Begin with the end in mind.
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That adage is how Aztec Minerals (AZT.V; AZZTF.OTC) — a company that has no less than two large-scale, polymetallic projects to its credit — was put together.
In today’s mining sector, majors look to add to their project pipelines by buying out smaller exploration companies that have either made a discovery or expanded a known deposit.
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Knowing this, the seasoned team at Aztec has taken an interest in two North American projects — Tombstone in Arizona and Cervantes in Mexico’s Sonora State.
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Both projects boast the recipe that major mining companies are looking for, including potential for world-class scale, locations in mining friendly jurisdictions and proximity to infrastructure.
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| Between Tombstone in Arizona and Cervantes in Mexico, Aztec Minerals has two projects with the potential scale to attract a major’s attention. |
Moreover, the polymetallic carbonate replacement deposit (CRD) potential of Tombstone at depth and the gold-copper porphyry mineralization encountered near surface at Cervantes give Aztec the kind of targets it can really sink its teeth into.
Best of all, the company is trading at levels that indicate that the market has yet to wake up to the upside Aztec Minerals offers investors.
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Open-Pittable Gold And Silver Near Surface
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It starts with Tombstone’s potential to host significant, near-surface gold-silver resources.
Located near Tucson in southeast Arizona, the Tombstone area produced 32 million ounces of silver from CRD deposits and high-grade polymetallic veins between 1878 and 1939.
More recently, the Contention pit was mined as a bulk-tonnage, heap-leach operation in the 1980s, before low gold and silver prices shuttered the mine.
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Aztec’s management looked at this mothballed project and was convinced that there was a lot of gold and silver left behind.
Not only that, they believed they could quickly outline an open-pittable deposit by drilling around and below the historic Contention pit.
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So far, the drills have confirmed their beliefs.The company’s Phase 1 RC drilling program on the Contention area in 2020 hit significant oxide gold-silver mineralization in 19 of 21 holes.
The three areas drilled in this program span an impressive 860 meters in strike, with mineralization hit up to 100 meters below the pit area. But, as you can see from the graphic below, they’ve only scratched the potential in the pit itself.
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| The old Contention pit at Tombstone appears to host significant, near-surface gold-silver mineralization and is open to expansion in gaps between its main zones. |
As the above map indicates, Aztec’s next phase of drilling will focus on the gaps between these areas, as well as extensions along strike.
In a part of Arizona where open-pittable grades average between 0.4 g/t and 0.6 g/t gold, the grades Aztec has encountered so far have been well above that range.
The most recent drill results are highlighted by intersections like 7.62 meters grading 4.18 g/t gold and 174.2 g/t silver (6.36 g/t gold-equivalent) in Hole 18 and 22.86 meters assaying 1.74 g/t gold and 56.1 g/t silver (2.45 g/t gold-equivalent) in Hole 20.
Obviously, there’s clearly potential for the company to outline an easy, open-pit deposit at Tombstone.
But that’s just where the potential begins….
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A Treasure-Trove Target At Depth
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If Aztec’s geological team’s theories prove true, the open-pit resource would be merely an appetizer for the main course: a large CRD deposit that may exist at depth.
For a sense of the scale of such a deposit, one need only look 65 kilometers southwest of Tombstone to the massive Taylor CRD deposit outlined by Arizona Mining.
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That deposit stands at 100 million tonnes of 10% zinc-equivalent — big enough to draw a C$1.8 billion, all-cash takeout of Arizona Mining by South 32.
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The stock chart below shows the lucrative gains Arizona Mining shareholders enjoyed — multiplying their investments as much as 25 times over — as the drills established the scale of Taylor and then South 32 made its offer.
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| Arizona Mining’s experience outlining a massive CRD resource at Taylor shows you what’s possible if Aztec hits a similar deposit at depth at Tombstone. |
Historic holes drilled by past owner Santa Fe Mining on Tombstone suggest a CRD deposit similar in scale to Taylor may lie below the Contention pit.
And we’ll know soon: Aztec plans to test this possibility later this year with a Phase III core drilling program that will target a large area of conductivity with holes up to 1,000 meters in length.
Given the example set by Arizona Mining with Taylor, success with this deeper drilling program could uncork Aztec’s share price.
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Swinging For The Fences In Mexico
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And a potentially large CRD deposit isn’t the only target with world-class potential in Aztec’s portfolio.
Its Cervantes project in Mexico has shown excellent potential to host a large gold-copper porphyry.
For those who may be new to mining, good porphyry discoveries often host massive amounts of gold and copper.
The porphyries in this part of northern Mexico tend to be more gold-intensive than the copper-intensive deposits mined in Chile and Peru. And testing shows that the Cervantes property not only boasts many potential areas for such a porphyry deposit…but the drill is proving it.
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A Phase 1 program in 2020, which focused mainly on Cervantes’ California target, hit several long intersections, headlined by 160 meters of 0.77 g/t gold.
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With these hopeful results to build on, Aztec plans to follow up on Cervantes with drilling to test California laterally and at depth and to probe other high-priority targets.
Again, the scale typical of major porphyry discoveries gives Aztec a second project that could turbo-charge the junior’s valuation when drilling recommences.
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Undervalued Right Now
…And With Share Price Catalysts Straight Ahead
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The open-pittable gold-silver mineralization the company is chasing at Tombstone, combined with that project’s CRD potential at depth and Cervantes’ gold-copper possibilities, make Aztec Minerals one of the top juniors to watch in 2021.
Drilling on and around Tombstone’s Contention pit is set to begin next month, and that's just the beginning of a series of programs that will generate news flow all year long.
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The scale of the targets at Tombstone and Cervantes give Aztec two chances to prove up a resource that could attract a takeout similar to South 32’s C$1.8-billion buyout Arizona Mining.
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Despite all its upside, Aztec continues to sport a market cap just above C$20 million.
With a renewed bull market on the horizon for precious metals (and even base metals), work on Aztec Minerals’ two core projects this year could spark a big run on AZT.
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