London, England, Arian Silver Corporation (“Arian” or the “Company”) (TSXV: AGQ) (AIM: 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 three months ended 31 March 2012.

The MD&A and Financials are 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 during the first quarter of 2012 we have continued our progress towards becoming a large scale silver producer at our flagship San José Vein (“SJV”) property.

Arian produced 302 tonnes of silver concentrate during the quarter, a significant increase from the equivalent quarter last year. We continue to fine tune our toll mining operation where feasible and recently a fourth in line ball mill has been successfully commissioned which should improve daily plant throughput.

It is well known that silver prices have fallen significantly from mid-2011 highs and along with gold and other commodities, prices remain volatile. This coupled with the on-going major uncertainties in global economics makes forecasting difficult. The fall in silver prices will of course partially offset the profitability of our increasingly efficient operation at the SJV but the cash flow generated continues to support short term funding requirements.

As we have repeatedly stated the current small scale silver production at the SJV is very much a trial mining/ milling operation to produce data for an evaluation of a much larger operation. Detailed metallurgical and mine/mill design studies are underway and when the results of these studies are available we will report to all shareholders.

As detailed in the MD&A, on 12 March 2012 we reported considerable exploration success at the SJV. This resource update increases our contained silver ounces by some 32%, along with similar increases for lead and zinc since our previous independent mineral resources statement in July 2011. Shareholders should also note we currently receive no base metal credits from our current small scale operations. We are now planning further drilling to upgrade existing resources to the measured and indicated categories to support a potentially larger operation and to continue to drill the SJV in both an easterly and westerly direction. We also now have permission to drill within a one kilometre strike of the SJV within the Guanajuatillo township which might link existing blocks of inferred resources within the central portion of the SJV.

Global economic events affect us all and are not always in our control. Investor confidence is currently uncertain in many businesses and the junior mining market has been no exception. That said, as explained in our statements, at Arian we have a strong and growing asset base that we believe should gain wider investment support in due course as investor confidence returns to the sector and metal prices stabilise.

Once again thanks to all shareholders, employees and all those associated with supporting the company.”


Financial (all amounts are expressed in US dollars unless otherwise stated)

  • Revenue increased 102% to $2.3 million compared to Q1 2011

  • Gross loss improved by $0.1 million from a gross loss of $0.2 million in Q1 2011 to $0.1 million gross loss for Q1 2012.

  • Consolidated pre-tax profit has increased by $9.3 million from a loss of $8.4 million in Q1 2011(including a non-cash employees share options expense of $7.3 million for options vesting) to $0.9 million (including the reversal of a non-cash employee share options expense of $1.7 million for options lapsed).

  • Working capital decreased from $5.9 million in Q4 2011 to $5.1 million in Q1 2012.

  • Total assets increased from $16.3 million in Q4 2011 to $16.7 million. Q1 2012 includes intangible assets of $1.2 million, property, plant and equipment of $9.3 million, trade and other receivables of $2.3 million, inventories $0.9 million, financial assets $0.3 million and cash of $2.8 million.


  • San José production Q1 2012

    • 21,553 tonnes mined representing an increase of 11% from Q1 2011

    • 24,394 tonnes milled representing an increase of 15% from Q1 2011

    • 302 silver concentrate tonnes produced representing an increase of 107% from Q1 2011

    • 66,688 silver ounces produced representing an increase of 44% from Q1 2011

    • 330 silver concentrate tonnes sold representing an increase of 162% from Q1 2011

    • 75,911 silver ounces sold representing an increase of 96% from Q1 2011

  • San José exploration

    • Phase 4 drilling programme complete

    • Independent resource estimate updated by CSA Global (UK) Limited announced 12 March 2012:

      • 29% increase in resource tonnage along the SJV from the July 2011 mineral resource estimate;

        • Contained ounces of silver are increased by 32%;

        • Contained pounds of lead are increased by 29%; and

        • Contained pounds of zinc are 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.

Post 31 March 2012

  • Mill processing currently 400 tpd, this is primarily a result of the installation and operation of the fourth in-line ball mill.


Arian’s overall objective is to develop additional resources on the San José property concurrent with the existing contract mining and milling operations, complete a feasibility study, and move to larger-scale production.


In the three months ended 31 March 2012, the Company earned a pre-tax profit of $0.9 million (31 March 2011: $8.4 million) which includes a gross loss for the San José mine of $0.1 million (31 March 2011: $0.2 million), recognising the fair value non-cash expense of share purchase options vesting of $0.1 million (31 March 2011: $7.3 million), a credit of $1.7 million (31 March 2011: $nil) for the reversal of the fair value of share purchase options vesting that lapsed in the period and other administrative expenses of $0.8 million (31 March 2011: $0.8 million). Interest income from cash resources was $6,000 (31 March 2011: $11,000). Finance income was $0.1 million (31 March 2011: $0.1 million).

As at 31 March 2012, the Company had working capital of approximately $5.1 million (31 December 2011: $5.9 million). See Liquidity, Capital Resources and Working Capital for the items of working capital. Intangible assets amounted to $1.2 million (31 December 2011: $1.1 million) which relate to deferred exploration and evaluation costs in respect of the Company’s Mexican projects. Property, plant and equipment amounted to $9.3 million (31 December 2011: $8.1 million); $9.2 million of this relates to the San José mine development costs. Share capital increased by $0.1 million to $47.4 million (31 December 2011: $47.3 million) as a result of the issue of common shares in connection with the exercise of share options.


The Company currently owns 32 mineral concessions in Mexico totalling 8,038 hectares.

San José Project, Zacatecas State

The 100%-owned San José property is located approximately 55 kilometres to the southeast of Zacatecas City and comprises 11 mining concessions totalling approximately 6,300ha. The property has significant infrastructure, including a 4 x 5 metre (“m”) main haulage ramp (“SJ Ramp”) extending more than 4.0km along the footwall of the SJV system, and a 350m deep, 500 tonne per day (“tpd”) vertical shaft with operational hoist. In addition, a number of shallower vertical shafts are located along the SJV.

Production Information

Production information summary for San José mine is as follows:

Q1 2012Q4 2011Q3 2011Q2 2011Q1 2011
Head grade (mill) – Ag grams per tonne (g/t)173201199178178
Tonnes mined21,55324,43333,94122,38719,462
Tonnes milled24,39422,97121,51218,34821,128
Ag concentrate tonnes produced302256204144146
Recovery %49.0151.6847.7656.6638.08
Ag ounces produced66,68876,61865,80459,56846,236
Ag ounces per concentrate tonne produced221300323412316
Ag ounces sold75,91177,73877,58741,86838,772
Ag concentrate tonnes sold330242221117126

Quarter end inventory balances

Mined tonnes stockpile17,63720,47819,0169,9722,549
Ag concentrate inventory tonnes2452395729
Ag ounces included in concentrate inventory5,77214,99514,11823,07510,195

Head grade

The decrease in head grade from Q4 2011 to Q1 2012 by 14% was a result of optimising the total number of tonnes extracted in one of the Santa Ana blocks. The initial grade was calculated as being much higher but with significantly less tonnes. Arian optimised the increase of recoverable ore tonnes whilst still achieving significantly more than the mining grade cut off with the net result forecast to produce more silver ounces.

Tonnes mined

The increase in tonnes mined from Q1 2011 to Q1 2012 of 2,091 tonnes (11%) was a result of increased mining efficiencies including underground haulage.

The decrease in tonnes mined from Q4 2011 to Q1 2012 of 2,880 tonnes (12%) was a result of increased development in non-payable rock to access new stoping areas and to concurrently decrease the size of the stockpile.

Tonnes milled

The increase in tonnes milled from Q1 2011 to Q1 2012 of 3,266 tonnes (15%) and tonnes milled from Q4 2011 to Q1 2012 of 1,423 tonnes (6%) were largely a result of an increase in efficiency as a result of production improvements made at the mill.

Ag concentrate tonnes produced

The increase in concentrate tonnes produced from Q1 2011 to Q1 2012 of 156 tonnes (107%) and in concentrate tonnes produced from Q4 2011 to Q1 2012 of 46 tonnes (18%) were a result of improvements in throughput and efficiencies made at the mill.

% Recovery

The increase in recovery of 11 percentage points which represents a 29% increase from 38.08% in Q1 2011 to 49.01% in Q1 2012, was a result of further improvements to the mill; an exercise that is on-going.

Ag ounces produced

The increase in ounces produced from Q1 2011 to Q1 2012 of 20,452 ounces (44%) was a result of a combination of changes and improvements in the milling circuit, including increases in throughput, recovery and overall general improvements.

The decrease in ounces produced from Q4 2011 to Q1 2012 of 9,930 ounces (13%) was primarily a result of a result of the decrease in the head grade.

Mining Operations

The initial mining operation focussed on the Ramal Norte/Sur, San José 75 m 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 with the potential to increase the mining rate to circa 1,500 tpd subject to milling capacity availability.

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 further ball mill which commenced operation in May 2012. In particular, in Q1 2012 Arian developed 429 metres which includes 98 metres on the ramp, 179 metres preparation, 32 metres on raises and 120 metres exploration.

Recent ramp development in the Santa Ana area provided access to blocks indicated by diamond drilling enabling further verification of resource for further exploitation and extraction. The ramp continues development below level 120 to explore continuity of blocks as there is evidence of mineralisation at 300m depth.

Contract mining expectations remained unchanged at up to 500tpd. Mining was planned to operate 20 days per month. Total costs to mine and deliver ore to the mill are estimated at approximately $30/tonne.

Milling Operations

Although the mill has a maximum rating of 400tpd, it is not designed for the hardness and abrasiveness of the San José run of mine (“ROM”) material. When Arian commenced operations daily throughput of 120 tonnes was achieved, however it is currently milling approximately 400 tpd. This is a result of the installation of a reconditioned impact crusher which grinds the ROM material more finely before it is milled; the successful commissioning of the fourth in-line ball mill which commenced operating in May 2012; and the continuity of general improvements made to the mill.

The mill lease is a fixed cost of MXN 6 million ($0.46 million) per month. It is expected with the throughput of 400tpd approximately 125 tonnes of concentrate will be produced with an anticipated silver content of between 370 and 440 ounces per tonne (“opt”).

This continuing phase of pilot-scale milling allows Arian to review all key data providing Arian unique data to build an optimised/bespoke plant should it decide to pursue this route. Arian is also currently reviewing other alternatives as well as continuing to work to improve the current mill design and recoveries.

Based on a contained silver content of 370 opt at a spot price of $30/oz silver, a concentrate value of $9,700/tonne, after deductions, is forecast.

A 2% NSR (net smelter royalty) on SJV revenue is payable to the vendor of the San José property.

Exploration Drilling

In January 2012, Arian released further interim drill results relating to the phase 4 drilling programme which continued to show continuity of the vein thickness, silver mineralisation and grade along the SJV. Also announced were the results of the geophysical IP survey which successfully identified the areas of vein displacements and provided targets for 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 José”).

On 12 March 2012 an independent resource update which took into account all the phase 1, 2, 3 and 4 drilling programmes was published see section heading Mineral Resource.

Mineral Resource

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 José 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 GradeContained Metal


  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 12th 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 = 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.

The following reports prepared by A.C.A. Howe International Limited relating to the San José project are available on the Company’s website www.ariansilver.com or on SEDAR at www.sedar.com:-

a) Report dated 22 June 2009 and entitled “Preliminary Economic Assessment Report (PEAR) on the San José Silver-Lead-Zinc Deposit, Zacatecas, Mexico”; and

b) Report dated 15 August 2008 and entitled “Resource Estimation Update for the San José 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.


Arian has an independent laboratory on site which has been operational since April 2011; it is operated 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 decisions are made at the operation in a timely manner. In addition the laboratory provides an invaluable tool during drilling programmes which again has significantly decreased the turnaround times for analysis of Arian’s drill cores.

The laboratory comprises a comprehensive sample preparation facility, wet chemistry facility, with either Atomic Absorption Spectrometry (“AAS”) or fire-assay (“FA”) in use for final determinations of silver, lead and zinc. It is operated under the sole control and management of professional personnel from the Stewart Group who ensure the results are fully compliant with Arian’s quality assurance and quality control (QA/QC) programme.

Calicanto Project, Zacatecas State

Arian owns 100% of the Calicanto Project which consists of seven adjacent mining concessions totalling 75.5ha, 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.

Arian will commence further underground evaluation of the deeper levels of the Calicanto Vein once the water has receded to the appropriate level; this will include but not be limited to, mapping and underground sampling and subsequent analyses. 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.


During the period, the Company received new funding from:

  • the exercise of 525,000 share purchase options which generated £61,375

The following share purchase options are currently outstanding, each entitling the holder to acquire one common share of the Company:

  • 14,960,000 share purchase options with exercise prices ranging from £0.055 to £0.4925 (Cdn$0.10/Cdn$0.79) and expiring on various dates up to June 2016.

Working Capital — 31 March 2012
As at 31 March 2012, the Company had working capital of approximately $5.1 million (31 December, 2011: $5.9 million). The items of working capital and changes compared to 31 December 2011 are as follows:

Current assets

  • cash and cash equivalents – $2.8 million (31 December 2011: $4.0 million);

  • trade and other receivables – $2.3 million (31 December 2011: $1.9 million) — increase due to the trade debtor for the sale of silver concentrate from the San José mining operation;

  • inventories – $0.9 million (31 December 2011: $0.9 million) — relates to stockpile held at cost relating to production at the San José mine; and

  • financial assets held at fair value through profit or loss – $0.4 million (31 December 2011: $0.3 million) — relates to the Geologix shares received as part consideration for the final instalment for the sale of the Tepal project.

Current liabilities

  • trade payables – $1.2 million (31 December 2011: $1.2 million)

Management anticipates that the remainder of 2012 will show an improvement to revenues and production figures, based on the assumptions that silver prices will remain strong, although some volatility is expected, and further efficiencies should be realised at the mill. The preliminary results of the on-going mill and metallurgical studies are expected to be received during the second quarter. It is anticipated these studies will provide a platform which is expected to significantly increase efficiencies with milling and ultimately reduce Arian’s silver production cost per ounce.

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.

For further information please contact:

Arian Silver Corporation
Berkeley Square House
Berkeley Square


Arian Silver Corporation
Jim Williams
(London) +44 (0)20 7887 6599
[email protected]


Grant Thornton Corporate Finance
Gerry Beaney / David Hignell
(London) +44 (0)20 7383 5100
[email protected]


XCAP Securities PLC
Karen Kelly
(London) +44 (0)20 7101 7070
[email protected]


Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0) 7768 537 739
[email protected]


CHF Investor Relations
Cathy Hume
(Canada) +1 416 868 1079 x 231
[email protected]

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 José 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.

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 José 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.

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.



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