Arian Silver's MD&A and Results for the Financial Year Ended 31 December 2013

March 20th, 2014

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 Zacatecas, Mexico, today announces the release of its Management’s Discussion and Analysis (“MD&A”) and unaudited Financial Statements (“Financials”) for the year ended 31 December 2013.

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 that the refurbishment of Arian’s wholly owned processing plant, purchased in August 2013, remains on-track. When operating at the maximum capacity of 1,500 tonnes per day (“tpd”), the plant will have three times the throughput capacity of each of the Company’s previous toll milling operations. This, together with expectations of significantly better overall efficiencies, will enable us to realise the long-anticipated potential of the Company’s 100% owned San José silver-lead-zinc project.

I would like to formally thank shareholders, employees, and all those associated with supporting Arian Silver. It has been a year which has seen the Company take great strides towards becoming a medium-sized silver producer. The team and I remain energised and committed to executing prudently on the Company’s strategy.



OVERALL PERFORMANCE

This past year has seen Arian take great strides towards becoming a medium-sized silver producer.

In the early part of the year, Arian pursued the resumption of toll milling operations until this was terminated in June against the backdrop of the anticipated acquisition of a suitable second-hand custom processing plant.

On 29 August 2013 the Company issued a $15.6 million convertible note (“Note” or “Convertible Note”) and simultaneously acquired the El Bote processing plant (“El Bote” or the “Plant”) for $3.12m. This was a significant step for the Company as it enabled the elimination of its reliance on third-party toll millers and is expected to provide significantly increased operational control and efficiency, which should translate into reduced operational costs and superior metal recoveries.

Since acquiring the Plant, Arian has been focussed on its refurbishment, making preparations for its relocation to the Company’s San José project site, and developing the San José mine to prepare for the increase in production capacity.

Summary Financial Information

Annual 2013

Annual 2012

Change

$000s

$000s

$000s

Revenue

129

4,588

(4,459)

Gross loss

(564)

(764)

200

Net loss for the period

(1,611)

(4,031)

2,420

Cash and cash equivalents

7,241

491

6,750

Total assets

28,366

14,119

14,247

The decrease in revenue on 2012 results reflects the termination of toll milling operations in June 2013.

The net loss for the period reduced year-on-year due to the gain recognised in relation to the fair value adjustment of the derivative liability element of the Note and was offset by the transaction costs relating to the Convertible Note, a foreign exchange loss and an increase in the fair value adjustment for share based payments.

Cash and cash equivalents increased since 31 December 2012 following the issue of the Convertible Note and drawdowns of the Company’s Standby Equity Distribution Agreement (“SEDA”) facility.

Total assets increased since 31 December 2012 primarily due to the increase in cash at bank, and the acquisition of the El Bote processing plant.

A 7.5% royalty on taxable profits and a 0.5% net smelter royalty were introduced in Mexico with effect from 1 January 2014. These taxes have not been incurred by Arian Silver to date, and other mining companies operating in similar areas are currently challenging the application of these taxes. Advice received from Arian’s external Mexican legal advisers indicates the Company has a strong legal case to challenge the application of these royalties.

REVIEW OF OPERATIONS

San José project, Zacatecas State

Overview

The 100%-owned San José property lies 55 kilometres to the southeast of the city of Zacatecas and covers eight mining concessions totalling approximately 6,134 hectares. The property has significant infrastructure, including a 4x5 metre main haulage ramp extending more than 4.0 kilometres along the footwall of the San José Vein system, and a 350 metres deep, 500 tpd vertical shaft with an operational hoist. In addition, a number of shallower vertical shafts are located in a westerly direction along the vein.

2013

Full Year

Q4

Q3

Q2

Q1

Production information summary for San José mine

Head grade (mill): Ag grams per tonne (g/t)

189

-

-

191

174

Tonnes mined

14,501

8,057

1,816

4,628

-

Tonnes milled

3,479

-

-

3,221

258

Ag concentrate tonnes produced

47

-

-

43

4

Recovery %

42.74

-

-

41.42

60.90

Ag ounces produced

9,058

-

-

8,180

878

Ag ounces per concentrate tonne produced

194

-

-

190

251

Ag ounces sold

9,058

-

-

9,058

-

Ag concentrate tonnes sold

37

-

-

37

-











Quarter end inventory balances

Mined tonnes stockpile

27,015

27,015

18,958

17,142

17,935

Ag concentrate inventory tonnes

-

-

-

4

4

Ag ounces included in concentrate inventory

-

-

-

1,204

878



2012

Full Year

Q4

Q3

Q2

Q1

Production information summary for San José mine

Head grade (mill): Ag grams per tonne (g/t)

177

-

-

181

173

Tonnes mined

51,893

-

4,072

26,268

21,553

Tonnes milled

53,297

-

-

28,903

24,394

Ag concentrate tonnes produced

600

-

-

298

302

Recovery %

53.88

-

-

58.74

49.01

Ag ounces produced

165,304

-

-

98,616

66,688

Ag ounces per concentrate tonne produced

275

-

-

331

221

Ag ounces sold

177,960

-

8,937

93,112

75,911

Ag concentrate tonnes sold

648

-

32

286

330












Quarter end inventory balances






Mined tonnes stockpile

18,192

18,192

18,204

15,003

17,637

Ag concentrate inventory tonnes

-

-

-

36

24

Ag ounces included in concentrate inventory

-

-

-

11,276

5,772

During the first half of 2013, mining activities at San José were conducted to supply the toll milling operations at Juan Reyes. When that toll milling agreement was terminated, mining activities then slowed, until the El Bote processing plant was purchased, from which time mine development began to accelerate to ensure mine capacity would be sufficient to supply El Bote following its commissioning.

No tonnes were milled in the second half of 2013 due to the suspension of production at the Juan Reyes plant.

The stockpile of mined ore was higher at the end of 2013 than at the equivalent time in 2012 as the milling of mined ore ceased in June 2013. This stockpiled ore will be processed once production commences at the refurbished plant.


Fourth Quarter 2013

Fourth Quarter 2012


Annual 2013

Annual 2012

Change

Head grade - Ag grams per tonne

-

-


189

177

7%

Tonnes mined

8,057

-


14,501

51,893

(72%)

Tonnes milled

-

-


3,479

53,297

(93%)








Silver concentrate tonnes produced

-

-


47

600

(92%)

Silver ounces produced

-

-


9,058

165,304

(94%)

Silver ounces per concentrate tonne produced

-

-


194

275

(29%)








Silver ounces sold

-

-


9,058

177,960

(95%)

Silver concentrate tonnes sold

-

-


37

648

(94%)

Mining
Mining continued at the San José mine in Q4 2013 in preparation for the resumption of milling activities at the refurbished Plant in late 2014.

Milling
In the early part of the year, Arian pursued the resumption of toll milling operations at the Juan Reyes processing plant. This was terminated in June 2013 with the mutual consent of the owner of the plant, against the backdrop of the anticipated acquisition of a suitable second-hand custom processing plant.

In August 2013, the Company acquired the El Bote Processing Plant and commenced its refurbishment in situ. Upon completion of the refurbishment, it is planned that the plant will be dismantled, transported and installed in a modular manner at the Company’s 100%-owned site adjacent to the San José mine. An internal team is leading the refurbishment of the Plant to ensure the Company has the control necessary to ensure the project is performed to a suitable standard and in the most cost-efficient manner. Third parties will be utilised in the development of the necessary site works, tailings dam and electrical infrastructure for the plant.

The Plant is currently located approximately 60 kilometres from the site of the San José mine and is comprised of a crushing circuit with a reported throughput of 150 tonnes per hour, a grinding circuit of four ball mills, two flotation circuits, thickening tanks and filters.

It is anticipated that the Plant will be commissioned towards the end of 2014 with an initial capacity expected of 750 tonnes per day “tpd” after which, the Plant will be expanded to 1,500 tpd.

Exploration Assets
During the year, three of the Company’s concessions representing 145 hectares, which were not considered to hold mineralisation and which were outside the mineralisation trend, have been cancelled. The cancellation of these concessions does not impact the Company’s NI 43-101 mineral resource estimate and the Company now holds 28 mineral concessions in Mexico totalling 7,822 hectares as set out below.

Project Name

No. of Concessions

Area in hectares (“ha”)

San José

8

6,134

Calicanto

7

75

Others

13

1,536

Total

28

7,745

No exploration took place during the year. The Company’s proposed fifth exploration phase is now planned to take place after the Plant has been successfully commissioned and the San José Project is generating positive cash flow.

Information on Arian’s exploration assets are 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.

For further information please contact:

Arian Silver Corporation
Jim Williams
CEO
(London) +44 (0)20 7887 6599
jwilliams@ariansilver.com

Arian Silver Corporation
David Taylor
Company Secretary
(London) +44 (0)20 7887 6599
dtaylor@ariansilver.com


OR


OR

Grant Thornton UK LLP
Philip Secrett / David Hignell
(London) +44 (0)20 7383 5100
philip.j.secrett@uk.gt.com

Yellow Jersey PR Limited
Dominic Barretto
(London) +44 (0)7768537739
dominic@yellowjerseypr.com


OR


Hume Capital Securities plc
Jon Belliss / Abigail Wayne
(London) +44 (0)20 3693 1470
jon.belliss@humecapital.com




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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