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Azarga Metals' drilling showing positive signs for expanding Unkur resource


The KodarUdokan Basin is known to host major copper deposits, such as Udokan

Azarga Metals -

Quick facts: Azarga Metals

Price: 0.065 CAD

Market: TSX-V
Market Cap: $6.41 m
  • Giant Udokan mine just 35km away 

  • Flagship gold, silver project near land border with China; water and power nearby

  • Already home to a significant resource, which is 47% bigger than the 2017 inferred resource

What Azarga Metals does:

Azarga Metals Corp (CVE:AZR) is a Canada-headquartered explorer which owns 100% of the Unkur copper, silver project in the Zabaikalsky province in Russia's Far East, which it says is a discovery of 'global significance'.

The asset lies in the Chara-Aldan area, encompassing around 320,000 sq km and is home to the KodarUdokan Basin, which is known to host major copper deposits, such as Udokan.

The latter is currently in development, lies just 35km from Unkur, and is the world’s third-largest unmined copper deposit, containing around 27 million tonnes of the red metal.

Unkur boasts a 5,390 hectare (ha) mineral exploitation license, granted by Russia five years ago and some historical data. The first modern exploration program was conducted between 2016/17, which included 16 diamond holes.

Azarga, which has a market cap of under C$10 million, says Unkur is a globally significant discovery and has a current inferred resource of 62 million tonnes of material at 0.53% copper and 38.6 grammes per tonne (g/t) silver, or 91g/t silver equivalent.

That equates to 558,000 tonnes, or 1.2 billion pounds of copper equivalent metal or around 182 million ounces of silver equivalent. Notably, the project is open in both directions along strike and also down dip.

A preliminary economic assessment (PEA) released in 2018 envisaged a 2 million tonnes per year of open pit mine generating high-grade bulk copper-silver concentrate containing 13,200 tonnes of copper and 3.7 million ounces of silver over eight years. The pre-tax net present value (NPV) of the mine was put at US$203.6 million with an internal rate of return (IRR) of 28.9%.

The Unkur resource remains open in both directions along strike, down-dip and in other potential areas to the west and east. Azarga's aim is to show the potential of expanded mineralization at Unkur.

How is it doing:

In April last year, Baker Steel Resources Trust Ltd (LON:BSRT) completed on its agreement to invest into Azarga Metals to the tune of US$3mln via an 8% secured convertible loan due on December 31, 2022.

Assuming it converts all of the US$3 million owed to it, Baker Steel would beneficially own and control over 58.5 million Azarga shares, or around 39.16% of the firm's capital.

Azarga is using the cash for a second-phase drilling and exploration programme at Unkur, and a 6,000 metre diamond drill program kicked off in October last year. The work is expected to be completed by spring this year.

On February 11, 2020, the firm said initial drill results from the first six holes from the program had shown the potential for extending mineralization at depth and along strike. 

One assay showed the widest intercept of mineralization discovered so far at the project- namely 86 metres of mineralization, with an average grade of 0.6% copper and over 57.6 g/t silver.

Dr Alexander Yakubchuk, the group's vice-president of exploration, said results, along with 2016 drill findings, showed the presence of higher than the average of the resource grade mineralization extending over 1,200m in length and 400m down-dip in the northern part of the current resource envelope.

Furthermore, another two holes hit copper-silver mineralization some 2km southeast from the current resource, indicating a strong possibility for expansion to the southeast too.

Inflection points:

  • More drill results
  • Updated resource estimate
  • Copper, silver price moves

What the boss says:

Azarga Metals' chief executive Michael Hopley spoke to Proactive at the Mines & Money London 2019 conference in November last year.

He believes the Unkur project warrants more drilling beyond the 6,000m program. Ultimately, he said, Azarga would be looking for a partner, for such a big project.

"We're looking for probably a Russian company with deep pockets that would buy this and be able to continue the exploration and bring it into production," he said, adding that the firm had been talking to two or three companies about this for some time.

The company boss admitted that the fact that the project was in Russia did make some investors wary, but added: "You don't have to be a geological genius to look at the maps of this project to see how much bigger this potentially could be." 

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