Azucar Minerals (TSX-V: AMZ)(OTC: AXDDF) CEO Morgan Poliquin on Exciting Drill Targets at El Cobre Copper-Gold Project in Mexico

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the president and CEO of the now active again, Azucar Minerals, Dr. Morgan Poliquin. Morgan, I joke "now active" because I know you've been very busy behind the scenes, but we had some news that it's been very well received by the market. The headline reads "Drilling Recommences, Azucar Provides Update for the El Cobre Project in Mexico". Of course, this is a copper-gold project that has a resource across all categories of 2.6 million ounces, gold equivalent, and yet you have a market cap somewhere around $10 million or something ridiculous like that. Can you provide some context on this program, Morgan?

Morgan Poliquin: Yeah. Thank you very much for having me on again. I'm happy to do so. This project has got two interesting things that make it really special, and that is number one, the geology obviously, and we have a target called Norte, where we have a resource. We reported last year, an initial resource, but it's part of a five-kilometer-long trend of alteration and mineralization that we've identified over that trend with numerous targets that we've actually drilled and returned initial results from. As part of this program, we're testing an area to the North of the Norte resource that we have never even drilled, which has a magnetic feature, that looks really interesting. The number one thing is the geology and the scale of expiration targets that we have.

The second thing is the infrastructure. This project is in an area of Mexico where there's a quite unusual infrastructure. We're close to a power plant with power lines, we're 100-200 meters above sea level, generally, in most of the target areas. We got road access, we're near, I think, 60 kilometers North of the port of Mexico, Vera Cruz, rather the largest port in Mexico. So not only the geology, but we also have the infrastructure things going for us.

Gerardo Del Real: Agreed. Let's talk about what led to the targets, right? I am familiar with the Villa Rica Zone and I'm familiar with Encinal, but I had not up until this point heard about the Pedregal Zone, which is going to see a drill hole. That is the target that you mentioned was located North of the Norte Zone, it has not seen exploration drilling up until this point. What attracts you to that target specifically?

Morgan Poliquin: Well, the targets are defined by a couple of different methodologies. They're magnetic ties, and often magnetite can be concentrated with copper and gold and in porphyry environments, and the Norte Zone is a mag high, we call it, and this is another area with very clear mag high. The Norte Zone was very subtle in terms of copper and gold at surface. And so when this area is too, we don't know what this mag high is. It could be something else. Of course, that's exploration, but we're about a kilometer North of a mag high that turned out to be obviously something interesting. So, there's other features like this that we've never drilled. There's another one even further North. So we think that there's an abundance of targets that represent what could be a cluster of porphyry copper systems. And that's not uncommon in Australia, where you have porphyry systems with high gold and then that's similar geologically to this, we think in setting, they come in clusters. So we're hopeful that some of these other targets that we haven't tested yet will prove to be a separate porphyry gold-copper centers.

Gerardo Del Real: Well, one zone as you referenced, the Norte Zone has that resource across the indicated and inferred categories of 2.6 million ounces, gold equivalent. Of course, it's a porphyry copper-gold project, El Cobre is. And so if one zone has 2.6 million ounces of gold equivalent resource, it excites me to now have the drills turning again at other zones. And it also excites me to know that you have an abundance of targets, right? Which can sometimes be a challenge as far as prioritizing, but it sounds like you referenced the methodology here. It sounds like you're taking the high priority zones and going there first. Villa Rica and the Encinal Zone has already demonstrated itself to have good, solid mineralization. What are the goals with the two holes there?

Morgan Poliquin: Yeah, I think at Villa Rica, it's 1.8 kilometers South of the Norte Zone, where the resource is. And we hit things like 94 meters of 1.36% copper, pretty interesting stuff, obviously. And this is a very focused program and it's progressive. We have an abundance of targets that would require a very, very large drill program to fully test. And luckily we have some initial the results from these other targets, but the focus up until the resource was reported in, I think it was September last year, the focus has really been getting to the resource stage with our drilling at Norte with some initial targeting and other zones. So now we're kind of rotating back to flushing out and testing, doing additional work at some of these other targets with initial results.

So, right now, we've spoken about testing initially this Northern target, the mag zone we talked about. And then we're going to basically, some obvious areas where we think deserved testing, we'll start with, and we'll see what results, and plan further drilling based on that. So we're hoping that this will be part of a progressive program, but it's focused to begin with for precisely that reason, because we have so many targets, we have to focus. And so we'll be excited to see what comes up and how we can plan from here.

Gerardo Del Real: I referenced the 2.6 million ounces of gold equivalent with copper at $4.72, I'd be doing shareholders, listeners and readers a disservice, if I did not specify how much of that is gold and how much of that is actually copper, because it's a pretty significant copper resource for just one zone on a property that has five, six different centers, right? And so the breakdown is approximately 1.6 million ounces of gold and approximately, and correct me if I'm wrong, Morgan, but I think it's 475 million pounds of copper, correct? Across all categories.

Morgan Poliquin: Yeah. Thanks for that. So we have in, at the highlighted cutoff, we have, in the indicated category, we got 748,000 ounces of gold and 221 million pounds of copper. And in the inferred category, we've got a further 860,000 ounces of gold and a further 254 million pounds of copper. So as initial resource, especially when that's open pitiable, especially in an area of this kind of infrastructure, which obviously for a bulk tonnage deposit, which is what porphyry deposits generally are, you like good infrastructure. So I'm glad you highlighted that. I think it's a great first foot forward in defining what this project can be.

Gerardo Del Real: Let me play devil's advocate. If there's been two pushbacks I get from geologists, and I am not one and you obviously are, if there's two pushbacks that I get when I highlight the disconnect between the market cap of approximately $10 million Canadian, and the fact that you have this robust resource from just one zone, the first that I get, and this one even I can kind of push back on, is the grade, right? And that's offset by the infrastructure, which I can speak to personally, because I've been to the project. I know the infrastructure advantages that this project benefits from. The second one that I get and that I've heard, and in truth, I haven't vetted it as well as maybe I should have but we've talked about it, is that the rocks could be acidic. Can you speak to that a bit, Morgan?

Morgan Poliquin: I'm not sure what people mean by the second point. I'm thinking that they probably mean that there's the potential, I'm not sure if they're talking to the environmental side or if they mean the actual chemistry of the rocks, but we call them, these intrusions that tend to have gold rich porphyries, tend to be high potassium in their geochemistry, which means that they're very distinctive rocks and you see them around the world. There's a variety of different ways they manifest, but they often have significant gold with respect to copper. Whereas the copper deposits you see in Arizona, Northern Mexico, Chile, very often, those ones are really copper deposits with often molybdenum, but not a lot of gold. And the credits are pretty much all copper. So, El Cobre's type of a setting, they tend to be lower tonnage, not in all cases, but these high potassium rocks tend to be very discrete in scale, but tend to have significant gold credits. And in our case, I can't give you an exact figure obviously to these metal prices, but we're at an early stage with a resource. Test work would need to be required to understand exactly what all the characteristics of the rock are. But typically what we're seeing is not a high pyrite style of mineralization, where we're seeing copper in the form of Chalcopyrite and Bornite. So those are the minerals that you would recover typically in flotation, and then making a concentrate. That's how porphyries tend to work around the world, but we're at an early stage. And I think it's too early to be talking about exactly what kind of characteristics potential waste rock would have, test work is needed. But from my point of view, it's a fairly standard normal copper-gold porphyry. You might want to call it a gold-copper porphyry given that. I think it's fair to say these, and I'm not sure exactly, but about two thirds of the value I think is from gold.

Gerardo Del Real: That's why you're the geologist and I am not, Morgan. Thank you so much for that answer. I will say this, this is early stage, but this is also the stage where you have proven yourself with multiple discoveries to be most effective. That's drills turning, looking to add pounds, looking to add ounces. I'm excited to see the initial results and hoping for an expanded program later in the year.

Morgan Poliquin: Great. Thank you very much for the opportunity.

Gerardo Del Real: Chat again soon, Morgan. Thanks again for the update.

Morgan Poliquin: Take care. Bye.