Operations

San José Project

Location

The San José project is located 55km southeast of Zacatecas city within the prolific silver belt of Mexico. The property consists of 11 mining concessions totalling approximately 6300ha and is 100% owned by Arian Silver.

Geology

The mineralization at San José is typical of low-to intermediate sulphidation type epithermal veins containing silver and base metals that are found elsewhere in Mexico.

The vein structure has a potential strike length of > 10km within the concession area and varies from 3 to 25m in thickness. The average strike of the vein is E-W and dipping very steeply, from 82° to 85° to both northeast and southwest.

Infrastructure

The property has significant infrastructure, including a 4.5x5m main haulage ramp or portal extending more than 4.0km along the San José Vein and a 350m deep, 500tpd vertical shaft with operational hoist. In addition, a number of shallower vertical shafts are located along the San José Vein.

Exploration

Arian Silver commenced detailed systematic exploration at San José in December 2006 to include surface Induced Polarisation ("IP") geophysics and trenching, underground and surface surveying, underground sampling, progressing onto four phases of drilling to date for some 38,000 metres.

The Phase 5 programme is proposed to commence later this year with the intention to complete another 10,000m of drilling to both upgrade the current mineral resources and further delineate additional resources.

Resource

The most recent NI 43-101 resource was prepared by CSA Global (UK) and published in March 2012. Information is set below.

Resource Category	Tonnes	Average Grade			Contained Metal
	(t)	Ag (g/t)	Pb (%)	Zn (%)	Ag (M oz)	Pb (M lb)	Zn (M lb)
Indicated	8,000,000	119	0.38	0.85	30.61	67.02	149.91
Inferred	24,500,000	110	0.38	0.76	86.65	205.25	410.50

Mining

Initial pilot scale contract mining commenced at San José during Q4 of 2010.

2011 represented the first full year of mining at San José by Arian Silver. The results of trial production are summarized below:

	YE 2012	Q4 2012	Q3 2012	Q2 2012	Q1 2012
Tonnes milled	53,297	n/a	n/a	28,903	24,394
Head grade (mill) -    Ag grams per tonne (g/t)	177	n/a	n/a	181	173
Ag ounces produced	165,304	n/a	n/a	98,616	66,688

	YE 2011	Q4 2011	Q3 2011	Q2 2011	Q1 2011
Tonnes milled	83,959	22,971	21,512	18,348	21,128
Head grade (mill) -    Ag grams per tonne (g/t)	190	201	199	178	178
Ag ounces produced	248,226	76,618	65,804	59,568	46,236

Processing

Arian Silver enjoys exclusive use of a toll mill 50km from the Company's San José mine. The mill is privately owned and operated by Beneficiadora de Jales y Minerales Juan Reyes SA de CV ("Juan Reyes"), has a maximum capacity of 500tpd and benefits from two separate flotation streams to extract zinc in addition to lead and silver concentrate.

The Company remains focused on building its own bespoke mill adjacent to the San José mine; such a facility is expected to considerably reduce total operating costs. A second-hand processing plant which appears to be suitable for treating the San José ore has been identified and discussions regarding its acquisition have begun. Further updates will be announced via RNS in due course.

Environmental Management

Mexico commits to upholding its environmental policies. Arian Silver adheres to both Mexican law and internationally accepted environmental practices.

Future Upside

Management have been using current production revenue as a cash-flow generator to subsidise exploration at San José.

The proposed phase 5 drill programme will focus on the main San José Vein (SJV) to both expand the current resource as well as upgrade the existing resources.

In addition, preliminary exploration in close proximity to the main SJV has revealed numerous targets providing recognisable further opportunity.

Videos

San José Aerial Fly-Over Video 1:

San José Aerial Fly-Over Video 2:


The "Qualified Person" (as such term is defined in Canadian National Instrument 43-101) who supervised the preparation of the updated resource estimate for the San José Project, is Mr Galen White, who is an employee and Principal Geologist of independent consultants CSA Global (UK) Limited.

Mr Jim Williams, Eur Ing, Eur Geol, BSc, MSc, D.I.C., FIMMM, the Chief Executive Officer of Arian, is a "Qualified Person". This web page has been prepared under Mr Williams' supervision. Mr Williams has verified the data disclosed in this web page including sampling, analytical and test data underlying the technical information included herein, and the mineral resource estimate disclosed herein.