Arian Silver - Yet Another For The ISA!

9th Sep '10 by p3dr036

9 comments 13229 reads

I've been in AIM and TSX listed emerging silver producer Arian Silver Corp (LON:AGQ) focused on the silver belt of Mexico for some time now. Liked the story - bought the shares! Here are my reasons!

I was particularly attracted by the fact that the shares can be held in an ISA. So it was a "definite and probable" buy in my mind from the off!

The main attraction of course is the likelihood of future profit and AGQ certainly holds out the prospect of this.

The company's website gives the company strategy as:

Obtain advanced and low-cost (acquisition cost) silver projects and rapidly build up resources in the ground. Arian is focusing its exploration efforts in one of the richest known silver-bearing districts in the world - the Zacatecas State of Mexico.
Focus on short-term silver production. Arian is in the process of acquiring undervalued silver projects with the potential for profitable production at US$4.50 or less, and a resource potential in excess of 50,000,000+ ounces of silver.
Focus on projects with prior exploration and production history, thereby reducing risks and capital costs.
Arian's forward-looking strategy is to:
Develop projects towards production through a combination of company development and/or Joint Venture (JV) and acquisition opportunities.
Building shareholder leverage to silver through expanding silver resources and reserves, and eventually production per share.

The company has a number of silver projects in Mexico, the largest being at their now 100% owned San Jose mine. They have interests in three other projects; Calicanto; Tepal [in conjuction with their farm-in partner Geologix Inc [TSX-GLX] and San Celso. But for the time being the focus is on San Jose. Here they intend to carry out contract mining on the presently defined 10% of the overall San Jose licence area. They expect to mine 500 tons or ore per day from this but the company announced on 24th August this year that they expected to be able to increase this to 1,500 tons per day in the future [see the Press Release on the company website] . The ore mined will not be processed on site. Negotiations have been on going for some time now with a number of local milling operators and Arian expect to conclude a satisfactory agreement with the succesful toll miller soon. Once a milling contract is announced…

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pierre1

9th Sep '10

Can you specifie ISA able

wkr Pierre

Betasurfer

Pierre, if I understand your question correctly, you are asking what ISA-able means? It's a tax free wrapper. Placing investments inside an ISA wrapper means that any profits made from share price increases aren't eligible for capital gains tax. More here: http://www.moneysavingexpert.com/savings/ISA-guide-savings-without-tax

Basically, the issue is that most AIM stocks are not ISA-able. This is because even though they may be qualifying investments, AIM is not accepted as a "recognised Stock Exchanges" within the meaning of the legislation (which is absurd but there you go). If however, a stock is dual-listed (as in this case), then it usually will be ISA-able.

So where can you find a list of dual-listed stocks on AIM? Well, it's funny you should ask...

Thank you

p3dr036

11th Sep '10

pierre1 - By calling the share "ISA-able" I meant that the share was able to be held in an ISA. Some UK shares can be held in an ISA and some can't.

As I understand it current HMRC ISA rules state that any UK share that is listed on the main LSE market can be held in a Stocks & Shares Individual Savings Account or ISA. However shares listed on the AIM Market or Plus Market in the UK cannot be held in an ISA unless those shares are also listed on what the HMRC refers to as a "recognised" overseas stock exchange.

There is a list of "recognised" exchanges on the HMRC website. But in practice the exchanges which are most likely to be involved are the large and well recognised ones, such as the US and North American exchanges [NYSE, TSX etc] Australia [ASX] and so forth.

As Arian Silver is listed both on AIM and the Toronto Venture Exchange [TSX-V] it is able to be held in an ISA.

I am sure you will be aware of the advantages of holding shares in an ISA which are:
1 - no capital gains tax
2 - no income tax on dividends

Hope this is of use

coldsnap

13th Sep '10

Thanks for bringing this to my attention. I was looking for a UK-listed silver junior and you've found one. When I see Sprott Asset Management on the share register I always feel greatly encouraged as the Sprott managers are about the best in the business with precious metals.

I wondered what the histroy of the mine was and why the previous owners upped sticks in 2001. This article explains it: http://www.ariansilver.com/i/pdf/Mining_Journal_HK2010.pdf It seems they left because of the low silver price, but not before they had invested in mechanical mining infrastructure, which now beneifts Arian.

I can see that Arian are going to make some money, but i wonder how much the upside is. I guess we'll find out when the drill results start coming in.

CS

14th Sep '10

What I like about this company's "story " is their pragmatic approach:

1. They have a number of different projects. But they are taking the line of simply concentrating on one, at present - the San Jose mine.

2. They have only explored 10% of the San Jose mine area. But they reckon in that 10% there is enough silver available in the short term which could provide cash flow for the exploration of the remaining 90%. So it's the mining of the 10% first, followed by the exploration and [we hope] the subsequent meaning of the remaining 90%.

3. They have decided to keep their costs down, in the first instance, by contracting out the milling of their silver ore instead of processing it themselves. This has led to a reduction in their capital costs at this time as they won't need to repair or upgrade or replace their present machinery

This seems to me to show a sensible step by step approach which appeals.

Fangorn

16th Sep '10

Another nice move upwards today on this one after yesterdays 6.6% rise. Watching this one with interest.

22nd Sep '10

Well the news arrived at last. Arian have finally signed their toll milling contract and they will begin to receive a cash flow in Q4 of 2010. Key points in today's RNS are :

- A 500 tons per day ("tpd") contract mining operation at the San Jose
Project has been mobilized to commence production;

- Mining is planned to operate 20 days per month. Total costs to mine and
deliver ore to the mill are estimated at approximately US$26/t;

- The milling operation will initially handle up to 400 tpd with plans to
increase the throughput with an upgraded crusher. Mill hire is a fixed
cost at MXP3.7 million (approximately US$290,000) per month, subject to
adjustment for any operating downtime. This includes all operating costs,
maintenance and repair costs and consumables;

- At a milling rate of 400 tpd, 125t of concentrate should be produced per
month with an anticipated silver content of between 370 and 440 ozs per
ton ("opt");

- Based on a contained silver content of 405 opt at US$18/oz silver, a
concentrate value of US$6,500/t should be achieved;

- A 2% NSR on concentrate value payable to the vendor of the San Jose
property;

- Initial mill feed will be taken from surface dump material at Arian's Los
Campos property whilst underground development to reach the Santa Ana
resource block at San Jose is advanced;

- There is potential to increase contract mining production at San Jose from
500 tpd up to 1,500 tpd subject to available mill capacity;

- Cash flow expected in Q4 of 2010; and

- Production cash flow will fund the planned drilling program on the San
Jose Vein ("SJV") system.

Arian's Chief Executive Officer, Jim Williams, commented in today's announcement:

"It is with great pleasure that I report that all contracts are now in place that enable us to move into production at San Jose. As all preparatory work on-site is complete, we anticipate cash flows commencing during Q4 of 2010 from our initial 500 tpd mining operation. As we enter into production we are encouraged by the current fundamentals for silver.

I would like to thank all shareholders for their continued patience and support while we were negotiating the
best terms available for the respective contracts for our San Jose production."

The Los Campos property, 100% owned by Arian, is located near Zacatecas and the surface dumps from previous mining operations are estimated to contain material with an average reported grade of 250 g/t silver sufficient to source the initial mill feed.

Past drilling programs have so far only tested some 10% of the known strike length of the SJV system within the
property's boundaries. Going forward, the Company intends to use cash flow from the mining operation to explore and develop the remaining 90% of the known SJV, including infill drilling and further studies to assess the
economic options of larger-scale independent mining.

The resources identified to date at San Jose only cover approximately 10% of the total known strike length of
the SJV alone; these indicated and inferred resources contain some 43 million ounces of silver, 120 million
pounds of lead and 248 million pounds of zinc. The Company is optimistic that additional significant resources
can be identified over the remaining 90% of the SJV in due course plus other known zones of mineralization
within the concession area.

Arian's overall objective is to develop additional resources on the SJV system concurrently with the initial
contract mining operation with a view to becoming a larger-scale independent producer.

The share price reacted immediately on the news and raced away to a high of 21p [up over 50%!]. It is now at 18p.

As only some 10% of the San Jose property has been explored in detail, there is a great potential for this company. I topped up today on the news and these shares are staying firmly in my ISA for thelong term.

30th Sep '10

Punters seem to be taking John Licata's comments on Silver to heart

AGQ up 15.2% to 20.75

Anyone else buying here at these levels? AGQ seems to be accelerating upwards!

Arian Silver - Yet another for the ISA!

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P3dr036

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