Trading Symbols
AIM: AGQ
FWB: I3A
29 June
2016
Financial Results
for the Year Ended 31 December
2015
Arian Silver Corporation ("Arian
Silver" or the “Company”) announces the release of its
financial results for the year ended 31
December 2015.
Chairman’s and Chief Executive’s
statement
There is no doubt that 2015 has been a difficult year for the
mining industry, and one in which the challenges facing the
industry have been brought into sharp focus. The fall in commodity
prices amid concerns over global growth and the negative outlook
for precious metals prices resulted in significant financing issues
across the sector.
Against this challenging backdrop, Arian continued the
development of the San José project and achieved significant
milestones throughout the first half of the year. In March, we
produced our first lead-silver concentrate while commissioning the
La Tesorera plant and continued
the development of the zinc circuit, as well as continued the
underground development at San José. Meanwhile Arian completed a
5,000 metre exploration programme which resulted in a significant
resource upgrade announced in October.
Despite our progress on the project, the continued decline of
the silver price during 2015 together with the additional time that
was required to complete the commissioning process, made it evident
an additional cash injection would have been necessary, which was
not practicable given market conditions at that time coupled with
the Company’s existing debt financing arrangements.
As at 31 October 2015 Arian's
accrued debt under the senior secured financing arrangement with
Quintana amounted to approximately US$17.8
million with the initial repayment commencing in
April 2016. In addition, the
outstanding balance under the Base Metal Purchasing Agreement
amounted to US$15.2 million. Despite
lengthy discussions regarding possible solutions, none of these
were acceptable to the Company’s lenders. Therefore the Board, in
conjunction with its legal advisors, concluded that it was in the
best interests of shareholders and creditors that an orderly
foreclosure process be pursued to enable the Company to meet its
financial commitments as they fell due.
Accordingly, the Company concluded a Settlement Deed with
Quintana as described in our press release on 27 November last year
and obtained a release from all obligations to Quintana including
approximately US$1.9 million of
outstanding third party creditor balances in Mexico and provided the Company with a cash
injection of US$700,000. This enabled
us to preserve the value of the remaining concessions and allow the
Company to refinance, free of its debt burden, with corporate
overheads reduced by two-thirds.
We have since invested time identifying new development
opportunities with nearer term revenue potential and assessing
further exploration opportunities amongst the Company’s portfolio
of nineteen green and brownfield mineral concessions. In
May 2016, we obtained an exclusive
option on a gold and silver tailings project in Zacatecas Mexico and are currently undertaking
metallurgical test-work on the project, the results of which we
look forward to reporting in the second half of 2016.
Furthermore, during the first half of 2016 we raised £1.5
million before expenses, providing the Company with the financial
resources to advance exploration activities and assess new
opportunities.
Given the rebound of the silver price since the start of this
calendar year, of some 25% from its low in October 2015, this seems an opportune point
during the macro-economic cycle to gain access to new projects.
We would like to thank all our shareholders for their continued
support during what has been a very challenging period for the
Company but we look forward to updating you on our progress during
the rest of this year.
A J Williams
Executive Chairman |
J T Williams
Chief Executive Officer |
Business overview
Strategy
Arian Silver is focused on
identifying economic sources of silver and other precious metals,
and developing mineral projects through to production. The Company
has previously concentrated exclusively on projects within the
Zacatecas silver belt in
Mexico, but recent economic
conditions have presented abnormally high value opportunities
around the world, and the Company may broaden its focus beyond
solely the Zacatecas region and
indeed beyond Mexico, to ensure
the Company does not automatically preclude valuable opportunities
should they arise elsewhere.
Financial highlights
As at 31 December 2015, the
Company had total assets of US$1.7
million (2014: US$35.9
million) of which US$0.5
million (2014: US$2.8 million)
was cash. The Company had total liabilities of US$0.5 million (2014: US$6.8 million) of which US$0.5 million were current liabilities (2014:
US$6.8 million).
In the year ended 2015 the Company made an operating loss of
US$2.9 million (2014: US$3.9 million) and a loss per share of
US$0.13 (2014: US$0.18).
Overview of operations
During the year ended 31 December
2015, the Company was focused on the development of the San
José project and during the first half of the year, the Company
undertook a 5,000 metre drilling programme which led to a mineral
resource upgrade reported in October
2015.
In February 2015, the Company
bought back the 2% net smelter return royalty in respect of the San
José project for consideration of US$750,000.
The Company was compelled to enter into a settlement agreement
with its financing partner Quintana AGQ Holding Co. LLC and its
affiliates (“Quintana”) in November
2015. This settlement agreement resulted in Quintana taking
control of the Company’s primary operating subsidiary Arian Silver
de Mexico SA de CV.
Under the terms of the settlement agreement, Quintana was
required to transfer back to Arian
Silver the mineral concessions not related to the San José
project.
In return for receiving certain indemnities and releases,
Quintana paid Arian US$650,000 (plus
a further US$50,000 during 2016).
Properties
The company currently has 19 fully owned mining concessions
split between three distinct project areas:
Calicanto project
The Calicanto property consists of seven contiguous mining
concessions totalling approximately 75 hectares. The property is
located in the heart of the Zacatecas mining district, adjacent and partly
contiguous to Capstone Mining’s Cozamin mine, and covers four known
main vein systems.
The Company’s 2007 drilling programme returned high grade gold
and bonanza grade (>1,000g/t) silver intercepts from one of the
four veins. The drilling also intersected a number of veins
parallel to the principal structures that contained high grade gold
as well as significant lead and zinc values.
San Celso project
San Celso consists of three contiguous mining concessions
totalling 88 hectares. The concessions are located in the historic
mining district of Pánfilo Natera-Ojocaliente and are surrounded by
other concessions to the south and west.
Los
Campos
The Los Campos project
comprises four concessions covering an area of approximately 500
hectares located on the south side of the city of Zacatecas. The property is easily accessible
and is only a 15-minute drive from the centre of the City of Zacatecas and from the Calicanto
project.
Others
Arian Silver holds five
additional concessions not otherwise grouped into project
groupings, covering over 900 hectares. These concessions were
acquired in 2006 because of their strategic position to the San
Celso project. These concessions too require further exploratory
work to fully assess their economic potential.
Future outlook
The management team continues to advance potential opportunities
to expand and develop the Company’s mining assets, with a
particular focus on assets giving access to near-term revenues.
In May 2016, the Company entered
into an exclusive arrangement with Tierra Nuevo Mining Limited
(“TNM”) in Mexico to conduct
further assessment and due diligence on its assets including a
tailings project containing gold and silver, adjacent to Goldcorp’s
Peñasquito open-pit mine.
A NI 43-101 report prepared for TNM in 2012 outlined an
indicated mineral resource in respect of its tailings project,
containing 1 million tonnes with 3 grams per tonne (g/t) gold and
55 g/t silver, representing approximately 100,000 ounces (oz) of
gold and some 1.7 million oz of silver.
Arian Silver is undertaking
detailed metallurgical test work together with a scoping study with
a view to producing a saleable gold and silver concentrate from the
tailings project.
Consolidated
statement of comprehensive income
For the year ended 31 December
2015
(tabulated amounts expressed in thousands of US dollars unless
otherwise stated)
|
2015 |
2014 |
Continuing operations |
|
|
Administrative expenses |
(2,889) |
(3,943) |
Operating loss |
(2,889) |
(3,943) |
|
|
|
Net investment income |
21 |
9 |
Loss from continuing
operations |
(2,868) |
(3,934) |
|
|
|
Discontinued operations |
|
|
Loss from discontinued
operations |
(12,671) |
(1,980) |
|
|
|
Loss for the year attributable to
equity shareholders of the parent |
(15,539) |
(5,914) |
|
|
|
Other comprehensive
income |
|
|
Foreign exchange translation
differences recognised directly in equity |
5,306 |
(2,248) |
Other comprehensive income for
the year |
5,306 |
(2,248) |
Total comprehensive income for
the year attributable to equity shareholders of the parent |
(10,233) |
(8,162) |
Basic and diluted loss per share
($/share) |
(0.46) |
(0.18) |
Basic and diluted loss per share
from continuing operations ($/share) |
(0.09) |
(0.12) |
Basic and diluted loss per share
from discontinued operations ($/share) |
(0.37) |
(0.06) |
Consolidated
statement of financial position
As at 31 December 2015
(Tabulated amounts expressed in
thousands of US dollars unless otherwise stated)
|
2015 |
2014 |
Assets |
|
|
Intangible assets |
881 |
1,038 |
Property, plant and equipment |
5 |
28,440 |
Total non-current assets |
886 |
29,478 |
|
|
|
Inventories |
- |
1,498 |
Trade and other receivables |
311 |
2,043 |
Cash and cash equivalents |
474 |
2,846 |
Total current assets |
785 |
6,387 |
Total assets |
1,671 |
35,865 |
|
|
|
Equity attributable to equity
shareholders of the parent |
|
|
Share capital |
51,781 |
51,781 |
Warrant reserve |
3,455 |
3,455 |
Share-based payment reserve |
7,701 |
7,683 |
Foreign exchange translation
reserve |
2,092 |
(3,214) |
Accumulated losses |
(63,886) |
(48,347) |
Total equity |
1,143 |
11,358 |
Liabilities |
|
|
Trade and other payables |
528 |
1,556 |
Derivative liabilities |
- |
5,233 |
Total current
liabilities |
528 |
6,789 |
|
|
|
Convertible note liabilities |
- |
10,666 |
Derivative liabilities |
- |
6,206 |
Provision for mine closure |
- |
846 |
Total non-current
liabilities |
- |
17,718 |
Total liabilities |
528 |
24,507 |
Total equity and
liabilities |
1,671 |
35,865 |
The financial statements were approved and authorised by issue
by the Board of Directors on 28 June
2016 and were signed on its behalf by:
A J Williams
Executive Chairman |
J T Williams
Chief Executive Officer |
Consolidated
statement of cash flows
For the year ended 31 December
2015
(Tabulated amounts expressed in
thousands of US dollars unless otherwise stated)
|
2015 |
2014 |
Cash flows from
operating activities |
|
|
Loss before tax from
continuing operations |
(2,868) |
(3,934) |
Loss before tax from
discontinued operations |
(12,671) |
(1,980) |
Add Platinum note
extension fee |
- |
700 |
Adjustments for
non-cash items: |
|
|
Depreciation and
amortisation |
164 |
64 |
Exchange
difference |
6,797 |
117 |
Net investment
loss |
(21) |
(9) |
Change in fair value of
derivative liability |
(7,038) |
208 |
Transactions costs on
derivative liabilities |
- |
735 |
Proceeds from Quintana
for working capital |
(650) |
- |
Loss on discontinuing
operations |
10,494 |
- |
Equity-settled
share-based payment transactions |
18 |
14 |
(Increase) / decrease
in trade and other receivables |
(1,027) |
(849) |
Increase in trade and
other payables |
2,227 |
451 |
(Increase)/decrease in
inventories |
(211) |
(627) |
Cash used in
operating activities |
(4,786) |
(5,110) |
|
|
|
Cash flows from
investing activities |
|
|
Interest received |
21 |
20 |
Proceeds from Quintana
for working capital |
650 |
- |
Cash from discontinued
operations |
(47) |
- |
Acquisition of
property, plant and equipment |
(5,726) |
(6,626) |
Cash used in
investing activities |
(5,102) |
(6,606) |
|
|
|
Cash flows from
financing activities |
|
|
Proceeds from issue of
share capital |
- |
267 |
Proceeds from Base
Metal Purchase Agreement |
7,576 |
7,680 |
Repayment of Bash Metal
Purchase Agreement |
(957) |
- |
Platinum note extension
fee |
- |
(700) |
Cash from financing
activities |
7,531 |
7,247 |
|
|
|
Net increase /
(decrease) in cash and cash equivalents |
(2,357) |
(4,469) |
Cash and cash
equivalents at 1 January |
2,846 |
7,241 |
Effect of exchange rate
fluctuations on cash held |
(15) |
74 |
Cash and cash
equivalents at 31 December * |
474 |
2,846 |
* Discontinued operations contributed US$3,886k (2014: US$1,591k) to cash flows from operating
activities.
Consolidated
statement of changes in equity
For the year ended 31 December
2015
(Tabulated amounts expressed in
thousands of US dollars unless otherwise stated)
(Tabulated amounts expressed in
thousands of US dollars unless otherwise stated)
|
Share
capital |
Warrant reserve |
Share
based payment reserve |
Foreign exchange translation reserve |
Accumulated losses |
Total |
Balance: 31 December 2013 |
51,514 |
- |
8,001 |
(966) |
(42,765) |
15,784 |
Loss for
the year |
- |
- |
- |
- |
(5,914) |
(5,914) |
Foreign
exchange |
- |
- |
- |
(2,248) |
- |
(2,248) |
Total
comprehensive income |
- |
- |
- |
(2,248) |
(5,914) |
(8,162) |
Fair
value of share options |
- |
- |
14 |
- |
- |
14 |
Fair
value of warrants reserve |
- |
3,455 |
- |
- |
- |
3,455 |
Shares
issued for cash |
273 |
- |
- |
- |
- |
273 |
Share
issue costs |
(6) |
- |
- |
- |
- |
(6) |
Lapse of
share options |
- |
- |
(332) |
- |
332 |
- |
Balance: 31 December 2014 |
51,781 |
3,455 |
7,683 |
(3,214) |
(48,347) |
11,358 |
Loss for
the year |
- |
- |
- |
- |
(15,539) |
(15,539) |
Foreign
exchange |
- |
- |
- |
(3,917) |
- |
(3,917) |
Foreign
exchange reclassified to discontinued operations |
- |
- |
- |
9,222 |
- |
9,222 |
Total
comprehensive income |
- |
- |
- |
5,306 |
(15,539) |
(10,233) |
Fair
value of share options |
- |
- |
18 |
- |
- |
18 |
Balance: 31 December 2015 |
51,781 |
3,455 |
7,701 |
2,092 |
(63,886) |
1,143 |
For further
information please contact:
Arian Silver
Corporation
Jim Williams, CEO
David Taylor, Company Secretary
Tel: +44 (0)20 7887 6599 |
Northland Capital
Partners Limited
Gerry Beaney / David Hignell
Tel: +44 (0)203 861 6625 |
OR |
OR |
Beaufort Securities
Limited
Jon Belliss
Tel: +44 (0)20 7382 8300 |
Yellow Jersey PR
Limited
Dominic Barretto
Tel: +44 (0)7768 537 739 |
Forward-Looking Information
This press release contains certain “forward-looking
information”. 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 are deemed forward-looking information.
This forward-looking information reflects the current
expectations or beliefs of the Company based on information
currently available to the Company as well as certain assumptions.
Forward-looking information is subject to a number of significant
risks and uncertainties and other factors that may cause the actual
results of the Company to differ materially from those discussed in
the forward-looking information, 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.
Any forward-looking information 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 information, 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 information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainty therein.