INVESTOR PRESENTATION
Cautionary Note Regarding Forward-Looking Information
Certain information contained in this presentation constitutes forward-looking statements. All statements, other than statements of historical facts, are forward looking statements including statements with respect to the closing of the underwritten private placement and the Company’s intentions for its Hermosa Project in Arizona, USA including, without limitation, future drilling and other work on the Taylor Deposit, and the statements under Outlook later in this document. Forward-looking statements are often, but not always, identified by the use of words such as may, will, seek, anticipate, believe, plan, estimate, budget, schedule, forecast, project, expect, intend, or similar expressions.
The forward-looking statements are based on a number of assumptions which, while considered reasonable by Arizona Mining, are subject to risks and uncertainties. In addition to the assumptions herein, these assumptions include the assumptions described in Arizona Mining's management's discussion and analysis for the year ended December 31, 2015 ("MD&A"). Arizona Mining cautions readers that forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements and forward-looking statements are not guarantees of future results, performance or achievement. These risks, uncertainties and factors include general business, economic, competitive, political, regulatory and social uncertainties; actual results of exploration activities and economic evaluations; fluctuations in currency exchange rates; changes in project parameters; changes in costs, including labour, infrastructure, operating and production costs; future prices of zinc, lead, silver and other minerals; variations of mineral grade or recovery rates; operating or technical difficulties in connection with exploration, development or mining activities, including the failure of plant, equipment or processes to operate as anticipated; delays in completion of exploration, development or construction activities; changes in government legislation and regulation; the ability to maintain and renew existing licenses and permits or obtain required licenses and permits in a timely manner; the ability to obtain financing on acceptable terms in a timely manner; contests over title to properties; employee relations and shortages of skilled personnel and contractors; the speculative nature of, and the risks involved in, the exploration, development and mining business; and the factors discussed in the section entitled "Risks and Uncertainties" in the MD&A.
Although Arizona Mining has attempted to identify important risks, uncertainties and other factors that could cause actual performance, achievements, actions, events, results or conditions to differ materially from those expressed in or implied by the forward-looking information, there may be other risks, uncertainties and other factors that cause performance, achievements, actions, events, results or conditions to differ from those anticipated, estimated or intended. Unless otherwise indicated, forward-looking statements contained herein are as of the date hereof and Arizona Mining disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable law.
About Reserves and Resources
This presentation uses the terms measured, indicated and inferred resources as a relative measure of the level of confidence in the resource estimate. Readers are cautioned that: (a) mineral resources are not economic mineral reserves; (b) the economic viability of resources that are not mineral reserves
Cautionary Statement
•
Owns 100% of Hermosa Project
•
Taylor Deposit discovered in 2015–a significant zinc,
lead, and silver sulfide resource
•
Well respected, high caliber management team
including Richard Warke, Jim Gowans and Don Taylor
•
Cash balance at June 1, 2016 of ~C$28 million
(1)
•
Large, under-explored land package
(1) Includes net proceeds expected on closing of underwritten private placement.
•
Company holds 100% interest in:
•
450 acres Patented Mining Claims
•
16,600+ acres Unpatented Mining Claims
•
Current resource centered on the
patented mining claims
•
State of Arizona has long mining history
•
Close to required infrastructure
(1)
Hermosa Project
(1)
Highlighted Drill Intersections
Taylor Deposit
HDS-331:
41.5 feet (12.6 meters) at 29.41% Pb/Zn, 6.37 oz Ag, 0.89% Cu
HDS-332:
43.5 feet (13.3 meters)at 34.12% Pb/Zn, 5.63 oz Ag, 0.07% Cu
HDS-334:
425 feet (129.5 meters) at 7.47% Pb/Zn, 1.49 oz Ag, 0.14% Cu
HDS-338:
Long Section
Cross Section
Mineralization
Taylor Deposit
Location relationship of
sulfide mineralization
(CRD) to manto oxide
(MRZc and MRZs)
Inferred Resource
Taylor Deposit
39.4 Million Tonnes @ 11.04% ZnEq
Zn Eq% Cutoff
Zn Eq% Grade
Tonnes (Mt)
Pb%
Zn%
Cu%
Ag g/t
3
8.01
72.3
3.21
3.23
0.10
50.78
4
8.98
59.5
3.63
3.63
0.11
55.78
5
9.98
48.7
4.04
4.03
0.12
61.25
6
11.04
39.4
4.48
4.48
0.14
66.91
8
12.89
27.2
5.24
5.26
0.16
76.35
12
16.80
12.1
6.88
6.84
0.21
97.90
15
19.70
6.6
8.26
7.80
0.27
113.75
20
24.57
2.2
10.37
9.86
0.34
133.64
Results are based on a ZnEq grade calculated with the following metal prices: $0.85/lb for lead and zinc; $2.25/lb for copper; $15/oz for silver. Mineral resources are not mineral reserves and do not have demonstrated economic viability. There is no certainty that all or any part of mineral resources will be converted to mineral reserves.
•
Initial Bench-Scale Flotation Results:
•
Lead Recoveries:
•
92.9% recovery of lead
•
76% recovery of silver
•
Zinc Recoveries:
•
85.5% recovery of zinc
•
15% recovery of silver
•
Excellent Concentrate Grades Indicated:
•
75% for lead in concentrate
•
56% for zinc in concentrate
•
No Deleterious Elements in the Concentrates
Scoping Level Metallurgical Results
Expansion Potential
Expansion Potential
Expansion Potential
Taylor Deposit
•
Planned 28 hole 125,000 foot drill program
•
Test potential of Taylor Deposit
•
5 drill rigs, increasing to 8
•
Results from first two holes:
•
HDS-338 Intervals: 101.5 feet (30.9 meters) at 18% Zn/Pb, 6.13 oz
Ag, 0.19% Cu, including 61.5 feet (18.7 meters)at 29% Zn/Pb, 9.32
oz Ag, 0.28% Cu
•
HDS-339 Intervals: 108 feet (32.9 meters) at 31% Zn/Pb, 5.51 oz Ag,
0.15% Cu, including 57 feet (17.4 meters) at 45% Zn/Pb, 8.82 oz Ag,
0.17% Cu
Zinc Fundamentals-$1.55/lb by 2018
Taylor Deposit
•
Zinc inventories at lowest since 2009
•
Mine production down – Century, Lisheen,
and other closures
•
Spot treatment charges at lowest levels for
years
•
Price forecast to increase due to structural
imbalance - $1.55/lb by 2018
Deliverables
Taylor Deposit
•
Compete planned 2016 drill program Q3-16
•
Update inferred resource Q4-16
•
PEA Q2-17
Reasons to Own AZ
•
Large, high grade Zn/Pb/Ag resource and growing
•
Simple processing, high recoveries, no deleterious
elements, high grade concentrates
•
Only 20% of potential mineralized area tested by
drilling
•
Proven management team
•
Mining friendly jurisdiction
•
Large land package with additional exploration
Toronto Stock Exchange Trading Symbol
AZ
Issued and Outstanding
219.2 million
Issued Options and warrants
44.1 million
Fully Diluted
263.2 million
Share Price as of May 31, 2016
C$1.60
Market Capitalization
C$351 million
Average Volume (20 days)
319,000
52 Week High/Low
C$1.79/$0.22
Management/Insider Ownership
~44%
Richard W. Warke
Executive Chairman
Founder of the Company (Chairman and CEO). He was also the founder and Chairman of Ventana Gold Corp which was sold for C$1.533 billion and Augusta Resource Corporation which was sold for C$666 million. Richard is currently the President, CEO and Director of Catalyst Copper. He has more than 25 years of experience in corporate finance and marketing in the global resource industry, and has been involved in raising over $1 billion dollars in equity for resource companies. Although his endeavours have primarily involved mineral resource operations, he has also been involved with oil and gas, forestry, technology and manufacturing operations.
James Gowans
President and CEO
Mr. Gowans was formerly Co-President of Barrick Gold Corporation from July 2014 to August 2015 and Executive Vice President and Chief Operating Officer from January to July 2014. Recent prior roles include Managing Director of Debswana Diamond Company (Pty) Ltd., President and Chief Executive Officer of De Beers Canada Inc., Chief Operating Officer and Senior Vice President of International Nickel Indonesia tbk PT and Executive Vice President at Placer Dome Inc. Mr. Gowans has more than 30 years of experience in mineral exploration, mine feasibility studies, opening new mines, commissioning mine expansions and in the development of best practices in mine safety, mine operations and economic performance improvement. Mr. Gowans is a Professional Engineer and received a bachelor of applied science degree in mineral engineering from the University of British Columbia and attended the Banff School of Advanced Management.
Donald R. Taylor
COO
30 years of successful mineral exploration experience on more than five continents in base and precious metals, taking projects from exploration to mine development; was previously at Doe Run Resources and BHP Minerals; has Bachelor of Science degree in Geology from Southeast Missouri State University and a MSc from University of Missouri at Rolla; Licensed Professional Geologist in several states and QP as defined by NI 43-101.
Paul J. Ireland
Chief Financial Officer
Extensive financial experience in mining and forestry; Chartered Accountant; also CFO of Catalyst Copper. Other recent CFO roles with Ventana Gold Corp prior to its acquisition in 2011, Diavik Diamond Mines Inc. and Western Forest Products Inc.
Gregory F. Lucero
Vice President, Community and Government Affairs
More than 20 years of management experience in both the public and private sector, as well as an extensive background in the executive government working for local, state, and federal elected officials; holds a Bachelor of Arts degree in Political Science from the University of Arizona.
Purni Parikh
Vice President, Corporate Secretary
More than 22 years experience in business administration including more than 17 years experience with public companies in the areas of communications, investor relations and legal administration; also Corporate Secretary for Plata Latina Minerals and Catalyst Copper, as well as Augusta Resource Corporation prior to its recent acquisition.
Johnny Pappas
Director, Environmental and Permitting
Mr. Pappas has a distinguished career in the field of environmental management and permitting. Mr. Pappas recently held the position of Director of Environmental Affairs for Romarco Minerals Inc. where he was instrumental in directing the federal and state permitting of the Haile Gold Mine; the first gold mine permitted east of the Mississippi in the last 20 years. He was previously the Environmental Manager of the Climax Mine and was Permit Coordinator for Barrick’s Cortez Gold Mines. In
Richard W. Warke
Executive Chairman
Founder of the Company (Chairman and CEO). He was also the founder and Chairman of Ventana Gold Corp which was sold for C$1.533 billion and Augusta Resource Corporation which was sold for over C$666 million. Richard is currently President, CEO and Director of Catalyst Copper. He has more than 25 years of experience in corporate finance and marketing in the global resource industry, and has been involved in raising over $1 billion dollars in equity for resource companies. Although his endeavours have primarily involved mineral resource operations, he has also been involved with oil and gas, forestry, technology and manufacturing operations.
James Gowans
Director
Mr. Gowans was formerly Co-President of Barrick Gold Corporation from July 2014 to August 2015 and Executive Vice President and Chief Operating Officer from January to July 2014. Recent prior roles include Managing Director of Debswana Diamond Company (Pty) Ltd., President and Chief Executive Officer of De Beers Canada Inc., Chief Operating Officer and Senior Vice President of International Nickel Indonesia tbk PT and Executive Vice President at Placer Dome Inc. Mr. Gowans has more than 30 years of experience in mineral exploration, mine feasibility studies, opening new mines, commissioning mine expansions and in the development of best practices in mine safety, mine operations and economic performance improvement. Mr. Gowans is a Professional Engineer and received a bachelor of applied science degree in mineral engineering from the University of British Columbia and attended the Banff School of Advanced Management.
Poonam Puri
Director
Poonam Puri, Professor of Law and formerly Associate Dean at Osgoode Hall Law School and affiliated scholar to Davies Ward Phillips & Vineberg LLP, is one of Canada’s most respected scholars and commentators on issues of corporate governance, corporate law, securities law and financial regulation. Professor Puri is a member of the Board of Directors of the Greater Toronto Airports Authority and also sits on the Board of Directors of Toronto’s Women’s College Hospital. Professor Puri has a Bachelor of Laws (LLB) degree from the University of Toronto, a Master of Laws (LLM) degree from Harvard Law School and is a member of the Institute of Corporate Directors.
Don Taylor
Director
30 years of successful mineral exploration experience on more than five continents in base and precious metals, taking projects from exploration to mine development; was previously at Doe Run Resources and BHP Minerals; has Bachelor of Science degree in Geology from Southeast Missouri State University and a MSc from University of Missouri at Rolla; Licensed Professional Geologist in several states and QP as defined by NI 43-101.
Donald R. Siemens
Director
Independent financial advisor specializing in corporate finance, cross-border transactions and mergers and acquisitions; previously, Partner-in-Charge of Thorne Ernst & Whinney's (now KPMG) Vancouver office Financial Advisory Services group; over 30 years of experience as a Chartered Accountant; currently Director and Audit Committee Chair for Hansa Resources Limited,
Taylor Deposit Resource and Drill Results
Scott Wilson, President of Metal Mining Consultants, is an independent qualified person as defined by National Instrument 43-101 has approved and verified the information in relation to the Taylor Deposit resource estimates. Mr. Wilson is a Certified Professional Geologist and member of the American Institute of Professional Geologists (CPG #10965) and a Registered Member (#4025107) of the Society of Mining, Metallurgy and Exploration, Inc., a professional association and designation recognized by the Canadian regulatory authorities.
The results of Arizona Mining’s drilling results have been reviewed, verified and compiled by Donald Taylor, MSc., PG, President and Chief Operating Officer for Arizona Mining, a qualified person as defined by National Instrument 43-101 (NI 43-101). Mr. Taylor has more than 25 years of mineral exploration and mining experience, and is a Registered Professional Geologist through the SME (registered member #4029597). Mr. Taylor is also a Licensed Professional Geologist in several US states.
Central Deposit Prefeasibility Study, Reserves and Resources
Joshua Snider, PE, an independent Qualified Person under the standards set forth by NI 43-101, was responsible for preparing the information in relation to the pre-feasibility. Mr. Snider is a Civil Engineer with M3 and has over 15 years of experience in the engineering and mining industry.
Metallurgical test results included in the pre-feasibility study have been reviewed, verified, and interpreted by Christopher Easton, BSc., Chemical Engineering, a Qualified Person under the standards set forth by NI 43-101. Mr. Easton is the president of Easton Process Consulting Inc. has 24 years of mineral processing and metallurgical engineering experience, and is a Qualified Professional Member in Metallurgy of MMSA.
Scott Wilson, President of Metal Mining Consultants, is an independent qualified person as defined by National Instrument 43-101 was responsible for preparing the information in relation to the Hermosa Central mineral reserve and mineral resource estimates, including the Hermosa North West mineral resource. Mr. Wilson is a Certified Professional Geologist and member of the American Institute of Professional Geologists (CPG #10965) and a Registered Member (#4025107) of the Society of Mining, Metallurgy and Exploration, Inc., a professional association and designation recognized by the Canadian regulatory authorities.
Timothy George, PE, an independent Qualified Person under the standards set forth by NI 43-101, reviewed and was responsible for preparing the information for the Hermosa reserve determination and mine plan in the pre-feasibility study. Mr. George is a Mining Engineer with Metal Mining Consultants.
Process design criteria and cost estimates for the EMM facility in relation to the pre-feasibility study have been reviewed by Terry McNulty, D Sc, PE., a Qualified Person under the standards set forth by NI 43-101. Dr. McNulty is President of T. P. McNulty and Associates, Inc., has over 50 years of experience in
Qualified Persons
•
ZINC MARKET DATA
•
TAYLOR DEPOSIT DRILL DATA
•
CENTRAL DEPOSIT INFORMATION
Appendix
Appendix
Zinc Spot Treatment Charge
•
China CIF spot TC’s expected in $125-$135/t range
Appendix
Zinc Forecast to be in a Deficit for Next Three Years
•
Zinc price expected to break out on projected deficit – Scotiabank’s Patricia Mohr
forecasts $1.55 for 2018
Source: Scotiabank April 12, 2016
2010
2011
2012
2013
2014
2015
2016E
2017E
2018E
2019E
2020E
Gross total mine production
12,105
12,552
12,722
12,835
12,956
13,302
13,271
13,837
14,251
14,922
15,279
Less disruption allowance
(398)
(415)
(428)
(448)
(458)
Net mine production
12,105
12,552
12,722
12,835
12,956
13,302
12,873
13,422
13,823
14,474
14,821
Growth
3.7%
1.4%
0.9%
0.9%
2.7%
-3.2%
4.3%
3.0%
4.7%
2.4%
Concentrate surplus/(deficit)
(395)
(196)
623
339
56
(110)
-
-
-
-
-Refined zinc production
12,715
12,968
12,454
12,935
13,281
13,903
13,431
13,909
14,329
14,981
15,365
2.0%
-4.0%
3.9%
2.7%
4.7%
-3.4%
3.6%
3.0%
4.6%
2.6%
Consumption
11,693
12,551
12,827
13,295
13,887
13,989
14,077
14,281
14,538
14,815
15,099
7.3%
2.2%
3.6%
4.5%
0.7%
0.6%
1.4%
1.8%
1.9%
1.9%
Appendix
Appendix
Taylor Deposit – 2016 Drill Program Results to May 6, 2016
DH_ID
From (feet) To (feet) Interval (in feet) From (meters) To (meters) Interval (meters) Ag opt
Cu%
Pb%
Zn%
HDS-338
724
734
10
220.7
223.7
3.0
1.35
0.02
2.80
3.73
HDS-338
2395.5
2497
101.5
730.1
761.0
30.9
6.13
0.19
11.19
7.54
HDS-338 Including
2395.5
2457
61.5
730.1
748.9
18.7
9.32
0.28
17.31
11.78
HDS-338
2527
2537
10
770.2
773.2
3.0
3.60
0.05
7.09
3.24
HDS-338
3242
3254
12
988.1
991.8
3.7
3.72
0.86
4.18
3.86
HDS-338
3278
3352
74
999.1
1021.6
22.6
3.07
0.34
5.71
5.08
HDS-338
3372
3397
25
1027.7
1035.4
7.6
0.86
0.03
1.05
1.38
HDS-339
949
957
8
289.2
291.7
2.4
2.88
0.11
2.27
6.02
HDS-339
977
986
9
297.8
300.5
2.7
1.55
0.02
2.69
7.19
HDS-339
995
1000
5
303.3
304.8
1.5
2.70
0.12
2.36
4.20
HDS-339
1430
1450
20
435.8
441.9
6.1
1.56
0.09
2.52
1.51
HDS-339
1865
1879
14
568.4
572.7
4.3
2.90
0.37
8.72
13.48
HDS-339
1917
2025
108
584.3
617.2
32.9
5.51
0.15
14.72
16.61
HDS-339 Including
1917
1974
57
584.3
601.6
17.4
8.82
0.17
23.09
22.67
HDS-339
2062
2066
4
628.5
629.7
1.2
3.62
0.39
8.85
11.00
HDS-339
2092
2114.5
22.5
637.6
644.5
6.9
1.64
0.06
5.09
4.85
HDS-339
2144.5
2148
4.5
653.6
654.7
1.4
28.03
1.83
5.89
19.45
HDS-339
2421
2468
47
737.9
752.2
14.3
2.15
0.21
7.19
8.55
HDS-339
2488
2506
18
758.3
763.8
5.5
0.65
0.02
1.79
2.20
HDS-339
2526
2554.5
28.5
769.9
778.6
8.7
1.53
0.05
4.38
5.56
HDS-339
2574
2593.5
19.5
784.5
790.5
5.9
2.14
0.08
6.44
7.91
HDS-339
2612
2676
64
796.1
815.6
19.5
1.72
0.01
5.54
2.77
HDS-339
2691
2704.5
13.5
820.2
824.3
4.1
2.42
0.06
8.26
8.24
•
After-tax NPV (5%) of $830 million, after-tax IRR of 21.3%, and payback of 2.8 years
(1)
•
Average silver production of 12.2 million ounces per year for the first five years and 5.7 million
ounces per year for the life of mine (LOM)
•
Average EMM production of 110 million pounds per year for the LOM
•
Average cash costs of $4.35 per ounce silver and $0.74 per pound of Electrolytic Manganese
Metal (EMM) for the first five years and $4.45 per ounce of silver and $0.73 per pound of
EMM for the LOM
(1,2)
•
Average silver cash costs, considering all other metals as by-products
(1)
, of $(4.37) per ounce
for LOM
•
Mine life of 18 years
•
Initial capital expenditures of $834.6 million including $189.3 million for a 55,000 tons per
annum EMM plant
Appendix
Central Deposit
Central Deposit Reserve and Resource Estimate
(1)(3)Ore Type Tons
(000s) Ag (opt) Mn % Contained Ag Ounces (000s) Contained Mn lbs (000s)
Total Proven and Probable Mineral Reserves
Total Proven 31,067 2.73 8.58 84,737 4,051,000
Total Probable 28,589 2.11 7.99 60,339 3,182,000
Total Proven & Probable 59,656 2.43 8.31 145,076 7,233,000
Total Measured and Indicated Mineral Resource (Inclusive of Reserves)
(2)Measured 76,114 1.55 6.60 118,120 4,898,000
Indicated 105,568 1.11 5.03 117,043 5,443,000
Measured & Indicated 181,681 1.29 5.67 235,163 10,341,000
Total Inferred Mineral Resource
(2)Inferred 45,151 1.00 3.80 45,068 1,238,000
