Investment Intelligence Research
Azco Mining Inc - AZMN - Update
AZMN $1 ~ $100 Case Expounded
 

August 10 2006 Press Release Azco Mining Becomes Current in Financial Reporting:
 

"We are highly optimistic about our Future"
President and CEO - Dr W Pierce Carson - Azco Mining Inc

Can a Gold stock rise from $1.00 per share to $100 plus by the end of this decade, or next? You be the judge:
 

Anatomy of a Bull Market in the Making - For Both Gold Mining & Resource Issues:

 
Every once in a while, at least twice in each generation, we have a Resources Boom, and a Gold Mining Mania.
And, during such times it is possible to make an immense amount of money as Gold related issues tend to rise geometrically and often by a factor of many times the increase in Gold itself. Add to that a growing shortage and the very real possibility the World is running out of Gold, Silver and a host of other valuable resources and we have a recipe in the making for possibly the greatest resources boom of all time to unfold and when small companies can identify, acquire and build awesomely valuable inground assets and begin to monetize them in the process, then increasing cash flows, combined with increasing values can lead to truly staggering riches...

The most important thing to understand is: This can not only really happen, but could exceed all expectations. Deciding to invest in any company takes courage, as it is often hard to see ahead of time the potential strong increase in values that can sometimes occur, without warning. In December 1999, when we first highlighted Headwaters Inc HDWR - HW at its low of 50 cents, it was hard to foresee it rising to $45 upwards of 9,500% in just over 5 years, but we knew it had Billions in assets and a capable CEO, which is why we went out on a limb.

In the case of Azco Mining Inc., the longer term visibility is 20/20 compared to what one could foresee for HW back then: And now, with great prospect of significant Gold production looming, Azco's values are compelling especially with the prospect that a Nasdaq or Amex listing, could be in the offing in the not too distant future... To give some idea of how AZMN could potentially run up to near HW's all time high of $45, PEIX Pacific Ethanol Inc recently ran to $44 on prospects of earning 45c psh next year. Azco could earn similar numbers in 18 mos.

We are reminded of one of Azco's largest shareholders, who holds the distinction of managing to acquire one million shares of a company that subsequently rose to $50 within five years and 947 within 10 years: To never ever underestimate, how high any company's stock price can trade and never to limit one's potential. And, as an example of yet another instance, this same investor had invested in a metals company with a very similar pattern and behavior as Azco and some of his colleagues, who invested with him, did not have the tenacity to see this company trade up to its full potential. Like Azco, it traded briefly below $1 on a few occasions only to suddenly take off and run to $9.40, where those who held, were able to sell for staggering gains. Such may be a similar fate, that at a minimum awaits Azco. Since Azco could be producing between 250,000 to 300,000 ozs of Gold within as little as 3 years or by round the end of this decade with multiple World class mining projects, potential cash flows could run well into the hundreds of millions putting Azco on a par with HW or even higher and render it a rare 100,000 percenter off its '05 lows. Below we outline a strategy that could take Azco there.

Can lightning strike twice? Another of Azco's largest shareholders is said to have parlayed $40,000 into some $20 Million in 1999-2000. Being in the company of such highly successful investors, who between them own almost 15 % of Azco, are they seeing another home run in Azco, potentially as dramatic as their earlier wins?

We certainly think so and offer some of the background as to why we see Azco as an uncommon opportunity and why perhaps these 7 major milestones below, can set AZMN on a path to mining greatness, conglomeracy and an eventual $100 share price. Such a high objective may depend on $1,000 - $2,000 Gold being achieved and also considering the possibility that Silver could soon trade at $25 oz, Azco's Summit Silver output would actually double, projecting substantial revenues approaching $80 Million, but what could really put Azco over the top, would be 2 or 3 more acquisitions reaching 10 milestones, thus adding sufficient value to justify $100.

 
KEY OBJECTIVE #1
Summit Silver Gold Revenues
WITH POTENTIAL CASHFLOWS EXPECTED TO $40 MILLION OR 60 Cents Per Share at AZCO'S NEW SUMMIT PROPERTY COULD VALUE AZCO AT $20+ ALONE AT AN AVGE PE OF 34

KEY OBJECTIVE #2
New Acquisitions Building to 5 Million Oz Gold in Reserves

KEY ACHIEVEMENT #1
Estimated $3.3 Billion in-ground Assets or $50 p sh
Azco Mining Inc - An Uncommon Opportunity to acquire a broad based resources enterprise
with potential for many
NEW ACQUISITIONS STILL LIKELY W/ DEC ' 06 GOLD $650
Values 1.5 M Oz Gold Silver+Cu $735 M Net or $9.85 per sh
2nd Million Oz Gold+Copper could hold $455 M Plus Addtnl Valuing Azco's Net Gold Reserves towards $15.86 pr share Total Gross Assets Gold Silver Copper $2.1B - $27.50 pr sh

KEY ACHIEVEMENT #2
The acquisition May 9 '06 of the $250 M Summit Silver Gold Deposit, may turn out to be, one of the shrewdest business deals in history essentially involving an estimated 1 Million Ozs of Gold equivalent with tremendous upside exploration potential and 50,000 ozs pa output or $40 Million Cash flow
Longer term potential revenues of $100M: Entirely possible

KEY OBJECTIVE #3
Acquire addtnl 100,000 oz production in '07 in attempt to boost output upwards of 150,000 oz pa
or 100M revenues

KEY OBJECTIVE #4
Bring on line initial 1 Million oz Ortiz Gold deposit in 2008 boost output to 250,000 oz pa:
$200 M Revenues at $800

KEY OBJECTIVE #5
Bring on line 2nd 1 Million Oz Ortiz Gold Deposit in 2009 boosting output to 350,000 oz pa or 300 M Revs at $900

ICING ON THE CAKE
Bringing MIO, Mica & Felthspathic Sand into full production
along with add'l newer acquisitions - Potential $400 Million or $4 per share cash flow + $5 Bn Gold reserves = $100 psh

CONCLUSION
With so much going for Azco already and with such highly valued in-ground assets prospect of additional acquisition + very strong cash flows could drive shares sharply higher so that investing in AZMN at these low levels makes sense

 
AZCO ASSETS + $1000 GOLD = POWERFUL ELIXIR

 
Makes Azco Mining an unusual standout opportunity with $50 per share in inground assets adding $900 Million in just the last few months, that could go from a standing start to $100 Million in revenues, literally overnight?

With proven inground reserves of Silver Copper and Gold approaching 3 Million ounces and prices begin to rise exponentially the net added values can be truly staggering. Azco has added $900 Million in net value recently.

Just days ago, the very thought of producing 200,000 oz Gold per annum by 2009 may have seemed remote. But not any more. Now, with a potential Gold output of up to 150,000 oz pa, apparently within reach by 2007, the prospect of Azco having revenues in excess of $100 Million within 18 months is looking increasingly likely.

The new 1.5 Million oz above now includes 250 Million net value of the new Summit acquisition and 1M oz Ortiz deposit, plus net recoverable Copper. 2nd Million oz Ortiz deposit brings total net values to $1.19 B or $15.86

Total Gross Assets Gold Silver and Copper equal 2.1 Billion or $27.50 per share. Grand Total 3.3 B or $50+ p sh
Perhaps the more exciting aspect of Azco's future will be, how it executes on its acquisition agenda: Counting down the 24 identified properties that Dr. Carson has brought to Azco. With 3 done and 21 to go could this be:

A Countdown To Investment Riches Beyond Imagination
Investment Success is the reward for those who see the future way before others and act upon it propitiously

We have been unequivocally bullish on Azco and Gold for several years now and as AZMN proves up our ideas and having already created 30 Millionaires and numerous Multimillionaires, as the Azco story unfolds and the company gathers high momentum in the execution of its bold agenda and in particular its aggressive plans to significantly boost reserves through further exploration and acquisition of 24 additionally prospective mining properties around the World that Dr Carson has already identified, we see its values increasing exponentially in the months and years ahead. Investors did not initially believe us, when we predicted Azco might rise by 1,500%. They surely believe us now. With potential Gold reserves approaching three million ounces and near term production of Gold fast approaching, we're making a very strong case for Azco to not only earn as much as $1 per share soon, but potentially within 3 years > $2 and $3 before the end of the decade with $1000 Gold which now looks increasingly likely as December 2010 Gold recent recorded new all time record highs at $914. Dec 2008 Gold currently trades at $721 and production can be sold forward at this price. Dec 2010 Gold = $800

If Azco were to produce 200,000 oz of Gold per year by 2009, that could equate to $130 per share at P/E of 65

Since acquiring Azco Mining Inc AZMN's shares from under 10 cents all the way up to today's prices, we have throughout considered AZMN to be one of the most extremely undervalued asset plays in market history. Its recent debut as the #1 US Mining Stock in February '06, up 2200%, tends to bear out this viewpoint. With $50 per share total gross assets, trading at such undervalued levels today, presents a tremendous opportunity to acquire diversified Precious Metals and Minerals reserves with Gold Silver & Copper assets of $27.5 per share.

Our defendable and definitive research follows showing how AZMN's values already increased $900 M in 2006. And, our Top Ten reasons why Gold will likely go much higher bears out that Azco's future will likely be Golden. There's an old Wall Street Adage: Stocks that go up 2000 percent tend to go up 5,000~10,000% in due course.

In valuing Azco as above it is important to understand why the combination of sharply rising Gold prices and a drastic improvement in grades, is impacting Azco's values so very dramatically. This should be looked at strictly as a business proposition: Cost of production is expected to be $225 oz At $700 per oz Gold the net profit would be $485 oz or $48 Million net annually without expected grade improvements and 2nd million added could equate to $96M or $1.28 pr sh

The new Summit Silver Gold Net Valuations of $250 Million or $3.85 per share should be added to all valuations below:

And why Azco has to be considered extremely undervalued

Viz: Placer Dome bought out for equivalent of a PE of 123+ Could theoretically value Azco - AZMN at $100 per share...

"An uncommon opportunity to combine both industrial minerals
and precious metals exposure with increasing cashflows"

• Four "Economically Viable World Class Mining Projects" with combined cash flow potential well in excess of 100 Million dollars

• Exceptional potential for additional development upside over 90 Square Mile Ortiz lease area and patented claims at the Summit

• Highly prospective geological potential for Gold, Silver, Copper, Zinc and Lead discoveries at both fabled Ortiz Gold and Summit

• A relentless pursuit of additional assets to add value to Azco and in particular boost Gold and Silver reserves beyond 2.5 M ozs

• Already on a path certain countdown to becoming a significant Gold and Silver producer with growing strong cash flow potential

• Ability to leverage increasing cash flows into rapid development and management of additional properties, as they come on line

Mission Statement
"I intend to redirect the strategic future of this company to include identification and acquisition
of high quality Gold, Silver and Copper resources".
 

Strategic Agenda and Timeline

Exploration - Acquisitions - Production

"I believe the next several months will be an exciting time in the precious metals sector, and an exciting time for Azco as it builds its precious metals asset base and heads toward a production profile. We welcome you, thank you for your patience and trust and reiterate our intention to monetize these projects in due time". "Through strategic acquisitions using its proven experience and expertise in mining and markets, Azco's aim is to enhance shareholder value and build a strong cash-flow driven resource company with significant sustainable annual revenues over the next few years".

Dr. W. Pierce Carson
President and CEO
Azco Mining Inc

With the recent revelation on joining Azco Dr Carson bought with him a bounty of 24 potential acquisitions (see below resume) These are not trophy's and we certainly believe he'll waste no time in building Azco into a mining conglomerate.

Could Dr Carson be the most underestimated CEO in America today? We believe so. While investors may bid up prices of promising precious metals plays, often with no proven reserves to speak of: Serious investors focus on what is in the ground and what it will be worth in the future. Azco currently possesses independently verified in-ground Gold, Silver, Copper, Feldspathic Sand, Mica and Iron Oxide assets totaling $3.3 billion or over $50 per share in monetizable assets.

The difference between Azco's CEO and many others who may not yet possess proven reserves is Dr Carson has a truly amazing record of discoveries and identifications of viable economic resources and has turned deserts into Gold mines...

"In August 2003, Dr W Pierce Carson (see bio), decided to return home to the US, after developing more overseas Gold mines than any other individual in history, from prospector data to ingot. Dr Carson was very familiar with Sierra Nevada minerals claims and that is in essence, how Azco came to inherit the fabled Ortiz Gold Land Grant, passed down over many generations. In noting the immense inground reserves and potential of Azco's Felthspathic Sand & Mica Deposits, Dr Carson became CEO of Azco, rather than vie for absentee mine owners". Over the past 2 1/2 years, Azco Mining Inc has acquired an increasingly valuable portfolio of claims that will yield immense value with increasing resource and metal prices. In keeping with Azco's Mission Statement and Strategic Agenda a decision was soon made to proceed with mine ownership and operation, which is Dr Carson's specialty, and rather than proffer his numerous discoveries and identified claims to other companies, Azco entered into a secured term agreement with Dr Carson for exclusive rights to all of the designated acquisitions he has assigned to Azco, currently believed to include at least 24 delineated properties, with which Dr Carson has special relationships. The improvement in the standing of Azco, has permitted attractive financing to be obtained, at very favorable rates, for the purpose of developing these claims on an as need basis. Use of funds will be to support rapid development of the several mines within Azco, which will retain the considerable profits in house and enhance shareholder value. With near term production and very high metals prices, Azco's future could be Golden...

From Humble Beginnings... To a Great Future
Can Azco soon leverage an original $40 M to $4 Billion in Assets?

You've seen it happen before: Goldcorp increases its market cap from $50 M to $10 Billion as the premier Gold producer in North America, Headwaters goes from 10 Million to over 1 Billion in revenues becoming the second fastest US grower.

Remember how Azco started out...It's really an incredible story of how a little known company went out and discovered two hugely significant Copper deposits, selling them almost overnight to mining giant Phelps Dodge for windfall profits of $40 Million net and then leveraging this into acquisition of one of the world's largest and purest Mica and Feldspathic Sand formations. Now it has since pulled off the unimaginable, in acquiring very economically an extremely valuable Gold property with proven reserves of 2 Million ounces, with potentially enormous ongoing upside discovery potential, given the immense 90 Square Mile 57,000 acre size, location and especially conducive geological structure of the formation. Now, more recently, acquisition of a rare Micaceous Iron Oxide MIO Deposit has already leveraged assets to $3.3 Billion.

And, with additional acquisitions apparently imminent, at a time when Gold and Silver prices are surging, Azco could well be positioned for hypergrowth. With an Exploration Acquisition and Production agenda strong cashflows could develop in the very near future in near record time for an emerging mining company and asset acquisitions could add to all values, so that as Gold prices continue to rise and with the recently updated project values by Azco we are starting to see the possibility of earning as much as $1 per share as no longer remote, but at $850 ~ $1,000 per ounce increasingly likely...

Azco's stunningly successful and potentially enormously valuable acquisition of the Ortiz Land Grant, as one of the few remaining uniquely large mining reserves in the United States, that covering such a large area, it is a geologically highly prospective property containing 2 Million Ounces of proven Gold reserves and also holds potentially enormous additional exploration upside including, Silver, Tungsten, Molybdenum and base metals such as Nickel, Copper and Zinc and very real probabilities of additional Gold in part already determined by 386,000 feet of drilling outlined in over 1,500 drill sites.

With one of the World's foremost explorationists at Azco, with not just a proven, but enviable track record for creating wealth, Dr. W. Pierce Carson has initiated a new and revitalized exploration, acquisition and mining agenda for Azco.

His 35 year career record for raw exploration around the world leading to many significant discoveries and acquisitions, is quite unparalleled in many respects, with 50 + discoveries and identifications: The foremost explorationist of our era?

Dr. W. Pierce Carson PhD in Economic and Structural Geology an MS in Ore deposits from Stanford University and a Bachelors Degree in Geology from Princeton. Accomplished international mining career spanning 35 years with extensive experience in directing exploration development and mining of base metals, precious metals, industrial minerals projects.

Exploration and Mining Career Highlights

Early in his career, his geologic work with an exploratory task force at Exxon Minerals on all five continents, Central and South America, Asia, Europe and Africa led to major exploration programs in Australia, Chile, Germany, Spain and Africa.
Responsible for all precious metals exploration activities in the United States and Canada at Kennecott Copper Inc: A property that he identified and recommended for acquisition was acquired and developed by Kennecott, subsequently became a significant Gold-Silver producer.

• Acquisition of the Tabar Islands Gold property, in a joint venture with Kennecott.

• Discovery of the Kurara Gold Mine in Western Australia with subsequent successful financing, development and operation of the mine.

• Discovery of Emu South gold mine in Western Australia, joint venture of the property to Western Mining and subsequent sale of interest and $40 million distribution to limited partner investors.

• Completion of Ramu Nickel pre-feasibility study based on pressure acid leaching.

• Acquisition of the Girilambone copper property and design of the technically innovative and highly successful SX-EW processing system.

• Arrangement of financing for Girilambone mine development through joint venture participation and bank debt.

• Implementation of hedging programs.

• Successful operations of the Girilambone copper mine and the Kurara Gold mine.

• Discovery of Tritton Copper deposit using state-of-the-art geophysical methods.

• Purchase of Kennecott's interest in the Tabar Islands gold project.

• Acquisition of the Johnson Camp Copper mine and Tritton Copper property in the United States and Australia.

• Sale of Ramu nickel project, Papua New Guinea and Sierra Rutile titanium mine, Sierra Leone.

• Arrangement of project debt financing of $42 Million for copper and other mines.

Property Identification Agreement Between Dr W Pierce Carson
And Azco Mining Inc Covering 24 Or More Potential Acquisitions

From his extensive experience in the mining industry prior to his association with the Company, Dr Carson has become aware of specific properties that may represent attractive acquisition opportunities for Azco Mining Inc and Azco has already acquired two of these, namely the coveted and extremely valuable Ortiz Land Grant 2 Million ounce Gold deposit and New Planet Micaceous Iron Oxide (MIO) deposit. Over the span of his 35 year mining career, including properties above, Dr Carson has discovered or identified as many as 50 properties around the World considered economically viable or with very high potential for mining success at some future time and since Azco Mining Inc wishes to acquire high quality exploration and mining properties as part of its objectives for growth, as part of his employment contract, Dr Carson agreed to make available to Azco a list of twenty-four (24) properties and all the information he possesses in regards to these properties and cooperate fully to facilitate detailed assessments and aid with the acquisitions of same.

Acquisition of properties is a laborious and time consuming process however in spite of this, Azco has already succeeded in acquiring two extremely valuable properties and disclosed negotiations on two others are already in progress and may be well advanced. Given that 24 properties may be attractive enough to acquire, it would not be unreasonable to assume that up to 6 acquisitions per year may be possible and thereby over the next 4 years build strategic long term reserves up quickly in anticipation of higher metals and mineral prices over time.

Azco's immediate objectives are to bring its properties on line and into full production as quickly as possible to satisfy the rapidly growing demand for exotic minerals and increasing demand for Gold and Silver driving today's price to 25 year highs and acquisition of new assets.

Azco's Strategic Mission

"Through strategic acquisitions using its experience and expertise in mining and markets, Azco Mining's aim is to enhance shareholder value and build a strong cash-flow driven resource company with significant sustainable revenues annually, within the next several years"

Total Project Value includes 2nd Million ozs of Gold + $200M Copper potential and since the 2nd Million Ozs has even higher grades in some veins, it should equal value: Doubles original 1M oz $577 Million $7.21 per sh to $14.42 per sh

Now factor in Azco's 24 targeted acquisitions, the next of which is indicated to be a Gold and Silver property of significance: Viz 1 Million ounces, but this one with near term production potential and could effectively increase again, all of the above numbers putting Azco's upside at current Gold prices $21.63 per sh
None of this includes enormous potential for upside exploration and discovery of multi-million additional ounces of Gold and Silver plus Copper Lead and Zinc

And these prices do not include the massive in-ground reserves that the New Planet and Black Canyon Deposits represent effectively valuing AZMN at $50 ps: Including upcoming acquisition(s) should value Azco between $3 and $4B

It should also be borne in mind that Azco is an advanced exploration & mining stage company with proven reserves and though inground and non-producing as yet has enormous intrinsic value & monetizable assets, as opposed to many other exploration entities with unproven reserves that receive unconscionable valuations with huge caps for what may never ever become producing mines.

That's why Azco is currently considered extremely undervalued and versus its peers should be trading at $5 plus at least today and potentially a lot higher...

AZMN - Stunning New Comparisons and Valuations

Recently revealed compelling new valuations for Azco's Ortiz Reserve upgrade were significantly underestimated in previous editions of this report, as it now appears to potentially value the 1 Million Oz reserve at almost double previous estimates of a net value of $180 Million to almost $400 Million today with Gold prices consolidating around $650. The impact of what Dr Carson describes so aptly below as: "An improvement in grade of this magnitude, would have a truly dramatic effect on the project's already very attractive economics", now more effectively translates to net annual revenues for 10 years at $65 Million.

Quoting from the recent Azco press release: In reviewing the results Dr. Carson stated, "As attractive as these economics are, we can see significant additional upside in a number of areas. Importantly, MAG's study concluded there is a strong possibility that the gold grades and contained number of ounces have been significantly understated. This conclusion is based on reports by previous companies involved in the project and by an independent review conducted by a firm that specializes in resource estimation. That firm concluded that the actual grade could be up to 30% higher. An improvement in grades of this magnitude would have a truly dramatic effect on the project's already very attractive economics". - More...

Now, factor in this: Goldcorp's CEO Sees $800 Gold and $25 Silver by 2007 and US Gold's McEwan $2000

At $1000 Azco's Gold net would increase in value to around $805 Million AZMN could earn $1 per sh

MORE AMAZING NEWS: A GOLDEN BUYING BINGE

2005 December 22 Barrick Gold Buys Placer Dome for $10.4 B at a P/E of 123. 2006 Gold Rush Takeover Bonanza - Values Azco Mining Inc AZMN at sky high levels renders AZMN as rich potential target due to extreme undervaluedness: Feb 24 2006 Glamis Gold Ltd GLG Acquires Western Silver WTZ for US$1 Billion

Feb 22 2006 Acquisition of DEZ - Values Desert Sun Mining at US$500 Million With pre-feasibility estimates: Total Proven and Probable reserves in all zones containing 1.51 Million ounces of Gold as per Jan 26 2006 update by definition has to value Azco Ortiz deposit with more than 2 Million contained ozs of Gold as being at least as valuable not including recent 30% improvement in grades therefore potentially valuing Azco at well in excess of $8.00 per share, similar to other valuations arrived at below by other independent means and does not take into account the significant additional upside the Ortiz Gold deposit holds thus, theoretically, DEZ valuation places AZMN at least $10, without upgrades and could potentially value AZMN at $12.6 factoring in any possible upgrades.

With estimated output of 100,000 oz pa from Azco's Ortiz Deposit at current Gold prices of $660 plus: Expected net annual earnings, would equal $30.44 Million, not including 30% expected improvements in grades, could boost net earnings to near $40.00 Million. At a P/E Ratio of 123 would equal a per share price range for Azco of between $53 and $70 with an industry mean of $45 +.

It's becoming increasingly evident that Azco Mining is not only very extremely undervalued it has a lot of catching up to do to reach a $21 mean from current

Obviously additional acquisitions Azco is negotiating could explode estimates, not including recent revelation of Azco's
hidden assets of near $50 per share.

As 2006 Dawns... Is the World really running out of Gold ?

With 2005 Gold production reportedly at its lowest production levels in almost a Century: The evidence is highly compelling:

The deep and once very gold-rich South African Mines are mined out - Some say Australia is also tapped out - US remains prospective as a growing annual demand to supply deficit estimated at 1,220 tons cannot be sustained indefinitely by banks. According to the US Geological Survey USGS, they anticipate only 50,000 tons of Gold available for future recovery, another alarming statistic that could soon inspire panic buying as we're consuming Gold at a rate of 3,760 tpa, with just 13 years left!

Gold values have been rising for 5 years in a row and since September 2005 have been soaring, reflecting a variety of fears that include the possibility that within 2 or 3 decades, the World could run out of mineable Gold. The most precious of all metals that for thousands of years has been the ultimate store of wealth and legend of Gold rushes and mining bonanzas in times past as new discoveries continued have continued to be made, may finally be reaching finite limits of production and sustainable output. In recent years sharply awakening revelations that demand for Gold may already be outstripping supply by as much as 1,500 tons per annum is a stunning dimensional statistic that in of itself, is a truly alarming wake-up call as to the future availability of Gold in a World where speculation, hoarding and profiteering, now only just beginning, could run rampant... The almost unbelievable possibility that the World could really run out of mineable resources even within 20 or so years, places a huge premium on any proven resource of One Million ounces or more, let alone 2 ~ 5 Million ounces plus and so, with the latest report last month that Azco Mining Inc's Ortiz Gold Deposit contains 1 Million ounces ready to mine...

Valuing Azco's Outstanding Feasibility - Ortiz Gold Project
Quick Valuation by savvy accountant who was sought after by one of the richest families
in the US to account their fortune:

1. It looks to me based on a quick valuation calculation that the gold component of Azco Mining Inc
is worth $6.37 per share as follows:

2. Pre-Tax profit after capital costs, operating costs, refining, royalties and depreciation is estimated to be around $37 Million per year.

3. After-tax profit (assuming a 40% corporate rate and no net operating loss) estimated at $20.8 Million yr + $25 Million for tax losses.

As 2006 unfolds: How many stocks can you genuinely identify as being 10 times undervalued based on comparable proven in-ground values of major mining companies. Just as Google rose against all odds because it keeps on getting more valuable, so too Azco Mining AZMN keeps adding value per recent press releases: Additional acquisitions may be pending, so more value could yet be added... In fact substantially more than a few acquisitions may be pending, as the company just recently revealed it has targeted at least twenty four (24) prospective properties, including the already acquired Ortiz Land Grant that combined, may hold truly staggering potential riches.

Of late there's been a lot of speculation about the potential of Nevada's Cortez trend as a potential major producer with US Gold boasting of making a major land grab, adding to its Tonkin Springs property with inferred Gold reserves of 1.4 Million ounces, seeking to acquire four additional public companies that surround US Gold's claim that comprises a significant area of the Cortez trend calling it a major holding. The difference between US Gold's inferred claim and Azco Mining's proven reserves might arguably be the fact that Azco Mining has inherited one of the most valuable remaining undeveloped mining leases in continental US. The famed Ortiz Land Grant comprises 57,267 acres covering 90 square miles, in what easily could be described as the landmass of a major that by some measures could be twice the size of the Cortez trend and just a small part of which, the Carache and Lucas Canyon deposits hold 2 Million ounces proven reserves of Gold and the remaining areas are said to offer "Superb Upside Exploration Potential." Former executives of Newmont Mining Inc, retained to conduct a full scale comprehensive engineering, feasibility study and evaluation report on the property, are said to have described Azco's Ortiz Gold Fields as sensational at $400 oz and at recent prices of $520 oz, almost beyond spectacular... At $600 lost for words...

What does this mean? It could mean the Ortiz region might become one of the more promising prolific Gold producing regions of the 21st Century. Just 40 years ago when copious amounts of Gold were first discovered in Nevada: It was thought that while it might produce Gold on an economic scale, few could have foreseen how technology would enable the State of Nevada to become one of the most prolific Gold producing regions of the World, catapulting the United States into 2nd place as a World producer of Gold, behind South Africa and overtaking Australia. Could the Cortez trend could hold such promise too? Yes but the Ortiz trend could also be an extension from Nevada:

30 yeas ago, the Grasberg Gold-Copper deposit was first discovered in Indonesia. The initial reserves were thought to contain One Million Ozs of Gold and Seven Billion Pounds of Copper. Thirty years later, Grasberg is now a true Global Superstructure Giant producing three Million ounces of Gold and Billions of pounds of Copper annually and like finding a veritable Iceberg of reserves beneath the initial surface discovery at its near ground peak, entire deposit base reserves have grown to 35 Million ounces of Gold and 150 Billion pounds of Copper. The lesson of Grasberg is prospectors who discovered this early insignificant find were later shocked to have found the mother of all lodes.

In the same way as Nevada's Carlin and Getchell trends... Could the Ortiz Gold Fields contain a similar 'Iceberg' of underground Gold and Silver? Could the Ortiz area become a Western Hemisphere Infrastructure Giant capable of high Gold productions? Since the property has already been reported as potentially rich for underground mining, such probability cannot be ruled out and when some of the World's most highly qualified and respected Geologists have declared the entire 90 square mile deposit to offer "Superb Upside Exploration Potential", in view of what happened both in Nevada, where some of the same geology exists in the Ortiz range and with The Grasberg Project, it might be extremely foolhardy to summarily dismiss the high probability of the existence of, at least several million additional ounces of Gold...

And, since Azco Mining management has already reported that they are in negotiations to acquire additional drilled reserves of Gold, it might be equally foolhardy to pass on the opportunity to invest in what may become one of the most aggressive junior exploration and progressive mining companies of our time, that, with an estimated $3.2 Billion in gross in-ground proven reserves already part of its growing portfolio, this may be one company to own as possibly the cheapest way to buy into the current Gold boom that could have major upside.

'The power of the Base': It's been our good fortune to have recommended numerous issues when and where few others have dared to tread. Perhaps our most successful call and as possibly the only analyst to publicly highlight and recommend Headwaters Inc NYSE: HW, (formerly NASDAQ: HDWR) from the lows of 50 to 70 cents range in December 1999, to its recent peak at $45 in July 2005 and now what has become the 2nd fastest growing company in the US, having risen 95 fold or 9,500% off its lows, is a rare and stunning call in any Wall Street history. In other words, $10,000 invested in HW in December 1999, would have grown to almost $1 Million in 5.7 years. At the time we recommended HDWR - HW, our visibility was nothing like that of Azco Mining's is today. That's why we see so much upside:

In the case of Headwaters, apart from the in-ground asset values of $1 Billion or so, it was hard to foresee how tremendously successful HW would eventually become. In considerable contrast, Azco's acquisition program adding to its already immense $3.2 Billion gross in-dependently verified in-ground valuations, with hidden assets of almost $40 per share, AZMN offers unusual visibility for a bright future.

The share price structure and subsequent rebound in Azco looks like a larger version of what happened with HW portends major upside.

Latest valuation update versus most comparable peers with no proven reserves,
but comparing inground estimated reserve ownership

Based on where US Gold USGL is trading AZMN should be trading at $9.05 per share, again with considerable additional premium for its Azco's proven in-ground reserves and considerable upside potential of the 90 square mile highly prospective Ortiz Land Grant Reserve and:

Perhaps a better way of illustrating AZMN's extreme undervaluedness, is to compare it with Gold Giant Newmont Mining Inc NEM which, according to one well known analyst, when buying NEM recently, you were in actuality buying an ounce of Gold in-ground for about $448, excluding the depreciation and amortization costs etc. At today's valuation for AZMN, with everything else for FREE: (Arguably worth an estimated $10 per share). For the Gold component, you are paying $44 for each ounce in the ground: Which stock would you rather own?

That values AZMN's Gold component share price at $14.00 per share today,
without factoring in Azco's 15 ~ 30% lower production costs.

Versus the recent soaring performance of Paramount Gold PGDP on a partial interest in a 30 Million Ounce Silver 'prospect': Given the Mission Statement below wherein Azco's management has declared its intent to acquire only high quality proven reserves, one can truly only imagine the impact any additional acquisitions (that according to press reports are under negotiation), are likely to have on AZMN...

Just taking into account the 1.03 Million ounce open pit Carache and Lucas Canyon deposits and utilizing a very conservative estimated market capitalization using a P/E of 23, (the Yahoo average for gold stocks) is estimated to be 254.88 mil, but that does not take into account the potential 30% improvement in grades that would raise the value to $532 Million plus not including significant tax losses, would raise the share price value to $6.65 and still does not take into account the valuation of Ortiz's additional 1 Million ounces of proven Gold that potentially would carry a similar up to $6.65 valuation, with the possibility that it too could be the subject of quite signficantly higher grades of perhaps even greater than 30%, given there are already significant previous indications of much higher vein grades underground.

Ortiz Land Grant - History and Folklore

In 1535, when Alvar Cabeza de Vaca first traversed the Ortiz Mountains and Santa Fe New Mexico, he reported seeing within the area: "Many signs of gold, antimony, iron, copper, and other metals. The area is also believed to be very rich in Manganese, Molybdenum, Lead, Zinc, Uranium, Gas and even Oil. The Ortiz Mine has a fascinating history. The mine itself has significant historical importance to mining in New Mexico. In 1828 placer gold was discovered in the Cerrillos area and has been regarded as the first important gold found west of the Mississippi. Then in 1833, a Jose Francisco Ortiz discovered gold bearing quartz veins at the site of various field explorations. Even one of the most famous inventors and American icons of all time, Thomas Edison knew of the Ortiz and is reputed to have mined it. Soon after the Santa Rosalia grant was recorded with the Ortiz mine as its center. Potential for major underground deposits clearly exists.

That could put the entire Ortiz value alone at up to $18.75 per share, without any of the additional exploration upside expected factored in, but that's not all, while the average P/E or 23.6 might be the norm for now, in a World of soaring Gold that could be much higher and in the case of Place Dome Gold PDG, currently under offer at a premium price, the P/E ratio is close to 123, which would put AZMN's share price on just the 1.03 Million at around $37 per share and thus could potentially value the entire project at more than $50 per sh. Azco recently revealed it has independently verified hidden assets of approximately $3.3 B in inground reserves, equal to nearly $50 per share.

The recent $300 Million acquisition alone of Azco's rare Micaceaous Iron Oxide MIO deposit is worth about $5 per share currently, but in time using similar valuation formulas above, could potentially make it even more valuable than the 1.03 M Ortiz Gold deposit $1.5 Billion+.

And now finally factoring in the World Class Mica and Feldspathic sand deposit, already independently appraised at between $167 and $212 Million and its potential to produce similar cash flows to the 1 Million ounce Ortiz deposit at up to $60 Million per year, but with its value added enhance Mica, could see potential revenues in excess of $100 Million pa for this project with exceedingly high margin values.

It's becoming increasingly evident that Azco Mining Inc AZMN will be a lot more than the sum of these parts as it acquires new properties.
It should also be borne in mind that if the average prices for Gold over the next 10 years were to be as high as $750 ~ $1000, then it could
potentially add anywhere from $250 Million on the low end to $1.5 Billion net on the high end to its values. 2010 Future Gold just hit $800+.
When indices or markets like Gold rise multiple years in a row, they have a very strong tendency, to explode by as much as 100% higher.
Throughout our lifetime the mantra has become, especially since 911: 'Expect the unexpected'. So: Expect the World to run out of gold such as prognoses for Gold prices to rise to as high as $3,704 by 2019 would still equal only half of the gain in gold throughout the 1970's.
The most famous line In Sidney Sheldon's legendary novel and mini-series: "Master of the Game" - "By their ineptitude, they handed me a fortune": In a way can be re-defined as the Ortiz Land Grant being handed to Azco Mining Inc's shareholders... Due to a value oversight by some and a series of blunders by other decision makers past: Following $40 Million plus expenditure on Ortiz - They handed us a fortune:

At $1.5 Billion value for Azco's Gold today without upgrades and $700 M net plus at $1,000 oz would value AZMN in at near $30 per share.

Does all this make Azco Mining Inc AZMN a likely takeover target? Most probably today yes. Such undervaluedness is highly compelling,but imagine if Azco management makes good on its intentions to acquire additional properties, as disclosed in its recent press releases?

Azco Mining Inc already announced one additional new acquisition, already conservatively valued more than $5 per share or $300 Million based on a thirty year mine life at today's prices, but its entire production life average if much higher could value the MIO at $1 Billion plus and remember Azco's Mission Statement that the company has not only continued to execute on, but has continually delivered per dictum with two spectacular acquisitions and the legendary Ortiz Land Grant that is turning out to be a 57,267 acre deposit of awesome potential.

Conclusion: Sum of Azco's parts could be well as high as $18.35 for Gold, $5 for the Mica, Sand and $5 for the MIO = $28.35 per share And that's without factoring in any of the potential additional high quality Gold, Silver and Copper resources planned, as indicated below in his since widely promulgated Mission Statement and confident declaration upon assuming the CEO and Presidential role at Azco back in the fall of 2003, but only recently has the true significance of this statement really come to light, within the release of a report by Azco.

Apparently, when Dr. Carson began his tenure, he presented to the Board a list of 24 properties that he had personally researched and identified has having excellent potential for exploration and development. While most all of these are of course precious metal properties, there are also some additional Mineral Iron and Copper deposits Dr Carson considers as very attractive acquisition opportunities for Azco.

Recalling Azco's Mission Statement

"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

What can we now conclude from this? Azco Mining Inc, has compelling future potential, to become a mining conglomerate of significance and its agenda going forward can be succinctly defined by the following three all important words: Exploration Acquisitions and Production

Announcing positive results for the Ortiz feasibility Dr Pierce Carson, CEO, stated, "We are extremely pleased to be able to announce outstanding results, especially at a time when current gold prices, at a 25-year high, have created an exciting and very positive climate for the Company and its future prospects. MAG's study shows that at today's gold prices the Carache and Lucas deposits, which contain over 1.0 Million ounces of gold, would form the basis of a very attractive and economically viable open cut mining operation. At a gold price of $500 per ounce, the project would produce cash flow totaling $180.9 million over ten years, after payment of all costs."

At a gold price of $600 per ounce net operating pre-tax cash flow after payment of all costs has just recently increased to $270 million and with the addition of the recoverable Copper valuations indicated below, has effectively added some $450 Million in value to Azco this year...

Carson said, "In addition to gold, mineralized material in the Lucas conceptual open pit contains approximately $100 million in copper valued at current copper prices. The studies also will assess the economics of recovering copper as well as gold from the Lucas deposit. On the basis of present information, we are optimistic that a high percentage of this copper will be recoverable and could form a significant addition to the project's cash flows".

That puts the combined value at $370 Million or at $640 oz $407 Million or $5.07 per share. Apparently as indicated below grade improvements of 30% or higher can have a truly dramatic effect on the project's already very attractive economics. In light of leverage higher grades afford, cash flows as high as $530 Million may be possible, and much more with higher Gold.

The in-depth Ortiz Feasibility Study was conducted by Minerals Advisory Group - MAG is a well-known and highly respected firm whose principals have a combined experience of over 300 years in mining and related industries. MAG specializes in providing technical and financial advisories, appraisals, and merger and acquisition assistance to mining companies, financial institutions and governments.

In reviewing the results Dr. Carson stated, "As attractive as these economics are, we can see significant additional upside in a number of areas. Importantly, MAG's study concluded there is a strong possibility that the gold grades and contained number of ounces have been significantly understated. This conclusion is based on reports by previous companies involved in the project and by an independent review conducted by a firm that specializes in resource estimation. That firm concluded that the actual grade could be up to 30% higher. An improvement in grade of this magnitude would have a truly dramatic effect on the project's already very attractive economics.

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 five 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 reportedly is now 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 has to bode exceedingly 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 a highly coveted 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, Platinum and Copper also. This could be worth as much as $55 ~ $40 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 65 times earnings average that would be $40.

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 $532 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 to nearly $660, with Gold prices already at $825 plus 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 could now be worth up to $532 Million at current Gold values. 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 $1.064 Million or many times the current value of Azco. This is not fantasy. This value is as real as Desert Sun Mining such that any analyst, businessman or even another Gold company, would have to recognize that buying Azco today, just as buying Headwaters in December '99 could have equal or greater potential to deliver HW type returns at HDWR growth rates. An obvious 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 nine months ago, should have been hell bent on trying to buy this company, lock, stock and barrel. Another obvious no-brainer in that judging by the fact that AZMN has already risen 2,100% fully endorses this logic. But, let's say they only discovered Azco 5 or 6 press releases ago, reading between the lines of the increasing values and 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 as has been proven up.

We have been unequivocally bullish on Gold since the lows of 2005, and have been projecting values to $650 low range to $750 for 2006~7, and, we may also have been amongst the first in the World to call for new all time record highs in Gold or its outer months within one year:

We have been pounding the table on Gold in numerous special reports, some of which have been re-published on prestige Gold sites from around the World. And, if you think we've been exaggerating about how high Gold prices could go, just look at how far we've already come.

With Gold Breaking $700 Metals Accelerate in a Buying Frenzy

Gold prices soared again Tuesday May 09, in a stunning display of strength, as it cruised through $700 in much the way we thought it might, culminating in a near Limit Up move for the first time in almost 26 years. Meanwhile, December 2010 Gold potentially may have set the all time highest price for Gold ever recorded, taking out the previous extreme record of $875 and closing at $888. And in doing so, delivered in record time on our prediction of some weeks back that we would soon hit all time record highs in Gold in the forward months and not too long thereafter and most probably within a year set new all time record highs above $875 in the current or spot month.

Top Ten Reasons why Gold prices will rise substantially higher in due time

1. As we stated yesterday and on numerous previous occasions, the sheer power of the trend in a multi-decade breakout is truly stunning.

2. The alleged 10,000 ton short position in Gold, that must be increasingly bankrupting its holders and may be behind the latest big spike.

3. The growing Demand vs Supply deficit potentially already as much as 1,500 tons per year is unsustainable and yet slated to get worse.

4. The fact that the World really is running out of Gold. Many of the big mines are in serious decline and there is only 12 years supply left.

5. The Triple scenario or troika of the US Trade Deficit, War Deficit and Domestic Deficits all of which are unsustainable threaten the dollar.

6. The Triple War Scenario A three front asymmetric war in Afghanistan Iraq and possibly Iran with the prospect of a destabilized Pakistan.

7. A preemptive strike by Iran on Israel or vice-versa could send Gold prices soaring $100 overnight as could instability in Pakistan or India.

8. Nuclear proliferation and the threat of Nuclear Terrorism, domestic terrorism and the growing length of time since 911 bode plus for Gold.

9. $800 Billion going on one Trillion in War and defense costs and the prospect of fighting a three front war are really behind Gold's soaring.

10. Degradation and decline of Global Currencies led by the rapidly weakening Dollar and high Oil prices with massive inflationary impacts.

The US Dollar has been precipitously weak while US Treasury prices have been tumbling. This is a dangerous developing scenario as it is what everyone has been fearing might happen over the past 10 years or so and now it is finally happening. What does this mean? It means that all the money from China, Japan, the Middle East and Russia and all the other cash rich nations of the World that have been pouring their money into US Treasuries to take advantage of a strengthening Dollar, while it worked for a while, with the double whammy of rising bond prices and a rising dollar, has now reversed to reflect the dramatic synchronization and combination of falling bond prices and the US Dollar and this is being compounded by a mass exodus of funds from the US, which is bound to impact, what has up until recently been an economy awash with money and liquidity. Should and if this becomes increasingly severe, it like the soaring Gold, could be preempting another long term capital debacle of sorts or some sort of potential financial meltdown, as characteristically, when prices remain in a range for years as in the case of Bonds or for decades as in the case of Gold and Silver, traders and investors become accustomed to such flat trends and develop sophisticated option models for profiting from such activities, until they suddenly go badly wrong and get caught in a big short squeeze, not unlike what is now going on in Gold and Silver and on the downside in Bonds, what may be killing global investors.

What also tends to happen in the kind of runaway bull market in Gold as is now happening, is traders and investors short more Gold and Silver all the way up, thinking they have 'picked the top' of this now amazing run. Some $200 higher, since some commentators said Gold would not hold over $500 for long, are already out $200 and may be out of business if they haven't covered. This is essentially exactly what happened in 1979 ~ 1980, when many traders and investors called the top way too early. This time, given the strength in Platinum which set new all time record highs again yesterday and the fact that the World is running out of Gold, we expect prices to remain firm and trade in a new high range once the uptrend has exhausted itself and we fully expect that consolidation will in time work off recent excesses until such time as Gold and Silver are poised for their next major run higher which we believe will be towards $1,100 and $25 ~ $75 respectively.

Notwithstanding the fact that we have pulled back a little on Gold this morning, Gold, Silver and many other markets often have trouble in and around major milestone numbers such as $500, $600 and $700 for Gold, so the possibility of an interim top in Gold cannot logically be discounted, however should Gold in the short to intermediate term surge higher, then it would be very bullish indeed as in all likelihood, the Silver market would also surge to new highs and should that happen, it might send Silver prices to $18 plus or even past $20. One reason, why it might be unwise to count Gold out too quickly, is, with the kind of momentum behind this market, a 1980 type blowoff is possible...

As we have stated on many an occasion: This is not your father's Bull Market in Gold. This Greatest Bull Market Ever has only just begun.

The World really is running out of Gold

A Compendium of Compelling Evidence

From renowned analyst Eric Hommelberg with inserts

In my piece 'Junior Festival 2006' which we would more liken to the coming Junior Mining Bonanza, Part one 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 Bridge - Senior Gold Analyst J P 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 reservesThey 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 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 that is now becoming a buying stampede:

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

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. GG (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 definitely wouldn't be alone. 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 quite 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.

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

Denver, Colorado, July 29, 2005 - U.S. Gold Corporation USGL is pleased to announce that Rob McEwen has purchased by way of private placement with the Company, 11.1 million shares for US$4 Million becoming the Company's largest shareholder with 33.3% interest. It is planned that Mr. McEwen will be assuming roles 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 + per 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 greater supplies found.

Even if 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 likely be severely depleted in 10 years at current annual production rates.

The industry desperately needs some major new discoveries right now Since 99 only a very few world class gold deposits have been found.

Newmont President Pierre Lassonde expects some new world class gold discoveries (> 5 million ounces) in 18 months to two years time.

Majors are being 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 and that's not all... Due to an anomalic trade in mid-2003, Azco Mining could make the Guinness records as one of the all time gainers ever... With the recent revelation that Azco Mining has hidden assets of $3.2 Billion equating to over $40 per share this may be a stock for the ages.

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.

Source: Azco Mining Inc.
Press Release

Azco Mining Acquires $250 Million Summit Silver Gold Project in NM Plans Immediate Production
Tuesday May 9, 09:28 am ET

Company Plans to Soon Begin Production at Steeple Rock Mining District Site

GLENDALE, Ariz., May 9 /PRNewswire-FirstCall/ -- Azco Mining Inc. (OTC Pink Sheets: AZMN - News), a U.S.-based mining and exploration enterprise focused on gold, silver, copper and industrial minerals, announced today that it has acquired the Summit property, Grant County, southwestern New Mexico. The Summit silver-gold property, which is approximately 117 acres of patented and 600 acres of unpatented mining claims, contains drilled silver and gold mineralized material and has a current mining permit.
The company also acquired a permitted site suitable for processing activities located approximately 60 miles south of the Summit property on 257 acres of patented mining claims near Lordsburg, Hidalgo County, New Mexico. Azco further purchased a ball mill and a 400-ton-per-day flotation plant. The total transaction was valued at $1.3 million. The company plans to complete an engineering plan for the Summit mineralized material, erect the flotation plant at the Lordsburg processing site and begin production in the near future.

CEO Dr. Pierce Carson said, "We are acquiring the Summit at a time when silver and gold prices are at near-record levels and appear to be heading higher. In the 1980s, drilling and other work at the Summit that cost about $10 million resulted in significant mineralized material with grades in the range of 8 to 10 ounces of silver per ton and 0.12 to 0.15 ounces of gold per ton, which, at today's metal prices, represent an in-ground value exceeding $250 million.

"Although we have not yet finalized engineering studies, we believe that the Summit operation will be a profitable mining proposition, on the basis of present estimates. The precious metals may be mined from underground and marketed as a flotation concentrate. The Summit has excellent upside exploration potential. It is located in the Steeple Rock Mining District, where there has been notable precious metals production in the past.

"In addition, we expect that the establishment of a flotation mill at Lordsburg will generate other mining and processing opportunities from the surrounding mining districts, many of which historically have yielded substantial production.

"We believe there are no significant obstacles to moving the Summit project forward. We have the important permits in place and have acquired most of the equipment necessary for processing. We are carrying out final engineering studies. Based on the results of those studies, we will be in a position to release more details, such as projected capital, operating costs and a schedule for production."
The patented claims are subject to underlying royalties. The company acquired the Summit property and related assets through the purchase of all the stock of the Lordsburg Mining Company, a New Mexico corporation, from Imagin Minerals, Inc., a privately owned industrial minerals company. The purchase was completed following consolidation of fragmented ownership of the assets, which previously were held by several entities both related and unrelated to the Lordsburg Mining Company. Azco Mining holds the Lordsburg Mining Company as a wholly owned subsidiary. The Summit acquisition is subject to a property identification agreement between the company and its CEO.

About Azco Mining Inc.

Azco Mining is a U.S.-based mining and exploration company focused on acquiring and developing gold, copper and industrial mineral properties. The company owns mineral lease rights to the Ortiz gold property in New Mexico, believed to contain 2 million ounces of gold; a high-quality mica mine and processing facility near Phoenix; and a world-class resource of micaceous iron oxide (MIO) in La Paz County, Ariz. Azco intends to build a portfolio of high- quality, diversified mineral assets with an emphasis on precious metals. To learn more about Azco Mining Inc., visit http://www.azco.com .

An investment profile about Azco Mining may be found at http://www.hawkassociates.com/azco/profile.htm .
For investor relations information regarding Azco Mining, contact Frank Hawkins or Julie Marshall, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com . An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com and http://www.americanmicrocaps.com .

The information contained herein regarding risks and uncertainties, which may differ materially from those set forth in these statements, in addition to the economic, competitive, governmental, technological and other factors, constitutes a "forward-looking statement" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbors created thereby. While the company believes that the assumptions underlying such forward-looking information are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking information will prove to be accurate. Accordingly, there may be differences between the actual results and the predicted results, and actual results may be materially higher or lower than those indicated in the forward-looking information contained herein.

Press Release Source: Azco Mining Inc.

Azco Mining Provides Update on Ortiz 2M Ounce Gold Project
Wednesday April 19, 9:13 am ET

GLENDALE, Ariz., April 19 /PRNewswire-FirstCall/ -- Azco Mining Inc. (OTC Pink Sheets: AZMN - News ), a U.S.-based mining and exploration enterprise focused on gold, silver, copper and industrial minerals, provided today an update of the Ortiz engineering and resource review underway by Mineral Advisory Group, LLC (MAG) and Independent Mining Consultants, Inc. (IMC).
Azco CEO Dr. Pierce Carson said, "With gold prices now more than $600 per ounce and at 26-year highs, we have received many inquiries from shareholders and interested parties asking about our progress at Ortiz and the latest project valuations. MAG's original scoping study concluded that mining of an initial 1.0 million ounces of gold from the Carache and Lucas deposits would yield very favorable economic returns. That study, the results of which we announced December 13, 2005, also recognized considerable upside potential in estimations of contained ounces of gold and grades.

"Following the promising results from the original study, we commissioned MAG and IMC to carry out additional work aimed at further optimizing the project's already attractive economics. We believe these studies are likely to result in an increase in the total number of ounces contained in the new conceptual pits, an increase in the average grade processed and a decrease in the operating cost per ounce of gold produced. We anticipate completion of these studies in June 2006 and will release the results as soon as we receive them."

With respect to project valuation, MAG's original financial model showed production of 925,036 ounces of gold over 10 years at an average estimated operating cost of $230 per ounce of gold recovered. The capital cost was estimated at $38.2 million. At a gold price of $500 per ounce, net operating pre-tax cash flow would total $180.9 million. At a gold price of $600 per ounce, net operating pre-tax cash flow after payment of all costs would increase to $270 million.

Carson said, "In addition to gold, mineralized material in the Lucas conceptual open pit contains approximately $100 million in copper valued at current copper prices. The studies also will assess the economics of recovering copper as well as gold from the Lucas deposit. On the basis of present information, we are optimistic that a high percentage of this copper will be recoverable and could form a significant addition to the project's cash flows.

"All of these factors, including the current higher gold and copper prices and the excellent potential for work underway to increase the ounces of contained gold in the conceptual open pits and to decrease operating cost per ounce of gold recovered, contribute to a substantially increased valuation of the Ortiz project.

"In addition to Ortiz, Azco continues to evaluate other precious metals acquisition opportunities. We continue to look for new ways to accelerate our acquisition agenda, with a goal of further increasing the company's precious metals resources. We are making significant progress in that regard.

"We recently completed $2.5 million in financing under favorable terms with supportive institutions, which improved our financial position to advance the Ortiz gold project and pursue other acquisition opportunities.

"Azco's auditors are completing the final work necessary to bring our financial filings into full compliance. We expect to regain currency in May 2006 then immediately apply to resume trading of Azco's stock on the OTC Bulletin Board.

"I continue to believe the next several months will be an exciting time in the precious metals sector and for Azco as we build our precious metals asset base and focus on a production profile. Thank you for your patience, trust and support," Carson said.

About Azco Mining Inc
Azco Mining is a U.S.-based mining and exploration company focused on acquiring and developing gold, copper and industrial mineral properties. The company owns mineral lease rights to the Ortiz gold property in New Mexico, believed to contain 2 million ounces of gold; a high-quality mica mine and processing facility near Phoenix; and a world-class resource of micaceous iron oxide (MIO) in La Paz County, Ariz. Azco intends to build a portfolio of high- quality, diversified mineral assets with an emphasis on precious metals.

To learn more about Azco Mining Inc., visit http://www.azco.com .
An investment profile about Azco Mining may be found at http://www.hawkassociates.com/azco/profile.htm .
For investor relations information regarding Azco Mining, contact Frank Hawkins or Julie Marshall, Hawk Associates, at (305) 451-1888, e-mail: info@hawkassociates.com . An online investor kit including press releases, current price quotes, stock charts and other valuable information for investors may be found at http://www.hawkassociates.com and http://www.americanmicrocaps.com .

The information contained herein regarding risks and uncertainties, which may differ materially from those set forth in these statements, in addition to the economic, competitive, governmental, technological and other factors, constitutes a "forward-looking statement" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbors created thereby. While the company believes that the assumptions underlying such forward-looking information are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking information will prove to be accurate. Accordingly, there may be differences between the actual results and the predicted results, and actual results may be materially higher or lower than those indicated in the forward-looking information contained herein. Source: Azco Mining Inc.
About Azco Mining Inc

Azco Mining Inc. is a U.S.-based mining and exploration enterprise with an emphasis on gold, silver, 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.

The information contained herein regarding risks and uncertainties, which may differ materially from those set forth in these statements, in addition to the economic, competitive, governmental, technological and other factors, constitutes a "forward-looking statement" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, the Private Securities Litigation Reform Act of 1995 and is subject to the safe harbors created thereby. While the company believes that the assumptions underlying such forward-looking information are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the forward-looking information will prove to be accurate. Accordingly, there may be differences between the actual results and the predicted results, and actual results may be materially higher or lower than those indicated in the forward-looking information contained herein. The valuations are opinions based on proven in-ground reserves of Gold.