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The Company
AZCO Mining (AMEX: AZC) is an exploration and development company primarily focused on acquiring and developing copper
producing properties through to feasibility. AZCO has aligned itself with major strategic partners who, in turn, take
the properties into production, while the subsequent proceeds of production are apportioned at pre-determined percentages.
This method of production provides AZCO with a level of insulation from the problems associated with mine operation.
"AZCO has a strong cash position, with nearly $1 per share in cash and no debt"
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Using its experience and expertise as a mine finder, AZCO seeks out properties which meet strict criteria and specifically obtains properties containing copper oxide deposits that could be efficiently mined using the low-cost solvent extraction-electrowinning process.
As a result of this strategy, the Company has two main copper properties in which Phelps Dodge Corporation (NYSE: PD), the world’s leading copper mining company, has joined with AZCO as partner/operator of the Piedras Verdes and Suaqui Verde properties in Sonora, Mexico.
AZCO finalized an agreement with Phelps Dodge in December 1995, whereby Phelps Dodge acquired 100% of AZCO’s interest in the Sanchez mine in Safford, Arizona, and 70% interest in the Piedras Verdes property for $40 million.
"Phelps Dodge increased copper production by more than 100 million pounds from its record set in 1995.
The Piedres Verdes property alone is anticipated to match that performance"
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AZCO will be entitled to 30% of the proceeds generated annually from copper production. Additionally, Phelps Dodge has an option to obtain a similar interest in the Suaqui Verde project.
Copper production from the Piedras Verdes property is targeted for approximately 150 million pounds, or 75,000 tons, annually.
Indications are that Piedres Verdes can be in production by the fourth quarter of 1999 and pre-feasibility studies could be concluded as early as January 1998.
"Partnered with Phelps Dodge, which will spend in excess of $6 million on AZCO properties in 1997"
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With approximately $24 million in cash, cash equivalents and deposits and ownership of several high-potential gold and copper properties in Mexico, Mali and Indonesia;
AZCO is poised for continued growth into the next century and is strategically positioned to become a cash flow-driven company.
Management is also focused on acquiring gold assets as well as other near-production copper properties.
The Company’s objective is to be producing 50 million pounds of copper as well as 100,000 ounces of gold annually within five years.
"AZCO has a proven track-record as a successful mine finder"
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Financial Performance
The net loss for the six month period ended December 31, 1996 was $1,827,638 compared to a net
gain of $19,516,377 for the same period ended December 31, 1995. The variance was the result of the sale of properties
to Phelps Dodge. The Company believes that for the current fiscal year end of June 30, 1997, all capital requirements will
be funded with present cash and cash equivalents. The Company has nearly $1.00 per share in cash, based upon 25.6 million
shares outstanding, limiting the stock’s downside risk and providing the Company with the necessary capital to bring these
properties to production, along with the financing flexibility to pursue other acquisition opportunities. The Phelps Dodge
partnership also protects AZCO’s financial exposure in Mexico. AZCO’s financial responsibility for the pre-feasibility
study at Piedras Verdes is capped at $3 million with only $1.8 million remaining to be spent. Additionally, AZCO is
obligated to provide 30% of the equity portion of the total cost of the
Piedres Verdes project with Phelps Dodge obligated for the balance. By the end of 1997, AZCO will have fulfilled its
financial obligations in Mexico and the Company will have at least one property anticipated for production by the end
of the decade.
The Marketplace
Industry experts are now forecasting a deficit of some 210,000 tons in 1997 and an
additional 472,000 tons by the end of 1998. The demand pressure is forecast to extend into 1999, which should hold copper
prices near the $1.35/pound range. Moreover, industry analysts see dramatically increased demand from China driving the
price of copper up as much as 30 percent in the next 18 months, which coincides with the anticipated start of production at
the Piedres Verdes property.
AZCO has a track record of being a successful "mine finder." AZCO has proven its expertise
by acquiring and developing three favorable copper mining projects, and by attracting a strategic ally as mine operator
to perform the production on the properties. AZCO’s strategically alliance with Phelps Dodge Corporation (NYSE: PD), whereby
Phelps Dodge bought all of one and part of another AZCO’s
"By the end of 1998, AZCO is poised to generate annual revenues from an estimated 45 - 50 million pounds of copper, which at todays prices ($1.10/pound) would be worth $50 - 55 million"
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three properties for $40 million, is an unparalleled achievement for the
Company versus its peer group.
Cobre del Mayo leases the Piedras Verdes property and Phelps Dodge is the operator.
All revenues recovered from the property will be shared according to the 70-30% partnership outlined in the Cobre del Mayo
agreement. AZCO is protected by a $3 million cap in development costs during the next two years, and is responsible to
garner a small amount of equity financing once Phelps Dodge makes the determination to begin production. All other
financing issues will the responsibility of Phelps Dodge. The property is estimated to produce up to 150 million pounds
of copper per year, 30% of which would generate significant revenues for AZCO at current prices in excess of $1 per pound.
More than $10 million has already been invested in exploration at Piedres Verdes.
Properties:
Piedras Verdes Project: AZCO owns 30% of the Piedras Verdes property with a very limited financial exposure. Phelps Dodge will
be producing the pre-feasibility and feasibility studies, and will be the operator of the property. Before the sale
of 70% interest in Cobre del Mayo to Minera Phelps Dodge Mexico, AZCO had drilled 242 reverse circulation holes and has
estimated that the site contains approximately 1.3 billion pounds of copper, and the tonnage on the property is likely
to increase due to an aggressive drilling program this year. Recently, Phelps Dodge verified AZCO’s initial drilling
results within 6%. Suaqui Verde Project: The Suaqui Verde copper property is leased by Cobre de Suaqui Verde, S.A. de
C.V., a Mexican corporation that is owned 99.97% by AZCO. In June, 1996, AZCO entered into an agreement with Minera
Phelps Dodge Mexico for the exploration of the property. Under the terms of the agreement, a new company may eventually
be formed to hold the Suaqui Verde mining rights. Phelps Dodge can earn 70%; of the new company by: expending $2 million on
the project over the next three years, funding completion of a comprehensive feasibility study and paying AZCO $25,000
annually. Early drilling by AZCO and other companies at the site has demonstrated widespread copper mineralization on
the property.
"AZCO attracts major industry corporations as partners by finding high-potential properties that can be developed through low-cost means"
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Other properties: AZCO has formed the Sanou Mining Corp. in Mali, which wholly owns two gold concessions,
being the Dandoko and Medinandi properties, located in Mali, which play host to 5 major gold deposits within 150 km of the
concessions. AZCO also recently acquired three properties in Indonesia, owning 81-85 percent of the gold in the properties
which are located in favorable areas. Past samplings show elevated values of gold and base metals.
Management:
Mr. Alan P. Lindsay and Chairman and CEO, is one of the Company’s founders, has been responsible for arranging the
financing, the corporate development and the building of the organization toward to the success of the Company.
Mr. Lindsay has an extensive background in business management and marketing and has been involved in the mining
business for the past 10 years, and full-time on AZCO’s business since 1989.
Mr. Anthony Harvey, Vice Chairman, is one of AZCO’s founders and has been associated with AZCO mining since July 1988, full-time since May 1989. Prior to his
employment at AZCO, Mr. Harvey spent 30 years with Wright Engineers Limited in various management positions including:
mine construction, ore extraction, bulk handling and processing, project management, corporate marketing and development.
Mr. Doug Ramshaw, Vice President, Corporate Development. Mr. Ramshaw, a mining geologist from the Royal School of Mines, London
has a variety of experience in gold exploration and mining. Prior to joining AZCO, Mr. Ramshaw was a Mining Analyst at C.M. Oliver
and Company Limited, where he enjoyed first hand experience in the valuation and assessment of mining and exploration projects world-wide.
Four world class mining professionals strengthen the Company’s management. Dr. Ian Gray has in a long career worked for BP Minerals;
Paul A. Hodges and Dr. Nick Badham both worked for RTZ; and Gary Simmerman had previously worked with Santa Fe Pacific Gold.
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