TIDMAGQ
Arian Silver's MD&A and Results for the Nine Months Ended 30 September 2010
FOR: ARIAN SILVER CORPORATION
TSX VENTURE, AIM, PLUS SYMBOL: AGQ
FRANKFURT SYMBOL: I3A
November 25, 2010
Arian Silver's MD&A and Results for the Nine Months Ended 30 September 2010
LONDON, ENGLAND--(Marketwire - Nov. 25, 2010) -
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)(PLUS:AGQ)(FRANKFURT:I3A), a
silver exploration, development and production company with a focus on projects in the Zacatecas Silver Belt of
Mexico, today announced the release of its Management's Discussion and Analysis ("MD&A") and unaudited
Financial Statements ("Financials") for the nine months ended 30 September 2010.
HIGHLIGHTS
/T/
Financials (all amounts expressed in US dollars unless otherwise stated)
=- Total assets of $12.4 million, including intangible assets of $6
million, other financial assets of $0.3 million, non-current assets held
for sale of $2.8 million and cash of $2.4 million (as at 30 September
2010);
=- Consolidated loss for the period was $911,000;
=- Working capital was $4.0 million (as at 30 September 2010);
=- Exercise of share purchase warrants, share options and disposals of
Geologix Shares generated GBP 35,750 and Cdn$1.3 million; and
=- During the period the Company repaid all current borrowings from new
funds received.
Post 30 September 2010
=- Completion of a brokered and non-brokered private placement raised gross
proceeds of approximately GBP 3.9 million; and
=- Further exercise of share purchase warrants, share options and disposals
of Geologix Shares generated GBP 17,875 and Cdn$1.4 million.
Operations
=- Arian's key project is the San Jose property which lies 55km to the
South-East of Zacatecas City and covers 11 mining concessions totalling
approximately 6,300 hectares. The property has significant
infrastructure, including a 4 x 4 metre main haulage ramp, which extends
for nearly 3km along the footwall of the San Jose Vein system and a 350m
deep, 500 tonne per day ("tpd"), vertical shaft with hoist.
=- During the period Arian paid the final instalment of $500,000, to
acquire the remaining 33.33% interest in the San Jose property mineral
concessions, to give it 100% control of the San Jose Project;
=- Contracts signed for the planned 500tpd contract mining and milling
operation at the San Jose Project and the mining contractor mobilized to
commence production;
=- Milling operation will initially handle up to 400 tpd with plans to
increase the throughput with an upgraded crusher;
=- Cash flow from the San Jose mining operation is expected during Q4 of
2010; and
=- Potential to increase production at San Jose from 500tpd up to 1,500tpd.
Post 30 September 2010
=- Production commenced at San Jose with payable ore being stockpiled for
delivery to the mill;
=- Underground development work focused on the Santa Ana block, the initial
target block to be mined;
=- New 10,000m drilling programme commenced at San Jose; and
=- Contract signed for purchase of new laboratory facility for San Jose.
/T/
Arian's Chief Executive Officer, Jim Williams, commented today: "Thanks to the ongoing support of our
shareholders, we have been able to significantly increase the Company's value to date during the current
financial year. Mining has now commenced on the San Jose Vein ("SJV") and we are currently stockpiling run-of
mine ("ROM") material for delivery to the mill. Milling of ROM will commence shortly.
We now own 100% of the 6,300 hectare San Jose property and associated infrastructure and have started a new
10,000 metre drilling programme with a view to upgrading and increasing the existing resources within the known
area of mineralisation and to start to drill along the western strike extension of the SJV, 90% of which
remains largely untested.
The commissioning of an independently-run but 100% Arian-owned fully equipped laboratory on site at San Jose
will help us report all exploration results in a timely fashion thus allowing more rapid evaluation of the
potential for expansion.
Your Company has now joined the ranks of silver producers and we believe it will demonstrate the development
and expansion potential along the SJV at a time of buoyant silver prices over the foreseeable future.
My thanks again go to our shareholders for their support over the period and to management, staff and advisors
who have all contributed to the move into production".
MD&A AND FINANCIALS
The MD&A and unaudited Financials are available at SEDAR at www.sedar.com or 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 and includes defined terms used in the MD&A and Financials. The financial
information in this announcement does not constitute full statutory accounts.
REVIEW OF FINANCIAL PERFORMANCE
In the nine months ended 30 September 2010, the Company incurred an operating loss of approximately $1.2
million (2009 - $1.5 million). The Company does not yet generate any income from its operations. Interest
income from cash resources was $4,000 (2009 - $nil). Investment income was $0.2 million (2009 - $nil), of which
$0.1 million relates to the profit on disposal of part of the Company's holding of Geologix Shares, received in
connection with the grant of the Tepal Option and $0.1 million relates to a fair value adjustment gain in
respect of the balance of Geologix Shares held as at 30 September 2010 (see Liquidity, Capital Resources and
Working Capital). The loss for the period was $0.9 million (2009 - $1.5 million).
As at 30 September 2010 the Company had working capital of approximately $4.0 million (31 December 2009 - $4.0
million). See Liquidity, Capital Resources and Working Capital for the principal items of working capital.
Intangible assets amounted to $6.0 million (31 December 2009 - $7.7 million) which relate to deferred
exploration and evaluation costs in respect of the Company's Mexican projects, excluding the Tepal project. The
carrying value of the Tepal project has been transferred from intangible assets and is accounted for in current
assets as non-current assets held for sale valued at $2.8 million (31 December, 2009 - $nil) as a result of the
grant of the Tepal Option. The first instalment of the Tepal Option consideration from Geologix Explorations
Inc ("Geologix"), which is non-refundable, is accounted for as a deferred income item of $1.5 million (31
December, 2009 - $nil) in current liabilities pending exercise or termination of the Tepal Option. Share
capital reduced by $0.3 million to $37.9 million (31 December, 2009 - $38.2 million) largely as a result of the
redemption and cancellation of the common shares issued in 2009 to Grafton Resource Investments Ltd
("Grafton"), the issue to Grafton of common shares for debt offset by the issue of common shares in connection
with a share placement and the exercise of share purchase warrants and share options. During the period the
Company repaid all current borrowings from new funds received.
REVIEW OF OPERATIONS
The Company currently owns, or has rights or options to purchase, 32 mineral concessions in Mexico totalling
approximately 8,038 hectares ("Ha"), which excludes the mineral concessions relating to the Tepal project which
are under option to Geologix.
San Jose Project, Zacatecas State
The San Jose property lies 55km to the South-East of Zacatecas City and covers 11 mining concessions totalling
approximately 6,300Ha. The property has significant infrastructure, including a 4 x 4 metre ("m") main haulage
ramp, which extends for nearly 3km along the footwall of the San Jose Vein ("SJV") system, and a 350m deep, 500
tonnes per day ("tpd"), vertical shaft with hoist.
During the period Arian paid the final instalment of $500,000, to acquire the remaining 33.33% interest in the
San Jose mineral concessions, to give it 100% control of the San Jose Project.
In September 2010, the Company announced that all necessary contracts were in place for the proposed silver
production operation at the San Jose mine and that it was moving into production (see the Company's press
release dated 22 September 2010 entitled "Arian Silver Commences Silver Production"). Key points from that
release are as follows:
/T/
=- A 500tpd contract mining operation at the San Jose Project has been
mobilized to commence production;
=- Mining is planned to operate 20 days per month. Total costs to mine and
deliver ore to the mill are estimated at approximately US$26/tonne;
=- The milling operation will initially handle up to 400tpd with plans to
increase the throughput with an upgraded crusher. Mill hire is a fixed
cost at MXP3.7 million (approximately US$290,000) per month, subject to
adjustment for any operating downtime. This includes all operating
costs, maintenance and repair costs and consumables;
=- At a milling rate of 400tpd, 125 tonnes of concentrate should be
produced per month with an anticipated silver content of between 370 and
440 ozs per tonne ("opt");
=- Based on a contained silver content of 405opt at US$18/oz silver, a
concentrate value of US$6,500/tonne, after deductions, should be
achieved;
=- A 2% NSR on concentrate value payable to the vendor of the San Jose
property; and
=- Cash flow expected in Q4 of 2010.
/T/
The 500tpd mining operation is limited to just three mining blocks, Ramal Norte, San Jose 75m Level Central
Zone and Santa Ana, selected by Arian to support a four-year mine life with the potential to increase the
mining rate to 1,500tpd subject to milling capacity being available.
In October 2010, production at the San Jose mine commenced with ore being stockpiled for delivery to the mill.
New underground development to reach the Santa Ana block, the first of the three target blocks to be mined, has
progressed well and according to the mining plan. The development work is extracting a combination of payable
and non-payable material. Payable Run-of-Mine ("ROM") material is being deposited on the stockpile pad outside
the main San Jose mine ramp. The accumulation of this ROM material on the stockpile pad is designed to ensure a
smooth and constant supply of material to the mill. It is anticipated that the first transportation of the
Santa Ana ROM material to the mill will take place in the near future. Minor improvements to the mill are also
progressing well with a view to increasing the mill efficiency.
Arian's previous two drill programmes along the SJV delineated both a JORC and NI 43-101 compliant resource
estimates of approximately 43 million ounces of silver, 120 million pounds of lead and 250 million pounds of
zinc within only approximately 10% of the known strike length of the SJV within the concession area. Arian's
management considers the upside for material additional resources along the SJV system to be significant.
In November 2010, a new 10,000 metre drill programme was commenced which is aimed initially 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 will also start to explore in detail the SJV
system that lies to the west of the village of Guanajuatillo, which collectively accounts for approximately 90%
of the known strike length of the SJV system. One drill rig has commenced drilling at San Jose and a second
drill rig will be mobilised and operational shortly.
Also in November 2010, Arian contracted to purchase a semi-mobile laboratory, which is being sourced by Stewart
Group's Geochemical & Assay Division (the "Stewart Group"). The laboratory comprises a comprehensive sample
preparation facility, a fire assay laboratory and a wet chemistry laboratory that has facilities for Atomic
Absorption Spectrometry ("AAS"). The laboratory will be under the sole control and operational 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. It is anticipated that the laboratory will be fully set up
within approximately 6-8 weeks in a secure area on the mine compound at San Jose. Prior to the laboratory
becoming operational, Arian will utilise the analytical services of the Stewart Group's sample preparation
facility in Zacatecas. The Stewart Group, headquartered in the United Kingdom, provides a network of accredited
laboratories and metallurgical services to mining and exploration companies.
Arian's overall objective is to develop additional resources on the San Jose property concurrently with the
initial mining operation, complete a full feasibility study and move to large-scale independent commercial
production.
The current JORC and NI 43-101 Resources at San Jose contained in a report prepared by A.C.A. Howe
International Limited dated 15 August, 2008 and entitled "Resource Estimation Update for the San Jose Silver-
Lead-Zinc Deposit, Zacatecas, Mexico" (available on the Company's website www.ariansilver.com or on SEDAR at
www.sedar.com) are set out below:
/T/
=----------------------------------------------------------------------
Resource Category Grade Contained Metal
Tonnes Ag Pb Zn Ag Pb Zn
=----------------------------------------------------------------------
g/t % % (Moz) (t) (t)
=----------------------------------------------------------------------
Indicated 2,196,000 127.7 0.51 0.88 9.02 11,200 19,200
=----------------------------------------------------------------------
Inferred 11,190,000 93.8 0.39 0.83 33.76 43,400 93,200
=----------------------------------------------------------------------
1. Geological characteristics and +30 ppm grade envelopes used to define
resource volumes
2. The mineral resource estimates are in accordance with CIM and JORC
standards
3. The effective date of the mineral resource estimates is 15 August, 2008
4. The estimates are based on geostatistical data assessment and
computerised IDW(3), Ag grade wireframe restricted, linear block
modelling.
/T/
The "Qualified Person" as such term is defined in NI 43-101 who prepared the above mineral resource estimates
is Mr. Galen R White. Mr White was at the time these estimates were prepared an employee of A.C.A. Howe
International Limited.
LIQUIDITY, CAPITAL RESOURCES AND WORKING CAPITAL
In management's view, the most meaningful information concerning the Group relates to its current liquidity and
solvency since it is not currently generating any income from its mineral projects.
/T/
During the period the Group received new funding from:-
=- a private placement financing of units ("Units") each consisting of one
common share of the Company and one-half of a common share purchase
warrant (the "Placement"). The Placement raised Cdn$3,499,857 through
the issue of 69,997,139 Units at Cdn$0.05 per Unit. In addition 600,000
Units were issued in satisfaction of Cdn$30,000 of finder's fees payable
in connection with the Placement. As part of the Placement, 35,298,569
"F" share purchase warrants were issued.
=- the first instalment of $1.45 million under the Tepal Option granted to
Geologix. Settlement was effected by way of a cash payment of $725,000
and the balance of $725,000 through the issue of 3,434,193 Geologix
shares (the "Geologix Shares") at a price of Cdn$0.22 per share. The
Geologix Shares are listed on the Toronto Stock Exchange.
=- the sale of 2,442,193 Geologix Shares at prices varying between Cdn$0.23
and Cdn$0.40, which generated Cdn$674,035.
=- the exercise of 650,000 share purchase options and 6,528,116 "F" share
purchase warrants which generated GBP 35,750 and Cdn$652,812
respectively.
Since the period end the Group has received further funding from:-
=- the sale of the balance of 992,000 Geologix Shares at prices varying
between Cdn$0.40 and Cdn$0.57 raising proceeds of Cdn$487,221.
=- the exercise of 325,000 share purchase options and 8,729,083 "F" share
purchase warrants which generated GBP 17,875 and Cdn$872,908
respectively.
The following share purchase warrants and options are currently outstanding
each entitling the holder to acquire one common share of the Company:
=- 20,041,370 "F" share purchase warrants at an exercise price of Cdn$0.10
per common share expiring 22 January 2011.
=- 11,225,000 share purchase options with exercise prices of GBP
0.12/Cdn$0.25 and GBP 0.055/Cdn$0.10 and expiry dates of June 2013 and
July 2014.
/T/
It is anticipated that additional funding will be generated by cash flow from the contract mining operation at
the San Jose Project. In addition, on full exercise of the Tepal Option, a second instalment amounting to $1.55
million is due from Geologix in February 2011, which, at Geologix's election, may be made in cash, or up to 50%
in Geologix's shares valued at the 10-day average closing price immediately prior to the time of payment.
Working Capital - 30 September, 2010
As at 30 September, 2010, the Company had working capital of approximately $4.0 million (31 December, 2009 -
$4.0 million). The principal items of working capital and changes compared to the 31 December 2009 (amounts)
are as follows:-
/T/
Current assets
=- cash and cash equivalents $2.4 million ($0.1 million) - increase has
largely arisen through funds from the Placement, sale of Geologix Shares
and the exercise of share purchase warrants and options.
=- investments - available for sale assets $nil ($5.6 million) - decrease
due to the redemption of the Grafton Shares.
=- other financial assets at fair value through profit and loss $0.3
million ($nil) - relates to the fair value of the balance of Geologix
Shares.
=- non-current assets held for sale $2.8 million ($nil) - relates to the
carrying value of the Tepal project reclassified from intangible assets
as a result of the grant of the Tepal Option.
Current liabilities
=- current borrowings $nil ($1.6 million) - decrease arises from repayment
of loans from Grafton and Geologix.
=- deferred income $1.5 million ($nil) - relates to the value of the non-
refundable first instalment of the Tepal Option consideration pending
exercise of the Tepal Option.
/T/
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 projects are the Calicanto and
San Jose projects in Zacatecas State. Arian's Tepal project in Michoacan State is subject to an exclusive
purchase option to Geologix Explorations Inc. 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 IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES NOR FOR DISSEMINATION IN THE
UNITED STATES
This news 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 to fund a drilling program on the SJV system, the ability to implement a proposed drilling
program 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 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 commodity prices, 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.
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
Arian Silver Corporation
Carlyle House
235-237 Vauxhall Bridge Road
London SW1V 1EJ
England
OR
Arian Silver Corporation
Jim Williams
CEO
(London) +44 (0)20 7963 8670
jwilliams@ariansilver.com
OR
Arian Silver Corporation
Graham Potts
CFO & Corporate Secretary
(London) +44 (0)20 7963 8670
gpotts@ariansilver.com
OR
Grant Thornton Corporate Finance
Gerry Beaney
(London) +44 (0)20 7383 5100
gerry.d.beaney@gtuk.com
OR
XCAP Securities PLC
John Grant / Karen Kelly
(London) +44 (0)20 7101 7070
John.Grant@xcapgroup.com / Karen.Kelly@xcapgroup.com
OR
Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0)20 8980 3545
dominic@yellowjerseypr.com
OR
CHF Investor Relations
Cathy Hume
(Canada) +1 416 868 1079
cathy@chfir.com
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
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