Arizona Metals News Release

National Bank of Canada comment

Beacon Securities:

This morning, AMC announced that it has received a permit for two new drill
pads to test the Western Target from the Bureau of Land Management (BLM).
We are encouraged by the orderly nature that the permitting process is
progressing at the Kay Mine project in Arizona.
The new drill pads, W1 and W2, will be located ~1,200m west of the Kay Mine
deposit, where the company is completing a ~75,000m successful drilling
program. AMC continues to demonstrate that the mineralized system remains
robust.
Previously, AMC reported receiving a permit for an additional two drill pads to
test it Central Target. Drilling at the Central Target is expected to start in
November 2022. Currently construction of drill road is underway. Western Target
drilling expected to start in Q1/23.
We believe additional exploration can result in the discovery of at least 20MMt.
The results to date collectively reinforce our expectations that there is
significantly higher resource upside to our estimate at Kay Mine alone. Given
AMC’s exploration results and the number of geophysical anomalies that are
yet to be tested, the potential to outline more tonnage is relatively high.
The company has identified two major targets: Central and Western
geophysical and geochemical coincident anomalies. These are coincident
structural, electromagnetic, geochemical, soil gas, and gravity anomalies that
are associated with an outcropping mild gossan. At this point we have not
included credit for the potential of a discovery of more resources at the Central
and Western geophysical targets. Potentially, given their geophysical footprint
each of these targets can be just as large as Kay Mine.
The company has three drill rigs turning 24hrs per day, and another 12 holes are
pending assays. The Company is fully funded to complete its remaining 18,000m
for the Phase 2 program at Kay deposit. A follow up 76,000m of Phase 3 program
is planned.
AMC continued the expansion of the Kay Mine with excellent grades and width
while demonstrating excellent continuity of mineralization laterally and at
depth. The results show that mineralization can have substantial thickness, which
highlights the potential to define significant tonnages. We believe additional
exploration can result in the discovery of at least 20MMt (with a potential to
exceed 25MMt).
Valuation: AMC is trading at ~0.3x P/NAV. Our valuation is now based on the
exploitation of a conceptual minable resource of 20MMt, through a milling rate
of 1.6MMtpa and 80% base metal recovery and 60% for precious metals. We
use a 0.70x NAV multiple, a discount rate of 7% and corporate adjustments to
derive our price target. Our assumptions are informed by AMC’s exceptional
exploration success thus far and its potential to significantly extend its historic
resource base. We maintain a BUY and a 12-month target price to $10.50 per
share.

Crescent Securities:

AMC continues to deliver on milestones with Western Conductor drill permit approval

 

SUMMARY

  • AMC has received approval from the BLM for two new drill pads (W1, W2) located ~1.2 km west of the Kay mine.
  • These new pads will allow targeting the Western target as well as additional coincident anomalies located b/w the Western & Central targets.
  • Western Conductor has one of the largest geophysical signatures at Kay with ~1 km strike and 70 m wide with at least 400 m vertical extent.
  • Management plans to commence road construction to the Western target post confirmation of a bond with the BLM planned for this week.
  • Drilling at Western is expected in Q1/23.
  • Road construction to Central drill pads (C1, C2) is currently underway with drilling expected to commence in November.

 

CONCLUSION

  • AMC continues to deliver on milestones with successful drill permitting of the Western Conductor target.
  • Kay drilling to date is confirming excellent continuity of the wide fold hinge zone (~50 – 60 m) while confirming our estimated 24 Mt at ~5% CuEq which is based just on the ~320 m strike at Kay and down to ~1 km depth.
  • Our est. does not include any along-strike extension potential at Kay or the potential at Central & Western/regional targets.
  • In our opinion, both Central & Western targets (never explored before) have the potential to host another Kay, drilling dependent.
  • If drilling is successful at either, it could conceptually drive the resource potential at the project to 2x – 3x our current est.
  • With ~C$60 MM, AMC is well funded for the ongoing Phase 2 program (18,000 m remaining) and Phase 3 (budgeted 76,000 m or $27 MM).