LONDON (Alliance News) - Arian Silver Corp Thursday said it has signed an memorandum of understanding with a private company to evaluate a mining project in Mexico.
Arian has signed the memorandum with Tierra Nueva Mining Ltd to evaluate the private company's portfolio of mineral properties in the Zacatecas State. Arian is not paying a consideration for the memorandum, which is not exclusive.
The memorandum provides Arian the right to conduct due diligence on Tierra's portfolio over the next 90 days, and includes an option on the Noche Buena hard rock project and the full ownership of the associated tailings project at the site.
The projects primarily contain gold with silver, alongside base metals of lead and zinc as bi-products. The Noche Buena mine operated from 1926, closing in 1993 due to the low metal prices at that time.
"We are pleased to be making progress in rebuilding Arian, whilst remaining cognisant of the current low metal prices and the fact that investor sentiment towards the mining sector remains negative," said Chief Executive Jim Williams.
"With this in mind, we are initially concentrating our efforts on near-term and low-cost production opportunities, possibly through the leaching of tailings," he added.
Importantly, Williams is a minority shareholder in Tierra, and therefore is not allowed to vote on any matters related to the potential deal that may come as a result of the memorandum, including its execution.
Historical production records at the mine show the operation mined 1.0 million tonnes of ore when it was operational, with grades of up to 20.0 grammes of gold per tonne of ore, 800.0 grammes of silver per tonne of ore and 8% lead and zinc.
The tailings at the mine have a resource of 1.0 million tonnes of ore containing 3.0 grammes of gold per tonne, 55.0 grammes of silver per tonne and 0.8% zinc.
Arian shares were down 7.4% to 1.25 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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