Azucar Minerals (TSX-V: AMZ) CEO Morgan Poliquin on Exploration Drilling & Growing the 2.6 Million Ounce AuEq Resource at El Cobre

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of Azucar Minerals, Mr. Morgan Poliquin. Morgan, how are you today?

Morgan Poliquin: I'm excellent, thank you. And you?

Gerardo Del Real: I am well and happy to see an update on the drilling activity at the El Cobre Project. Let me be very transparent, as I always am. I am biased. I am a shareholder. You and I have known each other for over a decade now, and I absolutely believe that El Cobre is being gifted to speculators that take advantage of current prices. Azucar, I believe, with the resource in place is one of the better ways to mitigate risk in a market that is rewarding copper and gold explorers that make discoveries. I think the El Cobre discovery has been forgotten about and written off. And I would love for you, Morgan, before we talk about the news, to give us a brief overview of the project and the resource in place. And then we can get into why we think 2021 will unlock a lot of that value.

Morgan Poliquin: Great, thank you very much for the opportunity. Well, it's a porphyry system, which means that it has the potential for larger tonnage deposits. And porphyries produce most of the world's copper, I believe an increasing amount of the world's gold and molybdenum and other important metals. And this porphyry project is located in Vera Cruz state, Mexico, and this part of Mexico has amazing infrastructure. And the project itself is near a power plant, near highways, gas lines, ports and that, obviously, is really important.

So what we've been able to do over the years is find multiple porphyry centers over about a five kilometer trend of very exciting alteration, which is indicative of the porphyry environment. And one of these centers we've kind of been focused on with the drilling and we put out an initial copper-gold resource in, I think it was October of last year. And there are other centers that we feel have potential for, obviously, additional exploration. There's drilling on many of these targets, but we also feel that these targets are kind of exposed at higher levels and we think that there is the potential for a deeper system as yet undiscovered.

So it's kind of a twofold approach here. Obviously, the intention of the exploration is to try to expand the known resource, but also to try to explore for deeper targets that, as many people know, copper-gold porphyries can be significant in size and when you have this kind of environment, they could well be bigger feeder zones at depth to explore for. No guarantees of grade, but we feel that we're high in the system and that potential could be beneath us. So it's an exciting time for us to be able to test this. Last year was challenging, obviously, and continues to be with COVID, but we're doing our best to work around that. And health and safety of our team and crew and the communities are paramount.

Gerardo Del Real: Let's talk about the current market cap and that resource. Current market cap is approximately C$11 million. The resource you have 1.2 million ounces gold equivalent in the indicated category, another 1.4 million ounces gold equivalent in the inferred category. This is all just within the Norte Zone. Correct, Morgan?

Morgan Poliquin: That's right. Yeah. The resource that we released is, it's just on the Norte Zone, which I say is one of the areas that we've really focused on with our past drilling. And we have other zones that are with exposed mineralization at surface with drilling in them. One of them is the Porvenir Zone, where we're currently drilling. And we also have hits that are, we hope, indicative of the deeper targets. We've got a zone called the Suegro Zone, the Primo Zone. We also have near surface mineralization in a zone we call the Raya Tembrillo or in part of our Villa Rica Zone. So this is a very large system and maybe the way to put it metaphorically is we've got lots of smoke, but we also have some fire here in terms of this initial resource at Norte. But you're right. Norte is just one of the zones in a very large, what we call alteration system.

Gerardo Del Real: Let me play devil's advocate a bit. If I was looking to knock the resource, I would say, "Well, it's 2.6 million ounces gold equivalent across all categories. But when I look at the grades, it's 0.42 grams per tonne gold for the 1.4 million ounces in the inferred category and 0.49 grams per tonne gold for the 1.2 million ounces gold equivalent in the indicated category." How would you reply to that, Morgan?

Morgan Poliquin: Well, porphyry systems are larger tonnage and lower grade. They're not vein deposits that tend to be higher grade deposits. But I think this is fairly typical of the style of porphyry that it is and they're near surface bulk tonnage deposits that, in this case, obviously, this is amenable to open-pit mining. So yeah, obviously, we need to do further work before we can comment on the economics of it, but porphyry copper-gold deposits, this is within the range of grades that you see in those sorts of deposits. Tonnages can range as well. So, obviously, this is a smaller tonnage that we've, in this initial resource, than, porphyry deposits can be billions of tons when they're at the larger end of the category. So it's a good step towards defining the potential of this project. But, obviously, we're hopeful that this is a very preliminary step in the direction of understanding what we can have here.

Gerardo Del Real: Excellent. Let's get to the part where we grow the resource and hopefully make some new discoveries. Right? You mentioned the multiple zones. Diamond drilling has resumed. Everyone is back from the holiday break. I know how careful you've been in all your community relations in regards to COVID and, frankly, everything else. Walk me through the drilling program that's ongoing now.

Morgan Poliquin: Yeah, right now we're taking it target by target, drill hole by drill hole. So at the moment, what we've decided to do is kind of focus back on something called the Porvenir Zone, which, interestingly, was the first area where we found porphyry mineralization many years ago on the project. And we had some really interesting preliminary drilling there over the years, and so right now we have some; we'd like to better understand the distribution of the mineralization there.

So we're drilling at the Porvenir Zone, but of course, we're also doing a whole bunch of compilation work in the background. We feel that the geophysics that we've done over the years, the geochemistry and the alteration studies potentially are pointing in a couple of directions for looking for that deep mother of all this mineralization. Again, we really feel that the alteration, the geophysics and all the work that we've done is indicating that we're near the top of where you expect copper and gold mineralization within the porphyry environment and that a lot of the barren alteration has been eroded away. And so it's a depth that we need to look for the potential source for all of these near surface zones that we've been defining.

So we believe that's the big prize in porphyry environments is finding the big tonnage, higher grade stuff. But that being said, smaller tonnage near surface mineralization with good infrastructure can be pretty rewarding, as we've seen with different mining companies who have tackled these kinds of porphyries. So we think Norte is an exciting step and Porvenir, we're hoping that with our current drilling, we'll be able to better understand it. But really, what we'd like to do later in this year is really try to test for that big deep, the Big Kahuna, as it were.

Gerardo Del Real: I'm excited for that. I'm excited to see the initial assays. I know it's been a bit to get the drill back on the property and turning. Anything else you'd like to add to that, Morgan?

Morgan Poliquin: I think we covered it. Thank you very much for the opportunity. And we look forward to updating people as we move forward this year.

Gerardo Del Real: Thank you, Morgan. Appreciate your time as always.

Morgan Poliquin: Likewise. Thank you.