(MENAFN - ProactiveInvestors - UK) It's been an eventful year for Arian Silver (LON:AGQ) and the newsflow looks set to continue into 2013. The company's flagship San Jos property lies 55km to the southeast of Zacatecas City in Mexico and covers 11 mining concessions totalling around 6,300 hectares.
Q: What are the company's key plans for the year ahead?
Arian Silver: For the next 12 months, to re-start production, albeit initially on a toll milling basis, and at the same time further concentrate our best efforts on finalising the detail with our own custom mill. Within 12 months we anticipate being very advanced in the construction of our own mill and the financial modelling figures we have so far indicate a significant increase in efficiencies all around.
We also anticipate starting the next phase of drilling at San Jose because, although the market is arguably not allocating any value to extra metals in the ground right now, we believe this situation will change within the next six months and when it does we shall be ideally placed on this front.
Q: How are you funded going into 2013?
Arian: We have a SEDA facility in place which allows us, subject to certain stipulations, to obtain up to 5mln over three years. We have used a small part of this already which indeed was the whole point of the exercise in the first place. Also, we have already begun talks with a number of institutional bodies regarding financing of our own custom mill.
Q: What are the firm's key milestones in the early part of 2013?
Arian: The first key milestone will be the re-start of production using our recently announced new toll mill facility and initial revenues for this will benefit us early 2013. The second will be a decision on our own custom mill. This will be probably by far the biggest news we will have had for quite some time and effectively allows us, once construction has been completed, to have a wholly owned operation all within the confines of our San Jose concessions.
At the same time, there will be more drilling to increase resources, and this will essentially be two-fold, one to increase resources through step-out drilling and secondly, to infill drill with a view to upgrading our existing resources into higher categories.
Q: What is your outlook for silver prices in general?
Arian: Silver right now, like gold, is being significantly curtailed in price due to various macro economical factors all around us. We have this so-called 'fiscal cliff' financial issue which we all hope the US will resolve before the end of this year. Inevitably the printing of money will continue and theoretically when this happens metal prices increase. Obviously the better the silver price then the better our bottom line financial projections.
Q: Have operations begun yet at the refurbished process plant? If not, when can we expect this to happen and what sort of production numbers are you targeting?
Arian: The refurbished toll mill, which was built from scratch only 7-8 months ago, is practically complete. It is rated at 500 tonnes per day and we see this only as an interim step whilst we gear up for our own custom mill. The refurbished toll mill is located around 30 miles from our San Jose operation and the transportation cost between there and the new toll mill is around US8/tonne whereas our own custom mill will be constructed within the San Jose area so before anything else is taken into consideration this transportation cost will disappear. We expect to initiate production at 400 tonnes per day increasing to 500 shortly thereafter. At 500 tpd using 30 silver then annual revenues are expected to be around 18M. With our own custom mill these numbers, on all fronts, will be significantly improved.
Q: What is the latest on the legal action against the operator of the previous mill?
Arian: This is currently ongoing even though much of the disputed amount owing to us has now been paid. However, our contract was terminated earlier this year by the mill operator which we insist was illegal and this obviously caused us, if nothing else, a massive PR issue and up until that point in time we had managed to significantly improve the performance of the plant with the minimum of expenditure, and with this we had achieved a high of 63% recovery of silver in concentrate. This doesn't sound great but when compared to the approx 40% when we started we see it as a significant improvement and indeed our half year revenue at that point in time, as stated in our Q3 statements, was on track to be significantly better than those of 2011.