Azimuth aims to join TSX from Down Under

Australian gold outfit Azimuth Resources (AZH-A) is looking to bring its advanced-stage Guyanese project portfolio to Toronto in the coming weeks.

The company is so bullish on its upcoming TSX listing that it is relocating corporate headquarters to North America to be closer to its projects in Guyana, and improve its access to Canadian financing pools. 

Azimuth is also looking to recruit a local CEO to oversee operations in Canada and the U.S.  

Much of the Canadian coverage of Guyanese gold projects has followed the late-stage development of Guyana Goldfields’ (GUY-T) Aurora gold project and Sandspring Resources’ (SSP-V) Toroparu gold-copper property, but Azimuth has the land portfolio and drill results to rival both endeavours.

“We’ve been very lucky, or very fortunate, or very skillful,” managing director Dominic O’Sullivan said during a Feb. 2 presentation at the Sydney Mining Club. “But if you look at the numbers, I’m sure you can agree that they are some of the best that are coming back in the industry and business today.”

The company has built the largest land position in Guyana over the past five years, with the majority of its more than 8,000-sq.-km exploration package under full ownership.

According to company directors, Azimuth anticipates a re-rating of company shares following the TSX listing, based on its exploration success and the valuation of peer gold exploration companies listed on the exchange that also operate in the region. 

Azimuth’s projects are located in an area of Guyana that produces 300,000 oz. gold annually from a series of artisanal alluvial operations, and hosted Cambior’s open-pit Omai gold mine, which produced 3.7 million oz. gold prior to its closure in mid-2008. 

Azimuth’s advanced-stage West Omai land package totals 1,000 sq. km and is accessible by road 150 km southwest of Georgetown. 

Its exploration effort at West Omai has focused on a 15-by-3-km corridor that includes the Smarts, Hicks and Kaburi targets. The company has identified mineralization 30 km along strike, and drill programs have demonstrated a 12-km-long mineralized shear zone across the three targets.

Smarts was discovered during a drill program targeting a small artisanal pit and other auger anomalies, and it has returned Azimuth’s strongest gold grades. The company has completed 40,000 metres of reverse-circulation drilling at Smarts, and the mineralization is open at depth with intersections as deep as 140 metres. Azimuth expects a maiden resource estimate on the deposit in the next few weeks as results roll in from the resource drill program.

The program at Smarts encountered high grades within 50 metres of surface, and at depths up to 160 metres. Highlights include 15 metres grading 34.5 grams gold starting from 45 metres depth, 7 metres of 19.9 grams gold from 49 metres, 29 metres of 14.3 grams gold from 15 metres, 2 metres of 168 grams gold from 150 metres and 38 metres carrying 6.2 grams gold from 25 metres. 

Metallurgical testing at Smarts has identified an average head grade of 4.6 grams gold and 93% cyanide-leach recovery estimates.

The Hicks prospect has mineralization over a 2-km, continous shear zone averaging between 10 metres and 15 metres in width that is open along strike and at depth. Azimuth recently completed an 8,000-metre resource drilling program on the target, and an updated resource estimate is expected in the coming weeks. 

Hicks has a non-compliant, historic resource based on 17,000 metres of drilling totalling 4 million tonnes grading 2.2 grams per tonne gold for 290,000 contained oz. gold.

The Hicks drill program identified good gold grades within 60 metres of surface, including 30 metres grading 7.68 grams gold starting from 54 metres downdip, 5 metres of 7.92 grams gold from 58 metres, 17 metres of 5.4 grams gold from 14 metres and 87 metres of 1.77 grams gold from 34 metres.

 Azimuth’s testing at Hicks demonstrates a 1.77-gram-gold-average head grade, with a 93% gold recovery in cyanide-leach models.

The Kaburi target is located on the largest artisanal bedrock pit in Guyana. Azimuth estimates that 20,000 oz. of saprolite-hosted and alluvial gold have been produced from the pit at a 20% recovery rate. The company has completed 14 drill holes on the property totalling 2,500 metres, and found mineralization in quartz veins grading as high as 56 grams gold over 1 metre.

Kaburi was unexplored using modern methods outside of basic stream-and-sediment sampling by the Guyana Geology and Mines Commission until Azimuth released results from its maiden drill program on March 13.

Initial assays returned gold mineralization at depths reaching 140 metres, including 9 metres grading 9.2 grams gold, 1 metre carrying 55.9 grams gold and 135 metres of 0.32 gram gold. Azimuth continues scout drilling at the target, with up to 5,000 metres planned over the next three months to test a granitoid intrusion’s margins to the southeast. 

The East Omai project is 210 km east of West Omai towards Guyana’s coast. The property is part of a 110-km greenstone belt that includes Iamgold’s (IMG-T, IAG-N) Rosebel gold mine in Suriname, which produced 385,000 oz. gold in 2011.

Azimuth has identified numerous gold occurrences at East Omai through stream-and-surface sampling, and plans to start air-core drilling in the next two months.

Infrastructure and gold grades are often the two main technical concerns in Guyana. 

As part of its commitment to renewable energy, the Guyanese government has pledged to build a 150-megawatt (MW) hydroelectric power plant at Amaila Falls on the Kuribrong River in the Pakaraima Mountains. The power line is projected to pass directly through Azimuth’s West Omai project. The company is also in the process of building an access road which will pass within 5 km of the Hicks zone.

“The deal is, once the road is completed, financing of the dam will be arranged,” O’Sullivan commented. “It is already 30% debt financed. You might think that the size of the dam is quite small, but the total power draw for Guyana as it stands is only 100 MW, so that gives you a gauge of the size and intensity of development in the country.”

Azimuth has been a big riser on the Australian Securities Exchange so far this year, with its shares jumping 42%, or 21¢, since Jan. 3 to a first-quarter high of 97¢ in early March. The company has 392 million shares outstanding and a US$277-million market capitalization at presstime.

Azimuth raised US$20 million in October through an institutional private placement totalling 42 million shares at 46¢. The offering attracted a “number of significant Canadian institutions.” The company is 32% institutionally owned, with shareholders including Macquarie Group (MQG-A) and Vale (VALE-N).

Total exploration expenditures were projected at US$10.5 million through the first quarter in a cash-flow update filed at the end of January, including US$2-million worth of capital expenditures. Azimuth reported US$16 million in its treasury to end February. 

Australia’s Blackswan Equities writes in a March 13 note to clients that “due to West Omai’s high gold grades and simple metallurgy, it will have very low capital intensity and an attractive operating cost.”  

Despite it being early days, Blackswan analysts forecast a
capital expenditure of US$200 million and average cash costs of US$433 per oz. gold. Blackswan maintains a “buy” recommendation on the stock, and has Azimuth’s price target at A$1.10.