Arian Silver Corporation (“Arian” or the “Company”) (TSX VENTURE:AGQ)(AIM:AGQ)(FRANKFURT:I3A), a silver exploration, development and production company with a focus on projects in the silver belt of Zacatecas, Mexico, today announces the release of its Management’s Discussion and Analysis (“MD&A”) and unaudited Financial Statements (“Financials”) for the year ended 31 December 2013.
The MD&A and audited 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: “I am pleased to report that the refurbishment of Arian’s wholly owned processing plant, purchased in August 2013, remains on-track. When operating at the maximum capacity of 1,500 tonnes per day (“tpd”), the plant will have three times the throughput capacity of each of the Company’s previous toll milling operations. This, together with expectations of significantly better overall efficiencies, will enable us to realise the long-anticipated potential of the Company’s 100% owned San José silver-lead-zinc project.
I would like to formally thank shareholders, employees, and all those associated with supporting Arian Silver. It has been a year which has seen the Company take great strides towards becoming a medium-sized silver producer. The team and I remain energised and committed to executing prudently on the Company’s strategy.
OVERALL PERFORMANCE
This past year has seen Arian take great strides towards becoming a medium-sized silver producer.
In the early part of the year, Arian pursued the resumption of toll milling operations until this was terminated in June against the backdrop of the anticipated acquisition of a suitable second-hand custom processing plant.
On 29 August 2013 the Company issued a $15.6 million convertible note (“Note” or “Convertible Note”) and simultaneously acquired the El Bote processing plant (“El Bote” or the “Plant”) for $3.12m. This was a significant step for the Company as it enabled the elimination of its reliance on third-party toll millers and is expected to provide significantly increased operational control and efficiency, which should translate into reduced operational costs and superior metal recoveries.
Since acquiring the Plant, Arian has been focussed on its refurbishment, making preparations for its relocation to the Company’s San José project site, and developing the San José mine to prepare for the increase in production capacity.
Summary Financial Information
Annual 2013 Annual 2012 Change
$000s $000s $000s
Revenue 129 4,588 (4,459)
Gross loss (564) (764) 200
Net loss for the period (1,611) (4,031) 2,420
Cash and cash equivalents 7,241 491 6,750
Total assets 28,366 14,119 14,247
The decrease in revenue on 2012 results reflects the termination of toll milling operations in June 2013.
The net loss for the period reduced year-on-year due to the gain recognised in relation to the fair value adjustment of the derivative liability element of the Note and was offset by the transaction costs relating to the Convertible Note, a foreign exchange loss and an increase in the fair value adjustment for share based payments.
Cash and cash equivalents increased since 31 December 2012 following the issue of the Convertible Note and drawdowns of the Company’s Standby Equity Distribution Agreement (“SEDA”) facility.
Total assets increased since 31 December 2012 primarily due to the increase in cash at bank, and the acquisition of the El Bote processing plant.
A 7.5% royalty on taxable profits and a 0.5% net smelter royalty were introduced in Mexico with effect from 1 January 2014. These taxes have not been incurred by Arian Silver to date, and other mining companies operating in similar areas are currently challenging the application of these taxes. Advice received from Arian’s external Mexican legal advisers indicates the Company has a strong legal case to challenge the application of these royalties.
REVIEW OF OPERATIONS
San José project, Zacatecas State
Overview
The 100%-owned San José property lies 55 kilometres to the southeast of the city of Zacatecas and covers eight mining concessions totalling approximately 6,134 hectares. The property has significant infrastructure, including a 4×5 metre main haulage ramp extending more than 4.0 kilometres along the footwall of the San José Vein system, and a 350 metres deep, 500 tpd vertical shaft with an operational hoist. In addition, a number of shallower vertical shafts are located in a westerly direction along the vein.
2013
Full Year Q4 Q3 Q2 Q1
Production information summary for
San José mine
Head grade (mill): Ag grams per
tonne (g/t) 189 - - 191 174
Tonnes mined 14,501 8,057 1,816 4,628 -
Tonnes milled 3,479 - - 3,221 258
Ag concentrate tonnes produced 47 - - 43 4
Recovery % 42.74 - - 41.42 60.90
Ag ounces produced 9,058 - - 8,180 878
Ag ounces per concentrate tonne
produced 194 - - 190 251
Ag ounces sold 9,058 - - 9,058 -
Ag concentrate tonnes sold 37 - - 37 -
Quarter end inventory balances
Mined tonnes stockpile 27,015 27,015 18,958 17,142 17,935
Ag concentrate inventory tonnes - - - 4 4
Ag ounces included in concentrate
inventory - - - 1,204 878
----------------------------------- --------- ------ ------ ------ ------
2012
Full Year Q4 Q3 Q2 Q1
Production information summary for
San José mine
Head grade (mill): Ag grams per
tonne (g/t) 177 - - 181 173
Tonnes mined 51,893 - 4,072 26,268 21,553
Tonnes milled 53,297 - - 28,903 24,394
Ag concentrate tonnes produced 600 - - 298 302
Recovery % 53.88 - - 58.74 49.01
Ag ounces produced 165,304 - - 98,616 66,688
Ag ounces per concentrate tonne
produced 275 - - 331 221
Ag ounces sold 177,960 - 8,937 93,112 75,911
Ag concentrate tonnes sold 648 - 32 286 330
Quarter end inventory balances
Mined tonnes stockpile 18,192 18,192 18,204 15,003 17,637
Ag concentrate inventory tonnes - - - 36 24
Ag ounces included in concentrate
inventory - - - 11,276 5,772
----------------------------------- --------- ------ ------ ------ ------
During the first half of 2013, mining activities at San José were conducted to supply the toll milling operations at Juan Reyes. When that toll milling agreement was terminated, mining activities then slowed, until the El Bote processing plant was purchased, from which time mine development began to accelerate to ensure mine capacity would be sufficient to supply El Bote following its commissioning.
No tonnes were milled in the second half of 2013 due to the suspension of production at the Juan Reyes plant.
The stockpile of mined ore was higher at the end of 2013 than at the equivalent time in 2012 as the milling of mined ore ceased in June 2013. This stockpiled ore will be processed once production commences at the refurbished plant.
Fourth Fourth
Quarter Quarter
2013 2012 Annual 2013 Annual 2012 Change
Head grade -
Ag grams
per tonne - - 189 177 7%
Tonnes mined 8,057 - 14,501 51,893 (72%)
Tonnes
milled - - 3,479 53,297 (93%)
Silver
concentrate
tonnes
produced - - 47 600 (92%)
Silver
ounces
produced - - 9,058 165,304 (94%)
Silver
ounces per
concentrate
tonne
produced - - 194 275 (29%)
Silver
ounces
sold - - 9,058 177,960 (95%)
Silver
concentrate
tonnes
sold - - 37 648 (94%)
Mining
Mining continued at the San José mine in Q4 2013 in preparation for the resumption of milling activities at the refurbished Plant in late 2014.
Milling
In the early part of the year, Arian pursued the resumption of toll milling operations at the Juan Reyes processing plant. This was terminated in June 2013 with the mutual consent of the owner of the plant, against the backdrop of the anticipated acquisition of a suitable second-hand custom processing plant.
In August 2013, the Company acquired the El Bote Processing Plant and commenced its refurbishment in situ. Upon completion of the refurbishment, it is planned that the plant will be dismantled, transported and installed in a modular manner at the Company’s 100%-owned site adjacent to the San José mine. An internal team is leading the refurbishment of the Plant to ensure the Company has the control necessary to ensure the project is performed to a suitable standard and in the most cost-efficient manner. Third parties will be utilised in the development of the necessary site works, tailings dam and electrical infrastructure for the plant.
The Plant is currently located approximately 60 kilometres from the site of the San José mine and is comprised of a crushing circuit with a reported throughput of 150 tonnes per hour, a grinding circuit of four ball mills, two flotation circuits, thickening tanks and filters.
It is anticipated that the Plant will be commissioned towards the end of 2014 with an initial capacity expected of 750 tonnes per day “tpd” after which, the Plant will be expanded to 1,500 tpd.
Exploration Assets
During the year, three of the Company’s concessions representing 145 hectares, which were not considered to hold mineralisation and which were outside the mineralisation trend, have been cancelled. The cancellation of these concessions does not impact the Company’s NI 43-101 mineral resource estimate and the Company now holds 28 mineral concessions in Mexico totalling 7,822 hectares as set out below.
Project Name No. of Concessions Area in hectares ("ha")
-------------- ------------------ -----------------------
San José 8 6,134
-------------- ------------------ -----------------------
Calicanto 7 75
-------------- ------------------ -----------------------
Others 13 1,536
-------------- ------------------ -----------------------
Total 28 7,745
-------------- ------------------ -----------------------
No exploration took place during the year. The Company’s proposed fifth exploration phase is now planned to take place after the Plant has been successfully commissioned and the San José Project is generating positive cash flow.
Information on Arian’s exploration assets are contained in a technical report prepared by A.C.A. Howe International Limited dated 20 March 2006 and entitled “Technical Report on the Calicanto and San Celso Projects, Zacatecas, Mexico”. A copy of this report is available on the Company’s website www.ariansilver.com or on SEDAR 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.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) and no stock exchange, securities commission or other regulatory authority accepts responsibility for the adequacy or accuracy of this release nor approved or disapproved of the information contained herein.
Arian Silver Corporation
Jim Williams
CEO
(London) +44 (0)20 7887 6599
Arian Silver Corporation
David Taylor
Company Secretary
(London) +44 (0)20 7887 6599
Grant Thornton UK LLP
Philip Secrett / David Hignell
(London) +44 (0)20 7383 5100
Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0)7768537739
Hume Capital Securities plc
Jon Belliss / Abigail Wayne
(London) +44 (0)20 3693 1470
