part 3
MICA PROJECT
Azco Mining Inc. is owner and operator of the Black Canyon mica deposit near Phoenix , Arizona , a large mica resource containing a drilled reserve of 422 million pounds of recoverable mica and 3.7 million tons of by-product feldspathic sand. In 2003 and 2004 the Company sold limited quantities of mica and of its engineered mica-filled plastic pellet product to a major company that is an important producer of plastics for the automotive industry. Mica is increasingly used as an additive in plastics for its reinforcing properties and for its ultra-violet and heat resistant characteristics. The Company also has supplied mica to a leading global cosmetics manufacturer. One of the World's largest and purest Mica deposits, a proven reserve of 422 Million pounds has been independently appraised and estimated to be worth between $167 Million and $212 Million, represents only 5% of the total estimated reserves of 8.4 Billion pounds. The 7.4 Square mile deposit, at 5% contains 4 Million tons of the Feldspathic Sand bi-product, which has estimated reserves of upwards of 74 Million tons.
Azco Mining Inc, over a period of just a few years, has invested some $20 Million from the ground up, into a state-of-the-art customized infrastructure development for the entire mining, ore-separation, processing and production of both Premium Mica and Feldspathic Sand in a Dual Production Assembly.
The Felthspathic Sand component of the ore can be processed in a value added upgrade and sold into one of the nation's fastest growing construction markets in neighboring Maricopa county while its Mica production in processed, value added bulk form, can be sold to the Paint and Plastics Industries. Later it intends to pursue much higher-priced new markets, enabling it to significantly enhance its reserve values. Prices for basic processed wet ground Mica start at around 40 - 50 cents per pound and special "Surface Treated Mica" which Azco can also deliver in bulk, ranges from 60 to 80 cents, or more than $1000 per ton.
Premium grade 20 Micron particle size processed and refined Mica ranges upwards from $1.50 per pound for more specialist plastic applications and upwards of $2.00 per pound for cosmetics. As the particle size gets smaller or finer, the price rises exponentially towards as high as $30 per pound for 1 micron nanoMica and / or Titanium treated applications for metallic style paints and pigments.
Since mining, processing and refining of Mica and Feldspathic Sand is a dual production process, costs of the processing operations potentially can be covered by the Felthspathic Sand production revenues, recently upwardly estimated to $13 Million per year because of 30% price increases this year that may actually result in a bottom line improvement of between $2 and $4 Million annually. This unique anomaly should potentially render all Mica revenues as net free of cost. Therefore at 10,000 tons per year or 20 Million plus pounds output annually, at current market rates of around $1000 per ton or 50c per pound, net revenues could range between $10 Million on the low end and $16 Million plus at the higher end of bulk pricing at 80 cents per pound for surface coated processed Mica. That would equate to total gross revenues from Felthspathic Sand and Mica of between $23 Million and $32 Million, with potential total net revenues coming in between $10 Million and $24 Million respectively, dependant upon the Feldspathic Sand net differentials and Mica pricing variables. Using a twenty year mine-life production model, based on the extent of Azco's proven reserves, its projections allow for a relatively conservative up to 5 years to reach an average price of $1.00 per pound for its Mica and similarly conservative extrapolations throughout the 20 year projection plan that incorporates $1.44 Billion in cumulative revenues, without factoring in any material price increases or inflation. Notwithstanding this, the company has been averaged between $1.50 and $2.50 for its premium quality Mica sales thus far. Based on the above data and previous sales to date, the company estimates revenues could equal $717K for 2005~6 and $4 ~ $17M for 2006~7, $34 Million for 2007~8, $53 Million for 2008~9, rising to $74 Million in 2010, recently upwardly revised to $84 Million with operating cash flow of over $34 Million, potentially revised to upwards of $40 Million, (per additional revised increased in revenues of $10 M).
Azco truly represents an unusually unique and potentially 'highly profitable mining model', almost unlike any other related model.
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