and +30 ppm grade envelopes used to define
resource volumes.
2. Each mineral resource estimate is in accordance with CIM standards.
3. The effective date of each mineral resource estimate is 15th July 2011.
4. The estimates are based on geological, statistical and geostatistical
data assessment and computerised IDW(3), Ag grade wireframe restricted,
linear block modelling.
5. The resource was estimated using 152 drill holes and more than 28,000
metres.
6. Resource figures were prepared under the supervision of Malcolm Titley
who is a Qualified Person (as defined in Canadian National Instrument
43-101).
7. Tonnage figures have been rounded to reflect this as an estimate.
8. Ag (silver) ounces have been calculated using 31.1035 g = 1oz.
9. Pb (lead) and Zn(zinc) tonnes have been calculated using 2204.622 lbs =
1 tonne.
10. The mineral resource is 100% owned by Arian.
Readers are reminded that mineral resources are not mineral reserves and have
not demonstrated economic viability. There is no certainty that mineral
resources can be upgraded to mineral reserves through continued exploration.
Laboratory Update
The laboratory purchased in November 2010 from Stewart Group's Geochemical &
Assay Division ("Stewart Group") became fully operational in April 2011. The
laboratory comprises a comprehensive sample preparation facility, a fire assay
laboratory and a wet chemistry laboratory with Atomic Absorption Spectrometry
("AAS"), and is operated under the sole control and management of professional
personnel from the Stewart Group in order that results are fully compliant with
Arian's quality assurance and quality control (QA/QC) programme. The laboratory
has significantly increased the turnaround times for analysis of Arian's sampled
drill cores.
LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL
During the period the Group received new funding from:
-- the exercise of 1,400,000 share purchase options and 17,342,000 "F"
share purchase warrants which generated GBP 90,000 and Cdn$1,734,200
respectively.
-- the exercise of the Tepal option by Geologix which resulted in the
receipt of a final instalment of $1.55 million, satisfied as to $775,000
in cash and the issue of to the Company of 1,089,318 common shares of
Geologix at a price of approximately Cdn$0.70.
The following share purchase options are currently outstanding, each entitling
the holder to acquire one common share of the Company:
-- 18,485,000 share purchase options with exercise prices in the range GBP
0.055/GBP 0.4925 (Cdn$0.10/Cdn$0.79) expiring on various dates up to
June 2016.
Working Capital - 30 June, 2011
As at 30 June 2011, the Company had working capital of approximately $9.1
million (31 December, 2010 - $10.2 million). The items of working capital and
changes compared to 31 December 2010 are as follows:
Current assets:
-- Cash and cash equivalents - $7.2 million (2010 - $8.3 million).
-- Assets held for sale - $nil (2010 - $2.9 million) - relates to the
carrying value of the Tepal project reclassified from intangible assets
as a result of the grant of the Tepal option. This asset was realised on
exercise of the option from Geologix during the period.
-- Trade and other receivables - $1.8 million (2010 - $0.9 million) -
increase largely due to $0.9 million relating to the trade debtor for
the sale of silver concentrate from the San Jose mining operation and
$0.3 million increase in Mexican Sales Tax debtor, offset by $0.3
million for the transfer of the deposit for the assay laboratory to non-
current assets.
-- Inventories - $0.6 million (2010 - $0.1 million) - relates to stockpile
held at cost relating to production at the San Jose mine.
-- Other financial assets at fair value through profit and loss -$0.4
million (2010 - $nil) - relates to the Geologix shares received as part
consideration for the final instalment for the sale of the Tepal
project.
Current liabilities:
-- Deferred income - $nil (2010 - $1.5 million) - relates to the value of
the non-refundable first instalment of the Tepal option consideration
pending exercise or termination of the Tepal option. This was recognised
in Q1 2011 as part of the Tepal option exercise.
-- Trade payables - $0.9 million (2010 - $0.5 million) - the increase
relates to invoices outstanding relating to the production and
exploration costs at the San Jose project.
Qualified Person
Mr. Jim Williams, Eur Ing, Eur Geol, BSc, MSc, D.I.C., FIMMM, the Chief
Executive Officer of Arian, a "Qualified Person" as defined in the AIM
guidelines of the London Stock Exchange, and a "Qualified Person" as such term
is defined in Canadian National Instrument 43-101 ("NI 43-101"), has reviewed
and approved the technical information in the Review of Operations other than
the mineral resource estimates.
About the Company
Arian is a silver exploration and development company and is listed on London's
AIM; trades on London's "PLUS" market; is listed on Toronto's TSX Venture
Exchange and on the Frankfurt Stock Exchange. Arian is active in Mexico, the
world's second largest silver producing country. The Company's main project is
the San Jose project in Zacatecas State. Part of Arian's forward-looking
strategy lies in the envisaged use of large scale mechanized mining techniques
over wider mineralized structures, which reduces the overall unit operating cost
of metals, and to build up NI 43-101 compliant resources.
Further information can be found by visiting Arian's website:
www.ariansilver.com or the Company's publicly available records at
www.sedar.com.
This press release does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities of the Company in the United Sates. The
securities of the Company have not been and will not be registered under the
United States Securities Act of 1933, as amended (the "U.S. Securities Act") or
any state securities laws and may not be offered or sold within the United
States or to U.S. persons unless registered under the U.S. Securities Act and
applicable state securities laws or an exemption from such registration is
available.
Forward-Looking Statements
This press release contains certain "forward-looking statements". All
statements, other than statements of historical fact, that address activities,
events or developments that the Company believes, expects or anticipates will or
may occur in the future (including, without limitation, statements relating to
the mineral resource estimates, statements regarding the contract mining and
milling operation at the San Jose Project (the "SJ Mining Operation"), the
ability of the Company to achieve, maintain and possibly increase planned levels
of production from the SJ Mining Operation, the ability of the Company to
generate positive cash flow from the SJ Mining Operation, the ability to
continue or implement proposed drilling programmes on the SJV system and the
Company's exploration, development and production plans and objectives) are
forward-looking statements. These forward-looking statements reflect the current
expectations or beliefs of the Company based on information currently available
to the Company. Forward-looking statements are subject to a number of risks and
uncertainties that may cause the actual results of the Company to differ
materially from those discussed in the forward-looking statements, and even if
such actual results are realised or substantially realised, there can be no
assurance that they will have the expected consequences to, or effects on the
Company. Factors that could cause actual results or events to differ materially
from current expectations include, among other things, the performance of the
contractors and plant and equipment engaged in relation to the SJ Mining
Operation, failure to achieve anticipated production levels and mineral grades
for ore from the SJ Mining Operation, failure to establish estimated mineral
reserves, the possibility that future exploration results will not be consistent
with the Company's expectations, uncertainties relating to the availability and
costs of financing needed in the future, changes in the silver commodity price,
changes in equity markets, political developments in Mexico, changes to
regulations affecting the Company's activities, delays in obtaining or failures
to obtain required regulatory approvals, the uncertainties involved in
interpreting exploration results and other geological data, and the other risks
involved in the mineral exploration and development industry. Any
forward-looking statement speaks only as of the date on which it is made and,
except as may be required by applicable securities laws, the Company disclaims
any intent or obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise. Although the
Company believes that the assumptions inherent in the forward-looking statements
are reasonable, forward-looking statements are not guarantees of future
performance and accordingly undue reliance should not be put on such statements
due to the inherent uncertainty therein.
The mineral resource figures disclosed in this press release are estimates and
no assurances can be given that the indicated levels of minerals will be
produced. Such estimates are expressions of judgment based on knowledge, mining
experience, analysis of drilling results and industry practices. Valid estimates
made at a given time may significantly change when new information becomes
available. While the Company believes that the resource estimates included in
this press release are well established, by their nature resource estimates are
imprecise and depend, to a certain extent, upon statistical inferences, which
may ultimately prove unreliable. If such estimates are inaccurate or are reduced
in the future, this could have a material adverse impact on the Company.
Mineral resources are not mineral reserves and do not have demonstrated economic
viability. There is no certainty that mineral resources can be upgraded to
mineral reserves through continued exploration.
Arian Silver Corporation (TSXV:AGQ)
Historical Stock Chart
From Jun 2024 to Jul 2024
Arian Silver Corporation (TSXV:AGQ)
Historical Stock Chart
From Jul 2023 to Jul 2024
