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Tracker - June 23, 2022: Arizona Silver results support conceptual bulk tonnage target
 Arizona Silver Exploration Corp released results on June 21, 2022 for the deepest hole drilled on the 100% owned Philadelphia low-sulphidation epithermal gold-silver project in the Oatman district of Arizona. The market reacted negatively for several reasons. The more trivial reason was that the high grade vein portion intersected about 217 m down the dip of the vein by PC22-91 core hole yielded only 2.38 m of 6.7 g/t gold and 22.6 g/t silver, compared to better intervals higher up in the vein such as 3 m of 16.9 g/t gold and 4.39 m of 10.81 g/t gold. Furthermore, this hole was not drilled perpendicular to the vein dip and thus the true width is lower than reported. This creates the impression that grade and thickness of the Perry vein is diminishing as one travels down the dip of the vein. However, examination of the textures in the core has led to the conclusion that this deepest intersection is still about 100 m above the boiling zone where one might expect bonanza grade zones to be present. Based on the 60 degree dip of the Perry vein the open-pittable limit down dip is about 350 m, assuming a 300 m pit depth limit. Unfortunately, to test the down dip extension of the Perry vein Arizona Silver will need to step off the patented claims onto the unpatented claims to the east which fall under the BLM jurisdiction (this was the reason for the "bad" angle of hole PC22-91). Arizona Silver has retained Tetra Tech to initiate permitting. VP of exploration Greg Hahn believes this will take "less than a year" which the market interprets to mean this deeper potential cannot be tested earlier than Q2 of 2023.
The more serious reason for the negative market reaction was the deadly sentence: "Rig availability is anticipated in the fall". Arizona Silver's core rig has moved to another project. A core rig was chosen for the H1 2022 drilling because at the northern end of the Perry claim near the "Shark Fin" where there were no prior drill holes the terrain is steeper than at the southern end where Arizona Silver drilled RC holes in 2021. Core rigs have a smaller footprint than RC rigs so core drilling was chosen for access reasons. However, core holes provide better information about the geology and grade distribution and do not carry the risk of down-hole contamination that comes with RC drilling which grinds the rock into small chips. The major development for Arizona Silver that emerged in 2021 was the realization that the Perry vein had an envelope of lower grade mineralization in both the hanging wall and foot wall of the vein, which opened the conceptual potential for a low grade open-pit mining scenario. It is this potential outcome which interests me much more than the narrow high grade vein outcome. Hole PC22-91 yielded 78.7 m of 0.96 g/t gold and 9.2 g/t silver. Again, this is not a true width because of the angle of the hole relative to the dip of the vein. However, the section looking northeast that Arizona Silver has compiled makes it clear that the low grade mineralization occurs as a 30-40 m zone in the footwall of the vein. Unlike at the southern end of the Perry claim there is no mineralization in the hanging wall which Greg Hahn attributes to the fluid flow being less robust in this particular area.
The important news to come out of this year's drilling so far is confirmation that the low grade envelope persists along strike of the Perry vein and is not just a localized phenomenon at the southern end nor an illusion created by possible down-hole contamination created by RC drilling (the latter risk was mitigated by the fact that the low grade mineralization also occurred in the hanging wall which would not be caused by the deeper high grade vein mineralization). Arizona Silver has assays still pending for 2 important holes. Hole PC22-92 is an "infill" hole drilled into the Perry Vein at the southern end of the claim as a core hole to confirm the geology and grade distribution generated by last year's RC data. The results are expected in about 3 weeks, but these are unlikely to have an upside surprise; the risk is more of a downside nature in the event that the core intervals are weaker than the RC intervals. The other pending hole PC22-93 is a 350 m stepout northeast of the Shark Fin area at the northern end of the Rising Fawn patented claim in an area where Meridian drilled a cluster of RC holes during the eighties. The Meridian drill data indicates that the high grade Perry vein with a low grade envelope is present. Hole PC22-93 was drilled at about 55 degrees to a vertical depth of about 178 m to obtain a core basis for the geology and grade distribution. The news release indicated that the hole intersected "good stockwork quartz mineralization" which Hahn says was about 30-40 m thick. This hole is important because if it yields a similar low grade interval it will buttress the conceptual model of a bulk tonnage target with at least 800 m of strike form the southern end of the Perry claim to the northern end of the Rising Fawn claim.
Based on the Perry claim results so far I have visualized a bulk tonnage target in the form of a 60 degree southeast dipping zone striking 400 m by 35 m thick by 350 m down dip to a vertical 300 m open pit limit. At 2.6 specific gravity this translates into a tonnage footprint of 12.7 million tonnes. Open pit mining this slab would involve a 3.0-3.5 strip ratio that generates 40-45 million tonnes of waste rock. Based on results so far the grade potential is 1-2 g/t gold and 5-10 g/t silver for this conceptual bulk tonnage target. For this segment on the Perry claim that translates into 400,000-800,000 oz gold and 20-40 million oz silver in situ. If we assume this zone persists along the 400 m length of the Rising Fawn claim we can double these conceptual target numbers. The potential grows larger still if we project this scenario onto the untested Reseca claim to the northeast and to the southwest of the Perry claim.
The reason Arizona Silver is commanding an implied project value of only CAD $20 million based on 77 million fully diluted and a $0.25 stock price is because there are two significant undrilled "gaps" and the market is currently uncertain as to when the company will get a rig to drill these gaps and confirm the conceptual model. The 250 m Perry Gap requires a core rig because of the steeper terrain in that area. The Rising Fawn Gap can be drilled with an RC rig. Arizona Silver will take whatever rig type becomes available, but when that will happen is the uncertainty hanging over the market. Drilling the down dip extension of the Perry vein from the unpatented BLM claims will require a core rig.
The market has no patience for resource juniors in the general market context who are not in a position to flow drill results that generate new discoveries or confirm conceptual models. The prospect of a series of further interest rate hikes in what may be a futile effort to subdue inflation in the near term without crashing the economy sets the stage for cascading market declines that engulf resource juniors even though they are not carrying significant speculative premiums. Arizona Silver has about $850,000 working capital left so does not need to finance during the summer doldrums ahead of possible resumption of drilling in the fall. The Shark Fin area drilling during H1 of 2022 has been successful in supporting the conceptual bulk tonnage target. The stock's recent slide back into its original bottom-fish range reflects the market's unwillingness to buy any stock that is not in a position to generate results in the short term. Arizona Silver Exploration Corp continues to have a Bottom-Fish Spec Value rating with the missing piece needed to drive an uptrend being confirmation that a rig has been secured to resume drilling the Philadelphia project. The other key missing piece is BLM permits that allow Arizona Silver to step east of the patented claims and drill what management sees as the heart of this epithermal system. The ability to aggressively pursue exploration drilling at Philadelphia may also enable Arizona Silver to secure a major financing and not be vulnerable to losing drill rigs due to an intermittent results based exploration strategy.
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