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OUR TAKE: Positive. Arizona Metals announced a new discovery at Kay, called the Kay2 zone, with highlight interesction of 50.0 m grading 6.65 g/t AuEq, including 6.9 m @ 12.69 g/t AuEq. The Kay2 zone is located approximately 100 m north of previously drilled mineralization in the Kay deposit and AMC believes this is a new lens in the larger Kay system. Two drills have been dedicated to testing this new target and AMC plans to include it in the upcoming resource estimate. Additional holes are currently pending and in progress to explore the horizontal and vertical dimensions of the Kay2 Zone. Arizona Metals has drilled a total of 122,000 meters on the property to date.
We view these latest exploration results as positive for AMC shares, and we look forward to the results from ongoing drilling along with the updated resource which we expect in 1H/2025. AMC shares are rated SO with a C$4.50 PT.
KEY POINTS
Detail - AMC also noted two other drill holes in the Kay deposit with notable intervals; stepout hole KM-24-162 intersected 1.5 m @ 4.16 g/t AuEq and 5.5 m @ 1.65 g/t AuEq, which extended mineralization 30 m to the south. KM-24-160A intersected 3.7 m @ 1.03 g/t AuEq in a 95-m gap near the center of the deposit. True widths are estimated to be 50%-99% of reported widths. Location of latest drilling is shown in Figure 1 with results shown in Figure 2.
Balance sheet - AMC reported a cash balance of $20.6M as of June 30, 2024.
Valuation - With this note we have incorporated minor edits for the latest financial results. Using Scotiabank GBM prices, AMC shares are trading at 0.29x P/NAV10% vs development peers trading at 0.81x.
Historical price multiple calculations use FYE prices. All values in C$ unless otherwise indicated. Source: FactSet; company reports; Scotiabank GBM estimates
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