I have over the last year drawn your attention to Azure Minerals as an emerging stock worthy of consideration. I now believe it is the time to buy this stock, so I have bought a number over the last few days. There are a number of appealing features:
1. A number of good projects - one proven commercial project with upside and several other projects with partners earning in, saving the company money
2. Cashed up - The company had a capital raising in May, so it has $5.6mil in cash
3. Drilling - The company is about to drill a number of projects, with the Promentorio offering the prospect of a substantial increase in resources, which would greatly expand the in-situ wealth of the company.
4. Share price - The company is languishing at a record low, it has consolidated, so I believe its likely to attract a re-rating soon because of its advanced project, cash and drilling activity.
5. Commodity mix - The company is chasing the right commodities....mostly copper, but also silver and gold, and the prices for these are high, and likely to remain so. Copper stockpiles are falling, and gold/silver are even better looking.
The company is developing a number of projects:
1. Promentorio is 100% owned, its a high grade copper, gold & silver deposit. They are preparing a feasibility study on this project. Reserves of 502,000 tonnes @ 4.7%Cu (23,400tCu), 2.1g/t Au (34,000oz Au) and 99g/t Ag (1,600,000oz Ag). All these metals are very appealing because they are high. NPV of $60mil, but could be increased by 2-4x by further drilling in 2010/11. Low capex. They have tested only 250m strike (of 1km+ structure) and 150m depth. So strike & depth potential. They will also test a nearby ‘blind’ porphyry copper target.
2. La Tortuga JV with JOGMEC, a Japanese govt agency. They are spending $3mil for 50% stake, already spent $1.2mil. This is a porphyry copper target. Drilling this Sept quarter. Previous drilling intersected 159.6m@0.2%Cu,0.2%Zn from surface, with the bottom 26.9m returning 0.5% copper, 0.4% zinc & 12g/t silver.
3. San Eduardo JV with OZ Minerals, spending $US13mil for 70% interest on a porphyry copper deposit. IP surveys and drilling in the 2nd half of 2010.
4. Estacion Llano project is along strike from the Timmins Gold San Francisco mine (1.3Moz). Mineralisation may extend into its area, so potential for a sale of its project area to the 100,000oz/yr miner if they strike attractive mineralisation.
5. Other project interests as well.
The company has 355mil shares on issue at 4.1c worth $14.6mil. They have cash reserves of $5.4mil after an 100mil issue at 5c in May 2010. They are considering a Toronto listing which promises further upside, but they don't need the cash for now.
See presentation at their website (May 2010). View the company's stock chart at Google Finance.
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Andrew Sheldon www.sheldonthinks.com
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