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With inflation finally going down to the point the Federal Reserve almost certainly intends to announce the first rate cut in September, and the gold price reacting favorably as it hovers around the US$2,400 levels since April, Aztec Minerals (AZT: TSX-V, OTCQB: AZZTF) profited from slowly increasing gold junior sentiment, and managed to raise C$2.575M in a non-brokered LIFE offering. This is very decent for a C$18M explorer without a resource, and Aztec intends to use the proceeds predominantly for its Tombstone project in Arizona, US this summer, and potentially more surface exploration at its Cervantes project in Mexico.
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All currencies are in US Dollars, unless stated otherwise.
Please note: the views, opinions, estimates, forecasts or predictions regarding Aztec’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Aztec or Aztec’s management. Aztec has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.
Aztec Minerals announced an up to C$1.5M non-brokered LIFE offering on July 16, 2024, at a price of C$0.18 per share, with a half 2 year warrant @ C$0.25. LIFE means listed issuer financing exemption, in turn meaning securities aren’t subject to resale restrictions and can be offered to persons in the United States. More importantly for existing shareholders, a LIFE offering doesn’t have a holding period, so all issued shares were free trading immediately. The offering was done at a discount to market close before announcement (the 10-day VWAP was 0.194c at time of announcement, and the 20-day WVAP was C$0.178. A 7% finders fee was paid on approximately half of the financing orders (~C$90,000 in fees)
The financing was upsized to C$2.5M on July 18, 2024 due to increased demand (any more details on this Simon?), and was upsized again to C$2.6M on July 23, 20-24 on the same terms. It was closed shortly after on July 26, 2024 for C$2.575M or 14.3M shares and 7.15M warrants issued, and this is an impressive amount for a junior explorer as mentioned. The financing was a mix of HWNIs, gold fund investors, and retail shareholders. Many small explorers still experience big problems raising cash, as almost all available funds seem to go to more advanced developers these days. Aztec did well, and is ready to use the proceeds for further drilling at their Tombstone project in Arizona.
Earlier this year, Aztec has been busy sampling at Tombstone for months, reporting promising results into this month. Highlights of this program were:
- 60m @1.97g/t Au
- 30.2m @ 3.73g/t Au
- Individual samples of 1.33g/t Au, 3.79g/t Au, 4.94g/t Au and 8.66g/t Au
- 41% of samples returned values over 1g/t AuEq (as most results had substantial silver credits to them)
- High potential for further discovery of wide oxide gold/silver mineralization, not just along strike/down dip of the Contention Pit, but also to the west
Keep in mind, any sampling returning gold values above 20 ppb Au is already deemed sufficiently interesting to conduct drill targeting upon. For your understanding, 20 ppb Au is the equivalent of 0.02g/t Au, and almost half of the samples contain over 1 g/t AuEq, so the likelihood of finding more economic mineralization is pretty significant. Aztec Minerals has already drilled several programs at Tombstone, as the focus regularly switches from Cervantes to Tombstone and back, depending on various metrics. One of the reasons for example to focus further on Tombstone now is the current political situation in Mexico regarding open pit mining. CEO Dyakowski acknowledges this negative sentiment regarding mining, but according to him exploration is actually fine, and the company has not experienced any significant delays in obtaining exploration permits in recent years.
Notwithstanding this, the overall perception of Mexico isn’t positive for Aztec, so he decided to focus on Tombstone going forward, with Cervantes with its realistic 1Moz + AuEq oxide potential not going anywhere soon. Dyakowski is planning to do field work on Cervantes around Q4, 2024, potentially followed by drilling. For now, a 2,000m RC drill program at Tombstone is coming up in September, with many details about this being announced in August.
As a reminder, Tombstone is subject to a JV, with Aztec owning 75%. My global estimate for the mineralized envelope for Tombstone stands at a hypothetical 700koz Au. In general, the upcoming drill program is expected to focus on targeting step-outs to the west, filling in gaps, and deeper CRD targets, more specifically on strike and dip extensions of the shallow oxide mineralization, and move deeper to test for larger, deeper "Taylor-type" CRD targets along and adjacent to the Contention structure.
Conclusion
Despite the terms, it was impressive to see Aztec Minerals raising C$2.575M in a two times upsized financing, as the gold price is doing very well but general sentiment for juniors keeps lagging for now, potentially connected to increased costs impacting profitability of the entire mining sector. Aztec Minerals isn’t waiting for junior sentiment to turn, and is getting ready to expand mineralization at Tombstone by a new drill program, commencing in September. Stay tuned!
I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.
Disclaimer:
The author is not a registered investment advisor, and currently has a position in this stock. Aztec Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.aztecminerals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
