"I intend to redirect the strategic future of this company to include identification and acquisition of high quality
Gold, Silver and Copper resources".
Dr. W. Pierce Carson
President and CEO
Azco Mining Inc

"As the next step, Azco intends to further investigate the additional upside of the Ortiz project, including the likelihood of higher grades in the drilled resource and the potential to further improve the project's economics by mining to a higher cut-off grade. There also is very significant upside at Ortiz related to possible extensions of the known Carache and Lucas resources, and also related to other promising prospects and exploration targets within the huge 90 square mile area under our control."

In Summary

Some retrospective perceptions may be in order here to understand that attaining these real valuation levels takes time. Back in Dec 99 when Headwaters NASDAQ - HDWR and now NYSE HW was first identified and highlighted for its undervaluedness at $0.50 ~ $0.70 c per share, just as AZMN was recently, Headwaters did not look like a bankable prospect - Its 10 K looked so terrible you wouldn't have wanted to touch this one with a barge pole and yet the value was there as was a brilliant CEO with a sterling record for turnarounds and creating value.  That value like Azco today was arguably well in excess of $1 Billion extrapolating out Headwaters potential and in just 5 and a half years, Headwaters would go on to soar 9,500% from its lows of 50 cents a stunning half decade gain by any Wall St measure and today, HW has a Billion Dollar market capitalization and revenues of 1 Billion and is the 2nd fastest growing company in the US. 

Azco in comparison has many similarities to Headwaters, especially in having similar sized gross in-ground reserves well in excess of $1 Billion and a CEO with an astonishing record of exploration successes and discoveries that could be without historical equal. The rate at which Azco Mining Inc is adding value to its mining portfolio is nothing short of breathtaking and this bodes very well for its future.

Azco has a CEO that has started two major Gold producing mines virtually from scratch to full production and eventual sale and not too many people possess the capabilities to do that... So it is gratifying to know that the Ortiz Project has an enviable 1 Million Ounces that is essentially ready to start Gold production at the rate of 100,000 ounces per year and as much as 83,000 ounces of Silver annually, some Platinum also. This could be worth as much as $25 ~ $30 Million net at current and future Gold prices easily valuing AZMN at $10 per share just for this property alone, at a conservative 20 times earnings, but at current 50 times earnings average that would be $25.

The fact is, Azco Mining Inc is no longer a speculation, but a business proposition. In the most conservative sense it is fairly safe to say that at a net $250 Million valuation based on the higher than expected grades indicated in MAG's definitive Engineering Study Report, and not accounting for current Gold prices ranging from $515 to $600 plus Gold prices already available in outer months for long term future delivery, it is fairly clear, that just based on the Ortiz 1 Million ounces alone and not accounting for the 2nd Million ounce deposit or any of the other assets, a realistic valuation for Azco's ready to mine million ounce deposit would be roughly $250 Million at current Gold levels. Therefore, the entire 2 Million ounces, along with increased grades equating to a 30% improvement, would actually value Ortiz's known and proven reserves of Gold at well over $500 Million or 10 times the current value of Azco. This is not fantasy. This is real value and therefore any businessman who has the reserves or even another Gold company, would have to recognize that buying Azco today, just as buying Headwaters in December 1999 has equal if not greater potential to deliver HW type returns at HDWR growth rates. This is a no-brainer - It is bound to happen sooner or later as the value is clearly there and if Gold prices soar, it'll simply happen faster.

Finally - Any fund manager worth his salt, knowing of Azco six months ago, should have been hell bent on trying to buy this company, lock, stock and barrel. That is also a no-brainer in that judging by the fact that AZMN has already risen 1,000% fully endorses this logic. But, let's say they only discovered Azco 4 or 5 press releases ago, reading between the lines of the increasing power of the real story behind Azco: A savvy fund manager would have told his team to start buying and don't stop until we own all we can. Another no-brainer.

Now if you think I have been blowing smoke about how high Gold prices could go, read this and remember where you read it all first...

From renowned analyst Eric Hommelberg with occasional inserts for clarification

In my piece 'Junior Festival 2006' which we would more liken to the coming Junior Mining Bonanza,  Part 1 focused on the technical setup for the juniors in 2006. As explained the setup is phenomenal and some very serious gains are in the pipeline this year for those juniors succeeding in making discoveries. Well, we didn't have to wait for that long before the festival to start this year, since the gold price exploded on the very first trading day of 2006 thereby launching gold shares including even the majors into new highs. The HUI Amex Gold Index clocked its single biggest day gain ever and has since set new all time record highs, thereby leaving investors waiting for a correction since early December in a mental state of sadness. So after all, it's been a perfect start for the gold shares. Besides the phenomenal technical setup, there are some fundamentals in play which are extraordinarily bullish for the best of these junior shares as well. Especially those juniors making discoveries will be making headlines this year for sure. Now why is that? What on earth makes these discoveries so important? This report examines the need for new major discoveries and what it can do to your bank-account.

As John Brigde (senior gold analyst JP Morgan) said...

If you are lucky enough to buy into an exploration company that makes a discovery, you can effectively buy your own auto teller machine. Some of these things are just phenomenally profitable. Look what happened to PGDP and what could happen to AZMN soon.

This report will furthermore focus on: Decline in gold production only getting worse and the Majors are scrambling for new gold reserves.
Junior exploration companies will become the primary source for new gold reserves, therefore the smart money is pouring into juniors
This could create an unprecedented bidding war for new proven gold reserves that could be unimaginable at prorata PE Ratios of 100 +.
With production at its lowest levels in 90 years and South Africa and Australia mined out, the Fundamentals for Gold have never ever been more bullish than now: Just recently two high profile gold industry leaders rang the alarm bells lately regarding future mine supply:

DRDGold chief executive officer Mark Wellesley-Wood in the company's latest investor newsletter (November 2005):

Global gold production is set to decline dramatically over the next four years and this is set to generate a scramble for gold ounces.

Newmont President Pierre Lassonde: Bloomberg quoted him (November 27, 2005):

The situation for Gold is becoming drastic "Worldwide gold production last year had the largest decline in 39 years, Lassonde said."

"The decline in output will continue "For at least another couple of years, simply because the industry didn't put money back into the ground when the gold price was very low," Lassonde said" The same thing happened with Oil and Energy and look what happened there.

We've seen South Africa's gold production literally falling of a cliff last two years reaching an 80 year low recently. For many years now smart people have been warning about the coming and now current decline in Gold production: One of the strongest warnings came from Barrick's Exploration VP Alex Davidson who said in March 2003:

"Big mining companies need to spend more on exploration, or else at current annual production rates, reserves will be depleted in 10 years, he said. It can take six to eight years between making a discovery and starting mine production, and "we're not currently funding exploration at a level required to replace reserves." This totally endorses our groundbreaking theory: "The World is running out of Gold"

The Majors are scrambling to find new gold reserves and boost their holdings. PDG's acquisition at an estimated PE of 100 is the proof.

You would think that higher gold prices would solve the issue since more money would be spend on exploration then. Well, although there's money heading towards the exploration sector these days indeed it won't be of any help in the short term.. Why not? Because it takes years from exploration to production. Barrick CEO Gregg Wilkins said: The average lead time for a large discovery to go onstream with production was around five to seven years, but that 7 to 10 years was probably more realistic." "The industry isn't going to be able to respond immediately to higher gold prices. It is going to take a long time."

So there it is, the industry isn't going to be able to respond immediately to higher gold prices. How come? Simple, during the 1997 - 2002 period exploration budgets were cut by 67% so the mining industry is still relying on discoveries that were made many years ago. Let's first take a peek at the major discoveries being made over the last 25 years:

As you can see, just as with Oil where hardly any new major Oil fields have been discovered, almost no world class Gold discoveries have been made since the mid nineties and only a very few large discoveries since the late nineties.

According to Newmont's president Pierre Lassonde it will take another 18 - 24 months, before we will see new discoveries in the five million ounce range...

But hey, the major producers are pulling each 4 - 7 millions of gold out of the ground every year and no major discoveries are expected in the short term, so tell me, how are they going to replace those mined reserves?

Well, the answer is simple, they can't!

Industry consultant Ralph Bullis even fears that the large gold producers won't even survive at current extraction rates over the ... next Five to Ten years. His calculation is straight forward, he says that the top 5 Gold producers are each pulling each between 3.5 million and 7 million ounces out of the ground every year. In order to keep up with the current production rate, the miners need to replace their mined-out reserves through aggressive exploration and new discoveries. But that's exactly the problem. In order to replace 3.5 - 7 million ounces of Gold each year, you'll have to find a major world class gold deposit ( > 5 million ounce) each year which is highly unlikely. Bullis refers to the U.S. Geological Survey's database of global gold deposits and notice that of the 792 discoveries listed of greater than 100,000 ounces, only 6 percent contained 5 million ounces of gold or more.

Bullis goes on and says that even if a big discovery is made, it can take anything between three and 10 years to permit a mine in Canada and the United States, prospective areas where the major miners are looking for gold. This is in line with earlier comments from Piere Lassonde and Greg Wilkins who made it clear that the Gold Industry isn't going to respond immediately to higher Gold prices.

(Ralph Bullis was Exploration Director of Echo Bay Mines for more than a decade and was a member of the Canadian Institute of Mining committee, which helped set up guidelines on how to estimate mineral resources and reserves)

Don't let yourself be fooled by analysts claiming that there's no problem at all. They may well argue that there's still 30,000 tonnes of Gold left in the ground, so that gold producers can produce for another 10 years at current production rates thereby giving them plenty of time to explore for new reserves…They fail however to recognize that most of the easy ore has been mined already and that not all ore-reserves will be mined anyhow (last remaining reserves become too difficult and too expensive to mine). A good case in point was the Homestake Mine in South Dakota, which was shut down with a large base of ore "reserves" (millions of ounces) still on the books.

Juniors are now the primary source of new gold reserves.

So if the major companies won't be able to find new reserves in time themselves, what to do then? Sure enough they have to turn to the juniors since they are making 75% of all discoveries. Please don't think those remarks are exaggerated, the majors already showed an increased interest in juniors for more than two years now:

Barrick opened an office in Vancouver in order to monitor Junior companies. "Barrick Gold's New Office Tracks Junior Exploration Cos."

"Barrick Gold Corp. (NYSE:ABX) has opened a Vancouver office to monitor junior exploration projects, executive vice-president Alex Davidson said at an exploration conference. Davidson said two or three employees in the office are tracking junior projects, and visiting managers of companies and their exploration sites. The local office also handles Barrick's exploration efforts around Eskay Creek, its 100%-owned gold mine in northern B.C."

AngloGold CEO Bobby Godsell:

It is the end of big picture gold consolidation; there is no compelling logic to combining larger companies anymore. The real challenge now is how to replace your ounces for the future." The race to replace ounces is about to begin. It will take the form of takeovers of small producers with long reserve lives and high quality junior mining companies with large in ground reserves that can be mined economically.

A few months later these thoughts were echoed by Sam Jonah, the company president : Where or who will AngloGold buy next ?

Sam Jonah, the company president says small Gold companies will be the point of entry. "We will look at juniors that have attractive assets in there portfolios and require our expertise and capital to move these projects forward."

Gold Fields: Investing in juniors make sense

Ian Cockerill : "We invest in 10 juniors in the hope that one or two of them come up trumps, and the value you get off the table there will pay for the other eight that do not. But you are spreading your exploration dollars, It increases your chance of success."

"It has been a very successful program," Cockerill declared. He estimated that Gold Fields invested $30 million to $40 million in the junior exploration company process, converted $120 million in value, of which $40 million was harvested."

It seems that the interest in juniors slowly morphed into a buying spree during last quarter 2005

World's Largest Gold Producer to take Significant Position in Miramar

Miramar Mining Corporation is pleased to announce that it has entered into an agreement (the "Subscription Agreement") with Newmont Mining Corporation of Canada Limited ("Newmont") whereby Newmont will purchase, on a private placement basis, 18.5 million units (the "Units") of Miramar at a price of $2.35 per Unit for gross proceeds of $43.5 million.END.

Goldcorp takes 9.8 % stake in Wolfden

Goldcorp will spend about C$21 million ($17.9 million) to buy a 9.8 percent stake in the mineral exploration firm Wolfden. Goldcorp became interested after a series of good drilling results on the Bonanza Project in the Red Lake Mining District, Ontario.

Goldcorp buys Virginia's Eleonore project

TORONTO, Dec 5 (Reuters) - Goldcorp Inc. (G.TO: Quote, Profile, Research) will buy Virginia Gold Mines Inc.'s (VIA.TO: Quote, Profile, Research) Eleonore gold project in Quebec in a stock deal valued at about $420 million, the gold producer said on Monday.

Newmont Mining raises stake in Gabriel Resources to 19% Newmont Mining Corp., the world's largest gold miner, paid C$30 million to raise its stake in Gabriel Resources, which is developing the Rosia Montana gold project in Romania, to just under 19%.

The trend is obvious and the acquisition of Virginia's Eleonore project proves beyond any doubt that juniors making discoveries are paying off!. Before discovery Virginia traded around 1 CAD$ while currently trading at 11 CAD$. I'm confident you can do the math yourself.

Smart money pouring into juniors

So if the major companies are going after the juniors why wouldn't you as an investor do the same? You wouldn't be the only one, one of world's most savvy gold industry insiders is doing the same and he's not playing here with Mickey Mouse money, he's investing millions in promising junior companies. Yes, former Goldcorp CEO Rob McEwen is certainly in a buying mood and seems to be unstoppable:

Rob McEwen Acquires 20 % Stake in Coral Gold.

Rob McEwen purchase up to 1,250,000 shares in Coral Gold Resources Ltd., becomes a Director and Executive Chairman of the Board

Coral Gold Resources Ltd. (the "Company") has arranged a non-brokered private placement of up to 1,500,000 common shares at a price of $3.00 per share. The placee for up to 1,250,000 shares is Mr. Robert R. McEwen and upon closing he will hold just under 20% of the outstanding shares.

Rob McEwen Acquires 18.2% Stake in Nevada Pacific Gold

Friday December 9, 10:20 am ET

Nevada Pacific Gold Ltd. is pleased to announce that, subject to regulatory approval, it has entered into an agreement with Mr. Robert McEwen, of Toronto, Ontario to issue 12,500,000 Units at a price of $0.40 per Unit for aggregate proceeds of $5.0 million. END

Rob McEwen Acquires 33% stake in U.S. Gold'

Denver, Colorado, July 29, 2005 - U.S. Gold Corporation (OTC BB:USGL) is pleased to announce that Rob McEwen has purchased by way of private placement with the Company, 11.1 million shares for $4,000,000 becoming the Company's largest shareholder with 33.3% interest. It is planned that Mr. McEwen will be assuming the role of Chairman and CEO shortly following the planned resignation of current management.

Rob McEwen Acquires 10.5% Stake in White Knight Resources.

Robert R. McEwen has purchased 5,681,705 common shares of White Knight Resources Ltd. by way of a private purchase from Goldcorp. The purchase price was based on the higher of the current trading price or the 10-day average trading price to June 28, 2005.

Mr. McEwen now owns 10.50 per cent of outstanding common shares of White Knight. Shares were purchased for investment purposes.

Can you imagine what may be going on behind the scenes at Azco Mining with CEO Dr W Pierce Carson's stellar record in the mining industry and one of the most prolific and successful explorationists of our time with a historical record almost with out equal and on top of that the enormous upside potential the Ortiz Gold deposit might hold...? After the puny assets of PGDP, ECPN and even USGL none of which yet have proven reserves, AZMN has more inground proven reserves than all 3 of these companies combined worth $10 a share.

Highlights and Summary:

The industry is not replacing the reserves it is mining every year  - High grade mines are running out of ore. No new large supplies found.
Even ff Gold were to soar past $1000 / oz , it is still going to take four to seven years to open a mine. The Gold industry is not going to be able to respond immediately to higher gold prices.  Reserves will be severely depleted in 10 years at current annual production rates.
The industry needs some major new finds desperately. Since 1999 only a very few world class gold deposits have been found.
Newmont President Pierre Lassonde expects new world class gold discoveries (> 5 million ounces) in 18 months to two years time
Majors are forced to acquire juniors because of the need for more reserves  Juniors making discoveries are phenomenally profitable.
So after reading all this you might be interested in buying some junior shares as well. Juniors in a discovery phase were the real winners in 2005. And they will probably amaze everybody in 2006. Azco Mining Inc AZMN may top the list as the largest junior Gold gainer...

If you think about it... What Rob McEwan has done is place some heavy diversified bets around the traps. What W. Pierce Carson has done, is to place a huge bet on what he knows best and where he can exercise quality control and ensure a highly successful outcome.
 

About Azco Mining Inc

Azco Mining Inc. is a U.S.-based mining and exploration enterprise with an emphasis on gold, copper and industrial minerals. In 2004 the Company acquired mineral rights to approximately 90 square miles of mineral estate at the Ortiz gold property in New Mexico, where pre-1990 exploration and development work costing $40 million identified 2 million ounces of gold. Azco also owns and operates the Black Canyon mica deposit in Arizona, which contains a large resource of mica and by-product feldspathic sand. Recently the Company also acquired lease and purchase rights to a world-class deposit of micaceous iron oxide in Arizona, which constitutes a rare domestic source of this material used in coatings to protect structural steelwork against corrosion.