Azucar Minerals (TSX-V: AMZ) CEO Morgan Poliquin on the Latest Drill Results & High-Grade Potential at Depth at the El Cobre Porphyry Copper-Gold Project

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

Morgan Poliquin: I'm doing very well. Thanks very much. And you?

Gerardo Del Real: Excellent, excellent. Looking forward to the holidays. It's been a busy week of news. We just had a Fed decision. They did a rate hike, 0.25% as expected. Doesn't seem like it's moving the markets too much. You had some exciting news yesterday that I wanted to talk about at the El Cobre Project, specifically from the Norte Target, which is one of multiple porphyry centers. Can we talk about the news yesterday a bit, Morgan?

Morgan Poliquin: Delighted to do so. We were really pleased to put that out. We've been working on the Norte Zone, trying to define which direction the mineralization is going and what we call a late mineral intrusive. All those things have come together here. It was really nice to be able to put that out in a few sections in a way I hope people can readily understand.

Gerardo Del Real: Let's dig into it a little bit. So, the headlining number says Azucar hits 70.2 meters of 1.07 grams per tonne gold and 0.35% copper at the Norte Target. Before we get into the geologic takeaways that I thought were important, can you provide a brief overview of what you've outlined thus far at the Norte Target? Then we'll talk about the other zones, and then some of the key findings.

Morgan Poliquin: Sure, great. This was what really kicked off the excitement two years ago at El Cobre. The Norte Zone is one of five zones on the project, as you alluded to. We're quite excited about the project's potential in its entirety, but this zone has been evolving nicely with our drill program over the last couple of years.

What we've been able to do here is finally outline which direction the mineralization is going. We feel that it clearly projects to surface. We've been drilling angle holes in either side. The geometry has really come together nicely for us. I know you had some specific geologic questions, but hopefully that's a good way of introducing that.

Gerardo Del Real: Absolutely. Let's get to it. You mention in the release that there's a late mineral and barren to weakly mineralized intrusive which occurs in the middle of the Norte Zone, but it tops out about 400 meters below the current surface. Why is that important to understand? And then I also want to talk about the fact that mineralization may be preserved, as you say in the release, along its flanks and the implications there.

Morgan Poliquin: This is a really common phenomenon in a porphyry environment. What porphyries are, the mineralization can be distal or disconnected from an intrusion, and an intrusion is basically what we call a plug of hot magma that comes up. Those plugs of hot magma keep coming up, even after the mineralization has formed.

Sometimes the later ones are not producing mineralization, and they come up in the middle, and basically you've got a lump of low-grade, or barren granite, that's in the middle of your porphyry. What typically happens in  gold-copper porphyries that form closer to surface, the later granite bodies or plugs that come up, in many cases it's seen that they actually displace the mineralization through big structures and different mechanisms out to the side. So this thing is sort of in the middle, and if you look at a lot of porphyry gold-copper pits around the world, you'll find a barren zone in the middle. It's true in Bingham Canyon or Bajo de la Alumbrera.MP1 

You've got this barren thing in the middle and in deposits around the world you mine all the way around it. So, it's really important spatially to define that barren thing, and typically these things aren't circular in cross-section. They're more ellipsoid, meaning they're longer in one direction than others. When you're drilling, if you don't have that elongated direction well understood, you might be drilling along it, or coming in and out of it. Drill holes like to wander around a little bit.

I think our early drilling, which some of it was north-south, it just didn't define this late mineral granite – let's call it granite for the sake of argument – plug. It didn't define it very well. As we went on with our drilling, we were able to see that the mineralization, we think, trends northeast. So not east-west, how we originally thought. So we've shifted our drilling orientation, and that's now nicely defined this thing.

Again, it's a work in progress, but I think we have enough drilling to be able to put out these conceptual cartoon-like sections, which show the target areas, which are along strike. We feel that the zone is still open. We haven't fully closed it off by any means. It's also open at depth along the flanks, that granite plug. Hopefully, that's not too obtuse, and people can understand what we're talking about.

Gerardo Del Real: You mentioned the cartoon-like cross section. I thought it was excellent, especially for a layman like myself. I couldn't help but notice the potential for a high-grade porphyry at depth, which obviously would be a pretty significant prize. How far down are you testing that? We talked last time, I know you've got a new drill that can go down a couple of kilometers, if I'm not mistaken. How far down are you going to poke and see what's down there?

Morgan Poliquin: Well, we have a few geologic signals that we think are important. Number one, we recognize that just in general terms, the El Cobre Project, the porphyries exposed there, are all at the tops of the porphyry system, the level of exposure we have.

Regionally, we see alteration that is above the level of the porphyry system, such as at the Caballo Blanco Project, which is nearby. This has eroded down to the top of the porphyry environment. So what that means is that those high-grade zones that could exist, if they exist, they're going to be below us. We see some other interesting signs from fluid inclusion work, which is little bits of the fluid that formed the minimalizing veins, are actually trapped by the crystals that are forming these bits of fluid. You can go and look at them. It sounds very esoteric, but you can look at them and see the temperature and pressure conditions which formed the veins in the first place, and that tells you where you are in the system. And that also tells us we're very high on the system, meaning the potential for high-grade is beneath us.

Furthermore, these minerals are really important, copper minerals in porphyry systems in telling you where you are. Typically Bornite – it's a really high-copper mineral – it is usually at the heart of the system is where you see the Bornite, so it's deeper in to the best part of the system, and we're starting to see Bornite increase, we think with depth. That's an observation we're making. It's more chalcopyrite dominated at the top, which is a lower copper mineral.

So, the copper increases with depth is essentially what we're saying. We see that phenomenon. All the signals are we need to go deeper. We've got pretty significant mineralization. As you point out, we talked about a big interval of 1 gram and 0.3%-plus copper. If you look at the news release, there's some higher copper intervals that are shorter, 0.4%, 0.5% copper over shorter intervals. We’re hoping that's a signal that copper is increasing with depth.

In terms of how far down, we don't know. But porphyry systems can be continuous over a kilometer of vertical. So, that's pretty exciting. We haven't tested that vertical interval yet, and there's some deeper holes to drill. As you can see, also laterally we haven't fully explored it. So, there's lots of things to do from here, but the drilling we've done to date, in the form of these cross sections, has really defined the system in terms of conceptually how to test it next.

Gerardo Del Real: Well, should be a busy 2019. I understand that drilling is underway at the Villa Rica Target, the Norte Zone, and the Porvenir Zone. You own your own rigs. You're using three of those rigs to drill. I anticipate 2019 will have lots of news flow. Am I correct in that?

Morgan Poliquin: Absolutely. It's going to be an exciting year. We think that there are, as yet, even undefined targets. There are geochemical anomalies that don't have names assigned to them yet. While those three are going to be the principle focus, owing to the fact we've made discoveries there, it's a huge area. We think we're really just getting going. As you can see with the Norte Zone, it takes a while to kind of comprehend what you're dealing with sometimes. Sometimes they just turn in to very simple drill programs, but usually in these gold-rich porphyries that's not the case. So, it's been an exciting year, and 2019 is going to be a very intense year. We look forward to reporting results as they come in.

Gerardo Del Real: Morgan, thank you so much for your time. All the best.

Morgan Poliquin: Thank you very much. Merry Christmas to you and all your listeners.

Gerardo Del Real: Merry Christmas to you as well, Morgan. Thank you.

Morgan Poliquin: Thanks.