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

Arian Silver Corporation

November 28, 2007 09:00 ET

Arian Silver Corporation: Results for the Three and Nine Months Ended September 30, 2007

LONDON, UNITED KINGDOM--(Marketwire - Nov. 28, 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 three and nine months ended September 30, 2007. All amounts are expressed in U.S. dollars unless otherwise stated.

Arian's Chief Executive Officer, Jim Williams, said: "We have deployed a focused approach with our San Jose and Tepal projects and recently announced bonanza grades of silver, zinc and lead at San Jose. Recent drilling results have indicated a significant new copper and gold mineralised zone at Tepal.

"We have extended our Phase-1 core drilling programmes on both projects, to 6,000m on Tepal and 10,000m on San Jose, with the aim of producing JORC-compliant resource. Whilst these two projects are advancing at a remarkable pace we have also seen considerable developments with our Calicanto project.

"We continue to review potential acquisition opportunities but the priority for us is to continue with our systematic and measured approach and our target remains to be in production on one of our projects by the end of 2008. I am confident that we can achieve this."

HIGHLIGHTS

Financial

- As at September 30, 2007, the Company had assets of $5.9 million, including cash of $2 million.

- Expenditure on projects in Mexico in the quarter was $0.7 million.

- Consolidated pre-tax loss for the quarter of $1.1 million includes non-cash share option expense of $0.1 million.

Operational

- Continuing exploration work on the San Jose Project with the Phase-1 core drilling programme extended from 5,000 metres ("m") to 7,500m, of which 4,410 m has been drilled over 29 holes. Phase-1 drilling programme subsequently further extended to 10,000m at San Jose.

- Continuing exploration work on the Tepal Project with the Phase-1 drilling programme extended from 3,000m to 4,500m, of which 2,184 m has been drilled over 18 holes. Phase-1 drilling programme subsequently further extended to 6,000m at Tepal.

- At the Calicanto Project the Calicanto and San Buenaventura ramps were further advanced during the period.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Management's Discussion and Analysis of results for the three and nine months ended September 30, 2007 ("MD&A") and unaudited Financial Statements for the Company for the three and nine months ended September 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 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 nine months to September 30, 2007, the Company incurred a loss of $3.7 million after expensing the fair value of options granted of $1.0 million (which is a non-cash expense). There was no income other than interest from short-term cash deposits of $44,000. The Company continued to incur administrative costs in its Mexican operations and in respect of corporate overheads.

In the nine months to September 30, 2007, intangible assets increased by $2 million to $3.2 million as a result of substantial drilling programmes undertaken in respect of the Mexican projects. Cash of $4.1 million was received as a result of share issues.

LIQUIDITY AND CAPITAL RESOURCES

As at September 30, 2007, the Company had working capital of approximately $2.3 million (December 31, 2006: $3 million). Since September 30, 2007, a further $2.6 million in cash was raised from the issue of 6.2 million shares and these funds, based on current plans, are sufficient to cover ongoing obligations as they become due over the next 12 months. The decrease in working capital in the nine months to September 30, 2007 is the result of substantial project costs, plus administrative expenditure, offset by cash raised from the issues of shares.

The most significant assets at September 30, 2007 were intangible assets amounting to $3.2 million (December 31, 2006: $1.2 million) and cash of $2 million (December 31, 2006: $3.2 million).

Exploration and development commitments as at September 30, 2007

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



2007 2008 2008 2008 2008
Q4 Q1 Q2 Q3 Q4
$'000 $'000 $'000 $'000 $'000

San Jose 230 - 287 - 345
Tepal 345 - 575 - -
Calicanto Group - 235 - - -
---------------------------------
Total 575 235 862 - 345
---------------------------------
---------------------------------


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 on both the San Jose and Tepal Projects were extended from 5,000m to 7,500m at San Jose, and from 3,000m to 4,500m at Tepal. The Company continued to advance both the Calicanto and San Buenaventura ramps/declines at its Calicanto Project.

Since the end of the quarter, the Phase-1 drilling programmes referred to above have been further extended from 7,500m to 10,000m at San Jose, and from 4,500m to 6,000m at Tepal.

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 nine months periods to September 30, 2007:

San Jose Project, Ojocaliente District, Zacatecas State

As previously reported, the Company has an exclusive option over 100% of the San Jose silver-base metal property in Zacatecas State, Mexico. 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"). The Company has the right to buy out the NSR for $1.5 million at any time during the option period.

The San Jose mine, within the property, was previously operated by Zimapan (Penoles), (1973-1991), and Monarca (1993-2001). Over 2 million tonnes of ore was reported to have been extracted averaging 250g/t silver with minor base metal credits from lead and zinc. 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 largely 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 5,000m core drilling programme commenced at the beginning of May. During August the drilling programme was extended to 7,500m in light of the good assay results received. A total of 4,410m was drilled in the quarter over 29 holes, representing 58% of the total drilling contract. 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.

Apart from the on-going extensive drilling programme underway at San Jose, systematic exploration has been advanced along several avenues. This includes surveying, mapping (both surface and underground) and sampling (both surface and underground).

The surface and underground sampling work has been instrumental in locating and confirming the extent of the main San Jose Vein and the mineralisation associated with it. These programmes are continually being extended as and when required.

Tepal Project; Michoacan State

As previously reported, the Company has an exclusive option for 100% over the Tepal polymetallic project, located in Michoacan State, Mexico. The option is for a five-year term. Assuming the option is exercised in full, the Company will pay the vending company, 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 a right of first refusal to buy out the NSR for an unspecified amount.

The Tepal landholding is approximately 14,000 Ha.

A 3,000m core drill programme commenced on known targets in mid April. In August the drilling programme was extended by 1,500m to 4,500m. A total of 2,184m was drilled in the quarter over 18 holes, representing 48% of the total contract. 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 are being sent for analysis to check, from a correlation point of view, the historical assay database. This is an important part of the stringent QA/QC programme that the Company operates.

Although exploration has concentrated on a core drilling programme, some regional surface sampling has been undertaken, with a view to identifying further targets for drilling. This surface sampling work is on-going and so far the initial results have been very encouraging.

Calicanto Group, Zacatecas District, Zacatecas State

The Calicanto Project consists of five adjacent mining concessions totalling approximately 74 Ha namely: the Calicanto, Vicochea I, Vicochea II, Misie and Missie properties, collectively known as the "Calicanto Group". The concessions are located in the historic mining district of Zacatecas in Mexico. 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 3,149m was drilled over 16 holes. Results have been received and a detailed appraisal is underway.

Exploration has concentrated along three avenues at the Calicanto Project. Due to the better than expected results from drilling obtained during the second quarter, the Company decided to advance both the Calicanto ramp/decline (along the Calicanto Vein system) and the San Buenaventura ramp/decline (along the San Buenaventura Vein system). Work continued on the Calicanto and San Buenaventura ramps until the end of the quarter. At the period end the ramps had been extended to 110m and 121m respectively.

The San Buenaventura ramp intersected historic workings on the Misie structures at 65m and again at 80m 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.

To date, the Company has extracted some 3,000 tonnes of run-of-mine material (approx. 1,500 tonnes from each of the Calicanto ramp and the San Buenaventura ramp). The Company is reviewing various options to undertake metallurgical test work on this bulk sample.



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

2007 2006
$'000 $'000

Assets
Property, plant and equipment 167 131
Intangible assets 3,249 1,235
---------------------------
Total non-current assets 3,416 1,366
---------------------------

Trade and other receivables 491 243
Cash and cash equivalents 2,030 3,193
---------------------------
Total current assets 2,521 3,436
---------------------------
Total assets 5,937 4,802
---------------------------
---------------------------

Equity
Share capital 26,580 22,448
Share based payment reserve 1,906 947
Foreign exchange translation reserve (952) (910)
Retained loss (21,777) (18,062)
---------------------------
Total equity 5,757 4,423
---------------------------

Bank overdraft - 6
Trade and other payables 180 373
---------------------------
Total current liabilities 180 379
---------------------------
Total liabilities 180 379
---------------------------
Total equity and liabilities 5,937 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 nine months ended September 30, 2007 and
September 30, 2006
(In U.S. dollars)

3 Months 9 Months
ended ended
September 30 September 30
2007 2006 2007 2006
$'000 $'000 $'000 $'000

Administrative expenses (1,135) (802) (3,759) (2,752)
Goodwill written off - - - (13,635)
-----------------------------------
Operating loss before financing costs (1,135) (802) (3,759) (16,387)
-----------------------------------

Finance income 16 25 44 56
-----------------------------------
Net financing costs 16 25 44 56
-----------------------------------

Loss before tax (1,119) (777) (3,715) (16,331)
-----------------------------------
Loss for the period (1,119) (777) (3,715) (16,331)
-----------------------------------
-----------------------------------

Basic and diluted loss per share ($) (0.01) (0.01) (0.03) (0.26)

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 (31) - (8) -
- in respect of presentation of
financial statements in
United States dollars (4) - (34) -

Loss for the period (1,119) (777) (3,715) (16,331)
-----------------------------------
Total recognised income and expense
for the period (1,154) (777) (3,757) (16,331)
-----------------------------------
-----------------------------------

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 nine months ended September 30, 2007 and
September 30, 2006
(In U.S. dollars)

3 Months 9 Months
ended ended
September 30 September 30
2007 2006 2007 2006
$'000 $'000 $'000 $'000

Cash flows from operating activities
Loss for the period (1,135) (802) (3,759) (16,387)
Adjustments for:
Depreciation 9 - 23 10
Goodwill written off - - - 13,635
Exchange Difference 50 2 102 (50)
Equity-settled share-based payment
transactions 125 46 959 912
Costs settled through issue of shares - - - (208)
---------------------------------
(951) (754) (2,675) (2,088)
---------------------------------
Change in trade and other receivables (61) (51) (250) 1,256
Change in trade and other payables (304) 1 (192) 249
---------------------------------
---------------------------------
Net cash used in operating activities (1,316) (804) (3,117) (583)
---------------------------------
---------------------------------

Cash flows from investing activities
Interest received 16 25 44 56
Cash cost of acquisition of
Hard Assets Inc. - - - 353
Acquisition of intangibles (714) (155) (2,002) (389)
Acquisition of property, plant and
equipment (8) (12) (59) (73)
---------------------------------
---------------------------------
Net cash used in investing activities (706) (142) (2,017) (53)
---------------------------------
---------------------------------

Cash flows from financing activities
Proceeds from issue of share capital 2,868 33 4,132 2,212
Bank overdraft - - (6) -
---------------------------------
---------------------------------
Net cash from financing activities 2,868 33 4,126 2,212
---------------------------------
---------------------------------

Net increase in cash and cash equivalents
Cash and cash equivalents at beginning
of period 1,248 2,587 3,193 98
Effect of exchange rate fluctuations on
cash held (64) - (155) -
---------------------------------
---------------------------------
Cash and cash equivalents at end of
period 2,030 1,674 2,030 1,674
---------------------------------
---------------------------------

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 nine months ended September 30, 2007 and September 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 September 30,
2006

Opening balance 2,604 - 2 (1,029) 1,577
Goodwill written off - - - (13,635) (13,635)
Shares issued for cash 2,200 - - - 2,200
Shares issued for
consulting services 234 - - - 234
Fair value of share
options - 912 - - 912
Proceeds from options
exercised 32 - - - 32
Proceeds from warrants
exercised 1 - - - 1
Shares issued on
reverse take over 13,471 - - - 13,471
Foreign exchange loss 4 - - - 4
Net loss - - - (2,652) (2,652)
--------------------------------------------------
Balance
September 30, 2006 18,546 912 2 (17,316) 2,144
--------------------------------------------------

Period to September 30,
2007

Opening Balance 22,448 947 (910) (18,062) 4,423
Share issue costs (94) - - - (94)
Fair value of share
options - 119 - - 119
Proceeds from options
exercised 147 - - - 147
Proceeds from warrants
exercised 365 - - - 365
Net loss - - - (1,047) (1,047)
Foreign exchange loss - - (4) - (4)
--------------------------------------------------
Balance March 31, 2007 22,866 1,066 (914) (19,109) 3,909
--------------------------------------------------
Fair value of share
options - 714 - - 714
Proceeds from options
exercised 91 - - - 91
Proceeds from warrants
exercised 736 - - - 736
Net loss - - - (1,549) (1,549)
Foreign exchange loss - - (3) - (3)
--------------------------------------------------
Balance June 30, 2007 23,693 1,780 (917) (20,658) 3,898
--------------------------------------------------
Fair value of share
options - 126 - - 126
Proceeds from options
exercised 9 - - - 9
Proceeds from private
placement 2,878 - - - 2,878
Net loss - - - (1,119) (1,119)
Foreign exchange loss - - (35) - (35)
--------------------------------------------------
--------------------------------------------------
Balance
September 30, 2007 26,580 1,906 (952) (21,777) 5,757
--------------------------------------------------
--------------------------------------------------


Arian Silver Corporation

Notes to the Consolidated Financial Statements (Unaudited)
For the nine months ended September 30, 2007 and September 30, 2006

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").

ASC 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 31 December 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 31 December 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.

The directors have reviewed the Group's cash flow forecast and believe that the Company has sufficient working capital 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 ("ASC") 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 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 mineralisation 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 realised or substantially realised, 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
    Bishopsgate Communications Ltd.
    Nick Rome or Maxine Barnes
    +44 (0)20 7562 3350
    or
    Grant Thornton Corporate Finance
    Gerry Beaney or Fiona Kindness
    +44 (0)20 7385 5100
    or
    Haywood Securities (UK) Limited
    Daniel Brooks or Tom Beattie
    +44 (0)20 7031 8000
    or
    In Vancouver:
    Vanguard Shareholder Solutions
    Keith Schaefer
    (604) 608-0824 or Toll Free: 1-866-898-0825