LONDON (Alliance News) - Arian Silver Corp plummeted on Tuesday morning after its shares resumed trading on AIM, as the company's financial worries continued.
Arian shares were down 83% to 1.93 pence per share on Tuesday morning. The stock has traded as high as 52.71p in the past 52-weeks.
At the end of October, Arian shares were suspended from trading after the company said its loan note amendment agreement it was set to reach with Quintana AGQ Holding Co LLC had been terminated.
Arian had signed a letter of intent with Quintana to amend its loan note agreement in order to provide the company with around USD10.0 million in extra funding, but Quintana pulled out shortly afterwards, leaving Arian scrambling for a solution to its financial concerns.
On November 3, Arian received a default notice under its agreements with Quintana San Jose Streaming Co LLC and Quintana ACQ Holding Co LLC.
Under the terms of the settlement, Quintana was entitled to exercise its foreclosure rights under previous senior secured financing arrangements. Quintana exercised its security and took ownership of Arian Silver de Mexico SA de CV and its assets, including the San José project in Mexico.
Arian's accrued debt under the senior secured financing arrangement with Quintana amounted to about USD17.8 million on October 31, with initial repayments due to begin in April 2016. In addition, the outstanding balance under a base metal purchase agreement amounted to USD15.2 million.
That settlement deed meant Quintana released Arian from its obligations under the senior secured loan arrangement as well as the base metal purchase agreement and investment agreement in October 2014.
In return for receiving certain indemnities and releases, Quintana paid Arian GBP650,000 and agreed to pay Arian a further GBP500,000 once the settlement deed had been finalised.
On Tuesday, Arian said it had net working capital of around USD411,000 following Quintana's waiver over the GBP650,000. That is already down from the net working capital of GBP478,000 reported at the end of November when that deal was originally struck.
Arian reiterated that those funds will only last until February 2016, stressing it must raise additional funds for its projects in Mexico, and said funding discussions are underway.
Although the company lost the San Jose project to Quintana, Arian will retain the San Celso, Calicanto and Los Campos projects along other mining concessions through a new subsidiary.
In addition, Arian said it made a USD1.6 million profit in the second quarter ended June 30, swinging from a USD699,000 loss a year earlier. That pushed its profit for the six-month period ended June 30 to USD3.5 million compared to a USD1.8 million loss.
Arian does not generate any revenue, with the quarterly and half-year profit being the result of gains from its convertible note.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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