Aztec Minerals, 2 strong projects, 3 strong metals

For years investors have said, “just wait until gold breaks out to … US$2,100 or $2,200/oz…” Well, gold (“Au“) futures surpassed both of those milestones before pulling back to $2,160/oz. Yet, investors are wondering why their favorite Au / silver (“Ag”) stocks are languishing well below 52-week highs. Perhaps some think Au will fall back below $2,000/oz.?

I’ve been expecting a stronger Au price due to four years of elevated mining cost inflation. Newmont Corp.’s All-in-Sustaining-Cost (“AISC“) is up +10.6%/yr. from 2020-2023. And then there’s copper (“Cu“), trading at > $4.15/lb. today nearly a 1-yr. high.

Aztec Minerals (TSX-v: AZT) / (OTCQX: AZZTF) has two exciting Au-Ag projects, one with a Cu kicker, and is backed by $5B Alamos Gold. Cervantes is a 100%-owned 3,649 ha porphyry Au-Cu play with road access, a local town, on all-private land, with water wells on the property & grid power nearby.

The project is in SE Sonora state, Mexico, 160 km east of Hermosillo, ~265 km SE of Grupo Mexico’s Cananea porphyry Cu-molybdenum mine. There are seven prospective mineralized zones related to high-level porphyries & breccias along a 7-km corridor.

The California target at Cervantes has up to ~1.5 g/t Au over 137 m and 1.0 g/t Au over 165 m, plus strong gold recoveries from preliminary metallurgical tests ranging from 75% to 87%. Gram x meter figures > 100 are noteworthy for Sonora, and quite attractive for a prospective heap-leach mine.

NoteGrade thickness [gram x meters] is not to be construed as gross metal value, nor as a resource estimation. And, it may not be reliable in comparison to other company’s drill results. Every project has unique geology & mineralogy.

Cervantes lies along an E-W-trending Au belt 60 km west of the Mulatos epithermal Au mine (Alamos Gold), 35 km NE of Osisko Development’s San Antonio gold mine, 45 km west of the La India mine (Agnico Eagle) and 40 km NW of the Santana Au deposit (Minera Alamos).

Management announced final drill results and an Au & multi-element analysis for its 2023 RC drill program at Cervantes. It totaled 1,646 m in 13 holes testing the California porphyry Au target. Drilling by Aztec since 2016 is 67 holes / 12,134 m. To date, every hole has intersected near-surface, oxidized Au + minor Cu oxides.

The multi-element grades support the potential for an Au-Cu porphyry deposit at depth. The California target has an area of 1,000 m by 300 m with continuous anomalous mineralization up to 265 m vertically. It continues on strike to the east at least another 400 m.

As mentioned, Alamos is a strategic investor in Aztec. Importantly, Cervantes is not merely a “closeolgy” play to four Major / mid-tier mining companies, it already has strong drill results on > 10,000 meters.

Simple, low-cost, low-risk heap-leach operations can be quite profitable at high Au prices. They are often in the bottom quartile of All-in-Sustaining-Costs, and have low upfront capital. Permitting should be straightforward. There are many open pit, heap-leach operations in Sonora. Cervantes could be relatively fast to market.

The March 7th PR is a must-read, filled with everything there is to know about Cervantes. Here’s a quote regarding upcoming activities,

“Subject to available funds, further technical studies, reconnaissance work on other targets, metallurgical testing & the Cervantes phase 3B RC drilling program of ~20 drill holes / 2,850 m, incl. the California North & Jasper targets, is planned”

Tombstone project in Arizona surrounded by Majors & mid-tiers

Aztec also holds a 75% interest in the 452-hectare Tombstone JV, which includes most of the original patented mining claims in the district as well as some recently acquired properties. 

Between 1878 and 1939 Tombstone produced 32M ounces Ag, 240K ounces Au, 65M pounds of lead & 1.1M pounds of zinc from 1.5M tons of mostly oxidized mineralization. At spot prices, that equates to an Au Eq. grade of ~13 g/t. Aztec’s Tombstone project covers much of the historic district.

In 2023, the Company completed a 7-hole drill program that expanded the mineralized zones around/below the Contention open pit area. Broad intersections of oxidized Au-Ag were found.

Management will commence a surface exploration program at Tombstone ahead of a follow-up RC drill campaign targeting expansions of high-grade shallow Au/Ag around & below the Contention pit. Open pit heap leach oxide Au-Ag potential lies within Bisbee Group sediments around/below the Contention pit.

Many heap-leach mines in the western U.S. host 0.40 to 0.60 g/t Au, Tombstone’s drill results suggest the possibility of a resource grade of 0.60+ g/t Au. Bonanza grade Ag mineralization was hit in drill hole TC23-01; 3,477 g/t Ag [~112 troy oz./t] over 1.5 m, within an interval of 734 g/t Ag [~23.6 oz./t] over 7.6 m.

Drilling by Aztec from 2020-23 demonstrated that the Contention zone has significant oxidized Au-Ag mineralization open in all directions. Due to limitations of de-watering technology at the time, nearly all historical mining ended at a depth of ~190 meters.

Management’s focus at Tombstone is discovering new zones of shallow, open pit-able, oxidized mineralization around the Contention pit. Importantly, higher-grade, carbonate replacement deposits (“CRD“), could be beneath underlying limestones.

While the low-hanging fruit is in the top 100s of meters, there could be a huge prize 100s of meters below that. Management believes deeper limestone units have similar geology to Arizona Mining’s Hermosa-Taylor CRD project ~60 km to the SW. Hermosa-Taylor had 138M tonnes at 8.61% zinc eq. when acquired by South32 for $1.8B.

If management could find one-tenth of what Hermosa-Taylor has, that alone would be worth 10x Aztec’s entire valuation of ~C$19M. {$0.18/shr.} Freeport McMoRan has five operating mines — Morenci, Bagdad, Safford, Sierrita & Miami — in Arizona. BHP & Rio Tinto own the giant, world-class Resolution Copper project.

Hudbay Minerals has the 1.5B tonne, PFS-stage Copper World project, and Capstone Copper’s Pinto Valley has produced > 4B lbs. of Cu since the mid-1970s. Major & mid-tier companies should care about Tombstone. A single deep hole was drilled before Aztec took over, it hit 9.1% combined lead/zinc, + 0.61% Cu + 32 g/t Ag over 7.2 m.

Drilling by Aztec from 2020-23 of 51 drill holes and 6,579 m has demonstrated that the Contention Pit target has significant oxidized Au-Ag mineralization open in all directions. Management believes its drill results include some of the best in recent times across the SW U.S.

Aztec Minerals (TSX-v: AZT) / (OTCQX: AZZTF) has two exciting assets in world-class, safe, prolific mining jurisdictions, surrounded by numerous significant mining companies including strategic investor Alamos Gold. With Au near an ATH, readers should consider looking at companies with strong exposure to precious metals.

Please see the new Corp. presentation

Disclosures: The content of this article is for information only. Readers understand & agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Aztec Minerals, incl. but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party, or person. The shares of Aztec Minerals are highly speculative and not suitable for all investors. Readers understand and agree that investments in small-cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was originally posted, Peter Epstein owned shares in Aztec Minerals. Aztec is an advertiser on Epstein Research.

Readers should consider me biased in my view of the Company. Readers understand and agree they must conduct their own due diligence above and beyond reading this article. While the author believes he’s diligent in screening out companies that, for any reason, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector, or investment topic.