Trading Symbols
AIM: AGQ
FWB: I3A

ARIAN
SILVER

29 September 2017

Interim results for the six months ended 30 June 2017

Arian Silver Corporation (“Arian” or the “Company”) is pleased to announce its financial results for the six months ended 30 June 2017.

Jim Williams, Chief Executive of Arian, commented: “Our strategy is to create a portfolio of primarily lithium, silver and gold exploration projects, principally in Mexico.

The investment case for lithium is well understood given the expected demand for energy storage in the automotive and housing sectors. This demand for the metal is expected to grow and be sustained, which makes this an ideal time to have moved into the sector.

The region in Mexico in which Arian has been operating for many years is already known to host some large lithium deposits, and we are presently seeking out similar prospective mining concessions. As announced earlier today, we have withdrawn from exploring a group of projects under option, which although they confirmed consistency of lithium grades, did not contain the higher grades known to be attainable in the region.

With regards to Arian’s portfolio of silver projects, these contain some very promising targets which we are keen to retain and explore further once the silver price has demonstrated sustainability at higher levels.”

Strategy

Arian’s objective is to create a portfolio of primarily lithium, silver and gold exploration projects, principally in Mexico.

The group has operated in Mexico for over ten years during which time it has established long-term relationships with local government, communities, and key stakeholders. Arian’s geological experts assess and identify projects for potential mineralisation. Wherever possible, the Company will seek to enter into agreements whereby Arian has the option to acquire projects, allowing preliminary exploration work to be undertaken whilst minimising any financial commitment.

Where preliminary studies evidence sufficient mineralisation, increasingly comprehensive studies will be undertaken with a view to delineating a compliant mineral resource estimate in readiness of potential sale of the asset to a producing mining company, at which time a significant premium over its acquisition and development cost may be justified.

Financial highlights

As at 30 June 2017, the Company had total assets of US$1.5 million (2016: US$2.2 million) of which US$0.9 million (2016: US$1.2 million) was cash. The Company had total liabilities of US$0.1 million (2016: US$0.1 million) of which US$0.1 million were current liabilities (2016: US$0.1 million).

In the six months ended 30 June 2017 the Company made an operating loss of US$0.7 million (2016: US$0.9 million) and a loss per share of US$0.003 (2016: US$0.006). The Company raised proceeds by way of private placings of shares of US$0.8 million before costs and expenses, to further its strategy.

Overview of operations

During the six months ended 30 June 2017, the Company carried out a high level exploration programme over its portfolio of silver mining concessions covering an area of over approximately 1,500 hectares, to develop and direct future exploration work, the findings of which are set out in more detail below.

Properties

As at 30 June 2017, the Company fully owned 12 silver mining concessions covering an area of approximately 1,500 hectares. During the six months ended 30 June 2017, Arian acquired an option over three lithium mining concessions covering approximately 1,600 hectares for consideration of US$200,000, payable in instalments up to March 2018.

In light of assay results from the initial auger drill programme received after the period end, in September 2017, the Company will not undertake any further exploration work on these projects and will seek to negotiate an extension to the option agreement.

Silver projects

Los Campos project

The Los Campos project comprises four concessions covering an area of approximately 500 hectares, located on the south side of the city of Zacatecas. The property is easily accessible and is only a 15-minute drive from the centre of the City of Zacatecas and from the Calicanto project.

San Celso project

San Celso consists of three contiguous mining concessions totalling 88 hectares. The concessions are located in the historic mining district of Pánfilo Natera-Ojocaliente and are surrounded by other concessions to the south and west.

Calicanto project

The Calicanto property, the sale of which was completed in February 2017, consists of seven contiguous mining concessions totalling approximately 75 hectares. The property is located in the heart of the Zacatecas mining district, adjacent and partly contiguous to Capstone Mining’s Cozamin mine, and covers four known main vein systems.

Other silver projects

Arian Silver holds five additional silver mining concessions covering over 900 hectares. These concessions were acquired in 2006 because of their strategic position to the San Celso project. These concessions too require further exploratory work to fully assess their economic potential.

Lithium projects

Initial sampling at the three lithium projects held under option evidenced lithium grades of up to 0.016% (160 parts per million).

Pozo Hondo

The Pozo Hondo project is the largest of the projects at almost 1,100 hectares in size and covers one salar, the Laguna El Salado.

Columpio

The Columpio project is almost 400 hectares in size, encompassing two salars, Laguna Tenango and Laguna La Virgen, approximately 24km from the town of Villa de Cos.

Abundancia

The Abundancia project is 150 hectares in size and encompasses the Laguna Noria del Burro salar, approximately 40km from the town of Villa de Cos.

Post balance sheet events

On 13 July 2017, the Company announced a fundraise of £600,000 before expenses through the private placing for 0.5p each, of 120 million units, each comprising one Common share in the capital of the Company and one warrant exercisable to receive one Common share in the capital of the Company at 0.6p each. Admission of the Placing Shares became effective at 8:00am on 27 July 2017.

Future outlook

The expected increase in demand for lithium has significantly improved the economic potential for mining companies with access to good quality lithium assets. Arian is focussed on identifying new lithium prospects predominantly within the Zacatecas region of Mexico.

The review of the Company’s silver mining concessions resulted in the identification of good opportunities for the future exploration of those assets once the silver price has demonstrated sustainability at higher levels, the disposal of one silver project, and the absence of a need for any impairment.

Management continue to work towards the identification of additional opportunities to expand and develop the Company’s mining assets, with a particular focus on assets giving access to near-term revenues.

Notice of no auditor review of interim financial information

The interim unaudited consolidated financial information for the six month period ended 30 June 2017 have been prepared by and are the responsibility of the Company’s management, in accordance with International Accounting Standards (“IAS”) 34 Interim Financial Reporting.

Arian Silver Corporation

Consolidated statement of comprehensive income

For the six months ended 30 June 2017

(tabular amounts expressed in thousands of US dollars unless otherwise stated)

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

These consolidated financial information have been approved by the Company’s directors.

Arian Silver Corporation

Consolidated statement of financial position

For the six months ended 30 June 2017

(tabular amounts expressed in thousands of US dollars)

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

These consolidated financial information have been approved by the Company’s directors.

Arian Silver Corporation

Consolidated statement of cash flows

For the and six months ended 30 June 2017

(tabular amounts expressed in thousands of US dollars)

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

These consolidated financial information have been approved by the Company’s directors.

Arian Silver Corporation

Consolidated statement of changes in equity

For the six months ended 30 June 2017

(tabular amounts expressed in thousands of US dollars)

For the six months ended 30 June 2017

For the six months ended 30 June 2016

For the year ended 31 December 2016

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

These consolidated financial information have been approved by the Company’s directors.

Arian Silver Corporation

Notes to Consolidated Financial Information (Unaudited)

For the six months ended 30 June 2017

(tabular amounts expressed in thousands of US dollars unless otherwise stated)

1.    Basis of preparation, going concern and adequacy of project finance

These interim unaudited consolidated financial information for Arian Silver Corporation (“ASC” or the “Company”) have been prepared in accordance with International Financial Reporting Standards.

ASC is a company domiciled in the British Virgin Islands. The consolidated financial information of the Company comprise financial information of the Company and its subsidiaries (together referred to as the “Group”). The Group is primarily involved in the exploration and development of mineral resource assets.

The accounting policies and methods of computation used in the preparation of the interim unaudited consolidated financial information are the same as those described in the Company’s audited consolidated financial information and notes thereto for the year ended 31 December 2016. In the opinion of the management, the interim unaudited consolidated financial information include all adjustments considered necessary for fair and consistent presentation of financial information. These interim unaudited consolidated financial information should be read in conjunction with the Company’s audited financial statements and notes for the year ended 31 December 2016.

These consolidated financial information are presented in United States dollars as the Company believes it to be the most appropriate and meaningful currency for investors. The functional currencies of the Company and its subsidiaries are pounds sterling, Mexican peso and United States dollars.

The financial Information have been prepared on a going concern basis. The directors regularly review cash flow forecasts to determine whether the Group has sufficient cash reserves to meet future working capital requirements and discretionary business development opportunities including exploration activities.

On 8 June 2017, the Company successfully raised gross proceeds of US$775,000 (£600,000) by issuing 120,000,000 common shares at 0.5 pence each.

The Group’s assets are at an early stage and in order to meet financing requirements for their development previously the Company has raised equity funds in several discrete share placements, which is a common practice for junior mineral exploration companies. Although the Company has been successful in the past in raising equity finance, there can be no assurance that the funding required by the Group will be made available to it when needed or, if such funding were to be available, that it would be offered on reasonable terms. The terms of such financing might not be favourable to the Group and might involve substantial dilution to existing shareholders.

The directors currently believe that the Group has adequate resources for the foreseeable future or access to such resources in order to continue to prepare the Company’s financial information on a going concern basis. In reaching this conclusion, the directors have reviewed cash flow forecasts to the end of July 2018 and considered their ability to reduce expenditure in the event that further fundraisings are not completed within that timeframe, and have concluded they can make such savings as may be necessary in order to operate within the funds currently available to them.

2.    Intangible assets – deferred exploration and evaluation costs

The Group’s deferred exploration and evaluation costs comprise costs directly incurred in exploration and evaluation as well as the cost of maintaining mineral licences. They are capitalised as intangible assets pending the determination of the feasibility of the project. When the decision is taken to develop a mine, the related intangible assets are transferred to property, plant and equipment. 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 the Group can establish economically recoverable reserves on its properties, the ability of the Group to obtain necessary financing to complete the development of such reserves and future profitable production or proceeds from the disposition thereof.

Intangible assets for the six months ended 30 June 2017 are detailed in the following table and relate entirely to deferred exploration and development costs:

The opening balance for 30 June 2016 has been restated because upon review of licences in prior year, directors identified 4 licences relating to the San Jose project, which were discontinued in 2015. Therefore, the loss on discontinued operations in 2015 was restated, increasing by $69,000, with intangible assets and equity decreasing by the same amount.

3.    Available-for-sale investment

Investments classified as available-for-sale comprise the Group's investments in entities not qualifying as subsidiaries, associates or jointly controlled entities. They are carried at fair value with changes in fair value, other than those arising due to exchange rate fluctuations and interest calculated using the effective interest rate, recognised in other comprehensive income and accumulated in the available-for-sale reserve. Exchange differences on investments denominated in a foreign currency and interest calculated using the effective interest rate method are recognised in profit or loss.  The available-for-sale investments held at period end are held at cost as management consider it representative of fair value.

4.    Share capital and reserves

Share capital

The Company is authorised to issue an unlimited number of common shares of no par value.

Changes in share capital for the six months ended 30 June 2017 are as follows:

2016

·      On 27 January 2016, 79,787,493 common shares were issued at £0.01 each, £797,875 (US$1,137,419).

·      On 13 May 2016, 70,000,000 common shares were issued at £0.01 each, £700,000 (US$1,019,970).

Six months ended 30 June 2017

·      On 8 June 2017, 120,000,000 common shares were issued at 0.5 pence each, £600,000 (US$775,110).

Six months ended 30 June 2016

·      Upon review, it was determined that the fair value of the warrants issued during the period was incorrectly charged to the income statement, instead of being charged to share capital. Accordingly share capital was restated to include a charge of $1.3m.

Warrant reserve

The number and weighted average exercise price for the period ended 30 June 2017 are set out in the table below:

On 9 June 2017 132,000,000 common share purchase warrants were issued, exercisable at 0.76 US cents (0.6p) per common share, until 8 June 2019.

Upon review, it was determined that the fair value of the warrants issued during the period was incorrectly calculated as US$2.8m and should have been US$1.3m. Accordingly the balance of the warrant reserve for the six-month period ended 30 June 2016 has been restated.

Fair value of Warrants and assumptions

The estimate of the fair value of the Warrants is measured based on the Black-Scholes model. The following inputs were used in the calculation of the fair value of the warrants granted.

Share based payment reserve

The share based payment reserve arises on the grant of share options to directors, employees and other eligible persons under the share option plan.

A summary of the changes in the Group’s contributed surplus for the six months ended 30 June 2017 is set out below:

Foreign exchange translation reserve

The translation reserve comprises foreign exchange differences arising from the translation of the financial statements of operations that do not have a US dollar functional currency. Exchange differences arising are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised in profit or loss in the period in which the operation is disposed of.

Accumulated losses

Accumulated losses contain losses incurred in the current and prior years.

5.    Incentive stock options

A summary of the Company’s stock options as at 30 June 2017 is set out below:

6.    Related party transactions

These unaudited interim consolidated financial information include balances and transactions with directors and officers of the Company and/or corporations related to them. All transactions have been recorded at the exchange amount which is the consideration established and agreed to between the related parties.

Control of the Company

In the opinion of the Board, at 30 June 2017 there was no ultimate controlling party of the Company.

Identity of related parties

The Company and its subsidiaries have a related party relationship, with its Directors and executive officers.

Siberian Goldfields Ltd (“SGL”)

On 24 September 2013 the Company acquired an option for US$200,000 to conduct due diligence on SGL and its mineral properties, with a view to ASC undertaking a potential equity transaction or other corporate transaction or investment with SGL (“Transaction”). On 27 November 2013, ASC gave notice to SGL of its election not to proceed with a Transaction.

The option grant fee was repayable by SGL to ASC together with interest payable at a rate of 10% per annum in the event that ASC elects not to proceed with a Transaction. On 21 April 2017 the outstanding debt owed by SGL was settled through the issue of 2 million SGL shares representing 0.70% of the issued share capital of SGL. These were subsequently exchanged for 881,077 ordinary shares (representing 0.35% of the issued share capital) of Siberian Goldfields Ltd (“SGL UK”), a UK registered company. The Company’s interest in the underlying Siberian Goldfields project remains unchanged as a consequence of the restructuring from SGL to SGL UK.

As at 30 June 2017 the investment in SGL UK is shown as an investment held for sale in the statement of financial position.

As at 21 April 2017, interest accrued during the period ended 30 June 2017 amounted to US$6,000 (30 June 2016: US$10,000, 31 December 2016: US$20,000). As at 21 April 2017, total amount owed to ASC by SGL was US$272,000 (30 June 2016: US$255,000, 31 December 2016: US$265,000).

A.J. Williams is a director and shareholder of SGL.

Directors’ interests in shares of the Company

At 30 June 2017 the Directors of the Company and their immediate relatives controlled approximately 1.7% (30 June 2016: 2.8%, 31 December 2016: 2.8%) of the voting shares of the Company.

Directors’ interests in the common shares of the Company as at 30 June 2017 are set out below.

Transactions with key management personnel

During the period ended 30 June 2017 the Company entered into the following transactions involving key management personnel:

Dragon Group Ltd charged the Company a total of US$65,832 (30 June 2016: US$67,834, 31 December 2016: US$122,266). This relates to the reimbursement of A.J. Williams’ remuneration paid on behalf of the Company. A.J. Williams, Chairman and a director of the Company, beneficially owns Dragon Group Ltd. At 30 June 2017, US$21,944 (30 June 2016: US$11,306, 31 December 2016: US$10,413) was outstanding.

Key management personnel also participate in the Group’s share option programme.

JS Cable consulting fees

During the period JS Cable charged the Company a total of nil (30 June 2016: nil, 31 December 2016: US$10,141) in respect of consulting fees. There was no outstanding balance at 30 June 2017 (30 June 2016: nil, 2016: nil).

TA Bailey consulting fees

During the period TA Bailey charged the Company a total of nil (30 June 2016: nil, 2016: US$9,395) in respect of consulting fees. There was no outstanding balance at 30 June 2017 (30 June 2016: nil, 2016: nil).

7.  Post balance sheet events

On 13 July 2017, the Company announced a fundraise of £600,000 before expenses through the private placing for 0.5p each, of 120 million units each comprising one Common share in the capital of the Company and one warrant exercisable to receive one Common share in the capital of the Company at 0.6p each. The placing was conditional on the shares being admitted to trading on AIM (“Admission”). Admission of 120 million shares became effective at 8:00am on 27 July 2017.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

For further information please contact:

Forward-Looking Information

This press release contains certain “forward-looking information”. 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 are deemed forward-looking information.

This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company as well as certain assumptions. Forward-looking information is subject to a number of significant risks and uncertainties and other factors that may cause the actual results of the Company to differ materially from those discussed in the forward-looking information, 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.

Any forward-looking information 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 information, 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 information are reasonable, forward-looking information is not a guarantee of future performance and accordingly undue reliance should not be put on such information due to the inherent uncertainty therein.