{"id":109583,"date":"2017-07-24T12:56:28","date_gmt":"2017-07-24T16:56:28","guid":{"rendered":"http:\/\/countingpips.com\/?p=109583"},"modified":"2017-07-24T12:56:28","modified_gmt":"2017-07-24T16:56:28","slug":"azarga-metals-corp-oversold-coppersilver-junior","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/07\/azarga-metals-corp-oversold-coppersilver-junior\/","title":{"rendered":"Azarga Metals Corp., Oversold Copper\/Silver Junior?"},"content":{"rendered":"
July 24, 2017<\/div>
\r\n<\/div><\/div>

By\u00a0Peter Epstein, CFA, MBA \u00a0 \u00a0http:\/\/EpsteinResearch.com<\/a><\/span><\/strong><\/p>\n

Silver\u00a0(\u201cAg\u201c) junior stocks have been destroyed over the past 3 months through July 17th.\u00a0 Not even companies (near to) or in production have been spared.\u00a0 Of course, the Ag price is the main reason for the carnage, it\u2019s\u00a0down 13.4%\u00a0over the period.\u00a0 While 13% might not seem like a disaster, it is compared to\u00a0Gold\u00a0(\u201cAu\u201c) [down 4.5% and\u00a0Copper\u00a0<\/em>(\u201cCu\u201c)\u00a0up ~5%\u00a0since\u00a0April 17th<\/span><\/span>]<\/em>.\u00a0 In the past several days, the Ag price has settled in, now ~US$16.20\/oz., and some pundits are saying that select juniors are significantly oversold.<\/p>\n

\"\"<\/p>\n

A name I believe to be oversold is\u00a0Azarga Metals Corp. \u00a0[TSX-V:\u00a0AZR].\u00a0 Not only is it off ~30%\u00a0in 3 months<\/span><\/span>, it was (and still is<\/em>) under-appreciated to begin with.\u00a0 More tangibly, Azarga\u2019s flagship project is roughly 50\/50 Cu & Ag and, as mentioned, the Cu price is up ~5% since mid April.\u00a0 There\u2019s\u00a0no good reason\u00a0for AZR to be trading off more than the average Ag focused junior! \u00a0{I estimate the average Ag junior was down ~20% from April 17-July 17<\/em>}<\/p>\n

Azarga\u00a0is a [C$7.5 M \/ US$5.9 M] market cap company listed on the TSX-V (ticker:\u00a0AZR).\u00a0 It owns 60% [+ a call option on the remaining 40%<\/em>] of the\u00a0Unkur Copper-Silver\u00a0project in eastern Russia, a project Interest it acquired 16 months ago.\u00a0 In April the Company delivered a maiden NI 43-101 Mineral Resource estimate (\u201cMRE\u201c) of 42 Million metric tonnes (\u201cMt\u201c) of 0.52% Cu and 38 g\/t Ag \u2014 containing approximately\u00a0840 M\u00a0Inferred\u00a0pounds\u00a0Cu Eq., or 124 M\u00a0Inferred\u00a0troy ounces Ag Eq.\u00a0 The MRE was established quickly and cost effectively.<\/p>\n

\"\"<\/p>\n

The first modern exploration program, conducted from Aug. 2016 \u2013 Feb. 2017, consisted of 16 diamond core drill holes (4,580 m), plus 4 trenches and sampling of various outcrops, tested a strike length of 3,400 m. \u00a0In the map below, the red oval is an area of key interest, a zone of thicker and higher grade mineralization (confirmed by a ground magnetics survey<\/em>) in the northern part of the Resource area.<\/p>\n

Unkur is a\u00a0high-grade deposit that was actively explored\u00a0in the 1960s \/ 1970s, including drilling & trenching during the Soviet era.\u00a0 It has had several mineral resource estimates done on it, but none were (are) NI 43-101 compliant. \u00a0[Corporate Presentation<\/a>].<\/p>

\r\n
\r\n

Free Reports:<\/p><\/div>\r\n

\r\n

<\/a>\r\n\t Get Our Free Metatrader 4 Indicators<\/u><\/b><\/a> - Put Our Free MetaTrader 4 Custom Indicators on your charts when you join our Weekly Newsletter<\/p>

\r\n
\r\n
\r\n

<\/a>\r\n\t Get our Weekly Commitment of Traders Reports<\/u><\/b><\/a> - See where the biggest traders (Hedge Funds and Commercial Hedgers) are positioned in the futures markets on a weekly basis.<\/p>

\r\n<\/div>\r\n

\r\n
<\/div>\n

Four important features of the Resource are; (1) most of it (79%) is near surface, including two higher grade pods of mineralization.\u00a0 These pods could be amenable to low-cost open pit mining and could be mined earlier in a prospective mine plan, (2) mineralization is open in both directions along strike and down dip, (3) there\u2019s now thought to be more than one layer of ore, not just a single mineralized zone, and (4) the MRE only covers about half the known strike length.<\/em><\/p><\/blockquote>\n

In an excellent\u00a0Proactive Investors interview<\/a>\u00a0of\u00a0CEO, President & Director Dusty Nicol\u00a0in June, he stated that a potential doubling in size of the MRE was possible from the next drill campaign slated to start in August.\u00a0 A doubling in size and a likely increase in grade.\u00a0 He noted that the historic Soviet resource (not NI 43-101 compliant<\/em>) of ~165 Mt is about 4 times the size of the MRE.\u00a0 New work done by the Company so far seems to indicate that the Soviet era data erred on the side of conservatism on both size and grade.\u00a0 Management continues to methodically validate the historical resource and is excited by results to date.<\/p>\n

\"\"<\/p>\n

Regarding the opportunity to double the size of the MRE, Dusty thinks it could grow by a third or more from routine step-out drilling, connecting two known pods of mineralization in zone 2.\u00a0 And, if step-out drilling is successful in extending strike length by several hundred meters, there\u2019s tonnage underneath the pit bottom that could be included in an updated resource later this year.\u00a0 The technical team, armed with a better understanding of what controls the distribution of high-grade Cu & Ag mineralization, is optimistic they can increase the overall grade by targeting geophysical anomalies to the North and Northeast.\u00a0 After raising exploration capital, drilling is expected to start in August.<\/p>\n

The second phase of exploration will be carried out during the 2017-2018 field season and will focus on the potential for discovery of additional Cu \/Ag mineralization from 3 target concepts: (i) drilling along strike or down dip; (ii) drilling to confirm additional mineralized zone(s) postulated to occur stratigraphically below currently defined Zones 1 & 2; and (iii) drilling new targets expected to be generated by geophysical surveys.\u00a0 The plan comprises geophysical exploration; {continuation of ground magnetics and initiation of electrical prospecting to the north and northeast of the currently defined resource<\/em>} near-resource drilling; {8 diamond drill holes totaling 2,370 m<\/em>} new target drilling; {~1,500 m of additional diamond drilling<\/em>} and metallurgical characterization.CEO Nicol commented in June,<\/div>\n
<\/div>\n
\n

\u201cOur objective this year will be to at least double the size of the current Resource while increasing overall Cu & Ag grades.\u00a0 Some of this increase is expected to come from step out drilling near the current Resource footprint.\u00a0 The remainder of the anticipated new Resource is expected to come from drilling of new targets from geophysics.\u00a0 Several such new targets have already been identified and drilling will focus on near-surface, high-grade targets as they\u2019re identified.\u201d<\/em><\/p><\/blockquote>\n<\/div>\n

If the Company could double the size of the Resource to [840 M x 2 = 1.68 B lbs. Cu Eq.], it would be trading at just US$0.007 per lb. (net to Azarga<\/em>) of Cu Eq. in the ground. \u00a0{adjusted for Azarga\u2019s 60% ownership of the Unkur project<\/em>}<\/p>\n

Dusty is fluent in 5 languages and has worked in 70 countries, he stated that access to infrastructure is better at Unkur than in 90% of the places he\u2019s worked.\u00a0 He\u2019s worked in really hard places in terms of terrain, weather and permitting, but Unkur\u2019s location in eastern Russia is not expected to be challenging.\u00a0 Dusty has no trouble getting to site or getting rigs in.\u00a0 With the initial tonnage and grade and good infrastructure \u2014 less than 8 km from rail, direct rail to\u00a0Vladivostok (a Pacific Ocean port<\/em>)\u00a0and Chinese smelters, power & groundwater onsite, \u2014 this next phase of exploration will support the work needed for a third-party NI 43-101 PEA or internal scoping study to be delivered in the Spring of 2018.<\/p>\n

\"\"<\/p>\n

The project location has one advantage that few are talking about, namely a 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), a development bank specifically set up for the region.\u00a0 It offers debt & equity funding and loan guarantees on preferential terms for projects such as Unkur.\u00a0 Azarga has a strong presence in Russia, it has boots on the ground.\u00a0 The entire technical team at site and administrative team in the city of Chita is Russian, and a significant percentage of the Company\u2019s shareholder base is Russian.<\/p>\n

Catalysts over the remainder of the year include; drill results, results from geophysics and metallurgical testing, and a new Resource estimate.\u00a0 A PEA or internal scoping study is expected in the Spring of 2018.\u00a0 Readers are encouraged to check out this 12-minute video\u00a0interview of CEO Nicol<\/a>\u00a0to learn more about the Company and its plans for the remainder of the year.<\/div>\n
<\/div>\n
\n

Disclosures<\/u>: The content of this article is for information only. Readers fully understand and agree that\u00a0nothing\u00a0contained herein,\u00a0written\u00a0by Peter Epstein of\u00a0Epstein Research<\/a>\u00a0<\/em>[ER],\u00a0<\/em>(together,\u00a0<\/em>[ER])\u00a0about\u00a0<\/em>Azarga Metals Corp,\u00a0<\/em>including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing\u00a0contained herein is a recommendation\u00a0or solicitation to buy or sell any security.\u00a0<\/em>[ER]\u00a0is not\u00a0responsible under any circumstances for investment actions taken by the reader.\u00a0<\/em>[ER]\u00a0has never been, and is not currently, a registered or licensed financial advisor or broker\/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not\u00a0perform market making activities.\u00a0<\/em>[ER]\u00a0is not\u00a0directly\u00a0employed by any company, group, organization, party or person.\u00a0The shares of\u00a0<\/em>Azarga Metals\u00a0<\/em>Corp. are 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 in\u00a0<\/em>Azarga Metals\u00a0<\/em>and the Company was an advertiser on\u00a0<\/em>[ER].<\/em>Readers 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.\u00a0<\/em>[ER]\u00a0is 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.\u00a0<\/em>[ER]\u00a0is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic.\u00a0<\/em>[ER]\u00a0is not an expert in any company, industry sector or investment topic.\u00a0<\/em><\/p>\n<\/div>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

By\u00a0Peter Epstein, CFA, MBA \u00a0 \u00a0http:\/\/EpsteinResearch.com Silver\u00a0(\u201cAg\u201c) junior stocks have been destroyed over the past 3 months through July 17th.\u00a0 Not even companies (near to) or in production have been spared.\u00a0 Of course, the Ag price is the main reason for the carnage, it\u2019s\u00a0down 13.4%\u00a0over the period.\u00a0 While 13% might not seem like a disaster, […]<\/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-109583","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109583","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=109583"}],"version-history":[{"count":1,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109583\/revisions"}],"predecessor-version":[{"id":109584,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/109583\/revisions\/109584"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=109583"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=109583"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=109583"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}