NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES NOR FOR DISTRIBUTION IN THE
UNITED STATES
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 Zacatecas silver belt of
Mexico, announces the release of its Management's Discussion and Analysis
("MD&A") and audited Financial Statements ("Financials") for the year ended 31
December 2012.
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: "2012 has been a
busy year for the Company during which we significantly increased our silver,
lead and zinc resources at our flagship San Jose property, and acquired land at
San Jose to accommodate a proposed custom mill. In addition, we concluded
independent studies on mining, plant design and metallurgy, as well as a
technical audit combining the results of these studies. These have been
important steps for the Company's growth plans, and coupled with the intended
acquisition of a custom mill, can be expected to result in significantly
improved efficiencies through better metal recoveries, higher throughput and
lower overall production costs.
Our new toll milling operations resumed in February at a newly refurbished mill
with capacity of up to 500 tpd, which will provide essential cash flow to the
business. We will report production details with our Q1 results.
Arian looks forward to continued progress on all fronts during the rest of 2013
and once again, I'd like to thank shareholders, employees, and all those
associated with supporting the Company."
OVERVIEW OF 2012
Financial
Annual 2012 Annual 2011 Change
$000s $000s $000s
Revenue 4,588 7,467 (2,879)
Gross (loss)/profit (764) 812 (1,576)
Net (loss)/profit for the period (4,031) (10,970) 6,939
Cash and cash equivalents 491 3,991 (3,500)
Total assets 14,119 16,250 (2,131)
The decrease in revenues and gross profits, and the net loss, was a result of
the suspension of milling operations following a dispute with the mill owner.
The 2012 net loss of $4.0 million ("m") was $6.9m less than the 2011 loss of
$10.97m. The latter included a charge of $8.5m in respect of share option
expenses.
Operations
Following a dispute with the third party mill owner, Contracuna SA de CV
("Contracuna"), the Company announced in July 2012 that production was
suspended.
In November 2012 a contract was signed with an independent third party for toll
milling a minimum 90,000 tonnes of run of mine ("ROM"). Milling commenced at
this mill on 16 February 2013.
Annual 2012 (i) Annual 2011 Change %
Tonnes mined 51,893 100,223 (48%)
Tonnes milled 53,297 83,959 (37%)
Silver concentrate tonnes produced 600 750 (20%)
Silver ounces produced 165,304 248,226 (33%)
Silver ounces per concentrate tonne
produced 276 331 (17%)
Silver ounces sold 177,960 235,965 (25%)
Silver concentrate tonnes sold 648 706 (8%)
(i) Production in 2012 was suspended in July
Exploration
-- Phase 4 drilling programme indicated continuity of the vein thickness,
silver mineralisation and grade along the San Jose Vein ("SJV").
-- Results of the geophysical Induced Polarisation ("IP") survey identified
the areas of probable vein displacements and provided targets for some
of the last holes to be drilled in the Phase 4 drilling programme (see
the Company's press release dated 16 January 2012 entitled "Arian Silver
Reports Further Encouraging Exploration Progress at San Jose").
-- On 12 March 2012, Arian reported a significant resource estimate upgrade
(see the Company's press release entitled "Arian Silver Increases
Contained Silver at San Jose by 32% to More Than 117 Million Ounces in
Updated Mineral Resource Estimate").
Subsequent Events
Funding
The Company is seeking additional finance to help achieve its strategy of
increasing shareholder value by increasing production, productivity and mine
capacity, and is actively discussing funding possibilities with interested
parties.
Mill operations
Toll milling fully resumed on 16 February 2013 with a privately owned operator,
Beneficiadora de Jales y Minerales Juan Reyes SA de CV ("Juan Reyes"). The
contract with Juan Reyes gives exclusive use of the mill to Arian, is renewable
by mutual consent and is initially for the processing of 90,000 tonnes of
run-of-mine material from the San Jose mine. The mill operates with supervisory
assistance from Arian personnel to help optimise processing to maximise material
throughput and silver, lead and zinc recoveries.
Juan Reyes had indicated to Arian that the mill would be ready for operations in
December 2012. Arian has been actively involved in project management to help
ensure that the mill is properly commissioned.
The dispute with the owners of Contracuna caused toll milling operations to be
suspended in July 2012. Although all amounts owed to Arian by Contracuna have
now been repaid, Arian has submitted a claim for damages, which has been met by
a counter-claim by Contracuna, which Arian believes, has been submitted solely
to frustrate the legal process and is without merit.
SUMMARY OPERATING PERFORMANCE 2012
Fourth Fourth Annual Annual Change
Quarter 2012 Quarter 2011 2012 2011 %
Head grade - Ag grams per
tonne - 201 177 190 (7%)
Tonnes mined - 24,433 51,893 100,223 (48%)
Tonnes milled - 22,971 53,297 83,959 (37%)
Silver concentrate tonnes
produced - 256 600 750 (20%)
Silver ounces produced - 76,618 165,304 248,226 (33%)
Silver ounces per
concentrate tonne
produced - 300 276 331 (17%)
Silver ounces sold - 77,738 177,960 235,965 (25%)
Silver concentrate tonnes
sold - 242 648 706 (8%)
Production during 2012 was undertaken by Contracuna. In July 2012 Arian
announced the suspension of production in July 2012 following a dispute with
Contracuna. Arian has lodged court proceedings in Mexico to claim for damages.
Arian conducted further metallurgical testing during the year and announced in
October 2012 recoveries in the order of 80% had been achieved using a "Leach-Ox"
process (direct leaching of the ROM material). The test report further suggested
there was significant upside potential to improve the recoveries of silver with
the addition of flotation within the mill circuit to process the deeper seated,
less oxidised/more sulphide rich material.
During November 2012 Arian agreed terms for toll milling of a minimum of 90,000
tonnes of run of mine ("ROM") ore at a cost of US$38 per tonne with a newly
refurbished 500 tpd plant in Zacatecas. The plant is owned and controlled by an
independent third party, Juan Reyes, and toll milling began on 16 February 2013.
MINERAL RESOURCE ESTIMATE
On 12 March 2012, Arian reported a significant resource estimate upgrade (see
the Company's press release entitled "Arian Silver Increases Contained Silver at
San Jose by 32% to More Than 117 Million Ounces in Updated Mineral Resource
Estimate").
The highlights of this announcement were:
-- 29% increase in resource tonnage along the SJV from the July 2011
mineral resource estimate;
-- Contained ounces of silver have increased by 32%;
-- Contained pounds of lead have increased by 29%; and
-- Contained pounds of zinc have increased by 30%;
-- Mineralisation remains open along the western and eastern strikes of the
SJV and to depth; and
-- Further drilling is planned to infill the current resources, step out
along the remaining SJV structure in both directions, and to drill at
depth on the SJV.
Arian's resource estimate includes all drilling programmes from 2006 along the
SJV which has a delineated NI 43-101 and a JORC-compliant resource estimate of
approximately 30.61 million ounces of silver, 67.02 million pounds of lead and
149.91 million pounds of zinc in the "indicated" mineral resource category, and
88.65 million ounces of silver, 205.25 million pounds of lead and 410.50 million
pounds of zinc in the "inferred" mineral resource category. These NI 43-101 and
JORC-compliant mineral resources are summarised in the table below:
----------------------------------------------------------------------------
Resource Category Average Grade
------------------------------------
Tonnes Ag Pb Zn
----------------------------------------------------------------------------
(t) (g/t) % %
----------------------------------------------------------------------------
Indicated 8,000,000 119 0.38 0.85
----------------------------------------------------------------------------
Inferred 24,500,000 110 0.38 0.76
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resource Category Contained Metal
------------------------------------
Tonnes Ag Pb Zn
----------------------------------------------------------------------------
(t) (Moz) (Mlb) (Mlb)
----------------------------------------------------------------------------
Indicated 8,000,000 30.61 67.02 149.91
----------------------------------------------------------------------------
Inferred 24,500,000 86.65 205.25 410.50
----------------------------------------------------------------------------
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 12 March 2012.
4. The estimates are based on geological, statistical and geostatistical
data assessment and computerised IDW3, Ag grade wireframe restricted,
linear block modelling.
5. The resource was estimated using 188 drill holes and more than 38,000
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 = 1 oz.
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.
The following reports prepared by A.C.A. Howe International Limited relating to
the San Jose project are available on the Company's website www.ariansilver.com
or on SEDAR at www.sedar.com :-
a) Report dated 22 September 2009 and entitled "Preliminary Economic
Assessment Report (PEAR) on the San Jose Silver-Lead-Zinc Deposit,
Zacatecas, Mexico"; and
b) Report dated 15 August 2008 and entitled "Resource Estimation Update for
the San Jose Silver-Lead-Zinc Deposit, Zacatecas, Mexico".
Readers are reminded that mineral "resources" are not mineral "reserves" as they
have not yet demonstrated economic viability. There is no certainty that mineral
resources can be upgraded to mineral reserves through continued exploration.
REVIEW OF OPERATIONS
The Company owns 31 mineral concessions in Mexico totalling approximately 7,900
hectares as set out below.
----------------------------------------------------------------------------
Project Name No. of Concessions Area in hectares ("ha")
----------------------------------------------------------------------------
San Jose 11 6,279.57
----------------------------------------------------------------------------
Calicanto 7 83.97
----------------------------------------------------------------------------
Others 13 1,536.47
----------------------------------------------------------------------------
Total 31 7,900.01
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San Jose project, Zacatecas State
Overview
The 100%-owned San Jose property lies 55 kilometres to the southeast of
Zacatecas City and covers 11 mining concessions totalling approximately 6,300ha.
The property has significant infrastructure, including a 4x5 metre main haulage
ramp extending more than 4.0 kilometres along the footwall of the SJV system,
and a 350 metres deep, 500 tpd vertical shaft with operational hoist. In
addition, a number of shallower vertical shafts are located in a westerly
direction along the SJV.
The continuation of ramp development at the San Jose mine enabled the mine to
remain fully prepared and ready to recommence immediately to accommodate the
resumption of milling.
----------------------------------------------------------------------------
2012
Production information
summary for San Jose mine: Full Year Q4 Q3 Q2 Q1
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 276 - - 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
----------------------------------------------------------------------------
----------------------------------------------------------------------------
2011
Production information
summary for San Jose mine: Full Year Q4 Q3 Q2 Q1
Head grade (mill): Ag grams
per tonne (g/t) 190 201 199 178 178
Tonnes mined 100,223 24,433 33,941 22,387 19,462
Tonnes milled 83,959 22,971 21,512 18,348 21,128
Ag concentrate tonnes
produced 750 256 204 144 146
Recovery % 48.43 51.68 47.76 56.66 38.08
Ag ounces produced 248,226 76,618 65,804 59,568 46,236
Ag ounces per concentrate
tonne produced 331 300 323 412 316
Ag ounces sold 235,965 77,738 77,587 41,868 38,772
Ag concentrate tonnes sold 706 242 221 117 126
Quarter end inventory
balances
Mined tonnes stockpile 20,478 20,478 19,016 9,972 2,549
Ag concentrate inventory
tonnes 52 52 39 57 29
Ag ounces included in
concentrate inventory 14,995 14,995 14,118 23,075 10,195
----------------------------------------------------------------------------
Tonnes mined
No tonnes were mined in Q4 2012. The decrease in tonnes mined from Q4 2011 to Q4
2012 of 24,433 tonnes (100%) and decrease in tonnes mined from Q3 2012 to Q4
2012 of 4,072 tonnes (100%) was due to the suspension of production.
Tonnes milled
No tonnes were milled in Q4 2012 due to the suspension of production.
Mined tonnes stockpile
The stockpile of mined ore was 18,192 tonnes at the end of Q4 2012 compared to
20,478 tonnes at the end of Q4 2011.
Silver concentrate inventory tonnes
Silver concentrate inventory balance at the end of Q4 2012 was nil compared to
52 tonnes at the end of Q4 2011. This follows the suspension of production and
the sale of all remaining silver concentrate.
Mining Operations
The initial mining operation that commenced in 2010 focussed on the Ramal
Norte/Sur, San Jose 75m Level Central Zone and Santa Ana resource blocks. These
were selected by Arian, from several delineated resource blocks, to support an
initial pilot scale mining operation, which when added to the Soledad resource
block increases the potential mine rate to 1,500 tpd subject to available
milling capacity.
During 2012, Arian continued preparing and exploring mining blocks to verify
continuity of mineralisation to ensure production to the plant, ready for the
increase in milling capacity due to the operation of the 4th ball mill which
commenced operation in May 2012.
----------------------------------------------------------------------------
2012
All figures in this table are quoted
in metres Full Year Q4 Q3 Q2 Q1
Exploration Drilling 253 - 12 121 120
Ramp development 489 81 68 242 98
Preparation 338 - 8 151 179
Raises 96 - 33 31 32
----------------------------------------------------------------------------
Ramp development in the Santa Ana area provided access to blocks indicated by
diamond drilling on level 70, enabling further verification of resource for
further exploitation and extraction below this level. The ramp continues
development below level 120 to explore continuity of blocks as there is evidence
of mineralisation at 300 metres depth.
Contract mining was minimised during the second half of 2012 to avoid excessive
stockpiling; ramp development continued.
Looking forward to the planned resumption of mining at 500 tpd, mining costs are
expected to be $32/tonne including transport between the mine and mill.
Milling Operations
During Q1 and Q2 2012 Arian contracted its milling operations on a fixed monthly
fee basis with Contracuna. However, a dispute was announced on 16 July 2012
which resulted in the suspension of milling operations. On 7 August 2012 Arian
filed a claim against Contracuna to recover all losses and damages for breach of
contract.
The Contracuna mill had a maximum rating of 400 tpd but it was not designed for
the hardness and abrasiveness of the San Jose ROM material. Significant
improvement had been made to this mill that allowed it to increase to over 400
tpd during May 2012, following the installation of the 4th in-line ball mill and
other modifications.
On 9 August 2012 Arian announced that it had signed a letter of intent, for the
exclusive use of a newly refurbished and soon to be re-commissioned 500 tpd
mill. This mill, which is located nearby on the outskirts of the city of
Zacatecas, began toll milling on 16 February 2013.
Arian believes that the use of this re-commissioned mill will increase
recoveries and further test the potential for a larger scale commercial
operation.
A 2% net smelter royalty ("NSR") on SJV revenue is payable to the vendor of the
San Jose property. The vendor of the San Jose property also owns the newly
refurbished toll mill being commissioned. It is therefore in the interests of
the vendor to ensure the toll mill maximises recoveries.
Laboratory
Since April 2011 Arian has had a sample preparation and analytical laboratory on
site at San Jose operated on behalf of Arian by the Stewart Group, which is now
a subsidiary of the ALS Chemex Group. This is a valuable asset for Arian because
it allows for the rapid turnaround of samples and provides vital information to
our operational personnel to ensure that operating decisions are in a timely
manner. In addition the laboratory provides an invaluable tool during drilling
programmes which has significantly decreased the turnaround times for analysis
of Arian's drill samples.
The laboratory comprises a comprehensive sample preparation facility, wet
chemistry facility, atomic absorption spectrometry ("AAS") and fire-assay
("FA"), for final determinations of silver, lead and zinc. The laboratory is
fully compliant with Arian's quality assurance and quality control (QA/QC)
programme.
Exploration Information
In January 2012, Arian released interim drill results relating to the Phase 4
drilling programme which indicated continuity of the vein thickness, silver
mineralisation and grade along the SJV. Also announced were the results of the
geophysical Induced Polarisation ("IP") survey which identified the areas of
probable vein displacements and provided targets for some of the last holes to
be drilled in the Phase 4 drilling programme (see the Company's press release
dated 16 January 2012 entitled "Arian Silver Reports Further Encouraging
Exploration Progress at San Jose").
On 12 March 2012 the Company announced the conclusions of an independent
resource update by CSA Global (UK) Limited which took into account all the Phase
1, 2, 3 and 4 drilling programmes; the Technical Report is available on the
Company's website and was filed on SEDAR on 25 April 2012 at www.sedar.com.
Mineral Resource
Arian's resource estimate includes all drilling programmes from 2006 along the
SJV which has a delineated NI 43-101 and a JORC-compliant resource estimate of
approximately 30.61 million ounces of silver, 67.02 million pounds of lead and
149.91 million pounds of zinc in the "indicated" mineral resource category, and
88.65 million ounces of silver, 205.25 million pounds of lead and 410.50 million
pounds of zinc in the "inferred" mineral resource category. These NI 43-101 and
JORC-compliant mineral resources are summarised in the table on page 8.
Calicanto and other projects
Overview
Arian owns 100% of the Calicanto Project which consists of seven adjacent mining
concessions totalling 84ha, namely: Calicanto, Vicochea I, Vicochea II, Misie 1
and Misie 2, and Missie 1 and Missie 2 properties, collectively known as the
"Calicanto Group". The concessions are located in the historic mining district
of Zacatecas. The Calicanto Group of concessions comprises at least four main
mineralised vein systems.
There has been no significant expenditure on the Calicanto Project during the
past two years.
Additional information in respect of the Calicanto Project is 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Arian Silver Corporation
Jim Williams
CEO
(London) +44 (0)20 7887 6599
jwilliams@ariansilver.com
Arian Silver Corporation
David Taylor
Company Secretary
(London) +44 (0)20 7887 6599
dtaylor@ariansilver.com
Grant Thornton Corporate Finance
Gerry Beaney / David Hignell
(London) +44 (0)20 7383 5100
gerry.d.beaney@uk.gt.com
Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0)7768537739
dominic@yellowjerseypr.com
XCAP Securities PLC
Jon Belliss
(London) +44 (0)20 7101 7070
jon.belliss@xcapgroup.com
CHF Investor Relations
Juliet Heading
(Canada) +1 416 868 1079 x 239
juliet@chfir.com
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