VANCOUVER— Assay results from the first two reverse-circulation drill holes targeting a magnetic anomaly at Arizona Silver Exploration’s (TSXV: AZS) Ramsey silver project in western Arizona prompted a 77% drop in the company’s share price.
The stock had soared from 40¢ to $1.22 after a May 11 announcement that one of the holes, 1702, hit 44.2 metres of quartz veins peppered with a “sub-metallic grey mineral,” which could be a silver-bearing sulphide.
On May 30, assay results confirmed the mineral in question was ilmenite — a titanium-bearing oxide — but the interval was devoid of silver. Another hole reported in the release, 1703, was only weakly mineralized, with 58 metres containing 0.5 to 0.3 gram silver per tonne.
Shares of the company dropped to 24¢ at press time.
Mike Stark, the company’s chairman, tells The Northern Miner during a phone interview that upbeat analyst reports may have driven the company’s stock into oversold territory.
“I’ve been speaking with 75 people per day who were asking for clarification on why the stock was overbought at the beginning, especially when we went well over $1,” Stark says. “It was based purely on hype — people listening to other people — and a lot of downfall can happen in very quick order if claims are not substantiated. The assay results read ‘we missed,’ and sometimes that’s all investors need to decide they’re out. But it’s only part of the story. We’re still waiting for more assays.”
A research report by newsletter writer John Kaiser from Kaiser Research predicted shares of Arizona Silver could surge to $18 if mineralization correlates with a prospective magnetic anomaly on the property. The anomaly is 20 times larger than the one seen 450 metres south at the Ramsey silver mine, where production between 1921 and 1969 totalled 7,620 tonnes grading 1,093 grams silver.
The company says the anomaly could represent the northern extension of the Ramsey mine, but offset by a younger, northeast-trending fault.
“Kaiser was looking for 2 to 3 oz. silver spread out over a 500- by 500-metre area. His model is fair and reasonable, but it has to be proven, and something of that magnitude won’t happen overnight,” Stark says. “Our current drill program is exploratory and not of that size. We’re just getting our feet on the ground and trying to figure out what’s causing the anomaly. If it carries silver, we can start drilling it out.”
Arizona Silver is halfway through its 2,000-metre drill campaign, in which five holes will test the northern anomaly for a regionally trending fault. The fault, which separates an overlying package of rhyolites from metasediments and volcanics below, was a conduit for silver-rich fluids at Ramsey.
While only one of the two reported holes intercepted the fault, both holes show strong magnetite-bearing zones with pyrrhotite, so The Northern Miner asked Greg Hahn, president and CEO of Arizona Silver, whether those minerals could explain the magnetic response in geophysics.
“We hit recognizable amounts of pyrite and magnetite, both of which can generate geophysical anomalies,” Hahn says. “But those minerals are also present in the Ramsey mine mineralizing system, along with silica, so it’s encouraging to see them all together in the northern anomaly. What our intercepts lack is silver, so we either stepped out too far, or we’re on the wrong fault. We don’t know the answer to that yet, but we’re going to find out. It’s still early days.”
One challenge Arizona Silver faces at Ramsey is that the entire northern anomaly is covered under 100 metres of Pleistocene gravels, which is why the company relies on geophysical surveying to generate drill targets.
“You can’t see anything at surface — there’s little to no geology to make an informed decision,” Hahn says. “But everything we’ve seen in drilling looks identical to what we see with mineralization at the Ramsey mine. There appears to be a big system cooking underneath, it’s just a matter of hooking into it with a drill hole.”
Part of this year’s program will test the southeastern extensions of high-grade mineralization at the Ramsey mine, where drilling this year returned intercepts of 15.3 metres of 102 grams silver.
“The entire strike length of the mineralizing system appears to extend for over two miles,” Hahn says. “We’ve only tested a small part of the northern extension, and haven’t tested the area around the Ramsey mine or the southeastern extension where it’s wide open. There’s still a lot of work to do, so stay tuned.”
Shares of the company have traded in a 52-week range of 4¢ to $1.22, and closed at 24¢ at press time. The company has 28.8 million shares outstanding for a $7-million market capitalization.