Arian Silver

SPECULATIVE BUY

18/02/2010 Robert Tyerman

Arian Silver is poised to start production at San Jose in Mexico after raising £3.5m from Canadian investment group Sprott and others.

Jim Williams, entrepreneurial chief executive officer of London-based Arian, says the company is ‘ready to go’ at San Jose, where it last year estimated a potential resource of nearly 300,000 tonnes of ore with 189 grammes of silver per tonne of ore. With silver now trading at around $16 an ounce and industry watchers targeting $20 soon, Williams suggests San Jose could achieve a 160% internal rate of return at a price of $14 an ounce.

His long-term game plan is for AIM-quoted Arian, which stands to receive nearly £2m in two stages from selling another project, Tepal, to generate enough cash from its present San Jose operation to fund the establishment of a major silver deposit in the area. Williams foreshadows operating costs at San Jose of $40 a tonne, against an in situ metal value of $100 a tonne.

With many imponderables, the shares could justify a punt at 5.75p.

To order Arian Silver's annual report please click here

Tags: AIM, Commodities, Emerging markets

Sector: Mining

Companies: Arian Silver Corporation

Market cap: £13.5m

PE Forecast: n/a

Share price: 5.75p