Total Mineral Resources for Promontorio Project Increased to:

2,900,000 tonnes @ 2.5% CuEq¹ (1.4% Cu, 1.6g/t Au & 35g/t Ag)

containing:

39,600 tonnes Copper, 151,000 ounces Gold & 3,260,000 ounces Silver

Azure Minerals Limited (ASX: AZS) (“Azure” or “the Company”) is pleased to announce it has upgraded total mineral resource for the wider Promontorio Project and completed the maiden JORC Mineral Resource for the Cascada copper-gold-silver deposit.

HIGHLIGHTS

• Maiden Cascada Mineral Resource² of 2,060,000 tonnes @ 1.9% CuEq
• Cascada mineralisation remains open along strike and at depth
• Promontorio Project CuEq resource inventory increases by over 100%
• High grade zones (2.0% CuEq cut-off) at Promontorio and Cascada total:

1.0Mt @ 4.9% CuEq (3.0% Cu, 2.5g/t Au & 63g/t Ag)³

Table 1: Promontorio Project Mineral Resources

Azure’s Managing Director, Tony Rovira, commented: “I am pleased to present this maiden JORC Mineral Resource for the Cascada deposit, which adds substantially to the resources already identified at Promontorio. I am confident that with the exploration being undertaken under the EarnIn and joint Venture Agreement with Kennecott, more targets will be identified that could further increase the overall resource base of the Promontorio Project.”

¹ Uses grade cut-offs of 0.5% CuEq & 1.0% CuEq (see text and appendices for details on grade cut-offs and Copper Equivalence).

² Indicated + Inferred Resources: see Tables 2, 3 & 4 for detailed resource inventory classifications.

³ See Table 5

Mineral Resources

The Mineral Resource estimate for Cascada has been completed in accordance with the guidelines of the JORC Code (2012 Edition), and is detailed in Tables 2, 3 and 4. The resource was estimated by Mr Michael Waldegger, an associate of AGP Mining Consultants Inc., of Vancouver, Canada. Mr. Waldegger is a Competent Person, as defined under the 2012 JORC Code, and visited the Cascada site in January 2014.

The tables to support the requirements of the JORC Code (2012 Edition) with regard to Sampling Techniques and Data (Section 1), Reporting of Exploration Results (section 2), and Estimation and Reporting of Mineral Resources (Section 3) are appended to this report.

Table 2: Cascada Mineral Resource above a 0.5% Cu Equivalent Cut-off within the Resource Constraining Shell

Table 3: Cascada Mineral Resource above a 1.0% Cu Equivalent Cut-off below the Resource Constraining Shell 

Table 4: Cascada Mineral Resource Total within and below the Resource Constraining Shell

Table 5: Promontorio Project Mineral Resources – High Grade Zones (2.0% CuEq cut-off) 

The Cascada resources are considered to have reasonable prospects of economic extraction. A Lerchs Grossman optimized constraining shell was generated to constrain the potential open pit material. The open pit cut-off is 0.5% CuEq for material within the resource constraining shell and the underground cut-off is 1.0% CuEq for material below the constraining shell. These cut-offs are based upon other mining operations in northern Mexico and assumed mining and metal pricing parameters.

This modelling indicates that 95% of the total Cascada resource is contained within the open pit resource constraining shell. Cascada mineralisation comprises massive, semi-massive and disseminated copper sulphides hosted in vuggy silica and silicified volcanic and intrusive host rocks. The sulphide mineralisation is predominantly chalcocite and pyrite, with minor chalcopyrite and enargite (a copper-arsenic sulphide almost totally hosted within the High Grade Zone). Mineralisation was formed through highsulphidation epithermal and hydrothermal brecciation processes.

The deposit is 250m on strike and 200m wide in multiple veins and zones. Mineralisation strikes southwest to northeast and dips steeply to the northwest. Mineralisation outcrops to near-surface (approximately 2,000m elevation ASL) and reaches 1,800m elevation for a total vertical extent of approximately 200m. One drill hole (APR-DD-118) intersected mineralisation at a vertical depth of approximately 300m below surface. Mineralisation remains open along strike and at depth.

During exploration, geological controls and orientations of the mineralised zones were unknown, therefore all mineralised intersections were originally reported as “intercept length” that did not represent true width. Due to topographic and access issues, drilling was conducted on north-south lines, an orientation which is now known to be at approximately 45o to the northeast-southwest strike of the mineralisation. Dips of drill holes ranged from -30o to vertical.

A total of 37 HQ (63.5mm diameter) core holes (see Figure 1) were used in the resource estimate with an aggregated core length of 7,158m. Drill core was saw-cut longitudinally and half core samples collected and assayed. The total number of assayed samples in the database amounts to 7,509. Twenty-seven holes intersecting mineralization were not used in the resource estimate. These holes were historical holes dating back to 1993 and assays could not be validated.

Samples were prepared at ALS Chemex and Acme laboratories in either Hermosillo or Chihuahua, Mexico. Samples were weighed, assigned a unique bar code and logged into the database tracking system. The sample was dried and the entire sample was fine crushed to >70% passing a 2mm screen. A 250g split was pulverised using a ring and puck system to >85% passing 75 micron screen.

Envelopes containing the 250g sample pulps were sent via courier to the ALS Chemex and Acme laboratories in Vancouver, Canada for analysis. Samples were dissolved by four-acid digest and analysed by ICP (multi-element) and Fire Assay for gold.

The Cascada mineralisation demonstrates sufficient continuity in both geology and grade to support the definition of an Indicated Mineral Resource and an Inferred Mineral Resource in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code, 2012 edition).

For the resource estimation, three different zones were characterised and modelled, based upon presence, absence and style of mineralisation. The domains were modeled in 3D using Leapfrog Geo (version 2.1) 3D geological modelling software by Aranz Geo for the following zones:

• High Grade Zone – corresponds to a distinct zone of very high grade copper (enargite), silver and arsenic values in the center of the deposit. This zone is interpreted as a fracture fill or shear zone.
• Main Zone – defined using a 0.5% CuEq value. The zone corresponds well with the limit of the vuggy silica and incorporates intervals logged as massive and semi-massive sulphides.
• Waste Zone – surrounds the entire deposit to capture any remaining mineralisation not captured in the Main and HG zones

The deposit displays a number of strong mineralized corridors that could be modelled separately in future resource estimations. 

A total of 1,931 density measurements were collected by Azure using the water displacement method of weighing the dry core in air then weighing the core in water. The core is vuggy therefore Azure tightly wrapped the core pieces with a plastic film and accounted for the weight of the wrap in the calculation.

For 101 of those samples, Azure measure the volume of the core piece using a 3D scanner used in the industry to reverse engineer parts intended for 3D printing. The scans are extremely accurate and provide an excellent volume for the scanned material. Azure calculated density for these samples by dividing the dry weight of the sample by the scanned volume.

Since the 3D scan density is consistently higher, AGP reviewed the data available and produced a regression curve between the two methods. Removing three outliers, the regression is very good with a R2 of 0.97 and a slope of regression of 0.997. Inspection of a selected photo suite of core pieces shows that the plastic wrap probably inflated the volume of the material because it could not be drawn tightly enough in areas where there are drill induced gashes in the core and in the ends of the pieces. In contrast, the 3D scan may understate the volume since the scanning picks up natural voids on the surface of the sample.

It is AGP's opinion that the 3D scans provide a closer estimate of the true density of the samples. Since the regression between the water displacement method and the 3D scan was excellent, AGP elected to convert the 1,931 density values using the following regression equation:

• Density = 0.11744 + 0.99722 * Water displacement method

The density was then interpolated in the model using an inverse distance weighting method using a 30m x 30m x 20m search ellipsoid from the copper profile and interpolating in one pass. Over 85% of the blocks in the Main and High Grade zones were interpolated. The domains boundaries were considered as sharp, therefore the density samples from one domain were not used in the interpolation of the density in the adjacent domains. The remaining blocks were assigned an average density.

The Cascada grade model was estimated using ordinary kriging with an inverse distance and a nearest neighbour estimate was used for validation. The model was interpolated in 3 passes of increasing size that were based on the variograms. For copper the Pass 1 search ellipsoid reached 25m for the major axis, 17m for the semi-major axis and 10m for the minor axis. For gold the Pass 1 search ellipsoid reached 21m for the major axis, 13m for the semi-major axis and 10m for the minor axis. For silver the Pass 1 search ellipsoid reached 33m for the major axis, 16m for the semi-major axis and 10m for the minor axis. A 1.5x multiplier was used to define the second pass search parameters, and from Pass 2 a 1.8x multiplier was used to define the third pass search parameters.

For all passes a maximum number of 15 composites with a maximum of three composites from any single hole were used. Since seven composites minimum were needed for the most restrictive Pass 1, the interpolation method needed to pool data from three drill holes in order to interpolate a block. For the second pass, the minimum numbers of composites were reduced to four, forcing a minimum of two holes to interpolate a block. For the third pass, a minimum of two composites were required, therefore a block could be interpolated with data originating from a single hole.

The model was interpolated using Dassault Systems GEMStm desktop software version 6.5 into a block model with an origin located at 782,250 East, 3,146,105 North and 2,075 m elevation. The block model matrix size was 5m x 5m x 5m with no rotation. Drill hole spacing in the heart of the deposit (1,787m elevation ASL) averaged just above 15m. Block model matrix size was set to above 1/4th of the average drill spacing and also considered the possibility of a small open pit operation followed by an underground bulk mining scenario.

The Copper Equivalent (CuEq) calculation was based on the three year average metal prices ending October 30 2014 and recoveries as follows:

• Copper US$3.40 per pound and 95% recovery
• Gold at US$1,470.00 per ounce and 75% recovery
• Silver US$25.00 per ounce and 85% recovery

All domains boundaries were considered as sharp, therefore the composites from one domain were not used in the interpolation of the grade in the adjacent domains.

Based on decile analysis and probability plots, grades were capped as follows: For Copper:

• High Grade domain – No cap
• Main domain – 9% Cu
• Waste domain – 3% Cu

For Silver:

• High Grade domain – No cap
• Main domain – 300 g/t Ag
• Waste domain – 50 g/t Ag

For Gold:

• High Grade domain – 85 g/t Au
• Main domain – 20 g/t Au
• Waste domain – 3.5 g/t Au

Capping levels are typically between the 98th and 99th percentile of the population and are design to control between 1 and 3% of the metal. Raw assays were capped prior to compositing.

The capped drill hole assays were composited at 1.5 m intervals within the three mineralized domains. Composite intervals were reset at the boundary with the domains and the composite smaller than the 1/2 the nominal composite length were backstitch to the previous composite. Missing intervals or intervals defined in the database with no assay information were replaced with zero grades during the compositing procedure.

Grade models were validated globally to assess if the interpolation methodology introduced a bias in the estimate. Results indicated less than 5% differences between the various interpolation method with the Inverse distance and ordinary krige method been less than 1%. Model grades were also plotted on swath plots to validate the local estimate. No unusual pattern was noted for areas within the bulk area of the model. Naive compare and QQ plots between the composite grade and the block model grade were also completed.

The reported mineral resources are considered to have reasonable prospects of economic extraction. A Lerchs Grossman optimized constraining shell was generated to constrain the potential open pit material. This shell was designed using design parameters and costs for comparable deposits and 45 degree overall wall slopes. Recoveries were based on preliminary metallurgical testwork and had copper recovery of 95%, gold recovery of 75% and silver recovery of 85%. Metal prices used in the pit shell determination were $3.40/lb copper, $1,470/oz gold and $25/oz silver.

The open pit cut-off is 0.5% CuEq for the material within the resource constraining shell, which is based upon other operations in Mexico and the assumed mining and metal pricing parameters. Open pit mining with conventional truck/shovel mining methods is assumed, with valley fill storage of waste material. Wall slopes have been assumed at 45 degrees for the statement of the resource.

The underground cut-off is 1.0% CuEq for the material below the constraining shell, with mining assumed to be undertaken by conventional long-hole mining methods, based upon other operations in Northern Mexico and consideration of Mexican input costs. No underground mining shapes have been generated. Other operations in northern Mexico have reported production based on a slightly lower cut-off and AGP selected the 1.0% CuEq value as reasonable for the reporting of a resource.

Metallurgical testwork was conducted at SGS Minerals Services (Lakefield, Ontario) in 2014 on a 100kg sample of mineralisation from the Cascada deposit.

Locked cycle testwork at SGS gave rise to a high grade flotation concentrate, with good recoveries of copper, silver and gold. Grade and recovery specifications for the Cascada concentrate were:

• 33-37% Copper with >93% recovery
• 12-15 g/t Gold with >75% recovery
• 400-470 g/t Silver with >83% recovery.

BACKGROUND

Promontorio contains several different styles of precious and base metal mineralisation, including high sulphidation epithermal and porphyry copper, with potential for large, bulk-tonnage resources and smaller, high grade deposits. Azure’s strong belief in Promontorio’s potential has been validated with the formation of the Earn-In and Joint Venture Agreement (“Agreement”) with Kennecott Exploration Mexico SA de CV (“Kennecott”), a subsidiary of the Rio Tinto Group.

Azure and Kennecott entered into the Agreement in December 2014. Under the terms of the agreement, Kennecott has committed to spend US$2 million during 2015, and may earn an 80% interest by spending US$45 million within 12 years.

The first phase of exploration under the Agreement is currently in progress. It comprises airborne geophysical surveys covering the entire 10,520ha Promontorio project area. Follow-up work is expected to include Induced Polarisation surveys over areas of interest, with identified targets to be tested by diamond drilling.

-ENDS-

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