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Analysis

Vertical Integration Strategy

Mon, 10/21/2013 - 14:46

Companies invest millions of dollars in exploration, and though there may be resources that are easier to exploit and which thus offer a faster return on that investment, companies like Arian Silver that have long term production plans complement their cost control strategies by looking to vertically integrate their operations from the exploration phase to development and production. “Arian Silver is increasing the value of its resource with its current mill plant project and its aggressive exploration projects,” says Miguel Barahona of Arian Silver’s plans to increase the value of its San José mine.

When limited access to financing complicates a company’s operations, they must immediately prioritize their investments, in many cases outsourcing operations at a certain stage of development that are not considered to add value to their core operations. Arian Silver, along with many other companies in the mining market, has faced this operational challenge and decided to externalize the processing of its minerals; this is an experience that has given the company the know-how and experience to now be in the position to set up a mill of its own. “We are currently investing in our own processing plant and in metallurgical testing to increase recovery, and we are convinced this is the right strategy to ensure both product quality and cost efficiency,” comments Barahona. 

As mentioned by Gustavo Ortega Gómez, President of the Innovation and Technology Commission of Camimex, technology will continue to play an extremely important role in the mining industry in the coming years, given its power to help companies to work more efficiently. Arian Silver follows this same philosophy, seeking the best and newest technologies to incorporate into its vertical integration strategy. “We are constantly on the lookout for any technological discoveries that could improve our operations. If we find equipment that can improve our recovery rate or benefit our operations then we will incorporate it,” says Barahona.

With its clearly defined objectives of bringing the San José mine into production, completing its vertical integration strategy with the mill plant project, and concluding its exploration of the 75.5ha Calinto Group plot of mining concessions, Arian Silver is making sure that it achieves its long term goals in the most socially and environmentally responsible way possible. “We intend to be big, in terms of being a low cost producer with high safety, environmental and productivity standards. We are growing not only along the lines of production and resources, but also with constant advances in innovation and technology, as well as the right people that have the ethics and professionalism to help us to reach our goals and growth objectives as a whole.”