16 July 2013 – Managing Director: Tony Rovira
– Substantial mineralised zone indicated at Cascada
– Positive implications for Promontorio development
– Porphyry copper exploration potential recognised
Azure Minerals Limited (ASX: AZS) announced on 26 June that assay results from the first three holes drilled at Cascada included a 129 metre intercept at 2.9% CuEq with a high grade zone of 10 metres at 14% CuEq. More recently Azure announced that the next three holes returned results including 101 metres at 3.0% CuEq with high grade zone of 12 metres at 14% CuEq. These results are from the recently completed 18 hole, 2,800 metre Cascada drilling program. What do these results indicate in terms of Cascadas mineralisation style and scale?
MD Tony Rovira
We have now received assay results from seven holes at Cascada and we are absolutely thrilled with the great widths and high grades that we have identified. While early days, I believe this is one of the best copper discoveries made by an Australian company in recent years, and I feel comfortable calling the Cascada mineralised zone a deposit.
The high grades of copper, gold and silver at Cascada are exceptional and probably better than any reported to the market since Sandfires De Grussa discovery in 2009. De Grussa had higher copper grades but Cascada has the additional benefit of bonanza grades of gold and silver accompanying the copper.
We are still early in the delineation phase, however I feel that we are gaining an understanding of the geological controls of the Cascada deposit. So far we have observed copper sulphide mineralisation in all 16 holes drilled into the zone, which augurs well for a coherent mineralised body, although the overall size potential is still uncertain.
On the two westernmost sections, we have identified a zone of very high grade copper, gold and silver mineralisation, which may be up to 10 metres in true width with drill intercepts grading 5 to 10% copper, 2 to 12g/t gold and 100 to 400g/t silver. This high grade zone has been intersected in six of the first seven holes and is interpreted to strike northeast and dip steeply to the northwest. It begins at relatively shallow depths of 30 metres below surface and it remains open along strike and up and down dip.
Surrounding this high grade zone is a large halo of lower grade disseminated copper, gold and silver mineralisation extending over 100 metres in an east-west direction and with a horizontal width of up to 60 metres. This suggests that there is good potential for Cascada to contain a significant tonnage of high grade copper-mineralised material.
In addition, we are seeing some very large drill intercepts of low to moderate grade gold mineralisation, even in areas away from the main copper mineralisation. This is a new development and one that we are keen to explore further.
Is Cascada associated with the Promontorio deposit situated 200 metres to the south and what are the geological implications of these styles of mineralisation?
MD Tony Rovira
The Promontorio and Cascada deposits form separate parts of a single high-sulphidation, epithermal mineralised system containing significant quantities of base and precious metals. High sulphidation epithermal deposits form above porphyry copper bodies, and usually there is a connection or feeder zone between the porphyry and the overlying epithermal system. These types of deposits are common in northern Mexico and south-western US.
We believe that beneath Cascada and Promontorio is a porphyry copper body which was the source of the copper, gold and silver mineralisation and is likely to be mineralised in its own right. This makes the Promontorio Project a most exciting porphyry copper exploration target.
Future exploration will follow up the depth extensions of the Cascada mineralised system to search for the feeder zone or connection to the porphyry copper target. We are currently working on applying geochemical and geophysical vectors to direct our exploration towards the mineralising source.
What are the metallurgical attributes and potential implications of the style of the mineralisation at Cascada for its development and for your development plans for Promontorio?
MD Tony Rovira
The Cascada mineralisation is different from that at Promontorio. Cascada contains a high grade zone of massive and semi-massive copper sulphides surrounded by widespread disseminated copper sulphide mineralisation hosted in vuggy silica and silicified host rocks. The Promontorio mineralisation, on the other hand, is constrained in narrow veins (up to 5 metres wide) of massive and semi-massive copper sulphides with little disseminated mineralisation.
The predominant copper sulphide mineral at Cascada is chalcocite with lesser amounts of enargite, chalcopyrite and bornite. This is different from the nearby Promontorio deposit, where the mineralisation forms narrow veins of massive copper sulphides, mostly consisting of enargite.
Obviously we will be undertaking metallurgical testwork on the Cascada mineralisation however at this time we are very happy with what we are seeing. The predominance of chalcocite will be a major benefit to the overall project, as chalcocite has a high copper content and is one of the easiest of copper ores from which to produce a concentrate by flotation.
What are the potential implications of the Cascada results for the investment case outlined in the Promontorio pre-feasibility study (PFS), released in August last year?
MD Tony Rovira
The discovery of the Cascada deposit is a significant boost to the overall Promontorio Project. Assuming that the current drilling continues to successfully identify similar mineralisation, and we delineate a coherent copper-mineralised body, its highly likely that there will be a substantial increase in the projects overall mineral resource base, thereby significantly enhancing the economics of the project.
Promontorio has a JORC indicated and inferred resource of 840,000 tonnes at 4.1 CuEq. What are your plans for defining further resources in the area?
MD Tony Rovira
Promontorio has a mineral resource grading 4.1% CuEq, which is a high grade compared with most operating copper mines. The PFS completed last year confirmed that, because of its high grades, Promontorio is a low cost high margin project. Mining and milling costs are estimated to be US$29 per tonne and US$31 per tonne respectively (US$0.46 and US$0.48 per pound of copper produced), with a total cash costs (net of credits and all charges) of US$1.12 per pound of produced copper.
Given what we have identified to date at Cascada, it is possible that this new deposit could deliver a substantial body of mineralisation with a resource grade similar to that at Promontorio, but with a very high grade zone contained within it. The overall project economics can only be enhanced by this new discovery.
Our recently completed drill program at Cascada was designed to test the mineralised zone by drilling multiple holes on six, 20 metre spaced section lines, thereby covering a strike length of over 100 metres. If substantial mineralisation is intersected, we expect to undertake a resource calculation within the latter part of this year. The benefit of the drill hole layout and spacing is that it will allow us to develop the geological model and estimate the mineral resource without having to return for expensive resource delineation, in-fill drilling.
Given increasing investor concern about the cost bases of junior explorers, how do you plan to fund further drilling on Cascada and Promontorio and how do your costs in Mexico compare with other locations globally?
MD Tony Rovira
As at the end of March, Azure had $1.01 million in cash, and in April we raised $2.35 million via a share placement. There are a number of things to remember about Cascada and Promontorio that are very important and will be attractive to investors in our company going forward.
Further drilling at Cascada will not be blind exploration, but will extend the dimensions of the deposit. This will put Azure in a good position to continue with the exploration and resource delineation at Cascada and the advancement of the overall Promontorio Project.
Also important is that the investor community understands that our Promontorio Project is not in the middle of the desert, hundreds of miles from roads, rail, water and labour. We are situated in an historic and currently very active mining district, close to infrastructure, labour and mining towns. Furthermore, exploration and mining costs in Mexico are very low in comparison with similar activities in Australia. You certainly get more of a bang for your buck in Mexico!!
Thank you Tony.
For more information about Azure Minerals, visit www.azureminerals.com.au or call Tony Rovira on (+61 8) 9481 2555.
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COMPETENT PERSON STATEMENT: Information in this document that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Tony Rovira, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Rovira is a full-time employee of Azure Minerals Limited. Mr Rovira has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Rovira consents to the inclusion in the documents of the matters based on his information in the form and context in which it appears.