Arizona Metals: Deutsche Goldmesse Spring 2024 Presentation

0:00 ♪♪ Well, thank you, Kai, for that intro. This is our first time at this conference. It's been really nice to meet some current shareholders here today already, and hopefully some new shareholders. To give you some background, Arizona Metals was listed about 4 years ago. We have 2 projects in Arizona. Our focus is our K mine, which is a high-grade copper gold zinc VMS deposit. And we have a second project called Sugarloaf Peak, which I'll give some overview on.

0:45 The key for K is this is an extremely wide, high-grade VMS-type deposit, a gold-rich deposit of which there are not many left, and you can see some of the widths we have. The deposit is a mixture of gold-rich and copper-rich material. In some of the gold zones, we're getting up to 90 meters running 8 grams gold equivalent, and that's after assumed recoveries. In the copper-rich zones, we're seeing 125 meters running over 3% copper equivalent. In a typical VMS deposit, your minimum mining width might be something like 3 meters at a grade of 1%, a cutoff grade of 1%. We're seeing many multiples of both the width and the grade. True width of these valleys is around 80%. And if you take 80, I'll show you some of the zones, but at these kind of widths, there's the potential for extremely low cost bulk underground mining.

1:38 And because it is a high grade deposit, we also see potential for low capital costs. And I'll show you the plan of where we are and how we plan to get there. We'll go through some of our land position. We are currently very well funded. We've got 27 million Canadian in cash. This number here is as of December. Fully funded for the next 12 months, we've got about a $13 million budget. And that'll be primarily to take our K deposit to a resource and move to the feasibility stage. But we also have a significant exploration program around at 6 or $7 million to make new discoveries. And the last item we'll go over is we have recently proposed to spin out 2 companies to shareholders. One would be a royalty company based on the K mine and we see that as a platform to build additional royalties.

2:26 The second would be a spin out of our Sugarloaf Peak project and The rationale for that is we don't want to spend the funds we've raised in K. Those were raised for the K project. Arizona Metals would keep a percentage of each spin co. The structure roughly would be Arizona Metals keeps 20% of each spin co. The other 80% is spun out to shareholders on a pro-rata basis. So if you're a current AMC shareholder at the record date, you'll get a share of 2 new companies sometime after June. We plan to send out the circular in the next couple of weeks. During May, we'll send out the circulars. Both of these Spincos are subject to a shareholder vote. The vote date would be at our AGM June 30.

3:12 And assuming they're voted through, then we would initially put them into reporting issuers. And those are basically public companies that aren't yet listed. And so initially what we would do is we would put about $100,000 into each company just to get it ready for listing. So we would take very minimal cash from AMC. And the plan would be to put in a new management team for each company. So we would continue to focus on K, but this way we can advance the royalty and the Sugarloaf Spin Co with a new team, but also utilizing our infrastructure. We've got a very strong team of legal, explorationist geologists in Arizona that can aid these projects.

3:59 You know, Our board and team to date has really been exploration focused. They've had a strong track record of exploration, advancing discoveries. As we are now getting K towards the feasibility stage, we are planning to add more mind building expertise in the next few months in the near term. We're looking to bulk that up as we transition from really pure exploration into more development. And just to give you some background, capital structure, currently About 120 million shares outstanding. We have a market capitalization today of around 270 million. As I mentioned, around 27 million in cash, so fully funded for at least the next 12 to 24 months. Management owns about 12% of the company.

4:48 No warrants outstanding, so no overhang. We do have 5 million options, mostly in the money. And institutional share ownership is around 30%, but that's made up of around 30 different funds. So no single fund with a massive position. And trading volume, we currently trade around 1 to 2 million dollars per day in Canada and the US. And for share price, we reached a high of 7 dollars per share. Currently trading at around 2 dollars 30, So we have bounced off the bottom, which was around $1.60 a few months ago, but still 70% off the highs. So we think lots of value to be captured. And if you look at the analyst coverage, the analysts all have target prices ranging from $5 to $10 per share. So that's multiples of where we currently trade.

5:41 And that is all based really on the K deposit, which we'll go through. So very good location. Arizona, obviously mining friendly, provided you're on the right type of land, which I think we are. First project, K, an hour north of Phoenix. Sugarloaf, which we plan to spin out 2 hours west of Phoenix. And the K mine is importantly in a historic mining district in Yavapai County. There are 60 past producing mines within 100 miles of us, so about a two-hour drive. This region was really, in 1880, this is what started the mining industry in Arizona. These are very high-grade mines. Many of them ran for almost 100 years. The bulk shut down in the late 70s, and there's been no real exploration in this region for 40 years until we were the first mover back into this region.

6:34 And you can see some of these deposits. 2 hours north of us, United Verde was the first big discovery. Ran for 100 years with the open pit running at 5% copper in the open pit for 80 years. Underground, 10% grade. You compare that to your typical porphyry deposit in Arizona now would be running at something like 0.5%. So these VMS deposits have the benefit of very high grade. But because they have a small footprint and high density, there's also the potential for very low capital costs. And what we started with was a historic resource defined by Exxon Minerals in 1982. This was an internal proven and probable reserve, Exxon being the subsidiary of the oil company. They spent 7 years on this deposit, did a lot of work.

7:21 This internal reserve for them was based on a copper price of $0.60 per pound, using a cutoff grade of 2.5% copper equivalent. So just Based on today's price, we were expecting there's significant room to expand the deposit. And the analyst targets right now, obviously we're working on the resource, but the analysts are using a tonnage of 12 to 25 million tons for K alone. But we have 18 other targets around it where we think there are potential deposits as good or bigger than K. And I'll go through some of those. And just for a metal breakdown, it's roughly metal content, roughly 40% gold, 40% copper, the balance in zinc and silver. What we envision here, though, would be the deposit being mined as a whole with differential flotation once it's taken to surface. So we would have a mill that would produce a copper concentrate and a zinc concentrate.

8:20 Preliminary testing shows very good numbers for those recoveries. So we're anticipating a clean concentrate, no deleterious elements. A copper con with precious metals reporting, as well as a zinc con with precious metals. Detailed flotation is currently underway. And those results will be part of the resource estimate, which we're aiming for the end of this year. So they'll be incorporated into that. You can see the first program with some very high grade numbers, 40 meters at 3.4% copper equivalent, 38 meters at 3% with some higher grade zones. Those were the shallow copper rich zones. And we then moved into some very gold rich zones, which I'll run through briefly. But just key to this property is the type of land we're on. The K Mine itself is on patented land, which is essentially private land in Arizona.

9:15 The blue area we've outlined is BLM, that's Bureau of Land Management Federal Mining Claims. That's where we're doing a lot of exploration at the moment. And in the last 3 years, we've completed about $7 million worth of private land acquisitions. And that's the top right. You can see the purple and the red. We've acquired about 200 acres of private land. That is purely for infrastructure purposes. We're buying land that we envision as being the eventual site of the mill and the tailings. That's where the infrastructure would go. And the reason for buying private land, it's much quicker and easier to permit private land in Arizona. Whatever you can do to avoid disturbing federal land can really advance your permitting process. So while we have the drilling going on to move KHR resource, the exploration drilling, we are also concurrently doing a very important de-risking program. So the metallurgy's underway, rock geochemistry, hydrology, we've got an important social license program, all the elements that would go into the eventual feasibility study and the mine permit. We're running those in tandem to the drilling.

10:26 And just to give you a sense of the geology, The K deposit is in the yellow unit you see here. This is the Felsic unit. The 60-pass producing mines going an hour north of us are all in that same unit. The purple line is the contact, the Mafic-Felsic contact. We've got 10 kilometers of that contact on our land. The K deposit covers only 250 meters of it. So we know that if there's another deposit out here, it's going to be somewhere on that line. To date, we've tested only about 10% of that line. So you look at K is only 250 meters of strike. There's lots of room to have multiple Ks on this line. We've done some initial testing last year, central and west. Central target, we drilled about 4,500 meters, 7 holes. At the west, 8,000 meters and 8 holes. Some very good initial results.

11:15 We think we've found the edge of a deposit. The goal now is to follow up on that. So we recently announced that we have added 3 new drill pads, which will allow us to test it. But we've also increased the size of our land position significantly. So I'll show a slide of the map. But the goal, the immediate goal for the targeting is the rest of this year we'll be drilling K, but also the strike extent north of K, the eastern part of the project. And we've also filed an upgraded exploration plan called an exploration plan of operations. So we currently have 14 pads, which are permitted under what's called a notice of intent. That gives us 5 acres of disturbance. We've applied to increase that to 20 acres, which would allow us to put roads and pads all over the property.

12:06 We're expecting to get some feedback on timing from the BLM soon, but it would most likely be towards the end of this year, early into next year, once we build the roads. But that would purely be for the western portion. While that's happening, we'll be drilling the eastern portion. We have the pads and the targets to do that.

12:27 And just as I mentioned, here's some examples. The deposit starts at about 100 meters deep. We've drilled it to 900. Many of the deposits around us will go down to, you know, mine down to 1 1⁄2 kilometers. So there is great depth potential. But for the purposes of a resource, we focused only down to 900 meters. We were trying to add in the shallower tons first. But some of the examples you can see here, in the hinge zone down the center of the deposit, we've got a zone running 50 to 80 meters at 5 to 10 grams gold equivalent. True thickness is around 80%, but extremely wide zone, maybe averaging 60 meters from 300 meters deep down to 900, potential for extremely low mining costs with such great widths and grades.

13:17 But that will be the focus of upcoming economic studies. And in terms of the resource I mentioned, we're aiming to get this resource done by the end of the year. We have already drilled about 85,000 meters into the deposit. You can see the red dots. But still plenty of open areas. We see lots of expansion potential to make this deposit even bigger, and that's just down to 900 meters. We're planning to drill an initial 20,000 meters to get there, and we're fully funded to drill that. We're budgeting about $7 million to complete that work. And the depth potential here, you can see at the right slide. At about 950 meters deep, we had a very good intercept where the K deposit is essentially a cigar shape, where we see it starting at the top and it pinches down at about 900 meters. We think there's potentially another cigar below it starting at 950.

14:16 So we do plan to put a few deeper holes just to show that potential, even though they may not end up in the first resource. But we do think that the mineralization, we know that the deposits around us go far deeper than where we've currently drilled. And at these grades and widths, it's possible to mine these economically down to 3, even 4 kilometers deep.

14:39 And, all right, I'm nearing the end of the time here, but Our newly acquired claims you can see in green here, we just extended. So where we did have some good hits at the central and west, which are in the purple, we see the strike extending north and you can see some really excellent grades up there, 12% copper, 7 grams gold. The strike of that is extending into the green. We were lucky this year that that became available. We were able to stake that. So we increased our land position by 20%. And part of the plan of operations will be permitting roads and pads to get up to that area. But on the east side, we have pads 8, 9, and 10, which can test. We've got a very prospective target, an adit. You can see there it's a

15:25 historic adit, 30 meters long, with some very high grades, 12% copper, 6 grams gold, 300 grams silver. We have a rig going towards that tunnel right now. We're drilling towards it to test it. We think that could be potentially an extension of the K deposit, if you imagine a U-shape going from the red realm to the purple. So that's underway. Sorry. OK, I'll get it to 1 minute. But yes. You know, I think just briefly to mention, we're on the right type of land in Arizona, private land. We are not near any national forest, we're no endangered species, no indigenous land issues, but we also have very strong community support. We have very strong political support too.

16:14 And then just maybe briefly, you know, I've struggled enough just to give you the brief thesis on this deposit. The green area is a historic resource, million and a half ounces defined from surface to 70 meters deep. But we have drilled holes that are mineralized down to 300,400 meters deep. We've done metallurgy that shows that gold is recoverable. So we see the potential to triple the size at depth, but it's also open on strike, potential to triple the size. So we think the potential, although it's low grade, this could be a very large tonnage deposit. And it will take about $5 to $10 million of drilling. So that's one of the reasons to spin it out. Our shareholders will maintain the value. They'll keep the shares. But we'll raise the money separately, drill it separately.

16:58 OK. Perfect. Yeah. Oh, good overview. That's fantastic, Mark. Thanks so much for coming. Yeah, thank you. Really appreciate it. Thanks so much for coming. Yeah.