Aztec Minerals (AZT.V) has released assay results from its Cervantes drill program in Mexico and as the company is gearing up for a drill program at its Tombstone project in Arizona where it is focusing on CRDs, we thought it made sense to catch up with CEO Simon Dyakowski to get an update on Aztec. We discussed the drill programs at Cervantes and Tombstone while the recent addition of Alamos Gold (AGI, AGI.TO) to the shareholder register shows larger companies are starting to take notice of the exploration results.
Cervantes
The Cervantes asset consists of about a dozen exploration targets. How do you decide on how to prioritize the exploration targets? How do you rank them, in terms of getting to a resource calculation the fastest?
The targets have been prioritized thus far based on historic drilling results, surface sampling results, geophysical data, and surface geology.
The California zone has emerged as the most interesting target to date; however, Jasper and California North (which happen to be adjacent targets to California to the West and North respectively) are climbing up the priority list rapidly. While our attempt to drill Purisima East did not discover economic mineralization we are not abandoning the target. At Purisima East, our drilling was limited to the edges of our diatreme breccia target due, in part, to access issues related to the size of the RC (reverse circulation) drill rig. Our future plans at Purisima East include bringing a mobile core rig to a location not requiring road building. We have several other compelling targets that require further surface sampling and mapping before finalizing drilling targets – Estrella in particular.
At the California Zone you wanted to drill a deep hole to test the IP anomaly, but your hole did not reach the desired depth. Could you elaborate on what happened, how you will design your next attempt and why this IP anomaly is of such interest to you?
We attempted a deep test of the California Zone with an RC drill rig. Although RC drilling is typically conducted on shallower targets, our drillers brought in a booster compressor to add additional depth capacity. The issue with the drill arose when the drill hammer encountered the water table, the drill cuttings and the water did no mix well, and created a situation where the hammer became stuck down the hole; leaving us with no option but to abandon the drill hole.
In our upcoming drill program, we will be utilizing a Diamond Core drilling rig (for all of the holes in the program), that has capacity to test much deeper than an RC rig otherwise could, especially once we penetrate the water table.
The importance of this deep IP chargeability anomaly is its strength and size. The chargeability of the rocks was interpretated to be from contained sulfides, and the RC drilling did confirm that interpretation, with the intersection of significant levels of sulfide content at the top the targeted depths. The values for copper and molybdenum increased significantly, to near economic levels as well. There is a good potential for a Cu-Au-Mo porphyry mineralization to be found within the large IP chargeability anomaly.
You just completed a 26 hole drill program at California, what were your main takeaways from the zone? We were quite intrigued with holes 4 and 5 which intersected 167 meters of 1 g/t gold and 137 meters of 1.49 g/t respectively as that should help you to rapidly build tonnage there. But what are your takeaways from the 2022 drill program?
That the California target continues to expand and no hard limits to the Au -Cu mineralization have been found as of yet. The drilling continues to show California is a porphyry system at its highest levels and it may extend into Jasper and California North targets.
Is there a reason why the gold values were released first with the multi-element assays only later?
The samples were prepped and assayed for gold in a local Laboratory in Mexico, and the then prepped samples were subsequently shipped to Canada for multielement analysis. This resulted in a quick turnaround time for gold numbers out the gate (weeks), and a more typical turnaround time for multielement numbers (2 months) and we note this was simply a function of the workflow of the Assay lab we use. As such, we announced the numbers in the order they were received.
At what depth do you exit the oxide layer and do you enter the transition and sulfide layer of the system?
The oxide cap generally has a depth of 100 meters to 125 meters; before entering a transition zone to sulfide mineralization.
The results of the bottle roll tests of the oxide and mixed oxide-sulfide zones are good but the recovery rates of the pure sulfide mineralization are obviously more disappointing. Do you plan on completing follow-up work on the sulfide areas or is this something for further down the road as the oxide-hosted mineralization is obviously easier to you?
Our preliminary bottle roll metallurgical testing was encouraging as the oxide group recoveries were relatively high (~85%), indicating that this mineralization could be amendable to low-cost heap leach processing and recovery. The fact that ~50% of the gold was recovered by leaching in the sulfide groups in the bottle roll was also encouraging as heap leaching is primarily focused on oxide material. Depending on the volume of future sulfide material discovered, a more conventional sulfide recovery method such as a flotation circuit could be considered.
Our upcoming work will include a more robust metallurgical column test of a representative grade of the main California zone. This will provide a more fulsome profile of the potential heap leach recoveries for the oxide materials.
What are the next steps at Cervantes? When do you think you will be in a position to release a maiden resource estimate?
A follow up drilling program is our next step at Cervantes. We expect to mobilize a core drilling program shortly; the goals of which will be to expand the main California zone with step out drilling to the North, South, and West. As well as to follow up drilling on the discovery of copper mineralization at the Jasper Zone, and shallow oxide gold and California North. Finally, we will have the opportunity to obtain a deep test of the sulfide target underlying the California Zone Ridge. We will consider a resource estimate once we have a better understanding of the limits of mineralization around the California zone.
Tombstone
The focus this year was clearly on Cervantes but you promised to complete a Phase 3 drill program at Tombstone later this year to target a potential CRD structure. When do you anticipate to start drilling again? And will you solely focus on the CRD potential, or will you zoom in on the oxide gold potential as well?
We anticipate a core drilling program at Tombstone in the Autumn of 2022 and the program will include the drilling of both deep targets in search of CRD mineralization, as well as expanding the shallow gold-silver oxide zone at depth, east and west, and infilling to the south.
How is the availability of drill rigs in Arizona these days? What’s your drill cost per meter and how does this compare to the cost of drilling at Cervantes?
Rig availability is more challenging in the SW USA than it is in Northern Mexico; however, we have access to a diamond drill suitable for our needs to drill deep under the Contention Zone at Tombstone, as well as suitable to expand on the shallow RC drill holes we had focused on during 2020-2021. We have not set a budget yet for this upcoming drilling; however, drilling costs are modestly higher in Arizona than they are in North Mexico. Accessibility at Tombstone is easier than Cervantes, so there are some cost advantages in that respect.
Corporate
Your main event of the semester on the corporate front likely was seeing Alamos Gold (AGI, AGI.TO) stepping up the plate to take a strategic stake of 9.9% in Aztec. Alamos invested about C$2.4M which is peanuts to them but a major vote of confidence for Aztec. Can you elaborate on how this deal came to be? Had Alamos been following you for a while? And what got them across the finish line?
Alamos’ took notice of our results over the drilling campaign and when we went to the market for funding to continue our exploration of Cervantes they agreed to provide funding for the lead order of the private placement financing.
Is it correct to assume Alamos is mainly interested in the Cervantes asset?
I cannot speak for them, but I think that is a logical assumption given their nearby operations in Eastern Sonora.
At the beginning of this year, in your outlook for 2022, you mentioned Aztec is still looking for additional bulk tonnage opportunities in the Americas. Are you making any progress on that or has that been put on the backburner for now?
We are always on the lookout for opportunities to create value for our shareholders; however, we have our hands full with our two projects at present.
Conclusion
Seeing Alamos Gold coughing up almost C$2.5M to get a 9.9% stake in Aztec could be a game-changer for the company as it lends more credibility to the exploration stories. With a working capital position of approximately C$4M, Aztec is in a good shape to start drilling Tombstone later this year while figuring out a drill plan for Cervantes to follow up on the 2022 drill results.
Disclosure: The author has a long position in Aztec Minerals. Aztec Minerals is not a sponsor of the website. Please read our disclaimer.
