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Silver Company Signs Contract for Processing Plant

Written By Brian Hicks

Posted November 28, 2012

London’s Arian Silver (LON: AGQ) has signed a contract granting it exclusive use of a refurbished processing plant neat Zacatecas, Mexico. The plant is expected to come online in December, and its capacity is estimated at 500 tons per day.

After a toll milling operation was suspended for a while, Arian had halted the delivery of ROM ore from its San Jose mine, situated some 50 kilometers (31 miles) away from the plant. Arian will resume these deliveries when the plant becomes operational.

Initial sourcing will occur from the silver stockpiles that resulted from the suspension; once that is worked through Arian will then resume working from the current contract mining.

The initial contract, which is renewable and accounts for about half a year of production assuming the aforementioned 500 tpd, is for 90,000 tons of ROM ore at $38 per ton, including maintenance and repair costs.

Arian will continue to provide full-time employees and pay out a 2 percent smelter royalty on concentrate value, per the San Jose concession purchase terms.


Arian’s Chief Executive Officer, Jim Williams, commented: “We expect to achieve significantly improved recoveries of silver from this new toll milling operation as well as the potential for additional recoveries from lead and zinc previously not available to us. It will also provide a useful stepping stone towards the construction of a Company-owned processing plant on site at San Jose. While working to finalise the toll milling agreement, our mining and geological teams have continued to develop the mine and update the mining plan thus ensuring we are well placed to resume full scale contract mining to feed the new mill.”

San Jose remains a site of interest for Arian, as the company works to scale up its operations in that area mining for lead, silver, and zinc.

Present financial models suggest a likelihood of good ROI within a reasonably short time, even if silver prices reduce from current levels, Equities reports.