{"id":105204,"date":"2017-04-24T12:58:44","date_gmt":"2017-04-24T16:58:44","guid":{"rendered":"http:\/\/countingpips.com\/?p=105204"},"modified":"2017-04-24T12:58:44","modified_gmt":"2017-04-24T16:58:44","slug":"large-cu-ag-maiden-resource-from-east-russia","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/04\/large-cu-ag-maiden-resource-from-east-russia\/","title":{"rendered":"Large Cu-Ag Maiden Resource From East Russia!"},"content":{"rendered":"
April 24, 2017<\/div>
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By<\/strong>\u00a0Peter Epstein, CFA, MBA \u00a0\u00a0epstein.peter4@gmail.com<\/a>\u00a0\u00a0\u00a0http:\/\/EpsteinResearch.com<\/a><\/b><\/span><\/p>\n

Azarga Metals Corp. [TSX-V: AZR]<\/a>\u00a0owns a 60% interest\u00a0(with a call option to move to 100%)<\/em>\u00a0of the\u00a0Unkur Copper-Silver<\/a>\u00a0project\u00a0(\u201cUnkur\u201d) in eastern Russia.\u00a0 Unkur is a\u00a0high-grade deposit that was actively drilled and defined during the Soviet era. It had several mineral resource estimates done, but none were (are) NI 43-101 compliant.\u00a0 The following interview of\u00a0CEO, President & Director Dorian \u201cDusty\u201d Nicol\u00a0conveys the excitement management has about its maiden\u00a0mineral resource estimate<\/a>. \u00a0[Corporate Presentation<\/a>] \u00a0[Prior article on AZR<\/a>].\u00a0 Readers should note the progress (execution) of the Company since my\u00a0initial interview<\/a>\u00a0of Mr Nicol last year.<\/p>\n

\"\"<\/p>\n

Peter Epstein [ER]:\u00a0\u00a0Please describe Azarga Metals to readers unfamiliar with the story.<\/strong><\/p>\n

CEO Dusty Nicol:\u00a0\u00a0Azarga Metals<\/a>\u00a0Corp. is a C$9 million market cap company listed on the TSX-V (ticker: AZR).\u00a0 It owns 60% of the\u00a0Unkur Copper-Silver<\/a>\u00a0project in eastern Russia.\u00a0 We acquired the project mid-last year and have already delivered a maiden NI 43-101 Resource estimate based on the first Phase of drilling we did.\u00a0 It shows 42 million metric tonnes containing around 380,000 tonnes (840 million pounds<\/em>) copper equivalent, (or 124 million ounces silver equivalent<\/em>), in the Inferred category.\u00a0 We believe our maiden Resource is one of the larger ones put out by a copper or silver junior in the past few years.\u00a0 And, the Resource has plenty of growth potential because it\u2019s open in multiple directions and down dip.\u2026 a very good start!<\/p>\n

[ER]:\u00a0\u00a0The maiden Resource press release came as a surprise, many thought more time, money & drilling would be required.\u00a0 How did Azarga reach this milestone so quickly?<\/strong><\/p>\n

Dusty:\u00a0\u00a0Yes, we get asked that a lot, there was historical exploration done on the deposit back in the 1960s \/ 1970s, including drilling & trenching.\u00a0 That work and various historical [non-43-101 compliant<\/em>] resource estimates indicated that Unkur had the potential to be a copper-silver deposit of global significance, and what I mean by that is, much larger than what\u2019s reflected in our maiden Resource.\u00a0 We didn\u2019t simply \u2018twin\u2019 historical holes.\u00a0 We carefully considered prior exploration data and our own interpretation of the geology, and formulated a plan for the project\u2019s first modern physical exploration program.<\/p>

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The presence of the historical data really improved our efficiency because it meant that the maiden Resource could be derived from only 16 diamond core drill-holes plus four trenches.\u00a0 Having said that, I want to emphasize that while we used historical data to guide our exploration, our Resource estimate is based entirely on our own verified data.\u00a0 The total spend for that first Phase leading to the maiden Resource was around US$1.5 million.<\/p>\n

[ER]:\u00a0\u00a0Speaking of historical data, are there important takeaways regarding, \u201cSoviet era\u201d exploration drilling?\u00a0 How do recent drill results compare to historical records?\u00a0\u00a0<\/strong><\/p>\n

Dusty:\u00a0\u00a0Well, if we look at the areas where our new work overlapped with the old, we can honestly say that we have been pleasantly surprised by both grade and thickness.\u00a0 That means we\u2019re getting increasingly confident around that notion that this could be a world-class deposit.\u00a0 Importantly, our Resource only covers around half of the historically known strike length.\u00a0 That portends plenty of potential upside.\u00a0 Also, we found some things that the historical data didn\u2019t cover, for instance, there are multiple layers of ore, not just a single zone.\u00a0 Around a quarter of our maiden Resource comes from a second layer (referred to as Zone 2<\/em>).\u00a0 Having a second zone, maybe multiple mineralized zones, again suggests that we could be onto something really big.<\/p>\n

\"\"<\/p>\n

[ER]:\u00a0\u00a0What are some near-term catalysts over the remainder of the year?\u00a0<\/strong><\/p>\n

Dusty:\u00a0\u00a0Before I answer directly, there\u2019s more to say about the Resource that defines how we are moving forward.\u00a0 The majority of the deposit is located near surface, including two higher grade pods of mineralization, plus as mentioned, the Resource is open in multiple directions and down dip.\u00a0 This leads us to a two-pronged strategy.\u00a0 We will continue our physical exploration, which we expect will lead to a transformational increase in the Resource after our second Phase of work.<\/p>\n

Simultaneously, we will be considering economic and engineering aspects in terms of scoping study and PEA work.\u00a0 So, catalysts this year include; more drilling results, results from geophysics and metallurgical testing, likely a new Resource estimate, and the results of a PEA or internal scoping study.\u00a0 So, there should be plenty of action and news flow!\u00a0 Right now we\u2019re planning the Phase two work program and should be ready to approve and kick it off in the next 30-60 days.<\/p>\n

[ER]:\u00a0Presumably you\u2019re comfortable with Russian country risk.\u00a0 What can you share with readers about your views on Russia (eastern Russia)?<\/strong><\/p>\n

Dusty:\u00a0\u00a0I speak five languages and as a 40-year veteran geologist, I have worked just about everywhere.\u00a0 I\u2019ve worked in really hard places in terms of terrain, weather and permitting.\u00a0 Alaska is one \u2014 so is the high Andes of South America \u2014 but Unkur\u2019s location in eastern Russia is not.\u00a0 We have no trouble getting to site or getting rigs in.\u00a0 The site is only 7 kilometers from a railway and it has a 220KvA powerline running over it\u2026. Russian is fast becoming my sixth language!<\/p>\n

By the way, I think the location has one extraordinary advantage that no one talks about, and that\u2019s the package of incentives provided to promote investment in Russia\u2019s far east.\u00a0 There are tax incentives and royalty reductions, but the most important thing is the\u00a0Far East Development Fund (\u201cFEDF\u201d).\u00a0 It\u2019s essentially a development bank specifically set up for the region.\u00a0 It offers debt and equity funding on preferential terms for projects such as ours.\u00a0 Examples of companies that are working with the FEDF include\u00a0Amur Minerals,\u00a0Eurasian Minerals\u00a0and\u00a0Polymetal Intl. Plc.<\/p>\n

We have a strong presence in Russia.\u00a0 In fact, I\u2019m the only full-time employee who\u2019s not Russian.\u00a0 Our entire technical team at site and small administrative team in China is Russian.\u00a0 In addition, we have a strong presence in Moscow through our Moscow-based Director and his business associates & contacts.\u00a0 Also, a significant percentage of our shareholder base is Russian.\u00a0 As a result, I\u2019m very comfortable operating in Russia and I really think that the issue of \u2018country risk\u2019 is more one of perception than one of substance.\u00a0 I\u2019m finding Russia no more difficult to operate in than most other jurisdictions, and in fact in many ways I\u2019m finding it easier.<\/p>\n

\"\"<\/p>\n

[ER]:\u00a0\u00a0Azarga Metals\u2019 press release was quite detailed, can you summarize factors (other than size, grade and jurisdiction<\/em>) that readers might benefit from focusing on?\u00a0\u00a0<\/strong><\/p>\n

Dusty:\u00a0\u00a0Yes, as I said before two important features of the Resource are; (1) most of it is near surface, including the two higher grade pods of mineralization \u2013 i.e., think ease of mining and economic benefit.\u00a0 These pods could be amenable to lower-cost open pit mining and could be mined earlier, thus helping accelerate capital payback, and (2) it\u2019s open in both directions along strike and down dip \u2013 i.e., think growth potential!<\/p>\n

[ER]:\u00a0\u00a0Can you explain to readers the exclusive opportunity Azarga has to consolidate 100% of the project (via a call option on the remaining 40% Interest<\/em>)?<\/strong><\/p>\n

Dusty:\u00a0\u00a0Yes, we have a call option over the remaining 40% that can be exercised if\/when the Resource reaches 2 million tonnes of contained copper equivalent, with 70% in the Measured & Indicated categories.\u00a0 The price of the call will be either a mutually agreed upon valuation or based on an independent fairness opinion.\u00a0 We have a clear path to consolidate the project and are working towards the milestone to do so.<\/p>\n

[ER]\u00a0Thank you for your time and good luck on Phase 2 drilling later this year.<\/strong><\/p>\n

[Corporate Presentation<\/a>] \u00a0 \u00a0[Prior article on AZR<\/a>] \u00a0 \u00a0[Initial interview<\/a>]\u00a0 \u00a0\u00a0[Proactive Investors<\/a>]\u00a0coverage of AZR<\/p>\n

Disclosures<\/u>: The content of this article is for information purposes only. Readers fully understand and agree that\u00a0nothing\u00a0contained herein,\u00a0written\u00a0by Peter Epstein, about\u00a0<\/em>Azarga Metals Corp,\u00a0<\/em>including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further,\u00a0nothing\u00a0contained herein is a recommendation\u00a0or solicitation to buy, hold or sell any security. The content contained herein is not directed at any\u00a0individual or group. Peter Epstein and\u00a0<\/em>Epstein Research<\/a>\u00a0[ER]\u00a0are not\u00a0responsible, under any circumstances whatsoever, for investment actions taken by the reader.\u00a0Peter Epstein and \u00a0[ER]\u00a0have never been, and are not currently, a registered or licensed financial advisor or broker\/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they\u00a0do not\u00a0perform market making activities. Peter Epstein and\u00a0[ER]\u00a0are not\u00a0directly\u00a0employed by any company, group, organization, party or person.\u00a0The shares of\u00a0<\/em>Azarga Metals\u00a0are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks\u00a0can 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 any investment decisions.<\/em><\/p>\n

At the time this article was posted, Peter Epstein owned shares and stock options of\u00a0<\/em>Azarga Metals\u00a0<\/em>and the Company was a sponsor of<\/em>\u00a0Epstein Research<\/a>.\u00a0Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he\u2019s diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful.\u00a0Mr. Epstein &\u00a0[ER]\u00a0are 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. Mr. Epstein &\u00a0[ER]\u00a0are\u00a0not expected or required to subsequently follow or cover events & news, or write about any particular company or topic.\u00a0Mr. Epstein and\u00a0[ER]\u00a0are not experts in any company, industry sector or investment topic.\u00a0<\/em><\/p>\n

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By\u00a0Peter Epstein, CFA, MBA \u00a0\u00a0epstein.peter4@gmail.com\u00a0\u00a0\u00a0http:\/\/EpsteinResearch.com Azarga Metals Corp. [TSX-V: AZR]\u00a0owns a 60% interest\u00a0(with a call option to move to 100%)\u00a0of the\u00a0Unkur Copper-Silver\u00a0project\u00a0(\u201cUnkur\u201d) in eastern Russia.\u00a0 Unkur is a\u00a0high-grade deposit that was actively drilled and defined during the Soviet era. It had several mineral resource estimates done, but none were (are) NI 43-101 compliant.\u00a0 The following […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-105204","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105204","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=105204"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105204\/revisions"}],"predecessor-version":[{"id":105205,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/105204\/revisions\/105205"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=105204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=105204"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=105204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}