Arian Silver Corporation
TSX VENTURE : AGQ
AIM : AGQ
FRANKFURT : I3A
PLUS : AGQ

Arian Silver Corporation

August 30, 2007 02:03 ET

Arian Silver Corporation: 2nd Quarter Results

LONDON, UNITED KINGDOM--(Marketwire - Aug. 30, 2007) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISTRIBUTION IN THE UNITED STATES

Arian Silver Corporation ("Arian" or the "Company") (TSX VENTURE:AGQ)(AIM:AGQ)(PLUS:AGQ)(FRANKFURT:I3A) is a silver exploration and development company focused on identifying, acquiring and developing resource projects in Mexico. Today it reports unaudited results for the quarter and six months ended June 30, 2007. All amounts are expressed in US dollars unless otherwise stated.

Arian's Chief Executive Officer, Jim Williams, said "Excellent progress continues to be made. We completed our Phase-1 core drilling programme at Calicanto in April, which returned bonanza-grade silver mineralisation over widths wide enough that could possibly support underground mechanised mining, and at the same time we discovered new vein systems. In addition we commenced a 5,000-metre core drilling programme at our 4,300 hectare San Jose Project, and a 3,000-metre core drilling programme at our 14,000 hectare Tepal Project. We look forward to reporting the results of this on-going exploration in due course. Of course we continue to review many possible acquisition opportunities that will bring shareholder value."

HIGHLIGHTS

Financial

- As at June 30, 2007, the Company had assets of $4.4 million, including cash of $1.2 million.

- Expenditure on projects in Mexico and on other assets in the quarter was $1 million.

- Consolidated pre-tax loss before exceptional items for the quarter of $1.6 million includes non-cash share option expense of $0.7 million.

Operational

- Continuing exploration work on the San Jose Project with a Phase-1 (5,000 metres ("m")) drilling programme, of which 2,286 m has been drilled over 16 holes.

- Continuing exploration work on the Tepal Project with a Phase-1 (3,000 metres ("m")) drilling programme, of which 1,188 m has been drilled over 9 holes.

- Completion of the Phase-1 drilling programme exploration work at the Calicanto Group of projects, in which 3,149 m was drilled over 16 holes. Continuation of development of the Calicanto and San Buenaventura ramps.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis of results for the three and six months ended June 30, 2007 ("MD&A") and unaudited Financial Statements for the Company for the second quarter and six months ended June 30, 2007 ("Financials") are available on 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 MD&A and Financials will be posted to shareholders shortly.

The following information has been extracted from the MD&A and Financials. The financial information in this announcement has been extracted from but does not constitute full statutory accounts.

FINANCIAL RESULTS

Description

The Company is engaged in the acquisition and exploitation of mineral resource properties in Mexico.

Results for the period

In the six months to June 30, 2007, the Company incurred a loss of $2.6 million after expensing the fair value of options granted of $0.8 million. There was no income other than interest from short term cash deposits of $28,000. The Company continued to incur administrative costs in its Mexican operations and in respect of corporate overheads.

In the six months to June 30, 2007 intangible assets increased by $1.3 million to $2.5 million in respect of the Mexican projects, as a result of expenditure in respect of the substantial drilling programmes undertaken in the period. Cash of $1.3 million was received as a result of share issues.

LIQUIDITY AND CAPITAL RESOURCES

As at June 30, 2007, the Company had working capital of approximately $1.2 million (December 31, 2006: $3 million). In July, 2007 a further $2.6 million in cash was raised from the issue of 5.5 million shares and these funds, based on current plans, are sufficient to cover ongoing obligations as they become due over a 12 month period. The decrease in working capital in the six months to June 30, 2007 is the result of substantial project costs, plus administrative expenditure, offset by cash raised from the issues of shares. Cash raised from issues of shares was $1.3 million during the period (year to December 31, 2006: $5.4 million).

The most significant assets at June 30, 2007 were intangible assets amounting to $2.5 million (December 31, 2006: $1.2 million) and cash of $1.2 million (December 31, 2006: $3.2 million). In addition, there were tangible assets of $0.2 million (December 31, 2006: $0.1 million). Receivables increased to $0.4 million (December 31, 2006: $0.2 million).

EXPLORATION AND DEVELOPMENT COMMITMENTS AS AT JUNE 30, 2007

The Company does not have any exploration and development expenditure commitments in respect of its projects. However, the following are the material payments that will need to be made in order to maintain certain properties in good standing:

(a) In order to maintain the San Jose option agreement in good standing the Company is required to pay the vendor $1.5 million in instalments over the three-year period through to 2009 and will also grant the vendor a NSR of 2%. At June 30, 2007, $288,000 had been paid.

(b) In order to maintain the Tepal option agreement in good standing the Company is required to pay the vendor $5 million in instalments over the five-year period through to June 2011 and will also grant the vendor a NSR of 2.5%. At June 30, 2007, $576,000 had been paid.

(c) In order to maintain the Company's interest in the Calicanto group, the Company is required to pay, over the period to June 30, 2011 $380,000 in option payments. At June 30, 2007, $156,000 had been paid.

The Company has the right to withdraw from the option agreements relating to San Jose, Tepal and Calicanto at any time during the term of each option without financial penalty.

The outstanding expenditures described above are discretionary and not yet committed as they are dependent on timing and availability of funds.

REVIEW OF OPERATIONS

During the quarter, the Phase-1 drilling programme was completed on the Calicanto project. A Phase-1 drilling programme started on the Tepal and San Jose projects.

Qualified Person

Mr. Jim Williams, the Company's Chief Executive Officer and a "qualified person" as such term is defined under Canadian National Instrument 43-101, has reviewed and approved the technical information in this document.

The following, which have been grouped under their respective geographical settings, represents a summary of work carried out on the major projects during the three and six months periods to June 30, 2007:

San Jose Project, Ojocaliente District, Zacatecas State

In December 2006, the Company acquired an exclusive option over 100% of the San Jose silver-base metal property in Zacatecas State. The property lies 55 kilometres to the South-East of Zacatecas and covers two mining concessions totalling approximately 4,300 hectares ("Ha"). Assuming the option is exercised in full, the Company will pay $1.5 million in instalments over three years and a 2% Net Smelter Return ("NSR") although the Company has the right to buy out the NSR for $1.5 million.

The mine was previously operated by Zimapan (Penoles), (1973-1991), and Monarca, who leased the mine from Penoles (1993-2001), extracting over 2 million tonnes of ore averaging 250g/t silver. An existing underground development ramp extends 3 kilometres along the San Jose vein.

The western portion of the San Jose vein, over 4 kilometres of strike length, remains unexploited as mining activity focused on the eastern part of the vein. In addition, two main vein structures are exposed on the property, which have not been explored by modern systematic methods.

A 5,000 metre core drilling programme commenced at the beginning of May. A total of 2,286 metres was drilled in the quarter, representing 46% of the total drilling contract, over 16 holes. The drill programme has been designed to confirm the historic drill-hole data and to expand on a number of priority target areas. The drill core from this programme was logged and then split at the Company's facilities before being sent for sample preparation and analysis within the guidelines of the Company's QA/QC programme.

In addition underground sampling and surveying of a number of areas such as the Dois Nos Guie (DNG) and Santa Ana 40 metres level have been completed.

An Induced Polarisation (IP) geophysical survey was conducted on the property, designed to test the IP response of the San Jose and Dos Vetas Structures. The IP survey showed a positive response.

Tepal Project, Michoacan State

On August 9, 2006, the Company announced that it had entered into an agreement to acquire the exclusive option over 100% of the Tepal polymetallic project in Michoacan State, Mexico. The option agreement is for a five-year term. Assuming the option is exercised in full, the Company will pay Minera Tepal $5 million in instalments and will grant Minera Tepal a NSR of 2.5%. The Company has the right to withdraw from the option agreement at any time during the five-year period without penalty and has right of first refusal to buy out the NSR for an unspecified amount.

The Tepal landholding is approximately 14,000 Ha. Initial investigation by Arian indicates that the Tepal Project consists of four gossanous polymetallic deposits containing copper, gold and silver with potential for additional areas of mineralisation.

A 3,000 metre core drill programme commenced on known targets in mid April at the Tepal project. A total of 1,188 metres was drilled in the quarter, representing 40% of the total contract, over a total of 9 holes. Wide zones of mineralisation have been reported from the core logging. The drill core from this programme was logged and then split at the Company's facilities before being sent for sample preparation and analysis within the guidelines of the Company's QA/QC programme.

In addition to the drill programme, work has been completed on the organisation and compiling of data from the Hecla and Teck drill programmes which were conducted in the 1990's. A percentage of the coarse rejects and pulps from the Hecla and Teck programmes will be sent for analysis to check the historical assay database.

Calicanto Group, Zacatecas District, Zacatecas State

The Calicanto Project consists of five adjacent mining concessions totalling approximately 74 Ha namely, Calicanto, Vicochea I, Vicochea II, Misie and Missie propertes, collectively known as the "Calicanto Group". The concessions are located in the historic mining district of Zacatecas. The Calicanto Group of concessions comprises at least four main mineralised vein systems.

The Phase-1 drill programme at the Calicanto project was completed at the beginning of April. A total of 3,149 metres was drilled over 16 holes. Results have been received and a detailed appraisal is underway.

Work continued on the Calicanto and San Buenaventura ramps. At the period end the ramps had been extended to 102 metres and 80 metres respectively.

The San Buenventura ramp interesected historic workings on the Misie structures at 65 metres and again at 80 metres on a northeast minor quartz iron oxide vein. These old workings are along 3 or 4 parallel veins that together form the Misie vein system. Sampling and surveying of these historic workings were undertaken.



Arian Silver Corporation
Consolidated Balance Sheets
At June 30, 2007 and December 31, 2006
(In U.S. dollars)

Unaudited Audited
2007 2006
$'000 $'000

Assets
Property, plant and equipment 168 131
Intangible assets 2,534 1,235
----------------------------
Total non-current assets 2,702 1,366
----------------------------

Trade and other receivables 432 243
Cash and cash equivalents 1,248 3,193
----------------------------
Total current assets 1,680 3,436
----------------------------
Total assets 4,382 4,802
----------------------------
----------------------------

Equity
Share capital 23,693 22,448
Share based payment reserve 1,780 947
Foreign exchange translation reserve (917) (910)
Retained loss (20,658) (18,062)
----------------------------
Total equity 3,898 4,423
----------------------------

Bank overdraft - 6
Trade and other payables 484 373
----------------------------
Total current liabilities 484 379
----------------------------
Total liabilities 484 379
----------------------------
Total equity and liabilities 4,382 4,802
----------------------------
----------------------------

The accompanying notes are an integral part of these consolidated
financial statements.

These consolidated financial statements have been approved by the
Company's directors.




Arian Silver Corporation
Consolidated Statements of Operations and Deficit (Unaudited)
For the three and six months ended June 30, 2007 and June 30, 2006
(In U.S. dollars)

3 Months 6 Months
ended ended
June 30 June 30
2007 2006 2007 2006
$'000 $'000 $'000 $'000

Administrative expenses (1,563) (631) (2,624) (1,954)
Goodwill written off - (13,665) - (13,631)
-----------------------------------
Operating loss before financing costs (1,563) (14,296) (2,624) (15,585)
-----------------------------------

Finance income 10 20 28 31
-----------------------------------
Net financing costs 10 20 28 31
-----------------------------------

Loss before tax (1,553) (14,276) (2,596) (15,554)
-----------------------------------
Loss for the period (1,553) (14,276) (2,596) (15,554)
-----------------------------------
-----------------------------------

Basic and diluted loss per share ($) (0.01) (0.22) (0.02) (0.29)

Consolidated Statement of recognised
income and expense

Foreign exchange translation differences
recognised directly in equity
- in respect of re-translation of net
investment in subsidiaries 26 - 23 -
- in respect of presentation of
financial statements in
United States dollars (29) - (30) -

Loss for the period (1,553) (14,276) (2,596) (15,554)
-----------------------------------
Total recognised income and expense
for the period (1,556) (14,276) (2,603) (15,554)
-----------------------------------
-----------------------------------

There were no gains or losses during the period other than the above
reported loss.

The accompanying notes are an integral part of these consolidated
financial statements.

These consolidated financial statements have been approved by the
Company's directors.




Arian Silver Corporation
Consolidated Statements of Cash Flows (Unaudited)
For the three and six months ended June 30, 2007 and June 30, 2006
(In U.S. dollars)

3 Months 6 Months
ended ended
June 30 June 30
2007 2006 2007 2006
$'000 $'000 $'000 $'000

Cash flows from operating activities
Loss for the period (1,563) (14,296) (2,624) (15,585)
Adjustments for:
Depreciation 8 2 14 5
Goodwill written off - 13,665 - 13,631
Exchange Difference 79 43 52 33
Equity-settled share based payment
transactions 715 55 834 866
---------------------------------
(761) (531) (1,724) (1,050)
---------------------------------
Change in trade and other receivables (92) (43) (189) 1,316
Change in trade and other payables 129 (42) 112 (50)
---------------------------------
---------------------------------
Net cash used in operating activities (724) (616) (1,801) 216
---------------------------------
---------------------------------

Cash flows from investing activities
Interest received 10 20 28 31
Cash cost of acquisition of Hard Assets
Inc. - 353 - 353
Acquisition of intangibles (923) (199) (1,288) (234)
Acquisition of property, plant and
equipment (24) (42) (51) (55)
---------------------------------
---------------------------------
Net cash used in investing activities (937) 132 (1,311) 95
---------------------------------
---------------------------------

Cash flows from financing activities
Proceeds from issue of share capital 846 1,978 1,264 2,178
Bank overdraft - - (6) -
---------------------------------
---------------------------------
Net cash from financing activities 846 1,978 1,258 2,178
---------------------------------
---------------------------------

Net increase in cash and cash
equivalents
Cash and cash equivalents - beginning of
period 2,190 1,093 3,193 98
Effect of exchange rate fluctuations on
cash held (127) - (91) -
---------------------------------
---------------------------------
Cash and cash equivalents at June 30 1,248 2,587 1,248 2,587
---------------------------------
---------------------------------

The accompanying notes are an integral part of these consolidated
financial statements.

These consolidated financial statements have been approved by the
Company's directors.



Arian Silver Corporation
Consolidated Statement of Changes in Equity (Unaudited)
For the six months ended June 30, 2007 and June 30, 2006
(In U.S. dollars)

Share Foreign
Share based exchange Retained
Capital payment translation Earnings Total
reserve reserve
$'000 $'000 $'000 $'000 $'000

Period to June 30, 2006
Opening balance 2,604 - 2 (1,029) 1,577
Goodwill written off - - - (13,631) (13,631)
Shares issued for cash 2,200 - - - 2,200
Shares issued for
consulting services 234 - - - 234
Fair value of share
options - 866 - - 866
Shares issued on
reverse take over 13,471 - - - 13,471
Net loss - - - (1,879) (1,879)
--------------------------------------------------
Balance June 30, 2006 18,509 866 2 (16,539) 2,838
--------------------------------------------------

Period to June 30, 2007
Opening Balance 22,448 947 (910) (18,062) 4,423
Share issue costs (94) - - - (94)
Fair value of share
options - 833 - - 833
Proceeds from options
exercised 238 - - - 238
Proceeds from warrants
exercised 1,101 - - - 1,101
Net loss - - - (2,596) (2,596)
Foreign exchange loss - - (7) - (7)
--------------------------------------------------
Balance June 30, 2007 23,693 1,780 (917) (20,658) 3,898
--------------------------------------------------
--------------------------------------------------


Arian Silver Corporation

Notes to the Consolidated Financial Statements

1. Summary of Significant Accounting Policies

These interim unaudited consolidated financial statements for Arian Silver Corporation ("ASC" or the "Company") have been prepared in accordance with International Financial Reporting Standards ("IFRSs" or "IFRS").

Arian Silver Corporation is a company domiciled in the British Virgin Islands. The consolidated financial statements of the Company comprise the Company and its subsidiaries (together referred to as the "Group"). The Group is primarily involved in the acquisition and development of mineral resource assets.

The accounting policies and methods of computation used in the preparation of the unaudited consolidated financial information are the same as those described in the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2006. In the opinion of the management, the accompanying interim financial information includes all adjustments considered necessary for fair and consistent presentation of financial statements. These interim consolidated financial statements should be read in conjunction with the Company's audited financial statements and notes for the year ended December 31, 2006.

The Group is at an early stage of development and in common with many mineral exploration companies, it raises funds in discrete tranches. The current cash resources of the Group will not be sufficient to develop its exploration projects and, if warranted, bring them into production. In the event that the Group is unable to secure further finance it will not be able to fully develop these projects.

In July, 2007 $2.6 million of further funds were received from the placement of shares. The directors have reviewed the Group's cash flow forecast and believe that the Company has sufficient working capital following this funding to cover ongoing obligations as they become due over a 12 month period. They therefore consider it appropriate to prepare the financial statements on a going concern basis.

2. Merger with Arian Silver Corporation Ltd

The Company was previously named Hard Assets Inc. until its merger with Arian Silver Corporation Limited ("ASCL") on May 24, 2006 whereupon it was renamed Arian Silver Corporation and re-admitted to the AIM market of the London Stock Exchange on May 25, 2006. ASCL ceased to be a legal entity at the date of the merger.

The merger of the Company with ASCL in May 2006 was accounted for in accordance with the reverse take over method of accounting. Under this method, ASCL has been identified as the acquirer and accordingly the consolidated entity is considered to be a continuation of ASCL and the historical financial information prior to the acquisition is that of ASCL only. For accounting purposes, Hard Assets Inc. is thus deemed to have been acquired by ASCL.

3. Intangible assets

(i) Goodwill

All business combinations are accounted for by applying the purchase method. Goodwill (negative goodwill) arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. Goodwill arising on acquisition is capitalised and shown within fixed assets. The excess of net assets over consideration paid on an acquisition is recognised directly in profit or loss.

(ii) Deferred Exploration and Evaluation Costs

These comprise costs directly incurred in exploration and evaluation as well as the cost of mineral licences. They are capitalised as intangible assets pending the determination of the feasibility of the project. When the existence of economically recoverable reserves is established the related intangible assets are transferred to property, plant and equipment and the exploration and evaluation costs are amortised over the estimated life of the project. Where a project is abandoned or is determined not economically viable, the related costs are written off.

The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to the natural resource sector. These include the extent to which a Company can establish economically recoverable reserves on its properties, the ability of the Company to obtain necessary financing to complete the development of such reserves and future profitable production or proceeds from the disposition thereof.

Arian Silver Corporation is a silver exploration and development 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 and San Jose projects in Zacatecas state, and the Tepal project in Michoacan 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 Canadian National Instrument 43-101 compliant resources.

Arian was founded by Jim Williams, Chief Executive Officer, and Tony Williams, Chairman, who together have over 50 years experience in exploration, project construction and mining worldwide. Arian is supported by the Dragon Group in London, and the Endeavour Group in Canada.

Further information can be found by visiting Arian's website: www.ariansilver.com or the Company's publicly available records at www.sedar.com.

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, statements regarding exploration results, potential mineralization and mineral resources, 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 realized or substantially realized, 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, 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, foreign currency fluctuations, 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.

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

Contact Information

  • In London:
    Arian Silver Corporation
    Jim Williams
    CEO
    +44 (0)20 7529 7511
    or
    Arian Silver Corporation
    James Cable
    CFO
    +44 (0)20 7529 7511
    Website: www.ariansilver.com
    or
    Parkgreen Communications
    Justine Howarth
    +44 (0)20 7851 7480
    or
    Grant Thornton Corporate Finance
    Gerry Beaney
    +44 (0)207 385 5100
    or
    Haywood Securities (UK) Limited
    Daniel Brooks / Tom Beattie
    +44 (0) 207 031 8000
    or
    In Vancouver:
    Investor Relations
    Vanguard Shareholder Solutions
    (604) 608-0824 or Toll Free: 1-866-898-0825