Arian Silver's MD&A and Results for the Three Months Ended 31 March 2010

May 27th, 2010

London, England, Arian Silver Corporation (“Arian” or the “Company”), a silver exploration and development 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 2010.


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

• Total assets of $11.9 million, including intangible assets of $6 million, other financial assets of $0.6 million, non-current assets held for sale of $2.9 million and cash of $2.1 million (as at 31 March 2010);

• Consolidated loss before tax for the period was $371,000;

• Working capital was $4.1 million (as at 31 March 2010);

• Successful reversal of the share exchanges entered into during 2009 with Grafton Resource Investments Ltd (“Grafton”) and discharged Grafton loans totalling $1.05 million;

• Successful completion of an equity private placement raising approximately Cdn$3.5 million before expenses; and

• Initial instalment of $1.45 million received from Geologix Explorations Inc (“Geologix”) following grant of the option to acquire the Company’s Tepal property and a $517,500 loan from Geologix was repaid.


• San José mineral concessions are now 100% owned;

• Further batch of drillhole assay results released in respect of the San José Project;

• Past drilling programmes have so far only tested some 10% of the known strike length of the San José Vein (“SJV”) system within the property’s boundaries;

• Production from planned contract mining operation at the San José Project anticipated to commence in Q2 of 2010, to generate a positive cash flow during the second half of 2010; and

• Plans for a new drilling programme on the SJV system to be funded from cash flow from the contract mining operation at San José.

Arian’s Chief Executive Officer, Jim Williams, commented today: “During the reporting period we have achieved significant progress both from an operational aspect as well in terms of enhancing the value of the Company. We have continued to gear up for the commencement of first production at San José with preparatory work at the mine site. Rates have been agreed for the contract mining and transportation to the proposed mill and final results from the bulk sampling are awaited so that contract negotiations and the mill toll can be finalised with the mill operator. Although delivery of these results is behind the original time-line given to us by the operator we remain optimistic of achieving a production target for Q2 of 2010 given the relatively short lead time needed for the contact miner to mobilise on site.

“Once in production it is envisaged a large part of the revenue will be used to further explore the San José Vein system with a view to significantly building upon the known resources which currently cover only some 10% of the known strike length of the Vein within the concession boundary. We look forward to reporting further progress at San José in due course.”

The MD&A and unaudited Financials are available at SEDAR at or on the Company’s website at 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.

In the period under review, the Company incurred an operating loss of $0.3 million (2009 - $0.5 million) which includes expensing the fair value of options vesting of $8,000 (2009 - $16,000), and other administrative expenses $0.3 million (2009 - $0.5 million). The Company does not yet generate any income from its operations. Interest income from cash resources was $4,000 (2009 - $1,000). An investment expense was incurred of $0.1 million (2009 - nil) which relates to the fair value adjustment of the Geologix Shares that the Company received in part settlement of the first instalment of the consideration for the grant of the Tepal Option (see Review of Operations - Tepal Project, Michoacán State and also Liquidity, Capital Resources and Going Concern in the MD&A).

As at 31 March 2010, the Company had working capital of approximately $4.1 million (31 December 2009 - $4.0 million). The principal components of current assets are (i) cash balances of approximately $2.1 million (31 December 2009 - $0.1 million), (ii) other financial assets at fair value through profit and loss, which comprises the Geologix Shares valued at $0.6 million (31 December 2009 - $nil) and (iii) non-current assets held for sale, which represents the carrying value of the Tepal project which has been transferred from intangible assets as a result of the grant of the Tepal Option, valued at $2.9 million (31 December, 2009 - $nil).

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. During the period, the Company repaid all current borrowings from new funds received. The first instalment of the Tepal Option consideration of $1.5 million (31 December, 2009 - $nil) is accounted for as deferred income in current liabilities pending exercise of the Tepal Option. Share capital reduced by $1.0 million to $37.2 million (31 December, 2009 - $38.2 million) reflecting 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 and the issue of common shares in connection with the Placement. See Liquidity, Capital Resources and Going Concern in the MD&A.

The Company currently owns, or has rights or options to purchase, 33 mineral concessions in Mexico totalling 7,847.8 hectares (“ha”), which excludes the mineral concessions relating to the Tepal project which are under option to Geologix.

San José Project, Zacatecas State
During the period Arian paid the final instalment of $500,000, to acquire the remaining 33.33% interest in the San José mineral concessions, to give it 100% control of the San José Project.

In relation to the proposed contract mining and toll milling operation, results from the final bulk metallurgical testwork from the proposed custom mill operator, anticipated for early May, are still to be delivered. This has delayed final contract negotiations in relation to the milling operation. However, given the preparatory work already completed on site and the relative short lead time for the mine contractor to mobilise on site, Arian’s Management believes that commencement of the initial 500 tpd mining operation during Q2 of 2010 remains on target. In addition, the expectation remains that the operation will generate positive cash flows during the second half of 2010.

During Q1 of 2010 operational activity was focussed on preparation for production at the San José mine site including laying a new access road and refurbishment of mine buildings to accommodate additional offices and to house the mining personnel.

In April 2010 the Company released a further batch of drillhole assay results from the Phase-2 drill programme that was completed in 2008 at the San José Project (see the Company’s press release dated 21 April 2010 entitled “Arian Silver Reports on Progress at San José”). 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. A new drill programme will proceed in due course, largely financed by revenue generated from the planned contract mining operation at San José. Its objective will be to further define areas of high-grade mineralization by infill drilling and to continue the exploration of the SJV along its extensive westerly strike direction.

The current NI 43-101 Resources at San José contained in the Report dated 15 August, 2008 are set out below:

Resource Category


Contained Metal






























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 IDW3, Ag grade wireframe restricted, linear block modelling.

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.

In Management’s view, the most meaningful information concerning Arian relates to its current liquidity and solvency since it is not currently generating any income from its mineral projects.

The Group continues to operate under tight expenditure controls in order to preserve cash resources.

During the period Arian 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 and are subject to a hold period expiring in July 2010.

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

• 34,995,453 “F” share purchase warrants at an exercise price of Cdn$0.10 per common share expiring 22 January 2011.

• 15,175,000 share purchase options with exercise prices of between Cdn$0.10 and Cdn$0.60 (with Pounds Sterling equivalents) and expiry dates of between June 2010 and July 2014.
It is anticipated that Arian’s requirement for additional funding in the next 12 months will be met from cash flow generated from the proposed initial contract mining operation at the San José Project, proceeds from disposal of the Geologix Shares, through the issue of equity capital, the exercise of outstanding share purchase warrants and options, the sale of its interests in one or more of its projects, by way of project joint ventures or business combinations. 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.
Based on current expectations the directors believe that Arian will have adequate resources to continue in operational existence for the foreseeable future. They therefore believe it appropriate to prepare Arian’s financial statements on a going concern basis. However, if these expectations are not fulfilled Arian may not be able to meet its currently projected working capital and project expenditure requirements without additional finance. If these circumstances arose and other sources of finance were not made available to Arian as needed, then there would be significant concerns regarding Arian ability to continue as a going concern.

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
Carlyle House
235-237 Vauxhall Bridge Road
London SW1V 1EJ

Jim Williams - CEO
(London) +44 (0)20 7963 8670 / email:

Graham Potts — CFO & Corporate Secretary
(London) +44 (0)20 7963 8670 / email:

Grant Thornton Corporate Finance
Gerry Beaney
(London) +44 (0)20 7383 5100 / email:

Yellow Jersey PR
Dominic Barretto
(London) +44 (0)20 8980 3545 / email

CHF Investor Relations
Alison Tullis
(Canada) +1 416 868 1079 Ext. 233 / email:

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 José projects in Zacatecas State. Arian’s Tepal project in Michoacán 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: or the Company’s publicly available records at

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.


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, funding from the disposal of assets or from other sources, the mineral resource estimates contained in this press release, statements regarding exploration results, potential mineralisation, potential mineral resources, future production and the Company’s exploration and development 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, 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.