Arian Silver - More than just an explorer

Wednesday, Mar 23 2011 by
6
Arian Silver  More than just an explorer

Arian Silver (LON:AGQ) has poured the first batch of sliver concentrate from its San Jose mine, as the explorer transitions to emerging producer. Arian has produced 120 tonnes of silver bearing concentrate and has sold approximate 68 tonnes, since production commenced at San Jose in October 2010. The plant is currently undergoing optimisation testing, with normal production of silver concentrate expected to be around 125 tonnes per month containing a minimum 400 ounces of silver per tonne. 

Ore for production is currently mined from two mining blocks which have the potential to supply 500 tonnes of ore per day and the company is already planning to increase this daily figure to 1,500 tonnes per day with additional milling capacity that is currently under assessment. This is a significant step-up from the current plant configuration which would when implemented boost cash flow to the company in a major way.

To aid in quality and assay control the company is now using its own onsite semi-mobile laboratory. Use of an onsite laboratory will improve the turnaround time for assay results from the current two plus weeks to around 48 hours.

To support the proposed upgrade in the plant capacity the company is partway through an approved 10,000 metre drill programme at the San Jose vein.  Grades along the San Jose vein have been exceptionally high and suggest that vein will be a major silver producer. 

It is our opinion the current investment environment driving the silver price should continue to support a robust price going forward. With silver remaining at elevated prices, we expect Arian’s operating margin and free cashflow from operations will only improve over the coming months.

San Jose has an indicated mineral resource of 2.2 million tonnes of ore showing 127.7g/t silver, 0.51% lead and 0.88% zinc for approximately 9 million ounces of silver. The inferred resource stands at 11.2 million tonnes of ore showing 93.4g/t silver, 0.39% lead and 0.83% zinc for approximately 33.8 million ounces of silver.

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These resource numbers are based on 10% of the Sane Jose resource having been resource definition drilled. We are of the opinion the current round of drilling will significantly boost these numbers when the company next upgrades its San Jose resource.

Not to be outdone the Calicanto project is showing its potential, with four silver veins discovered in a vein system that is largely un-explored. The first phase of drilling of some 3,200 metres has returned very encouraging results.   Average grades intercepted from drilling have also been very high And the company has indicated Calicanto has the potential for a silver resource in the range 25 to 50 million ounces of silver.

On the corporate front Arian has completed the sale of its Tepal gold and copper project in the state of Michoacan, Mexico.  The Tepal sale was made to enable Arian to focus on the development of its silver assets at San Jose and Calicanto.  Arian will retain an equity exposure to Tepal and the cash will improve the liquidity of the company. However, cashflow from silver sales will provide the cash to support future development and exploration.

This article was produced by Senior Research Analyst, David Lennox.  


Filed Under: Silver,

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Arian Silver Corporation is engaged in the acquisition and development of mineral resource assets. The Company’s wholly owned subsidiary, Arian Silver de Mexico S.A. de C.V., is engaged in the exploration and production of silver. The Company focuses on projects in the silver belt of Mexico. The Company owns 100% of the Calicanto Project, which consists of seven adjacent mining concessions over a 75.5 hectares area, such as Calicanto, Vicochea I, Vicochea II, Misie 1 and Misie 2, and Missie 1 and Missie 2 properties, collectively known as the Calicanto Group. Its San Jose project is located 55 kilometer southeast of Zacatecas city within the prolific silver belt of Mexico. The property consists of 11 mining concessions totaling approximately 6300 hectares and is 100% owned by the Company. more »

Share Price (AIM)
39.5p
Change
-1.0  -2.5%
P/E (fwd)
8.9
Yield (fwd)
n/a
Mkt Cap (£m)
13.7



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20 Comments on this Article show/hide all

Isaac 22nd Apr '11 1 of 20
3

I hold shares in Arian. This stock had a good run in 2010, but has gone sidways in 2011. I think the market is mistaken and it is worth pointing out the following from the above text :

 

San Jose has an indicated mineral resource of 2.2 million tonnes of ore showing 127.7g/t silver, 0.51% lead and 0.88% zinc for approximately 9 million ounces of silver. The inferred resource stands at 11.2 million tonnes of ore showing 93.4g/t silver, 0.39% lead and 0.83% zinc for approximately 33.8 million ounces of silver.

These resource numbers are based on 10% of the Sane Jose resource having been resource definition drilled. We are of the opinion the current round of drilling will significantly boost these numbers when the company next upgrades its San Jose resource.

As the company produces Silver it is able to fund the drilling of San Jose and I suspect as the year progress some of the 11.2million Inferred resource will become Indicated.

Let's not forget that Mexico is one of the big silver producers in the world. It is a bit like drilling for Oil in Iraq imho And 90% of the San Jose Vein  is still unexplored so massive upside to go for & Arian holds 100% of the licence..

Also a semi-mobile lab has been installed in San Jose which will mean more newsflow in the coming months from Assay results

"We are pleased to report further progressive news with the installation and commissioning, on-site at San Jose, of our fully equipped semi-mobile laboratory, comprising sample preparation, wet-chemistry and fire-assay facilities. Our laboratory, which will be independently managed by personnel from the Stewart Group, will significantly speed up the analysis of our exploration samples.

http://www.investegate.co.uk/Article.aspx?id=20110411070003M6552

I think it is good business when you are producing something at $10/oz and selling it at $46/oz.

Silver rose 80% in 2010 and is up 46% so far this year. Some would say the price has gone parabolic, but the gold to Silver ratio historically has been around 1/16 but it is currently 1/32 so silver still has a lot of catching up to do.

I am expecting the share price to be in triple digits at somepoint imho. DYOR.

 Company presentation worth a read : http://www.ariansilver.com/i/pdf/2011-03_AGQP.pdf

Results next week

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Gerry Wood 22nd Apr '11 2 of 20

It can't compare with Silvermex SLX on the TSE. Look at their metrics on GoldMinerPulse.com if you want to see the comparison!

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Isaac 23rd Apr '11 3 of 20

Well the Juniors have lagged in the recent rise of Silver price.

Silver is up about 50 % this year but Arian has gone sideways. There are rumours in the markets that the rise is being driven by HSBC and JP Morgan massively short the silver market & Investors are asking for physical delivery so eventually these banks will have to cover the billions of $ short positions they have.

Those that Invested in Gold & Silver did so because they have no confidence in the $ ... the $ is close to it's Nov 2009 low and may break it. I don't think people who Invested in Silver are about to switch their silver for a $50 note - a fiat currency they have no confidence in.

It is expensive for the man on the street to buy $1500/oz Gold, but it is very affordable for the man on the street to buy Silver at $46/oz.

I think Silver has a way to go yet and the Juniors will at somepoint take off again just like they did in the back end of 2010.

Having said all that I would prefer it if silver consolidated here, a parabolic move inevitably ends with an eventual drop. However the rise in Gold has been more consolidated and steady and one tends to follow the other. I suppose the magnitude of the rise in Silver was inevtiable as it had a a lot of catching up to do.

Just look at this chart for the Silver:Gold ratio, it clearly wants to head back to the levels it was back in the 70s

GSR-GM.gif

 

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Isaac 25th Apr '11 4 of 20
1

Silver has gone nuts overnight! It closed on Thursday at $46.5, opened last night around $47.5 but spiked overnight to $49.5

Arian has a lot of catching up to do.

silver.gif


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Fangorn 25th Apr '11 5 of 20

Wow, that's some silver spike.

Can one assume that JPM has thrown in the towel and is now covering?

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Isaac 25th Apr '11 6 of 20
1

Silver prices have climbed nearly 60 percent so far this year, after jumping more than 80 percent in 2010, outpacing gold's 7 percent rise and the 10-percent gain in the 19-commodity Reuters-Jefferies CRB index

http://uk.news.yahoo.com/22/20110425/tts-uk-markets-precious-ca02f96.html

I think it is about time Junior miners took off.

 

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snickers 25th Apr '11 7 of 20
4

http://www.kitco.com/charts/CPM_silver.html
is the page to look at if you want to appreciate what a tightrope you're on if investing in silver. 600moz real non-ETF demand & falling, 800moz supply & rising. same applies to gold, with the obvious difference that gold is ..is  ..whatever it is, and what it has been for a long long time. divinely heavy etc.

It is expensive for the man on the street to buy $1500/oz Gold, but it is very affordable for the man on the street to buy Silver at $46/oz.

what does that even mean?

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Fangorn 25th Apr '11 8 of 20

Presumably it means that, if the average man in the street wants to hedge himself against inflation using Silver to do so is within his meagre means(whereas using gold isn't practical for most)

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nigelpm 25th Apr '11 9 of 20
2

In reply to snickers, post #7


It is expensive for the man on the street to buy $1500/oz Gold, but it is very affordable for the man on the street to buy Silver at $46/oz.

what does that even mean?


Nothing. It's one of the most ridiculous lines I've read on a BB for a while.

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Isaac 25th Apr '11 10 of 20
2

Nothing. It's one of the most ridiculous lines I've read on a BB for a while.

Probably not even remotely as ridiculous as holding RBS through the biggest finanicla crisis in our lifetimes.

Agree with Fangorn.

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nigelpm 25th Apr '11 11 of 20
2

In reply to Isaac, post #10


Probably not even remotely as ridiculous as holding RBS through the biggest finanicla crisis in our lifetimes.

Agree with Fangorn.


LOL. what's that got to do with Silver?

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thebuffoon 25th Apr '11 12 of 20
2

Nigel: It's one of the most ridiculous lines I've read on a BB for a while.

Isaac: Probably not even remotely as ridiculous as holding RBS through the biggest finanicla (sic) crisis in our lifetimes.

But still ridiculous, yes? 

Buffy

 

 

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extrader 25th Apr '11 13 of 20
1

In reply to snickers, post #7

Hi snickers,

Thanks for the supply/demand graphs......sobering indeed.

But with the caveat that roughly 250K oz p.a. over the last decade or so seem to be sourced from 'sales by governments', so presumably finite "in the long run"........

DAK where shortsales as alleged re JPM and HSBC would figure (if at all) in these numbers ?

TIA in any event for the 'wealth warning' and need to DM (= more)OR.

ATB

Discl.: Modest holder of Hochschild Mining (LON:HOC) and Petropavlovsk (LON:POG)

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Isaac 18th Jul '11 14 of 20
1

Next Stop 50p.......IMO - Resource upgrade due any day now from Phase III drilling. Silver touched $40/oz tonight....I expect Gold and Silver to make new highs this year.

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Fangorn 19th Jul '11 15 of 20

Yep all eyes on the next resource upgrade. In the interim interesting to see silver climbing again(as is gold, reaching record highs)

Like you, am expecting gold and silver to make new highs throughout the year as the Euro zone implodes and concerns mount over the UK and US debt profiles.

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p3dr036 20th Jul '11 16 of 20

When is the next resource upgrade due???

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Isaac 20th Jul '11 17 of 20
3

lol - Err it was released this morning :-)

Excellent news!


July 20, 2011

Arian Silver Announces Significant Increase in Mineral Resources at San Jose

LONDON, ENGLAND--(Marketwire - July 20, 2011) - 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 silver belt of Mexico, today announced the results of its updated Canadian National
Instrument (NI) 43-101 mineral resource estimates for its 100% owned San Jose Property, located in Zacatecas
State, Mexico. The updated mineral resource estimates have been independently supervised by Mr. Malcolm Titley,
BSc, MAIG, Principal Consultant, CSA Global (UK) Limited.

Highlights:

-- 86% increase in resource tonnage along the San Jose Vein (SJV) from the
August 2008 mineral resource estimate, a copy of which is available under
Arian's SEDAR profile at www.sedar.com;

-- 10% higher average silver grade;

-- 105% increase in contained silver, and;

-- 34% of gross silver mineral content now in the indicated category.

-- Mineral resource estimates based on all Phase-1, 2 and 3 drill holes (152
drill holes totaling over 28,000 metres);

-- Mineralisation remains completely open along the western strike and to
depth, and;

-- Phase-4 drill programme underway with 5 holes for 1,745 metres completed
so far.

http://www.investegate.co.uk/Article.aspx?id=20110720065958M0622

 

Broker update from XCAP

 

 

XCAP:

Arian Silver (AIM:AGQ)
Huge Increase in Resource at San José

Arian Silver Corporation (“Arian Silver”) announces a huge increase to their
Canadian National Instrument (NI) 43-101 mineral resource estimate at the
100% owned San José Mine in Zacatecas State in Mexico.
The new San José resources estimate includes an 86.7% increase in resource
tonnage to 25.0 million tonnes from the initial 13.39 million tonnes reported
for Arian Silver’s maiden resource of August 2008.
Importantly, the silver grade increased by 10.7% to 110.04 Ag g/t, from 99.40
Ag g/t, with an ensuing growth of 106.8% for in-situ silver metal to 88.45
million ounces from 42.78 million ounces.
Arian Silver achieved this expansion whilst raising 30.03 million ounces of
silver into the important Indicated category, representing 34% of the total insitu
resource ounces and a 232.9% increase in the level of confidence from
the maiden resource.

The mineral resource estimate is based upon all of the Phase-1, 2 and 3 drill
holes which comprises 152 drill holes for a total length of 28,000 metres.
Comment: We believe this resource statement is a significant milestone for
Arian Silver. Investors sitting long of Arian Silver currently have many
reasons to carry their position, not least of which is a fourth phase of
drilling guaranteed to further increase this enviable resource. We maintain
our strong BUY recommendation and stand by our GBP 1.41 target price
detailed in our research report of April 2011.

 

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p3dr036 21st Jul '11 18 of 20
1

Oops!!

Excellent update which I read with delight .... and then watched the share price drop! Doh!! It dropped about 10% on the update yesterday and is down another 5% or so today.

Luckily I have held AGQ since April 2010 and, having added some more since then, my "average " price for them is around 20p and I expect the price to be much higher by the end of this year. But it seemked odd to me to see the price drop so far on what appeared to me to be really excellant news.

p3dr036

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ryanandbethan 22nd Jul '11 19 of 20
1

I've just bought in yesterday. I too read that RNS and thought it was positive

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Fangorn 22nd Jul '11 20 of 20

Very positive update - There's an Edison note out today as well

http://www.edisoninvestmentresearch.co.uk/researchreports/ArianSilver220711update.pdf

Happy to keep adding anytime it goes sub 35p

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