1st Sep 2015 09:21
LONDON (Alliance News) - Arian Silver Corp shares plummeted on Tuesday after it said the commissioning of the La Tesorera processing plant in Spain is behind schedule and will not be completed until the fourth quarter of 2014, meaning it will need to secure additional short-term funds to keep going.
Arian is in discussions with several groups about securing additional working capital after the company reported a low cash balance, but the company has generated its first revenue from the plant.
Arian shares were down 48% to 11.12 pence per share on Tuesday morning.
In its analysis of the first half of 2015, the company said it made a USD3.5 million net profit, swinging from a USD1.8 million net loss a year earlier. That profit resulted from a USD5.5 million gain on derivative liabilities compared just a USD35,000 gain a year earlier.
Arian said it generated its first revenue from the sale of silver-lead concentrate in April from the La Tesorera processing plant, generating USD500,000 from the sale of 202 tonnes of concentrate.
Those initial sales are from production made during the commissioning phase of the processing plant, and Arian said any sales made during the commissioning phase is capitalised and recognised as a
non-current asset.
Commissioning of the plant has continued into the third quarter, but Arian warned the plant will not be fully commissioned until the fourth quarter because it has to carry out remedial work to the
tertiary crusher.
That means Arian's plan to ramp-up production is delayed, but it said it will still increase production to 1,500 tonnes of concentrate per day "over the coming months". Alongside that ramp-up, Arian said it expects its operating costs to fall, resulting in "significantly higher operating margins".
On a more positive note, the two remaining ball mills at the plant are now ready to be commissioned and should enable increased throughput once the tertiary crushing bottleneck has been cleared, and the zinc circuit is ready to be brought online once the other work has been completed.
At the end of June, Arian reported a cash balance of USD778,000, which is significantly less than the USD2.8 million balance held at the end of December.
"The price of silver continued to decline during 2015. Whilst the directors believe the price of silver will rise significantly in due course, continued short-term commodity price weakness inevitably reduces the cash generated by operating activities and increases the company's financing requirements. The board is therefore taking the steps necessary to strengthen the company's financial position," said the company.
"Additional working capital will be required whilst the company makes these changes, and we are currently in discussions with several groups in order to satisfy this requirement," it added.
By Joshua Warner; [email protected]; @JoshAlliance
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