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VANCOUVER, BRITISH COLUMBIA--AZCO Mining Inc. is pleased to announce that significant progress has been made at the Piedras Verdes copper project located 10 miles north of Alamos, Sonora, Mexico. Recent developments included the signing of a life-of-mine exploitation agreement; the acquisition of additional lands important to project development and resource expansion; results of a U.S. $4.1 million exploration program conducted in 1996; and a minimum U.S.$4.8 million project budget scheduled for 1997.
The Piedras Verdes project is wholly-owned by Cobre del Mayo S.A. de C.V. (30 percent AZCO and 70 percent Minera Phelps Dodge Mexico). The deposit is amenable to open pit mining, heap leaching and recovery by solvent extraction-electrowinning. In March 1995, AZCO estimated the copper inventory at 1.28 billion pounds with an average grade of 0.41 percent copper.
On March 4, 1997, Cobre del Mayo and Minera Serrana (owner of the main mineral concessions) executed a life-of-mine exploitation agreement subject to a schedule of advance royalty payments which are recoupable from future production royalties equivalent to 3 percent of net smelter returns.
In December 1996, Cobre del Mayo purchased 1,351 hectares of exploration concessions from Alamos Minerals Ltd. The terms of purchase were U.S. $300,000 on execution, U.S. $700,000 on the first anniversary and payment of a production royalty equivalent to a 2 percent future net smelter return. These concessions, which surround Cobre del Mayo's land position, have potential to expand project resources and are important to the effective siting of future production facilities.
Conclusion of the exploitation agreement and purchase of these new concessions will allow for acceleration of project exploration and development of a feasibility study.
During 1996, Cobre del Mayo recovered 16,685.5 meters of core from 58 diamond drill holes mostly located on five lines or fences spaced about 600 meters apart. The core fences were designed to improve the geologic understanding of the porphyry system and mineralization, evaluate the mineralized system at greater depth and better characterize rock types, mineralization and structural features. The core drilling suggests that the mineralization types, average grades and deposit dimensions previously defined and inferred by reverse circulation holes drilled by AZCO are essentially correct. Ten of the reverse circulation holes previously drilled by AZCO were twinned with core holes, which showed the average grade-thickness of the mineralized intervals to be within acceptable limits (less than 6 percent difference). Six column leach tests using acid agglomeration procedures on samples of the dominant mineralized types resulted in recoveries up to and about 80 percent. This is consistent with the 20 column leach tests conducted prior to 1996. The potential for additional resources has been suggested by the presence of strongly leached capping. These areas will be drilled during the 1997 program.
A minimum budget of U.S. $4.8 million has been approved for the Piedras Verdes project for 1997. The focus of this program is to expand and upgrade the classification of copper resources through additional core and reverse circulation drilling. The program also includes conducting geophysical surveys, additional metallurgical testing, preliminary project engineering and expanding the environmental data base for future permit applications. AZCO's 30 percent share of total expenditures until feasibility will be limited to U.S. $3 million or a remainder of $1.8 million, excluding acquisition of land or royalties on the project.
Based on AZCO's projections of favorable copper demand and pricing into the long term, AZCO looks forward to increasing shareholders value through the accelerated development of low cost copper production from the Piedras Verdes project.
On behalf of the Board of Directors of AZCO Mining Inc., David C