I've been in AIM and TSX listed emerging silver producer Arian Silver Corp (LON:AGQ) focused on the silver belt of Mexico for some time now. Liked the story - bought the shares! Here are my reasons!
I was particularly attracted by the fact that the shares can be held in an ISA. So it was a "definite and probable" buy in my mind from the off!
The main attraction of course is the likelihood of future profit and AGQ certainly holds out the prospect of this.
The company's website gives the company strategy as:
- Obtain advanced and low-cost (acquisition cost) silver projects and rapidly build up resources in the ground. Arian is focusing its exploration efforts in one of the richest known silver-bearing districts in the world - the Zacatecas State of Mexico.
- Focus on short-term silver production. Arian is in the process of acquiring undervalued silver projects with the potential for profitable production at US$4.50 or less, and a resource potential in excess of 50,000,000+ ounces of silver.
- Focus on projects with prior exploration and production history, thereby reducing risks and capital costs.
- Arian's forward-looking strategy is to:
- Develop projects towards production through a combination of company development and/or Joint Venture (JV) and acquisition opportunities.
- Building shareholder leverage to silver through expanding silver resources and reserves, and eventually production per share.
The company has a number of silver projects in Mexico, the largest being at their now 100% owned San Jose mine. They have interests in three other projects; Calicanto; Tepal [in conjuction with their farm-in partner Geologix Inc [TSX-GLX] and San Celso. But for the time being the focus is on San Jose. Here they intend to carry out contract mining on the presently defined 10% of the overall San Jose licence area. They expect to mine 500 tons or ore per day from this but the company announced on 24th August this year that they expected to be able to increase this to 1,500 tons per day in the future [see the Press Release on the company website] . The ore mined will not be processed on site. Negotiations have been on going for some time now with a number of local milling operators and Arian expect to conclude a satisfactory agreement with the succesful toll miller soon. Once a milling contract is announced and ore processing starts and the markets sees a substntial positive cash flow, then I expect the AGQ share price will increase substantially!
AGQ have stated [see the company website announcment dated 24th August] that it is their intention to use the cash flow from the contract mining to finance the development of therest of the 90% of the San Jose property. The company said:
"The 500tpd mining operation is limited to just three mining blocks, Ramal Norte, San José 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. Funds generated by the operation will be used to finance a new drilling programme at San José with the aim of further defining areas of high-grade mineralization by infill drilling and continuing the exploration of the SJV along its extensive westerly strike direction. Arian's past drill programmes along the SJV have so far only delineated some 10% of the known strike length of the SJV and Arian's management considers the upside for material additional resources along the SJV to be significant.
The overall objective is to develop the San José property concurrently with the initial mining operation, complete a full feasibility study and move to full scale independent commercial production."
So, in conclusion, we have a company here which is ISA-able and has the possibility [some say the "probability"] of becoming a profitable silver producer. It went into my ISA in April of this year and, so far I don't reget the decision.