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| | Corporate Profile: Arizona Mining Inc
Publisher: Kaiser Research Online
Author: Copyright 2013 John A Kaiser
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Arizona Mining Inc (AZ-T)
| Arizona Mining Inc is the successor to AZ Mining Inc as of Oct 28, 2015, which changed its name from Wildcat Silver Corp on June 5, 2015. Wildcat moved onto the TSXV from the CSE on Sept 3, 2008 after spinning out Ventana Gold Corp on a 1:1 basis on Dec 14, 2006 so that it could focus on its Hermosa project (formerly Hardshell) in Arizona near the Mexican border. A TSX listing was obtained July 19, 2011. In Dec 2013 Arizona Mining released a PFS for a 12,500 tpd open-pit mine targetting the oxidized Central zone (formerly Manto Oxide) of 54.2 million tonnes of 75.6 g/t silver and 1.79% zinc with minor manganese and copper credits that relied on base case prices of $23.50 silver and $0.92/lb zinc. After $40 million expenditure Hermosa-Central turned out sub-economic. In 2014 the junior drilled the skarn sulphide mineralization at the base of the pit and found a major northwest dipping carbonate replacement deposit which became the basis for a 10,000 tpd PEA in April 2017 which indicated an after-tax NPV of USD $1.26 billion at 8% discount rate with a 42% IRR at base case prices of $1.10/lb zinc, $1.00/lb lead and $20/oz silver. CapEx was USD $457 million and OpEx $48/. The PEA resource was M+I 60.8 million tons of 4.4% zinc, 4.35 lead and 1.7 opt silver. The current goal is to deliver a feasibility in H1 of 2018 and have devlopment permits in place by the end of 2018. The exploration focus in 2017 is to see if higher grade ore from the Trench vein system and the Taylor Deeps zone can be brought into the mining plan. Arizona Mining Inc is headed by chairman Richard Warke and CEO/President Jim Gowans appointed in 2015. COO Don Taylor is the driving force behind the new discovery. |
Key to Understanding IPV Charts and Spec Value Hunter Tables
| An IPV Chart is a graphical presentation of a Spec Value Hunter table that has been constructed according to the Rational Speculation Model developed by John Kaiser. The IPV Chart allows speculators to identify which projects offer poor, fair or good speculative value in both absolute and relative terms. The speculative value depends on the project stage, the project's implied value as calculated by the company's fully diluted capitalization, stock price and net project interest, and the dream target deemed appropriate for the project. A dream target is what a project would be worth in discounted cash flow terms once in production. |
| Green background indicates the dream target judged appropriate for this play by John Kaiser - otherwise unranked. |
Poor Speculative Value -   |
Fair Speculative Value -  |
Good Speculative Value -   |
| Note: narrow arrows indicate IPV is outside the fair value channel but within 25% of the fair value limits |
| Click on the company name to view the company profile, the project name to view project details. |
| Click on the project icon if its background is shaded to get the IPV Chart for that company. |
| Hermosa-Central |  | 100% WI | United States | 5-PEA |
|---|
| Hermosa 43-101 Economic Study (USD except where noted otherwise) |
| PFS | Dec 10, 2013 |
| | Hermosa |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | OP |
| Cost Currency: | USD |
| Processing Type: |
|
| Capital Cost: | $834,600,000 |
| Operating Rate: | 12,500 tpd |
| Sustaining Cost: | $0 |
| Operating Days: | 365 |
| Operating Cost: | $39.49/t |
| Strip Rate: | 5.7 |
| BC Cash Cost per Unit: USD | $31.61/oz Ag |
| Mine Life: | 18 years |
| BC Cash Cost Net By-Products: USD | $4.84/oz Ag |
| LOM Tonnage: | 54,119,000 t |
| BC All-In Cost Net By-Prod: USD | $12.94/oz Ag |
| Est Startup: |
|
| Spot All-In Cost Net By-Prod: USD | $21.74/oz Ag |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Ag | Mn | Au | Zn |
| Grade: | 75.58 g/t | 0.08 | 0.10 g/t | 1.79% |
| Recovery: | 79.0% | 28.0% | 90.0% | 0.1% |
| Annual Output: | 5,700,000 oz | 110,000,000 lb | 10,000 oz | 10,000,000 lb |
| LOM Output: | 103,000,000 oz | 1,980,000,000 lb | 180,000 oz | 180,000,000 lb |
| Base Case Price: | $23.50/oz | $1.19/lb | $1,250/oz | $0.92/lb |
| Spot Price: | $15.38/oz | $0.71/lb | $1,214/oz | $1.22/lb |
| Base Case NSR: | $29.36/t | $28.69/t | $2.74/t | $2.02/t |
| Spot NSR: | $19.21/t | $17.12/t | $2.66/t | $2.67/t |
| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: |
|
| Discount Rate: | 8% |
| After-Tax NPV: | $611,000,000 |
| Total Base Case NSR USD: | $62.81/t |
| Pre-Tax IRR: |
|
| Total Spot NSR USD: | $41.67/t |
| After-Tax IRR: | 21% |
| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | $106,376,875 | $0.31 | Pre-Tax Payback: |
|
| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | $9,936,875 | $0.03 | After-Tax Payback: | 2.8 y |
| Enterprise Value CAD : | $2,116,392,477 | $6.13/sh | Share Price: | $6.19 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | $1,080,183,750 | $389,430,214 | $34,400,536 | ($158,892,296) |
| Base Case Pre-Tax Net NPV/Sh USD: | $3.13 | $1.13 | $0.10 | ($0.46) |
| Premium BC PT NPV over EV: | ($1.55) | ($3.55) | ($4.57) | ($5.13) |
| Spot Pre-Tax NPV USD: | ($655,736,250) | ($684,230,511) | ($684,639,630) | ($672,788,843) |
| Spot Pre-Tax Net NPV/Sh: | ($1.90) | ($1.98) | ($1.98) | ($1.95) |
| Premium Spot PT NPV over EV USD: | ($6.57) | ($6.66) | ($6.66) | ($6.62) |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
 |
 |
| Hermosa 43-101 Economic Study (USD except where noted otherwise) |
| PEAU | Nov 12, 2012 |
| M3 Eng. | Hermosa |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | OP |
| Cost Currency: | USD |
| Processing Type: |
|
| Capital Cost: | $627,000,000 |
| Operating Rate: | 14,920 tpd |
| Sustaining Cost: | $152,000,000 |
| Operating Days: | 365 |
| Operating Cost: | $20.89/t |
| Strip Rate: | 2.8 |
| BC Cash Cost per Unit: USD | $14.40/oz Ag |
| Mine Life: | 16 years |
| BC Cash Cost Net By-Products: USD | $11.24/oz Ag |
| LOM Tonnage: | 96,000,000 t |
| BC All-In Cost Net By-Prod: USD | $17.44/oz Ag |
| Est Startup: |
|
| Spot All-In Cost Net By-Prod: USD | $18.08/oz Ag |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Ag | Au | Cu |
|
| Grade: | 64.00 g/t | 0.08 g/t | 0.04% |
|
| Recovery: | 62.0% | 90.0% | 20.0% |
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| Annual Output: | 7,900,000 oz | 14,375 oz | 861,937 lb |
|
| LOM Output: | 125,720,000 oz | 230,000 oz | 13,791,000 lb |
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| Base Case Price: | $28.75/oz | $1,525/oz | $3.50/lb |
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| Spot Price: | $15.38/oz | $1,214/oz | $2.83/lb |
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| Base Case NSR: | $41.71/t | $4.03/t | $0.55/t |
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| Spot NSR: | $22.31/t | $3.21/t | $0.45/t |
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| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: |
|
| Discount Rate: | 5% |
| After-Tax NPV: | $658,000,000 |
| Total Base Case NSR USD: | $46.29/t |
| Pre-Tax IRR: |
|
| Total Spot NSR USD: | $25.96/t |
| After-Tax IRR: | 32% |
| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | $138,300,893 | $0.37 | Pre-Tax Payback: |
|
| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | $27,635,520 | $0.05 | After-Tax Payback: | 1.7 y |
| Enterprise Value CAD : | $2,116,392,477 | $6.13/sh | Share Price: | $6.19 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | $1,433,814,280 | $732,299,421 | $346,091,505 | $121,661,535 |
| Base Case Pre-Tax Net NPV/Sh USD: | $4.15 | $2.12 | $1.00 | $0.35 |
| Premium BC PT NPV over EV: | ($0.52) | ($2.55) | ($3.67) | ($4.32) |
| Spot Pre-Tax NPV USD: | ($336,831,685) | ($409,953,730) | ($441,011,798) | ($451,319,005) |
| Spot Pre-Tax Net NPV/Sh: | ($0.98) | ($1.19) | ($1.28) | ($1.31) |
| Premium Spot PT NPV over EV USD: | ($5.65) | ($5.86) | ($5.95) | ($5.98) |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
 |
 |
| Hermosa 43-101 Economic Study (USD except where noted otherwise) |
| PEA | Oct 26, 2010 |
| M3 Eng. | Hermosa |
| Mining Scenario | TR | Mining Costs |
| Mining Type: | UG+OP |
| Cost Currency: | USD |
| Processing Type: | leach, SXE |
| Capital Cost: | $297,000,000 |
| Operating Rate: | 3,630 tpd |
| Sustaining Cost: | $56,000,000 |
| Operating Days: | 365 |
| Operating Cost: | $73.05/t |
| Strip Rate: |
|
| BC Cash Cost per Unit: USD | $23.85/oz Ag |
| Mine Life: | 17 years |
| BC Cash Cost Net By-Products: USD | ($14.50)/oz Ag |
| LOM Tonnage: | 23,800,000 t |
| BC All-In Cost Net By-Prod: USD | ($9.38)/oz Ag |
| Est Startup: |
|
| Spot All-In Cost Net By-Prod: USD | ($31.65)/oz Ag |
| Production Potential |
| Metal 1 | Metal 2 | Metal 3 | Metal 4 |
| Metal: | Ag | Mn | Zn | Cu |
| Grade: | 99.54 g/t | 0.09 | 1.70% | 0.09% |
| Recovery: | 90.0% | 95.0% | 90.0% | 95.0% |
| Annual Output: | 4,058,824 oz | 253,399,318 lb | 48,250,588 lb | 2,551,405 lb |
| LOM Output: | 69,000,000 oz | 4,307,788,400 lb | 820,260,000 lb | 43,373,893 lb |
| Base Case Price: | $16.78/oz | $0.41/lb | $0.91/lb | $3.07/lb |
| Spot Price: | $15.38/oz | $0.71/lb | $1.22/lb | $2.83/lb |
| Base Case NSR: | $51.40/t | $78.41/t | $33.14/t | $5.91/t |
| Spot NSR: | $47.11/t | $135.79/t | $44.43/t | $5.45/t |
| Base Case Valuation |
| Reported Valuation Currency: | USD |
| Pre-Tax NPV: |
|
| Discount Rate: | 8% |
| After-Tax NPV: | $357,000,000 |
| Total Base Case NSR USD: | $168.87/t |
| Pre-Tax IRR: |
|
| Total Spot NSR USD: | $232.78/t |
| After-Tax IRR: | 19% |
| Annual Pre-Tax Cash Flow Base Case and Net CF/FDSH USD: | $126,954,038 | $0.36 | Pre-Tax Payback: |
|
| Annual Pre-Tax Cash Flow Spot and Net CF/FDSH USD: | $211,636,825 | $0.60 | After-Tax Payback: | 4.9 y |
| Enterprise Value CAD : | $2,116,392,477 | $6.13/sh | Share Price: | $6.19 |
| Note: |
| Comparative Valuations using Life of Mine Averages |
| Discount Rate: | 0% | 5% | 10% | 15% |
| Base Case Pre-Tax NPV USD: | $1,805,218,647 | $1,044,904,890 | $631,767,858 | $391,992,537 |
| Base Case Pre-Tax Net NPV/Sh USD: | $5.23 | $3.03 | $1.83 | $1.14 |
| Premium BC PT NPV over EV: | $0.55 | ($1.65) | ($2.84) | ($3.54) |
| Spot Pre-Tax NPV USD: | $3,244,826,023 | $1,954,161,413 | $1,249,301,939 | $837,288,559 |
| Spot Pre-Tax Net NPV/Sh: | $9.40 | $5.66 | $3.62 | $2.43 |
| Premium Spot PT NPV over EV USD: | $4.72 | $0.99 | ($1.06) | ($2.25) |
| The comparative NPV calculations assume constant annual cash flow based on the life of mine average annual payable production and CapEx spent in year one. The operating cost includes the LOM sustaining capital. Due to details such as ore scheduling these NPV figures may differ from those of the 43-101 economic study. |
| After-Tax Valuations using Spot By-Product Prices |
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