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Trading Symbols
AIM: AGQ
TSX-V:
AGQ
FWB: I3A
LONDON, UK, Nov. 27, 2015
/CNW/ - Arian Silver Corporation ("Arian" or the "Company"), a
silver mining company focussed on silver projects in the silver
belt of Zacatecas, Mexico,
announces that further to its announcement on 29 October 2015 of the termination of the
letter of intent and non-binding term sheet with Quintana AGQ
Holding Co. LLC, it has now signed an acknowledgement of the
Default Notice announced on 3 November
2015 ("Acknowledgement") and has further entered into a
settlement deed ("Settlement Deed") with Quintana AGQ Holding Co.
LLC and its affiliates (together, "Quintana").
Terms of the Settlement Deed
Quintana is entitled to
exercise its foreclosure rights under the terms of the senior
secured financing arrangement announced on 15 October 2014 and 30
October 2014, and accordingly pursuant to the
Acknowledgement, Quintana has exercised its security and taken
ownership of Arian Silver de Mexico SA de CV and its assets,
including the San José project.
Arian, through a new subsidiary, will retain the San Celso,
Calicanto and Los Campos projects
along with all other mining concessions held at the time when the
Company became public on the AIM and TSXV in 2006, such remaining
concessions all comprising more than 1,600 hectares.
As at 31 October 2015, Arian's
accrued debt under the senior secured financing arrangement with
Quintana amounted to approximately US$17.8
million with the initial repayment commencing in
April 2016. In addition the
outstanding balance under the Base Metal Purchase Agreement
("BMPA") with Quintana amounted to US$15.2
million.
Given the current metal prices, in particular the silver price,
together with the mechanical issues and resulting delays suffered
during commissioning of the La
Tesorera processing plant, the San José operation will
require a further significant cash injection to make the project
viable. In light of the aforementioned security arrangements and
financial difficulties, together with Quintana's unwillingness to
waive the timing of any default under the agreements, the Board in
conjunction with its legal advisors, has concluded that an orderly
foreclosure process under the terms of the Settlement Deed was the
only viable option available to the Company, that it was in the
best interests of both shareholders and creditors, and that
otherwise, the Company would not be able to meet its financial
commitments as they fall due.
Under the terms of the Settlement Deed, on closing (expected by
31 December 2015), Quintana will
release Arian from its obligations under the senior secured loan
arrangement as well as the BMPA and Investment Agreement dated
14 October 2014. Closing will be
deemed to have occurred upon inter alia the Company having
delivered to Quintana all documentation regarding the transitional
matters as aforementioned.
In return for receiving certain indemnities and releases,
Quintana has paid US$650,000 to
Arian, giving a positive net working capital position of
US$478,000. In addition, Quintana
will pay to Arian a further US$50,000
upon closing as described above. In the event closing has not
completed on or before 31 December
2015, Quintana will have the right to demand reimbursement
of the US$650,000 payment. The funds
paid by Quintana are not tied to a specific use of proceeds and may
be expended before closing, but together with existing cash, are
currently expected to sustain the Company to February 2016.
Upon completion of the foreclosure process and closing of the
transaction, Arian will be debt-free and have no liability for the
outstanding creditor balances in Mexico of approximately US$1.9 million.
Ongoing Strategy
The San Celso, Calicanto and
Los Campos concessions include
high grade brownfield gold and silver projects in Zacatecas in close proximity to existing
mines, all of which benefit from excellent infrastructure. In
addition, Arian is in discussions to grow its asset portfolio to
include strategically located mining concessions.
The Company will need to raise additional funds for its projects
in Mexico and for general working
capital purposes; discussions are currently underway in this
regard.
Jim Williams, Chief Executive
Officer of Arian commented: "Despite this setback we must first
take stock, and then look ahead to the future. As a management team
we are focussed on a return to growth with the raising of funds,
acquisition of additional mining concessions, and continuing of
exploration activity."
The Company's shares will remain suspended until further
notice.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) and no stock exchange, securities commission
or other regulatory authority accepts responsibility for the
adequacy or accuracy of this release nor approved or disapproved of
the information contained herein.
Forward-Looking Information
This press release contains certain "forward-looking
information". All statements, other than statements of historical
fact that address activities, events or developments that the
Company believes, expects or anticipates will or may occur in the
future. This forward-looking information reflects the current
expectations or beliefs of the Company based on information
currently available to the Company as well as certain assumptions
(including in particular, that the necessary administrative steps
required to receive additional funding from Quintana, that
additional finance will otherwise be available, that any remaining
mining concessions will contain mineral resources or can be
developed commercially, that any discussions will lead to the
acquisition of additional mining concessions, or that it will be
viable to continue exploration activities). Forward-looking
information is subject to a number of significant risks and
uncertainties and other factors that may cause the actual results
of the Company to differ materially from those discussed in the
forward-looking information, and even if such actual results are
realized or substantially realized, there can be no assurance that
they will have the expected consequences to, or effects on the
Company.
Any forward-looking information speaks only as of the date on
which it is made and, except as may be required by applicable
securities laws, the Company disclaims any intent or obligation to
update any forward-looking information, whether as a result of new
information, future events or results or otherwise. Although the
Company believes that the assumptions inherent in the
forward-looking information are reasonable, forward-looking
information is not a guarantee of future performance and
accordingly undue reliance should not be put on such information
due to the inherent uncertainty therein.
SOURCE Arian Silver