Mexico s next silver mine. Corporate Presentation October 2015

Transcription

1 Mexico s next silver mine. Corporate Presentation October 2015

2 San José: an Overview Large mineral resource estimate (Silver, Lead, Zinc) Potential to increase our resource base 10 year mine life based on current resources Commissioning programme underway Reached mechanical completion in January First lead-silver concentrate produced in March First zinc concentrate expected in September Annual production profile of: 1.9 million ounces of silver, 4.7 million pounds of lead, and 4.4 million pounds of zinc Poised for a developer to producer re-rating Construction of the processing plant Leveraged to Silver PAGE 2

3 PAGE 3 The Heart of the Mexico Silver Belt

4 San José History 2006 Acquired San José 2006 to 2009 Drilling campaign of c.40km Achieved significant NI compliant resource 2010 to 2013 Concept proved by trial production 2013 Acquired processing plant Commenced site preparation and a refurbishment programme 2014 Construction of the processing plant 2015 Commissioning underway Completed a 5,000 meter exploration program Purchase of 2% NSR royalty from previous owners Produced first lead-silver concentrate Lawrence Roulston site visit PAGE 4

5 US$32 Million Finance Package Convertible loan note US$16.4 million convertible loan C$ % interest rate Repayable by October 2017 Three year term Base metals stream US$15.6 million upon achievement of milestones Stream of 78.2% of Pb & Zn output US$0.25 per lb Pb and Zn paid plus share of value above US$1.10 per lb Option to buy back 50% of the base metal stream for US$10.5m (Stream reduces to 27.4% upon delivery of 32 million pounds Zn and 38 million pounds Pb) PAGE 5

6 First Lead-Silver Concentrate First silver-lead concentrate Loading first truck Concentrate in the thickening tank PAGE 6

7 Resources Potential to Expand Resource Category Tonnes Average Grade Contained Metal (t) Ag (g/t) Pb (%) Zn (%) Ag (Moz) Pb (Mlbs) Zn (Mlbs) Indicated 5,350, Inferred 12,590, Prepared by CSA Global (UK) and published in October 2015 Mineral resource estimates based on all Phase 1, 2, 3, and 5 drill programmes The Mineral Resource Estimate has been prepared at a cut-off grade of 100g/t silver compared with 30g/t previously. The Mineral Resource Block Model has captured depletion from current and historic mining San José Mineralisation remains open along both western and eastern strikes and to depth Further infill and step-out drilling planned on and from current resource blocks General 3 principal project areas; 28 mineral concessions; 7,755 hectares 26 mineral concessions not yet explored Excellent track record of cost-effective exploration PAGE 7

8 San José Resource Blocks West End Guanajuatillo Soledad Santa Ana San José PAGE 8

9 Exploration Potential Completed a 5,000m drilling program at the Guanajuatillo area of the San José vein which returned some excellent intercepts. Purchased our own termite drilling rig which can be mobilised underground and is a cost effective way to test the deeper extensions of the San José vein under the current resource boundary. Drilling in Guanajuatillo Horsetail veining structures to the north of San José vein Mobilising drill rigs Termite Drilling Rig PAGE 9

10 Guanajuatillo: Strong Continuity GW GW , 072 GW , 070 GW , 068 GW , 066 GW , 064 GW , 063 GW TIRO CASUALIDAD GW ,058 GW , 059 TIRO GUANAJUATILLO Drill Hole From to Interval True Width Ag Pb Zn ID (m) (m) (m) (m) g/t % % GW GW GW GW GW GW GW GW GW PAGE Drill Hole From to Interval True Width Ag Pb Zn ID (m) (m) (m) (m) g/t % % GW GW GW GW GW GW GW Mobilising drill rigs GW Termite Drilling Rig

11 PAGE 11 San José Long Section

12 Annual Production Mine Life (years) 10 Production Annual Production targets Mill throughput (tonnes) 520,000 Silver grade (g/t) >160 Silver recovery 70% Silver production (M ounces) 1.9 Lead production (M pounds) 4.7 Zinc production (M pounds) 4.4 PAGE 12

13 Attractive Economics Economics San José (Projected) Capex $30m Sustainable Capex $12m C1 Cash Cost per ounce $8.79 All-in Cost per ounce $14.15 Annual Revenue at $18.5/oz Silver $50m Annual Revenue at $25/oz Silver Annual Revenue at $30/oz Silver $64.3m $74.9m C1 Cash Cost is an Alternative Performance Measure, which is net of by-product credits as well as treatment and selling costs. See Disclaimer slide for Information. C1 Cash Cost per ounce is per ounce payable silver produced. All amounts in US$ unless otherwise specified. Cash flows pre-financing and taxation Calculations assume US$2,200/t Lead and US$2,425/t Zinc PAGE 13

14 Modular Plant Layout Water Storage Fine Ore Bins Reagents Crushing Conditioning tanks Compressor Ag-Pb Flotation Coarse Ore Bins Milling Zn Flotation Concentrate Pads Thickeners Weighbridge PAGE 14

15 PAGE 15 Site Preparations (October 2013)

16 Plant Site Construction Progress Fine Ore Bins Constructing the flotation section Mills Flotation section PAGE 16 Crushing section Conveying section

17 Processing Plant (March 2015) Water reservoir Milling section Flotation section Tailings dam Concentrate pads Crushing section Crushing section Fine ore bins Milling section Flotation section PAGE 17

18 San José Operations Mining Fleet Mining and ore Processing Processing Facilities Tailings Storage 2 mining contractors engaged: Santa Cruz & Deminzac 12 haul trucks, 6 scoop trams, 3 jumbos Underground long hole stoping and sublevel caving Conventional crushing and grinding Lead and zinc flotation circuits Crushing circuit: primary, secondary & tertiary crushers, two screens Grinding circuit 4 primary ball mills Flotation / thickening / filtration circuits: for lead, silver and zinc concentrates Secure concentrate pads Fully equipped assay and metallurgical laboratory on site Initial tailings dam operational and permitted Engineering completed for the expansion of the tailing pond adjacent to the existing tailing pond Permitting in process PAGE 18

19 Infrastructure Mineral Concessions (6,200 ha) 35Kv Power line to the plant C.F.E. (utilities) 13.5Kv Power line to the mine C.F.E. (utilities) Hoisting system Current Operational Operational In place 3 ramps for production and services (Santa Ana, Soledad, Guanajuatillo) In progress Tailings Pond Current Phase to 2019/20 Water rights Conagua (utilities) Ejidos Relations (Panfilo Natera, La Tesorera, Guanajuatillo & Saucito) Auxillary Services (banks, schools, manpower, airport, government, hospitals) In place Cordial Excellent Surface Ownership Arian Silver de Mexico S.A. de C.V (plant, minesite, admin, tailings shop) 100% PAGE 19

20 Why Invest in Silver Now? Tighter supply of silver as a result of: Reduction in mine production Lower scrap supplies No government sales Increasing global demand: Electronics (Batteries) Automotive Green technologies (solar) Medical uses (antiseptics, disinfectant etc.) Water purification China, historically a major supplier of silver, is now a net importer. India has seen imports rise as a result of the restrictions on gold import. CRU expects industrial use of silver to jump 27% by Source: Metal Focus PAGE 20

21 Mexico: World s #1 Silver Producer Largest silver producing country in the World Prolific mineral potential and mining history Many mining service companies Excellent availability of senior personnel and skilled labour Part of NAFTA, low country risk and stable government Reasonable tax burden, permitting process, community support Zacatecas Security and social issues are localised, not pervasive Excellent transportation and energy infrastructure PAGE 21

22 Capital Structure The Company s Capital Structure as at 30 September 2015 Issued share capital 33,907,448 Share C$ to C$ Maturing January 2016 to May ,106,000 Convertible 8% loan C$ Maturing October ,429,468 C$1.00 Expiring October ,151,926 Fully diluted share capital 72,594, Week Share Price AIM: 0.70 to 0.42 TSXV: C$0.13 to C$0.75 Major Shareholders 3.7% Sprott, directors and officers Average Trading Volumes AIM TSX-V Total 2014 Q3 54,767 8,685 63, Q4 105,842 8, , Q1 138,000 12, ,080 PAGE Q2 81,787 14,753 96,540 Daily Share Price Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15 AIM Closing Price (pence) TSX V Closing Price (Canadian Cents) Daily Silver Price (US$) Jan 13 Jan 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13 Oct 13 Nov 13 Dec 13 Jan 14 Feb 14 Mar 14 Apr 14 May 14 Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 Jul 15

23 Directors and Senior Management Jim Williams Co-founder Director, President & CEO Experienced exploration & mining geologist with over 30 years experience worldwide. Mr Williams co-founded Arian Silver in 2005 and listed it on AIM and TSXV in Tony Williams Co-founder, Director, Chairman Mining geologist with over 35 years experience in the international mining industry, having been involved in projects in the Americas, Australia, Africa and Europe and the former Soviet Union. Tom Bailey Non Executive Director Professional legal counsel with over 30 years experience. Worked with Citibank and Chase Manhattan for a number of years. James Cable Non Executive Director Chartered Accountant with over 30 years experience. Significant international and commercial experience in several sectors. He is also Financial Director of Mantle Diamonds Limited. Miguel Barahona Operations Director (Mexico) Mining engineer with over 20 years experience internationally within various areas of the mining industry. He has also held senior positions for major mining operations, and designed mining processes for narrow-vein mining. He has been with Arian for over 3 years. James Crombie Non Executive Director Mining engineer with over 25 years experience. Former President & CEO of Palmarejo Silver and Gold Corporation until acquisition by Coeur d Alene Mines for US$1.1 Billion (December 2008). Dean Friday Chief Financial Officer Chartered Accountant with experience in investment banking and entrepreneurship. He also has significant onsite and corporate experience in the mining industry. David Taylor Company Secretary Fellow of The Institute of Chartered Secretaries and Administrators ("ICSA") with over 10 years experience in senior roles for a number of multinational blue chip companies, and most recently for ICSA, a leading authority on governance and compliance. Fuad Sillem Corporate Development Business graduate with extensive investor relations, corporate finance and management experience in the mining industry. PAGE 23

24 Investment Highlights Large resource base with significant expansion potential Funded and permitted to date Excellent operating team that constructed the processing plant and site infrastructure Commissioning underway and first lead-silver concentrate produced Production profile of up to 2.2 million of silver, 5.2 million pounds of lead and 4.6 million pounds of zinc Attractive economics, C1 cash cost of US$8.79/oz Significantly Undervalued compared to peers Construction at San José PAGE 24

25 Disclaimer All statements, other than statements of historical fact, contained in this presentation constitute forward-looking statements within the meaning of certain securities laws and are based on expectations, estimates and projections as of the date of this presentation. Such forward-looking statements include statements relating to increases in mineral resources and reserves, capital and operational expenditures and sustaining capital, cash costs per ounce, grades and recoveries, NPV and IRR, the Company s results of operations, financial position, revenue, profit, silver production, liquidity, availability of finance, prospects, growth, strategies, the silver price and the silver industry. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance, are subject to significant risks and uncertainties, and actual results and future events may differ materially from those anticipated in such statements. The Company does not intend to, and does not assume any obligation to update such forward-looking statements or information, other than as required by applicable law. A number of risks, uncertainties and other factors may cause actual results, performance and developments to differ materially from those expressed or implied by such forwardlooking statements including, without limitation, the availability of mining, environmental or other operating permits; the failure of plant, equipment or processes to operate as anticipated; the speculative nature of mineral exploration and development; operating or technical difficulties in mineral exploration; development and mining activities; reliability of calculation of mineral reserves and resources and precious metal recoveries; availability, of and costs associated with, mining inputs and labour; accidents; requirement for additional capital; the price of silver; general economic and business conditions; industry trends; competition; changes in regulation; taxation; controls and legislation; currency fluctuations (including the US dollar and Mexican Peso exchange rates); the Company s ability to develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves; changes in its business strategy; changes in national and local governments; and political and economic uncertainties. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any forward-looking statements or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly readers should not place undue reliance on forward-looking statements or information. The "Qualified Person" (as such term is defined in Canadian National Instrument ) who supervised the preparation of the updated resource estimate for the San José Project which forms the basis for the disclosure of all scientific and technical information herein, 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" as defined in the AIM guidelines of the London Stock Exchange, and a "Qualified Person" as such term is defined in Canadian National Instrument ("NI "). This presentation has been prepared under Mr Williams' supervision. Mr Williams has verified the data disclosed in this presentation including sampling, analytical and test data underlying the technical information included herein, and the mineral resource estimate disclosed herein. PAGE 25

26 Jim Williams CEO +44 (0) For additional information or enquiries, please contact Fuad Sillem Corporate Development +44 (0) Dominic Barretto Yellow Jersey PR +44 (0)