Arian Silver Strategy Update and Results for the Three and Nine Months Ended September 30, 2008

December 1st, 2008

London, UK Arian Silver Corporation (“Arian” or the “Company”) today announced a strategy update together with its unaudited results for the three and nine months ended September 30, 2008. Extracts from the management’s discussion and analysis and financial statements are reported below. All amounts are expressed in US dollars unless otherwise stated.

Arian’s Chief Executive Officer, Jim Williams, commented today “Following on from the excellent progress at our San Jose project reported in Q2, the final Phase-1 drilling results from our Tepal property were calculated, which resulted in a 36% upgrade of previously reported “inferred” resources into the “indicated” resource category. This confirms the excellent continuity of mineralisation in multiple directions on our Tepal property, which in turn gives us great encouragement for potential expansion of resources.

Regarding our Phase-2 drilling programme at San Jose, we have now completed nearly 7,000m of drilling in 38 drill holes. Results from assay batches comprising the initial 19 drill holes were very encouraging as reported in our press release dated 6 November 2008. On receipt of outstanding assay results a further update of the resource model estimate will be calculated and reported to shareholders.

Meanwhile we continue to dewater the San Jose mine workings and will carry out additional underground sampling to supplement our drilling on “new” areas exposed by lowering the water table. In addition we are also close to completing an initial scoping study to examine a preliminary production scenario based on some of our existing resources and involving contract mining and toll milling.

On 24 October 2008 we completed a non-brokered private placement at Cdn$0.10 per share which raised Cdn$1.75 million and we are also starting to receive repayment of approximately $1 million of Mexican sales tax relating to past exploration expenditure. This should allow us to complete the scoping study and reevaluate the overall resource potential at San Jose. However, I am sure all shareholders are aware of the global financial issues that are affecting not only our industry but also the whole investment spectrum. Our Company in common with all junior exploration companies requires access to equity markets as they develop and of course during 2008 this has become increasingly difficult. Accordingly we have decided to operate at a reduced pace until market conditions improve. We have, therefore, deferred some 5,000m of additional drilling planned as a finalisation of the Phase-2 programme at San Jose as well as curtailing exploration on the other projects in our extensive portfolio. We are also making reductions in overheads in our London and Mexican offices.

We believe we have already identified a very significant silver-lead-zinc resource at San Jose with obvious expansion potential. We have established excellent management teams in Mexico and London and once the financial markets stabilize we expect the value of the assets in Arian to be recognized and re-rated in due course.”

CURRENT STRATEGY

As the Company’s projects are in an exploration phase it is currently reliant on external funding to progress its programmes. Given the current turmoil in financial and securities markets the Board has implemented measures to preserve the cash resources of the Company. To this end planned exploration programmes have been deferred and those in progress largely curtailed; in addition, steps have been taken to reduce overheads generally.

The directors are investigating potential sources of funding, other than through direct equity placements, which may be available so as to enable the Company to continue to build on the exploration successes achieved to-date and to further the development of the Company and its mineral properties.

See Liquidity and Capital Resources discussion below.

MANAGEMENT’S DISCUSSION AND ANALYSIS AND FINANCIAL STATEMENTS

The Management’s Discussion and Analysis of results for the three and nine months ended September 30, 2008 (“MD&A”) and unaudited Financial Statements for the Company for the three and nine months ended September 30, 2008 (“Financials”) are available at SEDAR at www.sedar.com or 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.

HIGHLIGHTS

Financial
  • As at September 30, 2008, the Company had assets of $8.8 million, including intangible assets of $7.5 million, receivables of $1.0 million and cash of $0.2 million.
  • Expenditure on projects in Mexico and on other assets in the nine months was $3.1 million.
  • Consolidated pre-tax loss for the nine months of $3.3 million.
Post September 30, 2008
  • In October 2008 the Company raised Cdn$1.75 million through an issue of shares at Cdn$0.10 per share.
Operational
  • Two major Phase-1 drilling programmes completed at the San Jose project (11,722 metres (“m”)) and at the Tepal project (7,178m).
  • Initial Canadian National Instrument 43-101 (NI 43-101) mineral resource estimates in respect of the San Jose and Tepal projects released (March).
  • Upgraded NI 43-101 mineral resource estimates released in respect of the San Jose project (August) and the Tepal project (September).
  • Phase-2 drill programme drilled 38 holes totaling 6,600m at the San Jose project. Initial results announced November 6, 2008.


FINANCIAL RESULTS

Three months ended September 30, 2008

The loss for the period was $1.8 million (2007 - $1.1 million), consisting of the expensing of the fair value of share options vesting of $0.4 million (2007 - $0.2 million), a foreign exchange charge of $0.6 million (2007 — crediting a foreign exchange gain of $0.1 million) and other administrative expenses of $0.8 million (2007 - $1.1 million). The foreign exchange adjustments arise on consolidation, largely as a result of the translation of the Mexican subsidiary’s financial statements from Mexican Peso to US Dollars.

Nine months ended September 30, 2008

In the nine months to September 30, 2008, the Company incurred a loss of $3.3 million (2007 - $3.7 million) after expensing the fair value of options vesting of $0.5 million (2007 - $1.0 million), a foreign exchange charge of $0.2 million (2007 — crediting a foreign exchange gain of $0.2 million) and other administrative expenses of $2.6 million (2007 - $3.0 million). The foreign exchange adjustments arise on consolidation, largely as a result of the translation of the Mexican subsidiary’s financial statements from Mexican Peso to US Dollars. There was no income other than interest from short-term cash deposits of $20,000 (2007 - $44,000). The Company continued to incur costs in relation to its Mexican operations and in respect of corporate overheads.

In the nine months to September 30, 2008, intangible assets increased by $3.0 million to $7.5 million in respect of deferred exploration and evaluation costs related to the Mexican projects.

LIQUIDITY AND CAPITAL RESOURCES

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

The Company will require additional funding in the future in order to progress exploration programmes on its mineral projects, to meet property option payments, for development and for general working capital requirements. Sources of funds currently available to the Company are through the issue of equity capital, the sale of its interests in one or more of its projects, by way of project joint ventures or business combinations.

The Company has accumulated IVA (sales tax), which amounted to $997,000 at September 30, 2008. This relates to past exploration expenditure and is now being repaid in installments by the Mexican tax authorities. Any delay in future repayments of this IVA debtor will have an impact on the timing of further funding required for the Company and could bring forward a funding requirement into Q1 of 2009. The directors are currently investigating funding options, other than through direct equity placements, which may be available to the Company in the future.

Since the Company is at an early stage of development, it has in the past raised funds in several discrete tranches, which is a common practice for junior mineral exploration companies. Although the Company has been successful in the past in raising equity finance, there can be no assurance that the funding required by the Company will be made available to it when needed or, if such funding were to be available, that it would be offered on reasonable terms. The terms of such financing might not be favourable to the Company and might involve substantial dilution to existing shareholders.

The directors of the Company currently believe it appropriate to prepare the Company’s financial statements on a going concern basis. However, if the Company is unable to raise sufficient financing in the future, it may not be able to meet its ongoing working capital and other expenditure requirements. If these circumstances arose this would cast significant doubt on the Company’s ability to continue as a going concern.

See Risks and Uncertainties set out in the MD&A as well as Risks and Uncertainties — Requirement of Additional Financing in the Company’s 2007 Annual MD&A for details of additional risks associated with future funding of the Company.

Working Capital

As at September 30, 2008, the Company had working capital of approximately $0.5 million (December 31, 2007: $3.5 million). As detailed in Overview of Operations — Exploration and development commitments as at September 30, 2008 in the MD&A the Company will need to make some material payments in order to maintain in good standing its interests in certain properties. The next such payment amounting to $255,000 falls due in February 2009.

The decrease in working capital during the period is the result of project and administrative expenditure.

The most significant asset at September 30, 2008 was intangible assets of $7.5 million (December 31, 2007: $4.4 million). In addition, there were tangible assets of $0.2 million (December 31, 2007: $0.2 million) and receivables were $1.0 million (December 31, 2007: $0.7 million). Cash was $0.2 million (December 31, 2007: $3.1 million). Payables were $0.6 million (December 31, 2007: $0.3 million).

In May 2008 the Company raised approximately Cdn$3 million by way of a private placement of approximately 12 million units (each a “Unit”) at Cdn$0.25 per Unit. Each Unit consisted of one common share and one-half of one common share purchase warrant. Each whole warrant will entitle the holder to acquire one common share of the Company at an exercise price of Cdn$0.35 share for a period of 18 months from the closing date of the placement. The warrants are also subject to an accelerated exercise provision.

In October 2008 the Company raised Cdn$1.75 million by way of a private placement of 17.5 million common shares at Cdn$0.10 per share.

REVIEW OF OPERATIONS

The Company owns, or has options to purchase, 39 mineral concessions in Mexico totaling 21,691 hectares (Ha). The Company’s main projects are the Calicanto Group and San Jose, in Zacatecas state, and the Tepal project in Michoacán State.

During the period, the Phase-1 drill programmes were completed on both the Tepal and San Jose Projects; drilling at San Jose amounted to 11,722 metres (m) and 7,178m at Tepal. A Phase-2 drill programme was started at San Jose during Q2 and was terminated in Q3 with approximately 6,600m drilled in 38 holes. Assaying of core from the San Jose Phase-2 drilling programme is, however, being continued and in November 2008 the Company announced the results from the first 19 drill holes from the Phase-2 drill programme. In July 2008 the Company announced that a scoping study had been initiated at San Jose. At the Calicanto Project work focused on general security and fences were erected around all open shafts and mine workings. Work also continued on sampling and mapping to gain a better understanding of the mineral structural controls within the Calicanto Project area.

The Company reported its initial Canadian National Instrument 43-101 (NI 43-101) compliant resource estimates for both San Jose and Tepal during Q1 of 2008. These were prepared by A.C.A. Howe International Limited, independent consultants. During Q3 the Company announced updated mineral resource estimates in respect of both San Jose and Tepal, details of which are set out below.

During the period, the Company appointed Graham Tye, a Spanish speaking mining engineer with over 25 years of industry experience, as Chief Operating Officer.

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 NI 43-101 has reviewed and approved the technical information in this document other than the mineral resource estimates.

San Jose Project, Ojocaliente District, Zacatecas State

On August 21, 2008 the Company announced an updated NI 43-101 mineral resource estimate for the property (see the Company’s press release dated August 21, 2008 entitled “Arian Silver Upgrades San Jose Resource Estimate”).

The resource of 11,190,000 tonnes in the inferred mineral resource category, containing 33.76 million (M) ounces (oz) of silver (Ag), 95.7 M pounds (lbs) of lead (Pb) and 205.5 Mlbs of zinc (Zn), has been defined from the Phase-1 drill-holes drilled by Arian from May 2007 to March 2008.

NI 43-101 Resources at San Jose

Resource
Category

Tonnes

Grade

Contained Metal

Ag

Pb

Zn

Ag

Pb

Zn


g/t

%

%

(oz)

(t)

(t)

Indicated

2,196,000

127.7

0.51

0.88

9.02

11,200

19,200

Inferred

11,190,000

93.8

0.39

0.83

33.76

43,400

93,200


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 August 15, 2008
4. The estimates are based on geostatistical data assessment and computerised IDW3, Ag grade wireframe restricted, linear block modeling.


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.

On November 6, 2008 the Company announced the results from the first 19 drill holes from the Phase-2 drill programme (see the Company’s press release dated November 6, 2008 entitled “Arian Silver Reports Phase-2 Assays on Initial 19 Holes at San Jose”). The results continue to confirm the high-grade zones discovered in the Phase-1 drill programme and show that the high-grade zones are even more extensive. In addition, several drill holes intersected newly discovered high-grade silver mineralisation.

The latest results included:
  • 2m @ 915 g/t Ag, 0.54% Pb and 0.46% Zn
  • 3m @ 319 g/t Ag, 0.32% Pb and 0.62% Zn
  • 6m @ 223 g/t Ag
  • 2.1m @ 775 g/t Ag
  • 3.6m @ 253 g/t Ag, 0.58% Pb, 1.07% Zn
Tepal Project; Michoacán State

On September 24, 2008 the Company announced an updated mineral resource estimate in respect of Tepal (see the Company’s press release dated September 24, 2008 entitled “Arian Silver Upgrades Tepal Resource Estimate”) details of which are set out below.

The latest resource estimate is 54,964,000 tonnes in the inferred mineral resource category, containing 720,000 ounces (oz) of gold (Au) and 265.4 million pounds (lbs) of copper (Cu), for a gold-equivalent (Au-Eq) of 1,612,000 oz, has been defined from the Phase-1 drill-holes drilled from April 2007 to April 2008. In addition, the resource estimate has upgraded 36% of the previously defined inferred mineral resource to the indicated mineral resource category, and this represents 24,995,000 tonnes, containing 440,000 oz of Au and 147.1 million lbs of Cu, for a Au-Eq of 938,000 oz.

Tepal Mineral Resources

Resource
Category

Tonnes

Grade

Contained Metal

Ag

Pb

Zn

Ag

Pb

Zn

(‘000)

g/t

%

g/t

(oz x 000’s)

(Mlbs)

(oz x 000’s)

Indicated

24,995

0.54

0.27

1.2

440

147.1

938

Inferred

54,964

0.41

0.22

0.9

720

265.4

1,612


1 Au = Gold. Cu = Copper. AuEq = Gold Equivalent
2 Arian Silver has an exclusive option agreement to purchase 100% of the Tepal properties
3 Gold Equivalent Grades (g/t) were calculated using metal prices of US$600/oz Au, US$2/lb Cu and assuming 100% recoveries
4 The mineral resource estimates are in accordance with CIM and JORC standards
5 The effective date of the mineral resource estimates is September 24, 2008
6 The estimates are based on geostatistical data assessment and computerised IDW3, 0.18 g/t Au grade wireframe envelope restricted, linear block modeling


The “Qualified Person”, as such term is defined in NI 43-101, who prepared the above mineral resource estimates, is Mr. Galen White. Mr. White was at the time these estimates were prepared an employee of A.C.A. Howe International Limited.

For further information please contact:

Arian Silver Corporation

Jim Williams - CEO
(London) +44 (0)207 529 7511 / email: jwilliams@ariansilver.com

Bishopsgate Communications Limited
Nick Rome
(London) +44 (0)207 562 3350 / email: Nick.Rome@bishopsgatecommunications.com

Vicarage Capital Limited
Martin Wood
(London) +44 (0)207 060 1303 / email: martin@vicaragecapital.com

Grant Thornton Corporate Finance
Gerry Beaney
(London) +44 (0)207 385 5100 / email: gerry.d.beaney@gtuk.com

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

Arian Silver Corporation is a silver exploration company listed on London’s AIM and “PLUS”, on Toronto’s TSX Venture Exchange and on the Frankfurt Stock Exchange. Arian is active in Mexico, the world’s largest silver producing country. The Company’s main projects are the Calicanto Group and San Jose, in Zacatecas state, and the Tepal project in Michoacán State. Part of Arian’s forward-looking strategy lies in the envisaged use of large scale mechanised mining techniques over wider mineralised structures, which reduces the overall operating cost per ounce of silver, and to build up National Instrument 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.


The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

THIS PRESS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES NOR FOR DISSEMINATION IN THE UNITED STATES

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.

No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

Cautionary Note Regarding 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, 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.

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, 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.

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.
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