Arizona Eagle breathing new life in past-producing McCabe mine

Arizona Eagle Mining is advancing a high-grade gold exploration strategy in Arizona, anchored by the historic McCabe mine, as it prepares to list on the TSX Venture Exchange under the ticker AZEM. The company recently completed a reverse takeover with Core Nickel, gaining a public listing and additional critical mineral assets, but its primary focus remains firmly on gold in Arizona.

The McCabe project offers a strong starting point, with a historical resource of roughly 880,000 ounces of gold at high grades, alongside significant silver credits. While not NI 43-101 compliant, the deposit benefits from extensive past production, underground development, and historical data compiled from previous operators, giving the company confidence as it moves to validate and expand the resource. 

Arizona Eagle has launched a 5,000-meter drill program aimed initially at confirming the historical resource, with plans to step out and test extensions along strike and at depth. The company controls a significantly expanded land package of nearly 5,000 acres, including multiple parallel and perpendicular structures that could support a much larger mineralized system. Management sees potential for a multi-million-ounce gold deposit, driven by high grades, district-scale geology, and the opportunity to capture additional ounces using lower cutoff grades in today’s higher gold price environment. Success will hinge on demonstrating that mineralization remains open in all directions and can be meaningfully expanded through drilling.

To learn more about Arizona Eagle Mining, visit: www.arizonaeaglemining.com/

00:00 - Introduction
02:30 - Dual-asset strategy: Arizona gold focus and Manitoba nickel optionality
05:45 - Acquisition of the McCabe mine and land consolidation strategy
07:30 - Expansion to a 5,000-acre district-scale land package
08:30 - Advantages of private land and permitting in Arizona
09:15 - Existing infrastructure and underground development at McCabe
10:30 - Historical production, feasibility work, and remaining resource potential
15:00 - District-scale potential across multiple structures
16:00 - Current 5,000-meter drill program and initial objectives
18:00 - Strategy: confirm historical resource vs. step-out expansion drilling
20:00 - Potential to increase ounces by lowering cutoff grade
22:00 - Exploration upside: multi-million-ounce potential framework
26:30 - Future financing strategy and potential for additional drill rigs
28:00 - Manitoba nickel assets and longer-term development outlook
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Disclaimer: The views expressed in this podcast are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this podcast do not accept culpability for losses and/ or damages arising from the use of this publication.

Transcript

SPEAKER_00 0:06

Hello and welcome to Kitco Mining with me, Paul Harris. Today is Tuesday, March the 24th. We're talking about gold, silver, and copper exploration in Arizona. Joining me today is Kevin Reid, president and CEO of Arizona Eagle Mining, which will trade very soon on the TSX V under the ticket AZEM or AZEM. Kevin, welcome to Kitco.

SPEAKER_01 0:28

Well, thank you for having me.

SPEAKER_00 0:31

Kevin, let's start right at the top. You've just done a transaction. Your website is Arizona Eagle Mining, but the most recent news releases are about Arizona copper and gold. And that is about a reverse takeover transaction with Nickel Corp, which I understand is just finalized, and you'll be going trading under AZEM on the TSX V in the coming days. Let's start here and clear this up first. What is going on and why?

SPEAKER_01 0:58

Well, thank you. That's a great, uh, great question. We we have just completed our, it's it's just recently closed, the reverse takeover of a company by the name of Core Nickel, which has strategic uh nickel and um uh critical mineral mineral uh assets in Manitoba, in the Thompson nickel belt. And we are advancing the Eagle project, which is based in Yavapai County, Arizona. It's a past-producing gold, high-grade gold and silver uh project, which is um yeah, what the company that will the the asset that will be the focus of the company uh going forward.

SPEAKER_00 1:40

So, Kevin, bringing together a nickel project in Manitoba and a copper gold project in Arizona, what what's the thought process there?

SPEAKER_01 1:49

Well, really the the the rationale for the transaction was um the founders uh of the of our of Arizona Eagle Mining uh were principals in Cornickle. And the the the fact that Cornickel was public, the fact that Cornickel um had many of the same shareholders provided uh incentive for us to do the transaction this way, to go public this way. It also allowed us to keep to a um a tight timeline to go public. But really, the the the the the real reason for the transact, those are all are great and they they um accelerate our timeline to go public. But really, the the reason for the rationale for the transaction was um we like the assets in Manitoba, and it also provides the company um an additional asset and still in the mining space, but more in the critical mineral space, uh nickel and um potentially PGMs, whereas the Arizona Eagle Project is also in a mining-friendly area in Arizona, but is focused on gold, um, silver, and copper.

SPEAKER_00 3:02

Okay. Um let's wrap up the sort of conversation, a bit of a conversation about the RTO. Was there a raise with the transaction and how many uh shares will be outstanding once the dust settles?

SPEAKER_01 3:14

Yeah, there was a small financing back in November, uh, a subscription financing, receipt financing into uh Arizona. It was Arizona Copper and Gold, which will be renamed. That was the private company, be renamed Arizona Eagle upon completion of this RTO. And there is also a private placement into Cornel for total proceeds, a little over$3 million. The company is well funded to complete its uh inaugural 5,000-meter drill program, which is underway in Arizona.

SPEAKER_00 3:48

Okay. Um you mentioned that the the two entities, the two companies had similar sets of shareholders. How much of the resulting company does management own and how did you get how did management get its stock?

SPEAKER_01 4:00

The Proforma Company uh will be owned approximately 53%, approximately, but it's it's really 53, 54% of the ProForma company. And management got its its um position myself specifically uh as a CEO. I particip participated in each and every um financing. I was also a uh you know about a um 5% holder of core nickel prior to the merger. So I invested$400,000 into core nickel, but I've also invested$1.6 million into uh Arizona Copper and Gold on I um on, if not all, almost every financing, um, including the most recent one at a at$1.20 that was done in the fall. The other managed part of the management team have all participated in private placements and financings to get their position. In total, management has invested approximately$6 million.

SPEAKER_00 4:59

And what percentage does management own?

SPEAKER_01 5:02

53% of the pro forma company. On a basic basis, there will be 49 million shares outstanding post-post, and there'll be approximately 7 million share uh warrants and uh a little over 2 million, sorry, in total shares and warrants, or sorry, options and warrants, about 7 million additional shares. Um there are 2.6 million options, I believe, which are spread amongst myself and some of the other management uh team.

SPEAKER_00 5:38

Okay, so um management you know, very tightly held. Management has a lot of skin in the game. Now, the um the main asset will be the Eagle Gold, Silver, and Copper Project in Arizona, which you mentioned. Um, and that's been built around the past-producing McCabe mine. Um, how did you put that land package together? Uh, how much did you pay for that? Is there an NSR on the property?

SPEAKER_01 6:03

Excellent question. As you know, the McCabe mine has a has a storied history going back to the 1870s, um, after the California gold rush, uh, the prospectors, many prospectors, came to Arizona looking for gold and they found it. Uh, this mine was in production intermittently until the 1930s, shut down, and then you know, there was there were two world wars that took place in the early 1900s and mid-1900s. And then it was really in the in 1980 when we came off, just after coming off the gold standard, gold prices, as you know, had a had a significant move into the$800 per ounce range, which was you know 40x off the historical$20 per ounce gold price. So a company by the name of Stan West purchased the asset and advanced it. And and um was ultimately, I'm not gonna go into the all the details here, but it ultimately ended up uh through a series of um there are time of weak gold prices and and it ended up in private hands where it sat for 30 years with a geologist, actually. We struck a deal a little over a year ago to buy the McCabe asset from this landowner for$2 million US. And then we've entered into a series of additional transactions um buying additional private ground that surround the mine that are contiguous to the property, um, assembling over 300 acres, whereas the McCabe mine itself, what the asset was on approximately 87 acres. So we um we feel like we uh we did a good transaction. Um the timing was good. Gold prices were substantially lower when we did the deal. And um by consolidating the area, not just through the land purchases, which gives us a significant private land holding, we've also assembled over 4,000 acres of BLM Bureau of Land Management ground that is available for expiration. So in total, um we have nearly um 5,000 acres of ground. So we've assembled the district, if you will.

SPEAKER_00 8:22

Okay, excellent. Is the McCabe mine, is that on the private land, the patented land, or is that partly on BLM ground?

SPEAKER_01 8:29

The McCabe mine, the 87 acres that I spoke about, and many of the contiguous claims and parallel and jacent claims that we have acquired make up the a little over 300 acres of private ground. So that's very important from a permitting perspective in Arizona. Um, when you go to permit a mine on private ground, it's it's a much more straightforward process than if you were to do it on BLL, BLM ground, for example. So that's a huge advantage for us, in addition to the fact that it's has a storied history of mining. We have on the McCabe mine on its own, we have three shafts. The most recent one that was sunk in the 80s called the Sooner Shaft was sunk to a depth of um a depth of 1450 feet.

SPEAKER_00 9:19

Kevin, you mentioned that McCabe was a previously producing mine operating in in the 1980s. Um maybe uh let's talk a little bit about what you actually got with the purchase. And then I'm referring to infrastructure, development potential. Are there any historical resources left that you can build upon?

SPEAKER_01 9:37

Yeah, Paul, that's an excellent question. And that's really what brought us to the area was this McCabe mine. Um, as you rightly point out, it was as recent as the 1980s and early 1990s, which was a challenging environment for the gold price after 19, the spike up in 1990, the run-up in 1980, 81, the price really peeled off. So it was one of these things where they acquired the mine, they sunk a shaft. So to get your point, we they sunk a new shaft, and they did tons of uh underground development work where they um they drifted in some cases, you know, you know, miles, um, nearly uh based on historical records and the work we've done, we know they they drilled it, drifted at least three-quarters of a mile to the southwest and to and did multiple developments on on the 1850, 850 level, the 1450 level, on various levels, you know, being in production and and and um developing stopes. So there's all that infrastructure that's there. Of course, now the mine's been flooded and it's capped, but you know, we've done some preliminary engineering work um to understand what it would cost to you know drain the mine and rehab it. And we have some estimates there, um, which are sub-10 million dollars approximately, but this is not 43101. These are um independent engineering uh reviews we've had um we've had qualified people do. But the point is that all that infrastructure remains and the historic resource remains, which this in the again in the 80s, uh the company that was public, Stan West Mining, that held the asset, um, did a feasibility study, uh full feasibility study, which even at 350 gold said that the cash operating costs would be$200 per ounce. Now, this is all available in their annual reports through the through the 80s and early 90s, which we've also reviewed. So, what's been left behind is they did they produced there was a historic resource of 880,000 ounces at a grade of 11.7 grams per ton gold and a 69 gram per ton silver grade to the um for another 5 million ounces of silver. That was the historic resource that we've acquired. So, although they produce 60,000 ounces, that leaves us 820,000 ounces. Now the McCabe mine itself is over a strike length of approximately 800 meters, and it's only been um drilled to a depth of 400 meters. So, what's really exciting for us and really interesting is we've assembled many kilometers of strike length. And we know because we've sampled it, and because there are pass, again, small pass-producing mines that are on the same trend, and again in parallel structures, that only go down historically to very shallow depths of you know 300 feet, for example. So these mesothermal systems can go into the kilometers. So our opportunity here is to take an uh pass-producing, extremely high grade mine, and by today's standards, um uh 11.7 grams of recovered gold, that was the recovered grade after 15% mine dilution and 85% recoveries. If you reverse engineer that, that's a head grade of over 15 grams per ton. Again, this is not 43.101. This is a historic estimate, but we know that they produced. We have production records, we know the grades. Um, so this is an extremely high grade mine by North American um standards. And it's also actually a very shallow underground mine. It starts near surface in some places. In fact, in fact, at it it starts, we've sampled it at surface, and we've seen some extremely high grades at surface, which is available um on our website and in our presentation. But what the opportunity for us is, how you know, how much more can we extend this resource from 800,000 ounces across the four plus kilometers of strike we have. And at a depth that could potentially go to a kilometer or better. We know that the Iron King mine, that is three kilometers as a crow flies from from the McCabe, was mined to a depth of one kilometer. So we have uh four kilometers plus of strike length on the McCabe structure. We have parallel structures that we've acquired, private ground to the north, we have perpendicular structures. So there's a lot of structure for us to evaluate and um ultimately explore. So although we're starting with a phenomenal starting point of over 800,000 ounces at call it a head grade of 15 grams per ton, it's open at depth, it's open at strike, it's got multiple structures, it's on private ground, it's in mining-friendly Arizona, it's off a paved highway with water, a power line running through it, and access to a skilled labor force. So with given all those benefits, um we just see this as a tremendous opportunity to re-establish, reinvigorate an extremely high-grade mine that has an incredibly incredible stored storied history here.

SPEAKER_00 15:08

Okay, well, let's dig into that a little bit. You mentioned a 5,000 meter drilling program that's underway, Kevin. I want to ask you about that in just a second before we get there. Um, 800,000 ounces at 11 grams per ton and 5 million ounces silver. Fantastic. As you mentioned, that's non-43101. Uh, so two questions there. Do you have the data to support that, those resources? And what work do you need to do to make those historical resources 43101 compliant?

SPEAKER_01 15:37

So let's remember that um this was in production. So in today's dollars, they spent about 40, 35 to 40 million US in the 80s and early 90s on this project. That's over 100 million in today's dollars. So um, although it's not 43.101, we do have the data, and we've assembled that we've put all this data in our leapfrog model and our resource model and our drill targeting model. We have the data. Um, these are, and this is underground data. This is channel samples. This is they were in the ore, they were touching it. Um so the data we have, we don't have core. We don't have the core. Um, this work, you know, again, feasibility studies were done on this. This asset was ultimately acquired by a company called Magma Gold. Magma Gold was a company that was spun out of magma copper. Magma copper was a company spun out of Newmont in 1987 to monetize their copper assets. And ultimately, this was acquired by BHP in 1996. Magma copper was. And then this is how this gold asset ultimately ended up in private hands. So the data is done by world-class people at the time. Um, it was in production. We have production records. So this it, although it's an expiration story in the sense that we've got to go back in now and redrill this to get our own data, you don't spend that kind of money and have a number of different parties kick the tires on this um without having an extreme amount of comfort with the data. So the answer to that question is we're very confident in the data that we have. But at the same time, in order to bring it to 43101, we're gonna have to drill our own holes. And that's what we're doing, and that's what we will continue to do. We believe there's a lot more upside here than the the than the snapshot in time that gave them 800,000 ounces. And I would like also to point out, it's really important to point this out that that resource was done at a 6.8 gram per ton gold and um sorry, 6.8 grams per ton cutoff. So if the grade wasn't 6.8 grams per ton, it didn't make it into the resource. Our one of the fundamental questions we have, which we will find out as we drill, is how much gold is between two grams, which is a natural cutoff for this type of deposit in the current gold environment? This is not$300 gold, which is when the resource was done. This is$4,500 gold today. How much more gold do we have if we bring in gold that was running two grams to essentially seven grams? How much gold more gold would be there? And that's a fundamental question we'll have to we'll have to answer.

SPEAKER_00 18:32

Now you're asking some very intriguing questions there, Kevin, but uh let's try and put a bit of detail onto how you're going to answer them. So of this 5,000 meter drilling program, how much of that will be confirmation drilling of the historical resource, if you want to phrase it like that? How much of the drilling will be um expansion drilling, uh, looking to sort of grow the historical resource and to indicate what the upside potential may be?

SPEAKER_01 18:57

Excellent question. Um, the initial the initial drilling that we've started, we are on hole four. Um and we started at essentially, you know, uh in into into areas where we expect there to be the resource. We expect there to be um what we're trying to do, obviously, is miss old workings. So we're going into areas where the resource estimate um has indicated that there's there should be gold. And from there, we are actually moving out. And we're moving, we're stepping out to test areas that um may not necessarily be in there or be part of an inferred resource. We're stepping out 50, 100 meters to continue to expand, um, to expand the resource, but there's still a lot of drilling that we will need to do to confirm the historic resource and also to expand it.

SPEAKER_00 19:58

Okay, so how does that drilling program sort break down the 5,000 meters? What's directed to confirmation? What's directed to expansion?

SPEAKER_01 20:07

I would say right now, like it we're still in, I would say the the inferred resource area. And um it really will how that will evolve will really depend on how it goes. If we continue to step out and we continue to hit, we're likely to continue to step out. So I it's really going to be um dependent on on what we hit. Um because we are we are nimble. We we can pivot, we can say, okay, well, let's move the drill here. But as it stands now, um we are in, we are confirming um essentially the historic resource, and I suspect that most of the 5,000 meters will be directed towards that.

SPEAKER_00 20:55

Okay. Now you you increase the land package around the McCabe mine. You're seeing you're talking about parallel structures and other things. What is the potential size of the price that you're exploring for? How big do you think this potentially could be?

SPEAKER_01 21:12

So um that's a very good question. I I frame it this way: the McCabe historic resource is approximately 800,000 ounces. Again, at a recovered grade of 11.7 grams gold and 69 grams silver. That is the recovered grade. So the true grade, the head grade, would be about 30% higher. So close to 15 grams per ton. That's number one. Um, number two was we can increase the we can lower the cutoff grade and ideally bring in more gold. We will that will be determined on how how successful we are there. But in terms of size, if we use the 800,000 ounces, that is over um Approximately 800 meters of strike length at surface and down to 400 meters depth. That means for each kilometer or sorry, each meter of strike, we have a thousand ounces. Or each kilometer, we have a million ounces down to four hundred meters. What we've assembled on the McCabe structure alone is more than four kilometers. And we and I have to add it all up, but there are parallel structures and there's perpendicular structures that I believe will likely double that number. So it's open on strike. So I mean, if you do all that math, I mean you're you're in, and if you could double the depth, and maybe you could even potentially triple the depth. So the the potential is many millions of ounces. Now the question is, you know, is it there? How much is there? We know we have an excellent starting point. We know that there's been very limited drilling. To our knowledge, Stan West drilled 15,000 meters. That's what they drilled from surface. Um, they were sampling underground and drilling from underground, but that was more of to plant production. Um, so this project um has never really had modern exploration on it. What we have is a lot of high-grade mines that start to surface and go down a few hundred feet, many of them across many, many kilometers. So the question, it's a good question. I could I take the view that um one kilometer is a million ounces. So we've assembled over four kilometers on McCabe, and that's just down to 400 meters. So the potential there is potential is four million ounces, and if I double the depth, it's eight. And if I add the parallel structures, it it goes on from there as a potential. So, you know, that's why we're so excited, and that's why we feel like it's you know, we're starting with this with this um excellent starting point, and it can only grow from here.

SPEAKER_00 24:07

Okay, uh, Kevin, you're you've got a finance background, and finance people tend to like things like targets and budgets. So um looking at this opportunity through through that lens, how much time and money do you think it would get would need you would need to get to uh let's say that three million, four million ounces um that you perhaps uh alluded to there over that four kilometers of strike down to 400 meters of depth?

SPEAKER_01 24:32

That would take quite a bit of drilling. Um this is uh a question we've given some thought to. Uh my, you know, my uh four million. I mean, it's hard to say how many, you know, it it's hard to say how it will really depend on how successful we are with our drilling, right? It are we hitting continuously? Do we have to pivot? Do we have to go to a different area? Like, so we'll if it was just you know, go drill it uh on a on a grid-like pattern.

SPEAKER_00 25:06

Allow me to believe the question then. Um, you know, let's you know, let's take more of a stepping stone approach. Let's say you've you've got a million ounces in historical resources at the moment. To double that, how long, how much money do you think it would take to potentially double that?

SPEAKER_01 25:22

To double that, you're talking about another kilometer of strike, and you're talking about uh 400 meters of depth, so that's 20 holes um on strike, and then if you go down 50 meters, um that I'm doing the math in my head, that would be 50 meters times eight is 400. So that's a lot of holes. That's um I'll just thumb socket and say 200 holes. Um, so that would be a good year of drilling. A very good year, probably longer. But that I think I think if we were hitting in in that sort of pattern, I think the market would start to go, okay, this is this is working. But to get those holes, you're I mean, you're really talking about um on 50 meters or you know, 50 meter spacings on surface, and then another 50-meter spacing grid pattern, that's close to 200 holes. That could take that could take that'll take longer than a year. That that would, depending on how many drills we get, if we could add one or two drills, you're looking at a solid year, year and a half of drilling.

SPEAKER_00 26:39

Okay, so your your finance for the the 5,000 meter program you have underway, um, you're starting to look beyond that about what the the second phase would be, both in terms of potential number of holes or meterage and how much you would need to raise to be able to execute that.

SPEAKER_01 26:56

Absolutely. Um, we have enough money to execute on this program, which will you know really take us to you know approximately seven, eight months really of money of going pretty hard at it with one drill. Um you know, we'd like to add another drill. And depending on how receptive the market is to our results and how we're doing, um, you know, we would we would look to expand the program depending on on um you know market conditions and so on. But there's really, you know, like in the expiration game, there's there's you know you could have many drills on this project.

SPEAKER_00 27:34

Okay. Let's give our sort of mental arithmetic on the Arizona property a bit of a breather for the time being. And let's uh have a quick look back at Manitoba, where you have uh where you're in the the Thompson nickel belt. What are your plans for that sort of uh that base metals land package you have there?

SPEAKER_01 27:50

Yeah, there's um the great thing about working in in Manitoba and Canada is we you know we would have access to flow-through dollars. So we do have a historic resource uh on the MEL deposit, and there's some other very interesting targets that we could um we could use potentially flow-through dollars um to explore. So, you know, there's there's lots of interesting things that could happen there. Um, you know, with you know, with with the right budget, and um there, you know, there's there's there's things that can be done. But there's it's nickel, as you know, is is not having quite the excitement around it that um that gold is and that silver has for sure. Um but I believe that's going to change. And I believe the sentiment for nickel being the high beta uh base metal um will come back into vogue um likely in the next couple of years. So we have some time, but um very strategic in the sense that it's you know mining-friendly Canada. Um the Thompson nickel belt has been around for a very long time and has a very its own storied history. So the assets are good and um in the right environment. Um if the market wants to pay us to drill them, if the market's, you know, at the end of the day, the market will tell you what they want to see happen. And uh, when the market is receptive to us advancing those nickel projects, that's likely when we'll do it.

SPEAKER_00 29:15

Okay. Let's let's take a step back a little bit. What is the aim or goal of the company and how will you define success?

SPEAKER_01 29:24

Well, the aim of the company really is to um have a good handle on, you know, as soon as possible, north of a million ounces, to get these holes coming back and and and to see how we can maximize value. Again, lowering the cutoff grade, showing that the assets open on strike in both directions, showing that the you know, ideally that the asset is open at depth. So if we success for us would be showing that this that this McCabe mine is open in all directions, that we are able to lower the cutoff, to increase the amount of gold in the quote unquote potential resource, and demonstrating the high grade nature of this project and that there is, you know, for us, showing the potential, and that's being a multi-million ounce high grade deposit. That is our goal. And, you know, with the drilling we're doing now and the drilling we plan to do, it's you know, it's our hope that uh Mother Nature delivers.

SPEAKER_00 30:30

Well, I wish you the best of luck with the drilling there, Kevin. Arizona Eagle Mining will shortly be trading on the TSXV under the ticket AZEM or AZEM. Kevin Reed, many thanks for joining us today.

SPEAKER_01 30:42

Thanks for your time, Paul. I really appreciate it.

SPEAKER_00 30:45

And of course, to our viewers, if you like what you see, don't forget to hit that subscribe button. I'm Paul Harris, and this is Kitco Mining.