Silver Company Moves from Exploration to Production

The story behind Arian Silver’s presence in Mexico is a curious one. Founded by British geologist Jim Williams, the company is wholly financed from the UK. However, on the ground in Mexico, both at San José and Calicanto in Zacatecas, not one expat can be found. “Everything is managed by an experienced Mexican team that has considerable background knowledge of different ore bodies and deposits around Mexico,” says Miguel Barahona Gutiérrez, Director of Arian Silver Mexico. “Our most valuable asset is our HR. Our exceptional Mexican team is well-suited to all the different tasks required to develop the project.” Although lauding the Mexican staff, Gutiérrez still calls attention to the help provided by the company’s founders. The British elements provide the capital and the support that Arian Silver needs to operate in Mexico. Gutiérrez adds that his very close relationship with CEO Jim Williams, CFO Dean Friday, and other top executives, has allowed Arian Silver’s projects to reach the operation stage, despite the geography gap.

After Williams had spotted the opportunity to mine silver in Zacatecas, the search for a worthwhile vein began in earnest. The first project to be established was Calicanto, which was made up of seven mining concessions known as the Calicanto Group. Even though Arian Silver possessed another property close to a Capstone project in Zacatecas, the company wanted to avoid being distracted from its current principal focus on its second property, San José. Systematic exploration of San José began in 2006, with four phases of drilling performed one after the other to reach 30,000m. Full-blown mining then began in 2011, and a fifth phase of drilling, covering an additional 10,000m, is planned to better define the property’s resources. “Several aspects influenced the company’s decision to acquire San José,” explains Gutiérrez. “The first of these was its potential, as it had a wide vein with a length of 7km which could rise to 10km. The property had already been explored in certain areas and the potential was clear.” He quips that the old saying ‘the best way to find a mine is to search where there was a previous mine’ was shown to be true at San José. Other advantages included that it is only 55km away from the city of Zacatecas, with an access route only 3km from a major highway. These logistical conveniences helped Arian Silver in its decision to install a plant near the mine. “Previously, we had to freight the mineral all the way back to Zacatecas. Having a plant in San José itself would save on that cost,” Gutiérrez points out. Another challenge has been dealing with the length of the silver vein. Prior to Arian Silver taking over the project, less than 1% of the vein had been explored, although Gutiérrez estimates that the company has since traversed 90% of it. However, the vein was moved by a fault, so Arian Silver’s challenge in the next phase of exploration will be to find the vein on the other side of the fault. Once discovered, Arian Silver expects it to potentially increase the vein by a further three to 4km. At this point, even with such expansion potential, the company feels it has already built up its resources. “We had to make the choice to either keep drilling and build up more resources, or start producing. Junior companies only reach the point of building up their resources and then sell a project on to somebody else,” states Gutiérrez, adding that Arian Silver stands out by actually putting resources into production. As the company’s last completed drilling phase was in 2012, it is now busy extracting these resources.

Arian Silver’s mission statement states that it is seeking to create a silver mining arm that can produce a minimum of 2 million ounces of silver per year, a goal which will require steady growth; although doing so in the current economic climate for metals may prove difficult. However, Gutiérrez refuses to worry about situations that are beyond his control. “There are things we can control and others that we cannot. Arian Silver cannot control the prices of silver and base metals, which means we must focus on controlling the operational costs and our own efficiency. The only way to stay in business is to be a low-cost producer.” For all this confidence, it will be a real challenge for Arian Silver to achieve this goal without knowing if silver prices will continue to drop. “We cannot wait for prices to go back to previous levels as we might be waiting for a long time only for it never to happen.” According to the company director, diversification is not an option for Arian Silver, so it will continue to place its efforts into setting up production at San José. Once the project is fully operational, he expects that it will enable the company to instigate more projects in Zacatecas down the line.