THE INSIDE STORY: It’s encouraging when an exploration company exemplifies the definition of the term explorer, which according to my dictionary: ‘travels into undiscovered or un-investigated territory’.
In 2005, while contemporaries wrestled over projects in Australia or headed to less-politically friendly climates in Africa, Azure Minerals (ASX: AZS) journeyed to Mexico.
“We were looking for projects, but what was available in Australia was too expensive and most of the good projects had been well picked over,” Azure Minerals managing director Tony Rovira told The Resources Roadhouse.
“We looked in Central and South America, Africa and Indonesia, but Mexico stood out with better projects, not just technically, they were located in an ideal mining environment.”
Azure was by no means the first mining company to recognise Mexico’s potential.
Today over 350 mining and exploration companies with a healthy representation from North America, particularly Canada, operate in the country.
Azure was, however the first Australian company to stake its Mexican claim.
What is not celebrated outside of the America’s, is Mexico’s reputation as a mining friendly jurisdiction and mining history dating back over 500 years.
“The government and the general population understand the benefits mining brings so they want to help you and to attract more investment,” Rovira said.
“Its mining history combined with the current exploration and mining activity means there is a substantial support industry in place.
“There are dozens of drilling companies and assay laboratories, all the infrastructure you need is there.”
Azure’s introduction to Mexico was an earn-in Joint Venture with a Canadian junior company.
Once established, Azure staked properties in its own right.
Azure Minerals project locations in Mexico. Source: Company
The project to emerge as the company’s flagship is the Promontorio copper-silver-gold project, located in Chihuahua State.
Promontorio possesses high-grade copper sulphide mineralisation containing significant grades of gold and silver.
In the four years it has held the project, Azure has completed three large-scale diamond drilling programs totalling some 87 holes for around 13,000 metres.
From this drilling it has calculated an initial JORC-complaint total mineral resource of 502,000 tonnes at 4.7 per cent copper, 2.1 grams per tonne gold, 99 grams per tonne silver for 23,400 tonnes of copper, 34,000 ounces of gold and 1.6 million ounces of silver.
“It is a high-grade copper-gold-silver project that is modest in terms of tonnes at this stage, but we consider it to hold a great deal of potential for expansion,” Rovira explained.
“The most recent drilling at Promontorio was completed in January this year and the results have been very encouraging.
“We have completed a Scoping Study and a Pre-Feasibility Study as well as economic evaluation and mine planning, which have provided very positive results.
“We anticipate the increase in the resource will be enough to get this project up and running for a mine life of around eight to nine years.”
Azure recently drilled two holes outside of the Promontorio deposit to test two areas where historical shallow drilling, by previous owners, identified gold and silver mineralisation.
The first of these areas was Cascada, situated 200m northwest from Promontorio.
From 40m Azure intersected 70m of copper sulphide mineralisation grading 2.7 per cent copper equivalent.
That 70m interval included 36m of material running at 4.7 per cent copper equivalent, including a 13m intercept at 11 per cent copper equivalent.
Rovira acknowledges the result stemmed from one single drill hole, but in any language, a 70m intercept draws attention and could possibly indicate a deposit with significant size potential.
“The Promontorio deposit consists of veins varying two metres to five metres wide, whereas we think Cascada has potential to be a large volume deposit, with potential high grades as well,” Rovira said.
“Cascada definitely demands more attention and we intend conducting some serious work there involving a significant amount of diamond drilling.”
Targets surrounding Promontorio. Source: Company announcement
Testing of the other target near Promontorio called Risco Dorado, or Golden Cliff, also raised eyebrows by intersecting an 11m wide interval of silicified volcanic rocks containing disseminated and semi-massive pyrite and copper sulphides.
“It just shows the Promontorio project is not just the Promontorio deposit but includes numerous additional opportunities along strike, which require further work,” Rovira said.
“We see potential to develop a large mining operation. We’re very excited by what we have discovered so far and we will be back in there drilling as soon as we can.”
When the Global Financial Crisis brought tough economic times Azure was approached by Japanese Government organisation JOGMEC (Japan Oil, Gas and Minerals National Corporation), which also recognised Mexico’s potential for big mineral deposits, to form a Joint Venture to explore for copper deposits in Mexico.
Having similar arrangements in Australia JOGMEC was pleased to JV with a company in Mexico boasting Australian exploration expertise.
Azure’s two Joint Ventures with JOGMEC cover the El Tecolote and La Tortuga projects where the search is on for porphyry copper and skarn copper-zinc deposits.
Azure is free carried and operator of both projects.
JOGMEC can earn 70 per cent interest of the El Tecolote project by sole funding US$13 million of exploration expenditure. To date about US$3M has been spent.
So far El Tecolote has undergone several geophysical surveys, including aeromagnetics, VTEM and IP, as well as geological mapping and sampling, and 30 diamond drill holes.
Some very encouraging copper and zinc intercepts have been made, and further drilling is being planned to define the mineralised zones.
At the La Tortuga project, JOGMEC can earn 51 per cent interest by sole funding US$3 million of exploration expenditure and to date about US$2.5M has been spent.
“La Tortuga, or The Tortoise, is actually an apt name because we have been exploring this project in Joint Venture with JOGMEC for five years,” Rovira said.
“It has been progressing slowly, but with encouraging results, and we are confident slow and steady is going to help us win this particular race.”
Geophysical work at La Tortuga resulted in the identification of a large, deeply-buried porphyry copper target, into two deep diamond core holes of over 600m were drilled.
“We know the target starts around 600 metres below surface, but the strongest part of the anomaly is at a depth of about 1,000 metres,” Rovira said.
“One hole reached 660 metres and the other 605 metres. Both holes drilled into the top of the body and intersected promising looking porphyry rocks containing indications of precious metal and base metal mineralisation.
“We plan to drill another hole very soon; this time with a target depth of 1000 metres, which will take us into the middle of the anomaly.”
The next six months will be a very busy time for Azure Minerals as it works to complete the resource update for Promontorio, which is anticipated in April.
There will also be follow up drilling at Cascada and Risco Dorado plus regional mapping and sampling to identify more drilling targets within the project area.
“We also have a gravity survey at La Tortuga to assess and we expect to commence drilling the deep diamond hole very soon,” Rovira said.
“We don’t know what we will find down there, but what we’ve seen so far has been very encouraging.
“Our model is a big porphyry copper or IOCG-style of deposit, and if we’re successful then that will kick-off an entire new ball game for the company.”
Azure Minerals Limited (ASX: AZS)
…The Short Story
Level 1, 30 Richardson Street
West Perth, WA 6005
Phone: +61 8 9481 2555
Fax: +61 8 9485 1290
DIRECTORS and MANAGEMENT
Peter Ingram, Anthony Rovira, Wolf Martinick
Yandal Investments Pty Ltd 5.2%
Drake Private Investmenst LLC 5.1%
Stadjoy Pty Ltd 2.5%
SHARES ON ISSUE
$44 million (at 25/02/13)