London, England, Arian Silver Corporation ("Arian Silver" or the "Company"), a silver exploration, development and production company with a focus on projects in the silver belt of Zacatecas, Mexico, announces today the release of its Management's Discussion and Analysis ("MD&A") and unaudited Financial Statements ("Financials") for the three and six months ended 31 June 2014.
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 excellent operational progress with the refurbishment and reassembly of Arian Silver's processing plant, which is running ahead of budget. The extension of our loan note facility announced this morning will help the Company secure a financing arrangement capable of fully funding the San José project, which will see the Company's cash flow resume and larger scale production commence at rates of up to 1,500 tonnes per day. This is an important and positive step for Arian Silver and I look forward to announcing a more detailed update as soon as we have finalised the funding solution."
THE STRATEGY
The Company's strategy is to:
- establish a silver mining business capable of sustaining two million ounces per annum, and
- build shareholder value by expanding silver resources on the Company's mining concessions in Zacatecas, Mexico.
OVERVIEW OF SECOND QUARTER 2014
The company has made good progress in the advancement of the San Jose Project in the second quarter of 2014.
Highlights:
- Refurbishment of the Plant is now complete and the Plant is on track for commissioning by end 2014.
- Transportation of the refurbished Plant to the new site is near completion.
- Installation of a new line to supply grid power to the new plant site was completed.
- Development of a new access ramp into the Soledad section of the San José mine commenced.
Financial
| Three months ended 30 Jun 2014 | Three months ended 30 Jun 2013 | Change | Six months ended 30 Jun 2014 | Six months ended 30 Jun 2013 | Change | ||||
| $000s | $000s | $000s | $000s | $000s | $000s | ||||
| Revenue | – | 129 | (129) | – | 129 | (129) | |||
| Gross loss | (140) | (284) | 144 | (153) | (490) | 337 | |||
| Net loss for the period | (699) | (947) | 248 | (1,752) | (1,903) | 151 | |||
| As at 30 Jun 2014 | As at 31 Dec 2013 | Change | |||||||
| $000s | $000s | $000s | |||||||
| Cash and cash equivalents | 3,030 | 7,241 | (4,211) | ||||||
| Total assets | 30,687 | 28,366 | 2,321 | ||||||
Total assets increased since 31 December 2013 following the continued investment in the Plant and the development of the San José mine, and the capitalisation of interest for the period. The movement in cash balance reflects the continued investment in the mine and Plant together with general working capital spend.
The reduced gross loss between the Q2 2013 and Q2 2014 periods comes as a result of the Company's switch from production to development. The reduced net loss is primarily on account of the fair value adjustment relating to the derivative liability (this is explained further in note 7 to the Q2 Financial Statements).
Discussions over the refinancing of the Company's convertible debt instrument continue to advance positively.
Operations
| Second Quarter 2014 | Second Quarter 2013 | Change | |
| Head grade – Ag grams per tonne | – | 191 | (100%) |
| Tonnes mined | 1,588 | 4,628 | (66%) |
| Tonnes milled | – | 3,221 | (100%) |
| Silver concentrate tonnes produced | – | 43 | (100%) |
| Silver ounces produced | – | 8,180 | (100%) |
| Silver ounces per concentrate tonne produced | – | 190 | (100%) |
REVIEW OF OPERATING PERFORMANCE
| Q2 2014 | Q1 2014 | Q4 2013 | Q3 2013 | |
| Head grade – Ag grams per tonne (g/t) | – | – | – | – |
| Tonnes mined | 1,588 | 5,739 | 8,057 | 1,816 |
| Tonnes milled | – | – | – | – |
| Silver concentrate tonnes produced | – | – | – | – |
| Recovery % | – | – | – | – |
| Silver ounces produced | – | – | – | – |
| Silver ounces per concentrate tonne produced | – | – | – | – |
| Silver ounces sold | – | – | – | – |
| Silver concentrate tonnes sold | – | – | – | – |
| Quarter end inventory balances | ||||
| Mined tonnes stockpile | 34,342 | 32,754 | 27,015 | 18,958 |
| Silver concentrate inventory tonnes | – | – | – | – |
| Silver ounces included in concentrate inventory | – | – | – | – |
| Q2 2013 | Q1 2013 | Q4 2012 | Q3 2012 | |
| Head grade – Ag grams per tonne (g/t) | 191 | 174 | – | – |
| Tonnes mined | 4,628 | – | – | 4,072 |
| Tonnes milled | 3,221 | 258 | – | – |
| Silver concentrate tonnes produced | 43 | 4 | – | – |
| Recovery % | 41.42 | 60.90 | – | – |
| Silver ounces produced | 8,180 | 878 | – | – |
| Silver ounces per concentrate tonne produced | 190 | 251 | – | – |
| Silver ounces sold | 9,058 | – | – | 8,937 |
| Silver concentrate tonnes sold | 37 | – | – | 32 |
| Quarter end inventory balances | ||||
| Mined tonnes stockpile | 17,142 | 17,935 | 18,192 | 18,204 |
| Silver concentrate inventory tonnes | – | 4 | – | – |
| Silver ounces included in concentrate inventory | – | 878 | – | – |
The Company has completed the refurbishment of the Plant in-situ, and has commenced the dismantling and transport of the Plant to the Company's 100%-owned site adjacent to the San José mine. A new line to supply grid power to the new plant site has been installed, pre-construction earthmoving is complete, the laying of foundations is part complete. The new decline into the Soledad section of the San José mine which was commenced during the first quarter, has intersected the vein.
Development of the Plant remains on target to begin commissioning by the end of 2014.
Mining and development at the San José mine were maintained at a reduced rate during Q2 2014 as the Company operates a programme of mine development designed to ensure readiness for the resumption of processing operations.
SUBSEQUENT EVENTS
On 28 August 2014 the Company extended the maturity date of its convertible loan note facility with Platinum Long Term Growth VIII, LLC from 28 August 2014 to 30 September 2014 for consideration of US$350,000.
REVIEW OF FINANCIAL PERFORMANCE
Summary of Quarterly Results
The Company's focus during the quarter was the ongoing project of the refurbishment, relocation and construction of the El Bote Processing Plant and the development of the San José mine.
| Unaudited | Q2 2014 $'000 | Q1 2014 $'000 | Q4 2013 $'000 | Q3 2013 $'000 |
| Revenue | – | – | – | – |
| Cost of sales | (140) | (13) | (49) | (25) |
| Gross loss | (140) | (13) | (49) | (25) |
| Net investment income | (2) | 2 | 1 | 44 |
| Net profit/(loss) for the period | (699) | (1,053) | (583) | 875 |
| Basic and diluted earnings/(loss) per share | ($0.02) | ($0.03) | ($0.02) | $0.03 |
| Total assets | 30,687 | 29,454 | 28,366 | 27,361 |
| Total non-current financial liabilities | (192) | (190) | (187) | (185) |
| Shareholders' equity | (14,368) | (14,842) | (15,784) | (15,717) |
| Unaudited | Q2 2013 $'000 | Q1 2013 $'000 | Q4 2012 $'000 | Q3 2012 $'000 |
| Revenue | 129 | – | 34 | 136 |
| Cost of sales | (413) | (206) | (256) | (475) |
| Gross loss | (284) | (206) | (222) | (339) |
| Net investment income/(loss) | (68) | (21) | (84) | 57 |
| Net loss for the period | (947) | (956) | (1,156) | (968) |
| Basic and diluted loss per share | ($0.03) | ($0.03) | ($0.04) | ($0.03) |
| Total assets | 14,582 | 15,154 | 14,119 | 14,409 |
| Total non-current financial liabilities | (182) | (186) | (177) | (175) |
| Shareholders' equity | (13,414) | (13,971) | (13,003) | (13,464) |
FUTURE OUTLOOK
The Company is currently in an advanced stage of the refurbishment, transport and construction of the El Bote Processing Plant.
The Plant, which is expected to have begun commissioning by the end of 2014 is projected to deliver substantial cost savings against the previous toll milling operations. With reduced operating costs, the Company should enjoy significantly higher operating margins than would otherwise have been achievable under previous toll milling arrangements.
The completion of the construction of the Plant will be a significant development for the business and a critical event as the business moves towards the execution of its long term strategy.
The Company's financing arrangements are at an important stage, and continue to progress positively.
For further information please contact:
| Arian Silver Corporation Jim Williams, CEO David Taylor, Company Secretary (London) +44 (0)20 7887 6599 [email protected] | Hume Capital, Broker Jon Belliss / Abigail Wayne (London) +44 (0)20 7101 7070 [email protected] |
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| Grant Thornton UK LLP Philip Secrett / David Hignell (London) +44 (0)20 7383 5100 [email protected] | Yellow Jersey PR Limited Dominic Barretto (London) +44 (0)7768537739 [email protected] |
Forward-Looking Information:
This press release contains certain "forward-looking information". 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. This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company as well as certain assumptions (including that the Company will be able to obtain the necessary financing). Forward-looking information is subject to a number of significant risks and uncertainties and other factors that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, and even if such actual results are realized or substantially realized, 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, but are not limited to, the failure to raise the necessary financing, as well as unexpected delays in completing the transportation and refurbishment of the El Bote Processing Plant which could lead to unexpected delays in the start of operations and delays in the Company's mine expansion plans.
Any forward-looking information 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 information, 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 information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.
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.
