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Azucar Minerals (TSX-V: AMZ) CEO Morgan Poliquin on the Almadex-Azucar Spinout & His Mandate to Aggressively Drill the El Cobre Copper-Gold Project

June 15, 2018

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is CEO of Azucar Minerals (TSX-V: AMZ)(OTC: AXDDF), Dr. Morgan Poliquin. Morgan, how are you this afternoon?

Morgan Poliquin: I’m outstanding. Thank you, and yourself?

Gerardo Del Real: I am doing well also. Thank you so much for asking, Morgan. So, before we get into the details, exciting details, about the drilling commencing once again at the El Cobre project in Veracruz, Mexico, I want to talk about the name change and the closing of the Spinco because I think it's important to kind of paint an accurate picture of what that looks like now. Could you go over the details there and how things stand right now, Morgan?

Morgan Poliquin: Very good. Delighted to do so and happy to clarify. Obviously, there's a new company. The new company was in fact what is called Almadex – the name for the old company. But we felt that that was best to go with a new company, that name, and the reason for that is that that's our exploration – “ex,” “dex” indicates exploration, which is what that company will be doing on the exploration properties, and also, it has assets like royalties and some shares in Azucar. And Azucar is obviously the company that is focused on El Cobre, and that is, in fact, what used to be Almadex.

So, it's focused exclusively on the drilling and exploration of the El Cobre property and, of course, Newcrest participated in financing that effort and is a shareholder there. I hope that clarifies things for people. There's a new symbol for Almadex, the new company of course, being a new company. But apart from that and the name change, effectively, things are very similar with an exploration company and a company focused on El Cobre.

Gerardo Del Real: Excellent. So, just to kind of summarize there, Almadex, the “ex” being for exploration, obviously holds the exciting exploration portfolio and the royalty portfolio, which we'll talk about here in the next week or two. The focus today is on Azucar, which now holds the El Cobre project.

It is now a standalone project. You deserve credit, you and your team do, for making that attractive enough to be, one, a standalone asset and, two, a standalone asset that attracted the attention of a major like Newcrest. Let's talk about why you're excited to once again see the drills turning at El Cobre. Take it away, Morgan. Tell us the details.

Morgan Poliquin: Well, obviously since the spin-out from Almaden in 2015, we had some good fortune. We knew that this project had the potential for multiple, what we think of as a district, a new area of multiple porphyry copper-gold occurrences. The drilling over the last couple of years has shown that to be the case. We have targets spread out over 4 to 5 kilometers or so. Some of them we still haven't drilled yet.

Since the last drilling, well, the spin-out and other things have been going on. We felt it was a great opportunity for us to go and do a large amount of surface exploration work and getting caught up on all the drill core we do have and trying to define these targets a little better. And one of the things that popped out is that we had discovered and announced a new area of outcrop, this Naranja zone just north of where we were drilling at Raya Tembrillo and about a kilometer south of the Norte zone. So, clearly related in many ways, and that area is pretty exciting from an alteration point of view.

And so, we feel we have some good vectors out of the data we have. And when you're drilling away, you don't have an opportunity to be doing data reviews. You're rapidly interpreting. It has allowed us to get kind of a regional review complete, which has given us some good strong direction of where to follow up and we're drilling once again and we're drilling on the Norte zone where we anticipate stepping out and also doing infill drilling to move that towards potential resource.

We think that that zone is still open and it's premature to talk about a resource. But obviously, that's where we hope to get to. Whereas at Raya Tembrillo, it was first-pass drilling and we have found two things in that. We found our drilling there clearly identified that we have a tabular zone and that we drilled holes at different orientations, which defined the tabular zone, which we consider to be exotic, which means that it's come from something. It's moved along oxide mineralization and some of what we call hypogene, which is more in-place, deeper copper-gold mineralization.

So, we had very good hits at surface in the former and at depth, but we, again, don't feel that we're in the center of that system so we're stepped out. We anticipate drilling about 500 meters north of there to begin with in that whole Villa Rica area in a zone we call the Naranja zone and we'll see what happens, obviously. It's an exciting target and it's a big step out.

And so, basically, the drilling for this year, what we intend to do is to do two things, step out significantly and test, in some cases for the first time, targets where we have good mineralization defined moved to the kind of definition necessary for resource work.

Gerardo Del Real: You know, Morgan, I was at the 121 Mining Investment Conference last week in New York and there were two very consistent themes. The first was almost everyone agreed that copper's headed higher in the mid to long term and, the second, almost everyone agreed that there's just very few quality copper exploration projects out there. And, of course, El Cobre being a copper-gold project, I got to believe that Newcrest, your partner, is excited about this round of drilling. You've said this will be the most aggressive next 12 to 18 months that this district has ever seen. Is that accurate for me to categorize it that way, Morgan?

Morgan Poliquin: Yeah, that's the mandate that we've been given. As we all know, it's been a pretty tough number of years in the resource sector and we've had to be fairly cautious and conservative, which we are by nature with our treasury and as we're doing the exploration. But I think clearly that work was successful and fruitful and that it identified and clearly defined the potential here. And I believe that's why Newcrest wanted to work with us on this project and explore it aggressively.

That's the intent here is to use the treasury here over the next couple of years on drilling the project. Obviously, the concept is to, as I said before this is to really flush out the potential of all these zones and what this project can be. Obviously, it's not enough to do feasibility studies and porphyries and things of that nature. This is for aggressive exploration.

Gerardo Del Real: Excellent, and you mentioned the treasury. What does that look like right now, Morgan?

Morgan Poliquin: Yeah, well, we just come out of the gate here and the investment by Newcrest, which is allocated to this, was around $17 million. So, that's what we're starting with here.

Gerardo Del Real: Fantastic. Well, I look forward to having you back on once we start seeing assays. I can't wait. I think it's going to be an exciting second half of the year for shareholders.

Morgan Poliquin: Thank you very much. I really appreciate the interest and look forward to talking to you as we start to produce drill results again.

Gerardo Del Real: Thank you, Morgan.

Morgan Poliquin: Thank you.

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