January 12, 2008 Aurelio Resource -- Putting S.E. Arizona Back On The Map
As I write this week's letter, I am sitting in McCarron International Airport having just arrived on a flight from Tuscon. South-east Arizona is a special place for me and I have been making yearly visits to places like Tombstone, Bisbee, and Douglas for nearly 7 years now. For those of you who have never been to this part of the world, I strongly suggest a visit. Fly into Tuscon and point your rental car east along I-10 in the general direction of El Paso, Texas. Exit I-10 at Benson, Arizona and get onto Hwy. 80. If you are feeling a tad hungry at this point, stop in at Reb's Diner and slide up to the lunch counter for some good old fashioned home cooking. Continuing on, your drive will take you through the tiny hamlet of St. David and before you know it the historic town of Tombstone will be visible on the horizon. Watch for Boothill Graveyard on your left where a good many gun-slingers of fame and fortune were buried with their boots on. On your right is Main Street where you can see daily re-enactments of the Gunfight at OK Corral. Once through Tombstone, keep enjoying the rolling expanse of high desert as you continue in a southerly direction. Soon you will begin to climb and the terrain will take on a more rocky appearance. You will go through a tunnel and as you emerge on the far side prepare to be amazed. What lays ahead and below is the historic mining town of Bisbee and off in the distance that gaping red hold in the ground is the Lavender Pit -- at one time the largest open pit Copper mining project in the world. When Phelps Dodge ceased mining operations in the Bisbee area in 1977, the entire town fell into disarray. Before too long, California folks ( ie the hippee crowd) found their way to Bisbee and bought old abandoned company houses for $5000 each. Next came the entrepreneurs like the one from New York who bought the old Copper Queen Hotel and the one from San Diego who bought the old Club 400 building and turned it into condominiums. And today the tourists come in droves to walk the winding, narrow streets in search of pottery, gemstones and oddities like locally made Killer Bee Honey. Oh, and don't forget the biker crowd dressed in black leather and driving their Harley's. You can find these free-spirited, and very friendly folks congregating at the Old Tymer's Saloon run by my good friends Charlie and his wife Gail. Indeed Bisbee is a very quirky town with something for everyone. But more importantly, it is a town that will leave your soul feeling rested and right with the world.
This particular trip to Bisbee was decidedly mining oriented. I spent several days driving about looking at where various exploration companies are once again exploring for Copper. I even found one that is one the verge of production and I will write about it in my next edition. On one of my journey's I ended up east of Tombstone not too far from the now abandoned towns of Courtland and Gleeson. A firm called Aurelio Resource is busy exploring in this area. But, Aurelio is not just another junior company aimlessly drilling holes in the ground and talking a good story. The folks at Aurelio are the real deal and their Hill Project near Tombstone is their flagship effort.
The Hill Project is a Copper---Zinc concern that right now consists of 3 known areas of mineralization. There are 5 other areas that are crying out for the drill bit. The 3 known areas of mineralization are the MAN, the Courtland and the South Courtland areas.
This particular part of Arizona is not an unknown quantity. In fact, back in the 1980's Santa Fe Pacific Mining was very active with the drill bit. Sadly enough, Santa Fe could not escape the shackles of low metal prices and their drilling efforts went unrewarded.
But, Santa Fe's 64,000 feet of drilling is now making the folks at Aurelio smile. Thanks to this old drilling work done by Santa Fe, Aurelio was able to issue a press release back in October that summarized the MAN area mineralization as follows:
Oxide
Chalcocite
Sulfide
Unclassified
Totals
(0.10%
Cu cutoff)
(0.10% Cu
cutoff)
(0.20% Cu
cutoff)
(0.20% Cu
cutoff)
(or
averages)
Tons:
328,000
ST
29,436,000
ST
28,919,000
ST
5,074,000 ST
63,757,000
ST
Copper
Grade:
0.51%
0.28%
0.55%
0.63%
0.43%
Zinc Grade:
0.49%
0.05%
0.25%
0.04%
0.15%
Lead Grade:
0.04%
0.02%
0.03%
0.01%
0.02%
Silver Grade:
0.002
oz/ST
0.034 oz/ST
0.087 oz/ST
0.054 oz/ST
0.060
oz/ST
Gold Grade:
0.002
oz/ST
0.002 oz/ST
0.006 oz/ST
0.005 oz/ST
0.004
oz/ST
"Copper-
Equivalent"
Grade:
0.76%
0.33%
0.75%
0.71%
0.56%
The independent mining engineering firm that authored the report also concluded that approximately half of the MAN deposit consists of chalcocite, which could be processed by low-cost heap leaching and SX/EW recovery.
Results on the South Courtland area are now starting to come in. Take a look at the following data from just 2 holes.
Drill Hole
Length
Zinc
Copper
Silver
BR07-30
300 ft
1.30%
0.12%
1.7 gr/MT*
Including:
160 ft
1.88%
0.14%
1.8 gr/MT
BR07-31
125 ft
0.88%
0.32%
4.6 gr/MT
Including :
55 ft
1.83%
0.53%
3.6 gr/MT
In particular take a look at the Zinc grades and Copper grades, but more importantly take a look at the thickness of the mineralization. Any time I see grades like this I get excited. When I see grades like this
over such thicknesses, I get a warm fuzzy feeling all over. This is the stuff that mines are made of and right now Aurelio's geological team is estimating that the South Courtland area is open at depth and to the
west. Keep a close watch out for further drill results from South Courtland.
Drilling in 2006 on the third area -- the Courtland area shows equally impressive results. A quick look through some old Press Releases shows grades of 0.93% copper over 285 feet and 0.61% Copper over 210 feet. Again, results that make me feel very good.
The following photo shows what the terrain looks like in the area. What excites me the most is the fact that you can easily drive right to these properties. Power for an eventual mining operation is nearby as is
other infrastructure such as accommodations for employees in places like Pearce and Elfrida.
Right now, Aurelio has only 34.5 million shares outstanding. The following chart shows price action over the past year. These are tough markets right now and Aurelio has been ravaged along with many other junior resource stocks.
At current prices, Aurelio has a market cap of just over $10 million. But, this market cap does not even begin to come close to reflecting the value intrinsic in just the MAN property alone. I will conclude this brief write-up by simply saying that Aurelio is an under-recognized story that deserves a
closer look. Things are happening in S.E. Arizona once again and Aurelio is well positioned to benefit.
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