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As Gold Consolidates, a Junior Explorer to Consider
Contributed Opinion

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Ron Struthers Ron Struthers of Struthers Resource Stock Report profiles Aztec Minerals, and explains why he believes the junior explorer stands out.

Gold continues to consolidate around $1950 as I expected. That said, a dip lower would not surprise me, but I believe the odds are higher for the next move to be upwards. I added in Commitment of Traders numbers and it is very different this time. In the past when gold rallied we would normally see managed money positions rise, but instead they have declined to 95,000 contracts from 230,000 back in February. In the past we would also see commercial short positions increase on a price rise but they have been flat. Large speculators have declined to 223,000 long contracts from around 350,000 in February. This rally is not driven on Comex, but by physical demand. Central banks bought a record amount of physical in 2019 and although purchases slowed in the first half of 2020, perhaps they are picking up the pace in Q3.

We are in the early stages of a new precious metals bull market and stocks that will have the largest gains are quality junior explorers that make a discovery. It is best to buy a handful of these, perhaps 10 to 20 with strong management and properties. One such company that stands above many is:

Aztec Minerals Inc. (AZT:TSX.V; AZZTF:OTCQB), Shares outstanding 51.3 million, Fully diluted 70 million.

Coeur Mining 4%. Insiders 10%, closely held 20%, Cash position $3 million.


  • Strong management with significant share ownership;
  • Tombstone, a Taylor-style look a like ($1.8b takeover) with same strong potential;
  • Numerous old high grade mines on site at Tombstone;
  • Tombstone samples up to 3,178 g/t silver and 23.5 g/t gold in old mine pit;
  • Historical drilling reduces exploration risk and a good guide for modern exploration;
  • Historical drill results, such as 44.2 metres of 1.61 g/t gold and 91.2 g/t silver in hole TR-01;
  • Deep targets identified at Tombstone for possible Taylor like deposit;
  • Discovery made in 2018 at Cervantes project in Mexico;
  • Cervantes, long and consistent gold-bearing intervals from 14 drill holes;
  • Cervantes drill intercept 160m of 0.77 g/t Au, including 80m of 1,94 g/t Au with 0.11% copper.

I met with Simon Dyakowski at PDAC earlier this year who became President and CEO in August.

AZT has a strong and in-depth management team and board; here are some highlights:

BRADFORD COOKE, Chairman, has over 40 years of experience as a professional geologist and mining executive. Mr. Cooke holds an M.Sc. in Geology from the University of British Columbia and a B.Sc. in Geology from Queens University. He is the founder and CEO of Endeavour Silver Corp., a mid-tier precious metals mining company, the founder and Chairman of Canarc Resource Corp., a TSE listed gold explorer, and now the founder of Aztec Minerals.

SIMON DYAKOWSKI, CFA, MBA President and CEO, brings to Aztec over 12 years of corporate development and capital markets experience. Mr. Dyakowski most recently acted as an adviser to TSX Venture Exchange listed mineral exploration companies on their corporate development strategies. Mr. Dyakowski holds an MBA from the University of British Columbia, is a CFA charter holder and holds an undergraduate finance degree from the University of Western Ontario. He previously worked at the Bank of Tokyo-Mitsubishi UFJ and Royal Bank of Canada dealing with investment-grade and mid-market Canadian corporate clients. Mr. Dyakowski has also worked in the equity research and equity sales departments at Salman Partners and Leede Financial.

JOEY WILKINS, B.SC., P. GEO. VP Exploration & Chief Geologist, has worked as a geologist for 30 years, including 23 years with various entities of Rio Tinto Exploration (Kennecott Exploration and US Borax). A graduate in Geoscience from the University of Arizona, Mr. Wilkins has extensive experience in exploration for porphyry copper worldwide, Au-Ag epithermal deposits, Ni-Cu-PGM deposits, and borate deposits.

PATRICIO VARAS, B.SC., P. GEO. Director, has worked and collaborated with major and junior mining companies in exploration projects that span North and South America, Europe, Africa, Asia and Australia. He was involved in the discovery of the Diavik Diamond mine as a project manager while at Kennecott Canada Exploration Inc., a division of Rio Tinto plc, and was instrumental in the project management that led to the discovery of the Santo Domingo Sur deposit in Chile with Far West Mining Ltd. More recently, founder and former CEO of Western Potash Corp.

MARK REBAGLIATI, B.SC., P. ENG. Director, has worked in mineral exploration from 1966 to the present in Canada, USA, Mexico, South America, Africa, Europe, Caucasus and China. In 1986 he established Rebagliati Geological Consulting Ltd and in that year began a 28 year association with the Hunter Dickinson group of companies playing an instrumental role in the discovery of the Mt. Milligan, Southern Star, Kemess South, Kemess North (BC), Pebble East (Alaska), Xietongmen and Newtongmen (China) porphyry copper-gold deposits and a cluster of VMS Cu-Zn-Au-Ag deposits (Mexico).

STEWART LOCKWOOD, LLB, MBA Director and Corporate Secretary, is a senior associate securities lawyer with over 25 years’ experience in corporate and securities law, currently with McCullough O’Connor Irwin LLP. From 1992 to 2000, he was in-house legal counsel for Canarc Resource Corp. Mr. Lockwood was also Past Chairman of the B.C. Securities Commission Security Policy Advisory Committee. From 2001 to 2016, he was a partner with Vector Corporate Finance Lawyers where he specialized in corporate and securities law for resource-based companies.

Aztec has two very good properties, Tombstone in Arizona and Cervantes in Mexico.

Tombstone, Arizona, 75% option

The Tombstone project is located 100 kilometers southeast of Tucson, Ariz. The historical Tombstone silver district is renowned for its high-grade, oxidized silver-gold-lead-zinc-copper epithermal and CRD mineralization hosted in veins, mantos, pipes and disseminated orebodies that were mined in the late 1800s and early 1900s.

Although the historical silver mines at Tombstone were generally small but high grade, Aztec believes they could be related to much more extensive epithermal and CRD mineralization. Since 2017, Aztec has completed geological mapping, geochemical sampling and geophysical surveying to identify the most prospective areas for epithermal gold-silver mineralization around and below the Contention open pit.

Tombstone is located about 65 km from the famed Taylor deposit and has similar geology and mineralization style identified in 1990s historical data. Arizona Mining discovered the Taylor Deposit and it was bought out by South 32 in 2018 for $1.8 billion. Arizona Mining TSX:AZ went from $0.25 per share in 2015 to $6.25 in 2018 when it was bought out and we know the mining market back then was not near as favorable as it is today.

Aztec has commenced reverse circulation (RC) drilling at its Tombstone project covering much of the historical Tombstone silver-gold-zinc-lead-copper district located in southeastern Arizona. The phase 1 RC drill program will consist of around 20 drill holes totaling 2,900 meters. The main target is shallow, bulk-tonnage, heap-leach, epithermal gold-silver oxide mineralization around and below and adjacent to the previously mined Contention pit.

Three four-hole patterns, or spokes, will be drilled to test segments of the north-northeast-trending Contention structure along 800 meters of strike length and across the 50-meter-to-100-meter width of the steeply west-dipping structural corridor with argillized porphyry diking. Three additional holes will test the following: a geophysical NSAMT conductor target, a covered geologic dike target and a series of gold-rich quartz veins hosted in strongly altered rhyolite. Additionally, the collaring of two holes for subsequent core drilling later this year to test for deeper, high-grade, Taylor-style carbonate replacement silver-lead-zinc-copper-gold deposits (CRD).

This quote from a recent press release by Aztec chief executive officer Simon Dyakowski, "Since acquiring an option on the Tombstone project, Aztec has generated several exciting new targets through its methodical evaluation of historic exploration and production data followed by systematic exploration programs. The phase 1 RC drill program represents Aztec's first opportunity to test for shallow, bulk-tonnage, heap-leach gold-silver oxide mineralization."

This slide form AZT's presentation gives some highlights and shows the old Contention pit where AZT found high grade samples of 3,178 g/t silver and 23.5 g/t gold.

Historical drilling by USMX aimed at exploring for shallow epithermal gold-silver mineralization around the Contention pit in 1993, well after the mine had closed*. Its result returned multiple intersections, including 1.61 grams per tonne gold and 91.2 grams per tonne silver over 44.2 meters; USMX drilled 7,350 meters in 86 shallow RC holes at the north end of the pit to delineate shallow, bulk-tonnage, heap-leach, epithermal gold-silver mineralization; historical drilling highlights were as follows:

  • 44.2 meters of 1.61 grams per tonne gold and 91.2 grams per tonne silver in hole TR-01*;
  • 68.6 meters of 1.42 grams per tonne gold and 28.6 grams per tonne silver in hole TR-02*;
  • 38.1 meters of 1.73 grams per tonne gold and 35.3 grams per tonne silver in hole TR-08*;
  • 35.1 meters of 1.54 grams per tonne gold and 24.1 grams per tonne silver in hole TR-12*;
  • 30.5 meters of 2.65 grams per tonne gold and 37.6 grams per tonne silver in hole TR-41*;
  • 41.1 meters of 1.20 grams per tonne gold and 49.1 grams per tonne silver in hole TR-70*.

These USMX drill intercepts indicate the presence of bulk-tonnage, epithermal oxide gold-silver mineralization around the center and northern part of the Contention pit, and much of the remainder of the pit remains undrilled. This drilling campaign will attempt to verify the historical results by twinning some of USMX's drill holes in addition to drilling new and unexplored areas. Aztec has in its possession the historical drill logs, maps and reports but does not have any information on the quality assurance or quality control measures taken and recognizes these results are non-National Instrument 43-101 compliant.

After the shallow drilling AZT plans to drill test some deeper target shown by this Natural Source Audio-frequency Magnetotelluric Imaging:

Cervantes Mexico, 3,650 hectares, 65% JV with Kootenay Silver

AZT already has a discovery at Cervantes with results from a 2018 drill program. Cervantes is a highly prospective porphyry gold-copper-molybdenum property located 160.0 km east of Hermosillo, Sonora, Mexico. It is well located within the Laramide porphyry belt approximately 265.0 km southeast of the huge Cananea porphyry copper-molybdenum mine of IMMSA and 55.0 km west of the Mulatos epithermal gold mine of Alamos. The 3,650-hectare property is situated on private ranch lands accessed via dirt road from the town of Tonichi. The property has a 900m by 600m gold in soil anomaly that averages 0.44 gr/t gold with 118 samples ranging from 0.07 to 4.38 gr/t, 18 samples greater than 0.9 gr/t, largely hosted in quartz feldspar porphyry intrusive at the California target.

Aztec completed a Phase 1, 17 diamond core hole program in 2018, 2,675 meters in total. The drilling was conducted on two targets, the California and Jasper, however the bulk of work completed at California. Holes tested an impressive 900m by 600m gold in soils anomaly that averaged 0.44 g/t over hydrothermal breccias, quartz feldspar porphyry intrusive, and Paleozoic siliciclastic sediments. Every hole in the phase 1 drill program intersected porphyry-type gold-copper-silver mineralization, and most holes collared in outcropping mineralization. Ignoring the abandoned holes CER1, 8 and 12, over half the holes at the California prospect intersected robust 100+ meter widths of higher-grade mineralization exceeding 0.4 gpt gold, spanning an 800-meter length and a 200-meter breadth, to a maximum vertical depth of 150 meters. The system is completely open in all directions.

Phase 1 Core Drilling highlights, near surface intercepts:

  • 160 meters of 0.77gpt Au, 0.13% Cu and 3.4gpt Ag
  • 139 meters of 0.70gpt Au, 0.10% Cu and 2.1gpt Ag
  • 43 meters of 1.18gpt Au, 0.16% Cu and 5.1gpt Ag
  • 122 meters of 0.60 gpt Au, including 62m of 0.88 gpt AU and 0,06% copper

AZT is working on finalizing their JV with Kootenay Silver and will then plan follow up.


Last financials as of March 31st reveal $115,231 in cash and no debt. Since then AZT closed a $3.075 million financing at 30 cents per share with a 1/2 warrant exercisable at 40 cents for two years. Chairman Bradford Cooke purchased 1 million units. This is ample funds for current and planned work programs.


AZT has a strong management team and a low share structure for a junior with two advance stage exploration projects. I believe a significant gold discovery at their Cervantes project in Mexico more than substantiates the current $28 million market cap.

Drilling has started on their Tombstone project and with historical drilling as a guide, the drill has a strong chance of yielding some very good results. This could quickly become a near-surface heap leach deposit but even more excitement is the drill targets down deeper. I suspect they could be the source of the near-surface gold and silver and could be much higher grade. Drilling at Tombstone began a week ago and is RC drilling that will go very fast so drill results will not be that far away.

The stock could move sharply on drill results with a good promotional group behind the company, much the same as Blackrock Gold, our top performing junior so far this year. The stock took a nice run when drilling was announced and the recent pull back offers another great entry price, since my alert a week ago. Resistance was around 50 cents and that will now act as support. Volume has also picked up, indicating this stock is coming into play.

Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.


1) Ron Struthers: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Aztec Minerals. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company currently has a financial relationship with the following companies mentioned in this article: Aztec Minerals is a paid advertiser at Additional disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
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