Operations

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.

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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.
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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.

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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.

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Resource


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

San José Mineral Resource Estimate -- 12 March 2012

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


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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





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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.
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Environmental Management


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

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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.

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Videos


San José Aerial Fly-Over Video 1:

San José Aerial Fly-Over Video 2:


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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.
 
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