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Montezuma Mining drilling to unlock Australia’s next big gold discovery

Montezuma Mining's strategically located Yamarna Gold Project has been significantly de-risked by the exploration and development programmes undertaken by Gold Road. These confirm the presence of multiple styles of gold mineralisation within shears that run directly into Montezuma owned tenements.


We initiate coverage of Montezuma Mining Company (ASX:MZM) with a Speculative BUY rating that will allow investors to join the register early before onset of a strong drill program.

The current share price provides a low cost entry point with very significant leverage to a commercial GOLD discovery at the Yamarna Gold Project.

Montezuma carries an Enterprise Valuation (EV) of $12M for its Yamarna Gold Project and an accompanying portfolio of manganese and copper assets at Butcherbird and Green Dam respectively.

This matches the 2009 entire EV carried by peer group neighbour Gold Road (ASX:GOR) prior to its 5.6M ounce gold find at Gruyere. It then soared by 2,074% to current Market Cap of $232M.

Gruyere is part of an 11,000 metre trend line that contains multiple high potential gold targets owned by GOR that trend directly into the Montezuma controlled “High Priority Target”.

This target is very large and covers 20 square kilometres that includes 2 parallel strike lines of 5 kilometres length.

Montezuma has received 25% of assays from early stage near surface aircore drilling with highlights of up to 2.7 g/t gold and pathfinder elements in basement rocks.

This data is indicating potential for the presence of a large gold system. Widespread and strong gold anomalism over several square kilometres supports this view.

Proactive Investors notes that the strategically located Yamarna Gold Project has been significantly de-risked by the exploration and development programmes undertaken by Gold Road that confirm the presence of multiple styles of gold mineralisation within shears that run directly into Montezuma owned ground.

Montezuma has further de-risked the project by completing early stage reconnaissance drilling that indicates the widespread presence of gold mineralisation.

This exploration has provided growing evidence of multiple large-scale gold systems. Reverse circulation drilling to test key targets will commence soon.

A fast track and very low cost / high risk/ high reward drill programme of 5,000 to 10,000 metres is imminent. It took Gold Road time before it “unlocked” the key to Gruyere.

Gold Road’s best result from their maiden aircore drilling programme at Gruyere was 174ppb compared to 2.7g/t achieved by MZM at a similar stage of exploration.  There is potential for significant share price appreciation for Montezuma with ongoing good drill results.

Proactive Investors believes that Montezuma represents a highly leveraged play into Australia’s most prospective and emerging gold province.

Our 12 month share price target is calculated at $0.47 - $0.72 that will be driven by commercial gold discoveries from the drill bit. Speculative Buy.


Recommendation: Speculative Buy

Sector: Materials
12 Month Price Target: $0.46 - $0.72 on successful drilling

Share Price: $0.28
52 Week -: High: $0.30/Low $0.12
Issued Ordinary Shares: 70.5M
Options: 19.2M

Market Cap: $19.7M

Cash: $6.0M (approx.)
Equity in listed Investments: $1.8M
Debt: nil
Enterprise Valuation: $11.9M

Major Shareholders
Duketon Mining Ltd: 7.6%
Ranguta Ltd: 7.26%
Zero Nominees: 7.0%
Top 20 own: 69.4%

Directors and Management
Non-Executive Chairman: Seamus Cornelius
Executive Director: Justin Brown
Non-Executive Director: John Ribbons


Montezuma Mining Company Limited (ASX:MZM) is an ASX listed exploration and development Company that holds a number of multi-commodity exploration tenements in Western Australia.

The Company’s prime focus is on the 100% owned Yamarna Gold Project which is located along strike from the multi-million ounce gold discoveries reported by Gold Road Resources.

Montezuma also owns a large manganese resource at the 100% owned Butcherbird Project, and holds an option for 75% of Woodie West Manganese Project which abuts the high grade Woodie Woodie Manganese Mine.

Figure 1: Portfolio of Western Australian projects


The Yamarna Gold Project is located within the northeast section of the Yilgarn Craton which is acknowledged as a world class province containing approximately 30% of known global gold reserves.

The Yilgarn includes historic gold production and known gold resources exceeding 300 million ounces that are mostly contained within parallel belts known as Southern Cross, Kalgoorlie Norseman, Leonora, Duketon, and now Yamarna (Figure 2).

Figure 2: Gold belts within the Yilgarn Craton of Western Australia relative to Montezuma’s Yamarna Project

The Yamarna Belt is geologically similar and has the same age as the Kalgoorlie Gold Belt which hosts over 120 million ounces of gold from historic production and current resources. The shear is made up of a package of volcanic rocks that range from ultramafic to felsic in composition.

Development of gold resources at Yamarna was held back by its barren ground cover and isolation, and remains one of the most historically under explored greenstone belts in Western Australia.

Figure 3: Comparison of the developed Kalgoorlie and Laverton Belts compared with the underexplored Yamarna Belt

Gold Road assumed first mover status within the Yamarna Belt, when it commenced exploration in 2009 with four new discoveries within 15 months that included Central Bore Trend, Attila Trend, Khan North and Tamerlane.

Gold Road has now added a major gold resource at Gruyere, hosting 5.6 million ounces within a total JORC compliant 6.8 million ounces (at a grade of 1.3 grams per tonne) across its Yamarna tenements.

Ten Gold Camp Scale targets have also been identified that track southwards along trend and into the Yamarna Gold Project (Figure 4) owned by Montezuma.

Figure 4: Regional scale of geochemical anomalies identified by Montezuma relative to 10 gold camps identified by Gold Road

The Yamarna Gold Project is made up of exploration tenements E38/2999 and E38/2889 that form a very strategic holding that straddles the most currently productive Gold Road tenements.

Montezuma acquired the project area after researching historic soil sampling completed by Western Mining Corporation. This included an anomalous area covering approximately 20 square kilometres that contains two sub parallel liner anomalies with over 5 kilometres of strike length and is known as the “Montezuma Priority Target Area” (Figure 4).

This geochemical anomaly is coincident with a granite and greenstone contact that has strong parallels with recent discoveries reported by Gold Road along trend and prospects to the north and west.

Updated regional gravity data (Figure 5) highlights the size of a large gravity high and its relationship with the Montezuma Priority Target Area.

Figure 5: Regional gravity data showing high value targets

This is further illustrated in a recent regional aeromagnetic study (Figure 6) which clearly shows a regional scale shear zone.

Figure 6: Aeromagnetic study reveals reginal scale shear zone

Montezuma combines geochemical and aeromagnetic studies to confirm that the “Priority Target Area” lies in a very favourable structural position. It is coincident with a very large embayment that is interpreted as part of a granite body located along an even larger shear.

Structural interpretation suggests an aggressive exploration effort is warranted.


A maiden scout drill programme was recently completed that included 202 vertical aircore holes for approximately 7,500 metres (average depth of 37 metres), drilled to blade refusal that tested for sub surface anomalism at the top of bedrock level that is outlined in Figure 7.

Figure 7: Layout of maiden (scout) drill program


Reconnaissance drilling has defined three targets for deeper drilling after a shallow first-pass campaign at Yamarna in November 2015 confirmed the presence of widespread anomalism in three regional-scale mineralised corridors.

Results have included 11 holes hosting gold values greater than 0.1g/t gold, with individual assays up to 2.7g/t gold.

This is growing evidence of multiple large-scale gold systems and which will be followed up in the coming weeks by reverse circulation drilling at three targets, namely Jatz, Captains and Cruskit.

The standout target zone at Jatz, extends for 1.5 kilometres and remains open along strike.

Basement mineralisation intersected during drilling showed a moderate to strong copper, bismuth, molybdenum and tellurium association that is common in meso-thermal gold deposits in the Yilgarn.

Proactive Investors notes that these initial results confirm the presence of three regional scale targets.

Figure 8: Regional collar location plan showing widespread gold anomalism in three major corridors

Figure 9: Jatz gold corridor delineated by multiple basement gold intersections. All intersections are downhole widths

Overburden thickness varies from 10 to 40 metres, which somewhat thicker than at Gruyere.

Figure 10: Cross section indicating layout of overburden and bedrock


The Butcherbird Manganese and Copper Project (100% owned) is located adjacent to the Great Northern Highway and approximately 120 kilometres south of Newman.

Butcherbird hosts a JORC estimate of 64.7 million tonnes grading 11.2% manganese, along with multiple additional occurrences that are in the early stages of development, and has potential for copper.

A Scoping Study completed by Engenium investigated the production of 0.5 to 1.0 million tonnes of ore to produce 36% manganese for a life of mine of 10 years.

Woodie Woodie West (75% owned) abuts the western boundary of the high grade Woodie Woodie Manganese Mine, will be evaluated and drilled once clearances are obtained.

The Green Dam Nickel, Copper and Platinum Group Element project is currently undergoing data gathering and desk top studies.


Montezuma has established a wholly owned subsidiary in France known as Cordier Mines SAS. The Company is attempting to gain permitting approval for the Bonneval Gold Project.


Figure 11: Gold price expressed in US$ and A$ terms

The Australian dollar gold price continues to outperform in the face of a weaker local currency, providing significant upside for development of new local gold resources.

All in sustaining costs “AISC” for production of an ounce of gold at major gold mines in the region include Granny Smith with an ASIC of US$770 / A$1,055 and Tropicana with US$730 / A$1,015.

The Australian dollar relative to the US dollar affords potential high profit margins for Australian explorers that can make a commercial gold discovery and move through to production.

The direction for gold prices in the medium term may be influenced by political and economic developments within the United States, as presidential, congressional and senate elections are less than a year away.


- Assay results – ongoing.
- Drilling campaign - November of 2015. A larger rig will be employed that will test beneath the Jatz and Captains Prospects.
- Montezuma maintains a pipeline of manganese, copper and nickel projects that are aimed at providing potential long term growth.


Montezuma Mining Company is currently valued at $19.7 million, of which $6.2 million is cash and $1.8 million are investments in ASX listed Buxton Resources (ASX:BUX), RNI (ASX:RNI), Exterra Resources (ASX:EXC) and Dankalli (ASX:DNK).

The Company holds significant levels of cash to mount an ongoing drill program at Yamarna to flesh out the extent and potential scale of the gold system.

Montezuma is very tightly held with the top 20 shareholders owning 69.4% of the company, so any strong drill results will see an immediate appreciation in the share price.

Montezuma resource assets carry an Enterprise Valuation of $11.9 million.

Taking a line through Gold Road’s exploration journey, which has a market capitalisation of $232 million, there is an opportunity to join the Montezuma share register early before the onset of a strong drill program.

The discoveries by Gold Road and the spectacular results that have been generated on adjoining tenement ground to Montezuma that carries a JORC resource of 6.8 million ounces and an Enterprise Valuation of $232.3 million or $34.16 per ounce.  Hence the potential upside for early stage investors in Montezuma begins to be gleaned.

Included in the Gruyere discovery which is located 11,000 metres to the northeast are additional targets within South Dorothy Hills include a series of major targets that are 2,000 metres to the northeast, and 4,000 metres to the west (Figures 4 & 5) of Montezuma’s Yamarna Gold Project tenement boundaries.

Gruyere exhibits a strike length of 1,800 metres and a resource estimate calculated to a depth of 485 metres (at a finding cost of less than $2.00 per ounce and within porphyry).

Deeper drilling confirms the presence of significant gold mineralisation at a depth of 1,100 metres that remains open.

The geochemical and magnetic signatures at the Montezuma Priority Target Area exceed the size of early technical signals generated at Gruyere, and are conceptually reinforced by the results obtained from the maiden near surface drill programme.

Drill testing within the southern extension of the South Dorothy Gold Camp (by Gold Road) confirms the presence of supergene and shear hosted gold zones within greenstones. This now expands the types of gold mineralisation found within regional greenstones and significantly upgrades the potential at the Montezuma Priority Target Area.

The potential for large and deep seated gold resources is further reinforced by the presence of the Tropicana Gold Resource (7.9 million ounces) which is located immediately to the south of the Yamarna Belt.

Tropicana includes four open pit deposits that are located along a 5,000 metre strike line, and are known to extend to at least 1,500 metres below the surface.

Proactive Investors believes that shares in Montezuma currently represent a very low cost and entry point with high risk / high return parameters in one of Australia’s most highly prospective gold regions.

Any commercial discovery from ongoing drilling would see our 12 month share price target of $0.46 - $0.72 begin to look “light” given how tightly held the Montezuma share register is by major shareholders.

Risk is also negated by a broader metals portfolio that includes manganese resources, copper and nickel exploration and significant cash backing.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.



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Quick facts: Element 25 Ltd

Price: 0.405 AUD

Market: ASX
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