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Friday, January 13, 2017

Hermosa - a summary

We seen over the past week a series of posts on Arizona Mining's Hermosa Taylor deposit that it has issues, and I apologies for being negative on this project but we are talking about a company that has market cap of ~$600M. They have sufficient funds to everything to the highest standards. For me, the most frustrating part is that they appear to have been careless (the manganese issue) and dishonest by 'erasing' references to 'clean' concentrates and decreasing recoveries and concentrate grades.

If I was a shareholder, I would feel that I was entitled to a honest reply from the company. Instead AZ management have gone into "ostrich" mode and buried their heads in the sand.

Manganese

The manganese question could tacked head-on. All they have to do is go back to the assay database and check see if the manganese is pervasive or just found in a few areas (i.e. close to the manto oxide zone). This would take a couple of days to do, and would have allowed them to state that the manganese was a local issue and by accident some of the samples used for preliminary metallurgical sample contained significantly more manganese than the majority of the deposit.

However, AZ management decided to take the mature approach. They removed the following statement from their latest presentation, but you can still find it in their Jan 7th 2016 PR (link).

Dec 7th Presentation - slide 6
and in the technical report

Page 6 - Oct 2016 Technical report - this statement is repeated on pages 7 and  94

I wonder if we will see an amended technical report with an 'updated' metallurgical section in the coming weeks?

Metallurgical Recoveries and concentrate Grades

I'm extremely concerned about the changes to the metallurgical recoveries and concentrate grades values in the recent presentations. They match the values in the technical report, so why where incorrect values used in the December 7th presentation?

The timing was a bit strange as the date of the presentation coincides accidentally with the announcement that they had raised $36M to develop the project (link)?

My concern is that maybe this was another careless mistake, like the manganese issue, and bulk density question. However, when you look at it, that is a lot of faux pas from a single company.


The Elephant in the room

I apologize for sounding negative, AZ have defined a lot of resources and control ~17,500 acres of prime exploration ground. They've done a lot of drilling, so why don't we have a look at where those holes are:

DO NOT CROSS THE RED LINES
Wow, all of the drill-holes are on private land? OK, I get it, permitting is much easier on private land, but AZ have been drilling Hermosa since July 2007 (funny fact - it took them 7 months to release the results (link*)), surely in that time they would have got a permit of two to allow them to drill in the lava public land surround the deposits?

I like the way (circled in yellow) they've had to drill these weird orientated holes, like tentacles of a perverted squid in a Hentai cartoon reaching out for a nubile young lass.

*press releases prior to this (link and link) were releasing assay results from the re-sampling of the historic ASARCO drill sample pulps. 

The question you have to ask is:

Why? It is reallly that hard to get a permit to drill a few holes in the Coronado National Forest?

If you can't get a drill permit, imaging the issues that they will face when they try and develop the project? I'm sure it will be easy, just like at Resolution (linklink or link)!

Well, at least they will have got someone on-board to buy the concentrate, but then again the observations from Ocean Partners are just words. they mean nothing as we have to be realistic here, there is going to be no mining, and no concentrates being produced from Hermosa in the next 10 years.

up to 6 years just for the permits
and some fecking nimbys


Heck, if they want, I'll sign an MOU to discuss the precious metal stream....