Speculation has been rife over the last 24 hours about what exactly happened at Arizona Silver (AZS.V), which ran like a stuck pig for a few weeks up to a $1+ territory on the back of analyst John Kaiser’s coverage, that appeared to suggest a $10+ stock was in the offing.
The company dropped results of its first 1.5 holes (one hole’s core broke off and was lost down the hole), and they weren’t high in grade at all. In fact, it appeared to be a better iron play than silver.
A black iron- and silica-impregnated sandstone intersected between 560-665 feet (171-203 metres) contained anomalous iron, copper, nickel, zinc, and vanadium. This interval bears strong similarities to the mineralized zone at the Copperstone gold deposit located about 25 miles (35 kilometres) to the northwest of the Ramsey Mine. This iron-rich interval and the lower silver-bearing interval will be analysed for gold.
Today, Kaiser dropped an email to his readers that put up his side of things, and much like our take yesterday, where we suggested the stock was oversold considering more results are on the way, he’s not done with the play yet.
I have been on the road since Wednesday and am in transit this Tuesday morning. Arizona Silver released results for 2 RC holes drilled on the Ramsey project.
Hole #2, which was lost before hitting the projected detachment fault that hosts the Ramsey silver vein, did not yield any silver. Hole #3 did cross through the detachment fault and yielded 58 metres of the target zone which was continuously mineralized with silver as expected, but the silver grade ranged only 0.5-3.0 g/t silver.
That is just smoke and it suggests that while the Ramsey vein system is present under the gravel cover, the silver mineralization has faded away. There is no narrow high grade 30-40 opt silver internal at the fault, nor is there a 3-4 opt halo around the vein. There is thus no evidence so far supporting the visualized outcome of a 60 million tonne system grading 125 g/t silver. The tonnage footprint is present but the grade so far is not.
It is possible that the system is weak in the area of hole #3, but the glass is definitely half-empty at this stage while we wait for the rest of the holes.
The rig has been moved to the area of the Ramsey vein itself while results from the remaining holes are awaited.
The stock closed at $1.21 on Monday, which was way into S-Curve territory, and not surprisingly is down $0.94 at $0.27 on 4.4 million share volume as I write this. This is an over-reaction caused by the stock’s run-up. If the stock had stayed at $0.61 where I recommended it on May 18 ahead of assays confirming a discovery, it would have sagged to only the $0.40 level as the market waits for the full picture as to what the Ramsey fault offset extension is all about.
I expect the stock to recover into the $0.40-$0.50 range as the quick gratification seeking crowd exits.
I received word from one insider at the company that the results were a surprise to all, but that there was indeed concern about the stock price getting ahead of the story.
My contact says the game isn’t over; “We still have three other holes that were the primary target, there is native silver in areas of the property which have not yet been properly explored, and now of course the gold aspect to the geology. One of the technical advisors worked on Copperstone Mine in Arizona (high grade gold) and he says the geology looks the same. There is also an upside with the zinc and lead present in our drill holes, both have a strong market price.”
An exec with another company contacted me today looking for info, having bought in over $1, and his take was similar to mine, where I wondered if the company was pumping the brakes to prevent the market going nuts with the stock.
“Good take on AZS,” he said. “Like you, the decision to release two holes the way they did is a head scratcher. AZS was going to have a booth [at the Metal Writers Conference], then they didn’t… which makes you wonder if they knew beforehand. Still I have to ask, why halt and put that news out? ‘Brake pump’ as you said?”
AZS rose today, as we predicted, bringing a 37% return for those who bought on the panic. The stock sits at $0.35, still below Kaiser’s suggestion of where it should be, but a big loss for those who bought in on the hype spike over the last few weeks.
— Chris Parry
FULL DISCLOSURE: Arizona Silver is not an Equity.Guru marketing client and the author owns no stock in the company.Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.