Not for
Distribution to U.S. Newswire services
nor for Distribution in the United
States
Trading Symbols
AIM: AGQ
TSX-V: AGQ
FWB: I3A
27 November 2015
Arian Silver Signs Settlement Deed with Quintana
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.
For further
information please contact:
Arian Silver
Corporation
Jim Williams, CEO
David Taylor, Company Secretary |
Cantor Fitzgerald
Europe
Stewart Dickson / Jeremy Stephenson / David Porter / Patrick
Pittaway
(London) +44 (0)20 7894 7000 |
OR |
|
Yellow Jersey PR
Limited
Dominic Barretto
(London) +44 (0)7768 537 739
dominic@yellowjerseypr.com |
|
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.