Arian Silver beefs up San Jose

Arian Silver (AGQ-V, AGQ-L) finds itself in an enviable position.

Not only is the company producing silver at its San Jose property during a time of high silver prices, but it is doing so on a property with significant expansion potential.

That potential is beginning to be realized through an aggressive drilling campaign – funded from silver sales from its mine – that has led to a recent boost in resources.

On July 20 the company said it saw an 86% increase in resource tonnage at its San Jose vein.

The new estimate brought indicated resources up to 8 million tonnes grading 117 grams silver, 0.40% lead and 0.72% zinc for 30.03 million oz. silver, 69.9 million lbs. lead and 126.6 million lbs. zinc.

And the San Jose vein boasts another 17 million tonnes in the inferred category grading 107 grams silver, 0.37% lead and 0.78% zinc for 58.42 million oz. silver, 140.1 million lbs. lead and 291.1 million lbs. zinc.

The resource update also brought a 10% higher average silver grade, a 105% increase in contained silver, and put 34% of gross silver content into the indicated category.

The update was based on 152 drill holes totaling over 28,000 metres at the project which sits in Mexico’s silver belt in the Zacatecas state.

But Arian isn’t content to let the drills stand idle. With mineralization still open along strike to the west and at depth, the company has launched into a fourth phase of drilling.

Thus far, Arian has drilled five holes for 1,745 metres of what will be a 40-hole program.

“There are several wide intercepts of high-grade silver and base metal mineralization within the existing San Jose vein resource envelope, which remain to be fully quantified,” Arian’s chief executive Jim Williams said of future drilling.

Specifically, the company has yet to drill on 3 km of strike west of the known deposit and 2 km of strike east of it.

And there are other targets as well.

The most notable is a second vein to the south of the San Jose vein, which is known as the Bety Vein.

Bety runs parallel with the San Jose vein and surface samples have returned grades of up to 500 grams of silver.

As for current mining at the project, the company began to generate cash flow in the fourth quarter of last year.

Production thus far, however, has been relatively modest as it is milling 500 tonnes per day and can produce up to 125 tonnes of concentrate per month.

But, Arian says mining throughput can easily be expanded to 1,500 tonnes per day. It will  have to source additional mill capacity to do so however, which is something it’s currently assessing. 

For 2011 the company plans to produce 600,000 to 810,000 oz. silver in concentrate at a total cash cost of US$10 per oz.

Over the last 52-week period Arian shares have fluctuated between 12¢ and 89¢ and at presstime were trading for 46¢.