General Precious Metals
Aztec Minerals (TSX-V: AZT) CEO Simon Dyakowski on the Renowned Aztec Team & Drilling Plans at the Tombstone Project in Arizona and Cervantes Project in Mexico
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the new President and CEO of Aztec Minerals (TSX-V: AZT)(OTC: AZZTF), Mr. Simon Dyakowski. Simon, how are you today?
Simon Dyakowski: Doing well, Gerardo. Thanks for having me on.
Gerardo Del Real: Congrats on the new – as the company likes to describe itself – addition to the “Elephant Hunters Group.” You pride yourself on being explorers. In fairness to Aztec and the team there, you've already made a significant discovery. We'll talk about that in the future because I don't think it's priced into the stock yet. We'll get into that a bit later.
But before we get into that, can you talk a bit about your background and why Aztec Minerals, why you decided to step up and take the reins here?
Simon Dyakowski: Absolutely. My background has been in the capital markets. I started my career at Salman Partners and Leede Financial. I was equity research associate and I worked as a stockbroker focusing on junior mining. My career later took me through a stint in investment banking, where I worked on larger cap names. I've come full circle back to junior mining over the last three years.
I've been an advisor to a number of junior exploration companies. My expertise has been in helping them market, helping them raise money and strategically plan to navigate the complexities of the mining capital markets, specifically on the junior exploration side of the ledger.
I'm very pleased and excited to be joining Aztec. I've been working with them as a consultant for a few months. It's an excellent opportunity for me to work with some really renowned members of the board, specifically Brad Cooke. He's the Chairman. He's the CEO of the Endeavour Silver, largest shareholder chairman. Joey Wilkins, past president, he's the VP Ex and Chief Geo now. He's a great guy to work with. He is responsible for the discovery that Aztec did actually make in 2018, as well as for securing the Tombstone project, which is what we're about to be drilling over the next few months here into the second half of 2020.
Then rounding out the board there's Mark Rebagliati, renowned geologist who's been inducted into the Canadian Mining Hall of Fame, and Pat Varas, who's been associated with a couple of very large M&A mining assets over the past decade. Really fortunate to be working with these guys and also with the company in general. It's an extremely well-structured company with two fantastic assets in mining-friendly jurisdictions and a really good capital structure with only 52 million shares out and we're well into the drill phase on both projects.
Gerardo Del Real: The team is top notch. The first two things I look at when deciding whether I want to be involved with the company, or be a shareholder of a company, the team, number one, and the share structure. The structure, you should be commended, and the team there should be commended, on one, how tightly held it is, two, how much skin in the game insiders have and three, you IPO'd, I believe, about three years ago. So for you to have as tight a share structure, given the brutal nature of the bear market we just came out of, I think speaks to how you view shareholders. Kudos to you all on that.
Simon Dyakowski: Yeah, thank you. That really is key on junior exploration companies to carefully manage that. Obviously, typically these aren't cash-flowing enterprises, so you do have to dilute, but you have to do it strategically and at the right time to support your corporate development goals. Obviously, the group that took this company public and has been managing it has done a really, really good job of doing that.
Just on that point, we just did complete a financing to get us through the next bit of work, specifically on our Tombstone project. We put $3 million in the till at a price of $0.30 with a half warrant at $0.40. So we have about $3 million in the kitty right now. Our market cap, as of yesterday, was around $23 million Canadian. We're really in a good spot here to provide new investors hopefully with an opportunity to participate if we're successful in the next stages of development of our key projects here.
Gerardo Del Real: Speaking of being in a good spot, you mentioned Tombstone. You have two assets that are extremely, extremely attractive from an exploration perspective. Tombstone seems to be the first up and the next in line to see the drill. Can we talk about Tombstone a bit?
Simon Dyakowski: Sure. Tombstone is next up in terms of exploration. Aztec has an option agreement in place to acquire a 75% interest in Tombstone and after we've wrapped up our next round of drilling we should be there. There's a small work commitment of around $700,000 Canadian left to vest that 75% interest. We're looking to take care of that this fall. We do expect to start drilling there over the next few days, hopefully.
Just a bit of background on Tombstone. Tombstone is a past-producing silver district. It's located in southeastern Arizona. It's actually the site of the shootout at the O.K. Corral for those who are familiar with Western lore. Many people are familiar with that. Effectively it is a mining town. Between 1870 and 1930 there was over 30 million ounces of silver mined out of small mines in the Tombstone silver district. More recently in the 1980s, there was an open pit heap leach operation operated on the patented claims to which Aztec is earning an interest in the Tombstone Project.
We're looking forward to starting a reverse circulation drill program over the next few days, as I mentioned, and that is to test some structures along that open pit – it's called the Contention Open Pit – to test to see if there's additional mineralization there. Then later this fall, we hope to drill some deeper holes, some core holes and test underneath that open pit where there's potential for CRD mineralization. That's a subsequent phase of our first drill program at Tombstone. We do look forward to commencing that a bit later in the year and that represents another unique target. With the reverse circulation drilling, we'll be targeting near-surface epithermal silver and gold mineralization. With the deeper drilling, later this year, we'll be targeting CRD, which is polymetallic mineralization.
The discovery model that we'll be using there will be modeled after the Taylor deposit, which lives about 60 miles to the southwest of us. That's a famous discovery that was made about five years ago in 2015 by a company called Arizona Mining. They themselves drilled under a past-producing historic silver district and made a fantastic discovery of what this now to be over 100 million tonnes of zinc equivalent. It was bought out actually after Arizona developed it over the 2015 to 2018 period. They attracted an investment from South32 Mining and they were bought out at a $1.8 billion valuation back in June of 2018. Anyways, that's another target style that we have at Tombstone and we're looking forward to testing that later this fall as well.
Gerardo Del Real: You mentioned Arizona Mining, it's a heck of an analog. For those that aren't familiar, those shares, I believe, went from right around the $0.20, $0.25 level to, I think, $6.25 per share post acquisition back in 2018. Is that about right, Simon?
Simon Dyakowski: Yeah. From January 2015, it traded around $0.25 exactly up to $6.25. So those shareholders got a 25X return over that time period.
Gerardo Del Real: Not a bad run. You also have another project that I really like, the Cervantes Project in Sonora, Mexico. Can you speak to that? Because you've had some really good success there as well.
Simon Dyakowski: This is the project that initially attracted me to Aztec. I just couldn't believe that this company was trading at such a low valuation after having made a gold discovery in 2018. Cervantes is located in Sonora, Mexico in Northern Mexico in what's considered to be a favorable mining jurisdiction in Mexico. There are a number of heap leach gold mines in operation in that area.
This is the project that Aztec went public on, they went public on an auction to acquire a 65% interest in the Cervantes Project. It's about 3,600 hectares. It's well located, good infrastructure in the area. The deal was structured as an option to acquire 65% from Kootenay Silver.
In 2018, Aztec embarked on an initial drill program there where they targeted what's known as the California target, which was a large geochemical anomaly spanning about 900 meters by 600 meters, which had elevated gold in soil. They actually successfully made a discovery. Joey Wilkins made a discovery there. Some of the highlights of that discovery from the 14 holes that were drilled into the gold-bearing zone were 160 meters of 0.77 grams per tonne gold, including 80 meters and over 1 gram of gold. It looks to be an oxide cap to a potentially a gold-copper porphyry system. But there seems to be at least a sizable oxide component at surface. The team at Aztec at the time also went ahead and did some preliminary metallurgical work and they did find some good gold recoveries, in the 85% range in one of the tests. Those kind of numbers, in that part of Mexico, are pretty attractive.
I was just really surprised when I was introduced to the story to see that that had already happened. We're looking forward to now that we've vested the 65% of interest from Kootenay, we're looking forward to finalizing plans for a phase two drill program to infill some of the 14 holes in the California zone, as well as to test some of the other targets.
I should mention that there are a number of other targets at Cervantes. It's a big property and many of them have not yet been drilled tested. As we move forward here and wrap up drilling at Tombstone, we'll look to plan a large phase two or a substantial phase two program at Cervantes and restart the cycle of adding value to that property, hopefully.
Gerardo Del Real: Simon, you have an excellent team. You have a great share structure. Two exciting projects, both which apparently will see the attention of the drill bit here soon with Tombstone and then later on in the year with Cervantes. You have cash in the treasury.
Is there anything else that you'd like to add? I know we're going through a small, but what I view as a healthy pullback in gold and silver right now. I think it's somewhat comical that people are worried about gold down $100, and we're still at $1,919. We're at $1,919 an ounce. Anything else you want to add to that and what we can expect here the rest of the year?
Simon Dyakowski: Look, that's a really good point. You do have to keep this pullback in perspective, we're still $1,900 an ounce. I just highlight that on Tombstone, we'll be moving really quickly to start drilling. We've seen a number of other explorers that have put out good drill results in that southwestern United States or Mexico region. Putting out silver and gold numbers have gotten a pretty good re-ratings in the market.
So our investors can look forward to, I'd say, pretty robust news flow over the next four to five months, kicking off with RC drilling at Tombstone. Hopefully we'll be into some results relatively quickly into the fall here. So a lot of touch points for investors to get familiar with the story if they choose to participate with us.
Gerardo Del Real: Well said, Simon, thank you so much for your time. We'll chat again soon.
Simon Dyakowski: Great. Thanks for your time, Gerardo.