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Azure Minerals (ASX:AZS): A chat with CEO Tony Rovira

June 9, 2023

AZS, Azure Minerals


Azure Minerals (ASX:AZS)

We talked with Tony Rovira, CEO of Azure Minerals (ASX:AZS), about his discovery of the Cosmos nickel deposit many years ago, the exciting exploration work that has helped discover the Azure’s Andover nickel-copper-cobalt deposit in the West Pilbara region of Western Australia and the potential for pegmatites at Andover to be rich in lithium.

Azure owns 60% of Andover, with the legendary Mark Creasy the other 40%.

Full transcription below.


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Stuart: Hello, and welcome to “Stocks Down Under.” My name is Stuart Roberts, and I’m one of the co-founders of our service. And joining me today on Tuesday, the 6th of June, 2023 from Perth is Mr. Tony Rovira, who is the managing director of Azure Resources, ASX: AZS. Tony, good afternoon.

Tony: Hello, Stuart.

Stuart: So it’s getting a bit of a habit interviewing Roviras. So I had Rovira Junior, Alex, who’s just made his first foray into the field after 10 years of a relatively luxurious life on St. Georges Terrace working in investment banking. But Tony, he clearly is a chip off the old block. Watching the old man do things like discovering Cosmos for Jubilee, and all the other adventures of the next 20 years, he’s clearly wanting to emulate the old man’s success.

Tony: Well, I certainly hope he has great success. I’ve had a very good journey along the way as well. So yes, it’s an exciting business running a junior exploration company. And if you can have some good success and make good discoveries, then it’s just a fantastic opportunity.

Stuart: Right. So, many people will know you as the man who, with Terry Graham, discovered the Cosmos nickel deposit, which was such a bonanza for Jubilee Mines. You moved on to start as you were about 2003, and a lot of that time was spent kicking around Latin America looking for silver. You kind of called that off because, you know, COVID made it difficult to get over there. But you’ve got a great consolation prize in Andover. Tell us about the pivot and how you managed to lay your hands on the end of a nickel, copper, cobalt project.

Tony: Certainly. We were operating in Mexico for about 15 years. And towards the end of that time, I think the market had become tired of the activities notwithstanding, we’d actually had some good technical successes. We had found a couple of good deposits, which will probably be mines one day. But at the end of 2019, the metals’ prices had tumbled. The market was in a big downturn. Early 2020, COVID came along and it just made everything just too difficult to operate in Mexico from a base in Perth. So we put everything, all the projects on care and maintenance, we kept a skeleton crew to keep everything in good standing. And the company pivoted its focus back from Mexico back into Western Australia. And I reached out to Mark Creasy that legendary and very highly successful prospector, and asked him if he had any assets that he might care to vend into Azure Minerals.

And he thought about it for a bit and he came back and said, yes, he had the Andover nickel project located in the West Pilbara near the town of Karratha, and that he would consider vending that into. And then we came to an agreement, and that transaction took place. We bought a 60% ownership of Andover from Mark, and he retained a 40% holding, which is freely carried through to the decision to mine. So, in about mid-2020, we started exploration on Andover for nickel. And we, in October drilled the first drill hole into what is now the Andover nickel deposit and had a great success with that first hole. And here we are nearly three years later and 200 diamond drill holes, 80,000 meters, we’ve got 2 deposits, which contain really nice high-grade nickel and copper sulfide resources.

Stuart: Right. But, at this point, Bon Jovi, “We’re Halfway There,” comes into my head. You are looking for about 100,000 tons of contained copper or nickel, I think is your exploration target for Andover. And we’re about 50,000 tons at the moment in the resource. Have I understood the situation correctly?

Tony: Not quite. We’ve got about 66,000 tons of nickel and about 30,000 tons of copper, and a little bit of cobalt as well. So we’re pretty well smack on 100,000 tons of contained nickel plus copper plus cobalt.

Stuart: Right. And how’s it looking in terms of deposits still open in all directions, or have, we reached what we think is the ideal site.

Tony: There’s two deposits there, Andover and Ridgeline, and they’re about 200 meters apart. Both of those deposits are still open at depth. Andover starts at surface. It outcrops as a nickel and copper-rich gossan. It extends down to over 500 meters below surface. We’ve stopped the drilling to that at that depth because it’s quite expensive to continue deep drilling down there. But the mineralization, high-grade, massive sulfide mineralization is still open at depth at the base of the, at the bottom of the Andover deposit. And then the Ridgeline deposit is a blind deposit. It doesn’t come to surface. It starts at about 200 meters below surface. So it’s an excellent success that our expiration team has delivered there to find something that is buried so deep beneath the surface.

Andover, sorry, the Ridgeline deposit as I said, starts at 200. It goes to well over 500 meters too. And in fact, probably the highest grade and thickest zone of massive sulfide mineralization was in the deepest hole that we drilled there. So there’s a really great opportunity for adding more tons to the resources. But probably we’ll need to wait until we’re actually underground to do that sort of drilling because it’s getting quite expensive from surface.

Stuart: All right. So we keep that in the wine cellar for a while, but you’re moving to a scoping study on the main deposit. What can we expect over the next year or so as we move towards that?

Tony: Well, the scoping study’s pretty well complete as far as all the various components of that study goes. So, your mining studies, metallurgical studies all the like, all the environmental and the like, all of those things are now complete and we’re currently in the writing-up stage of that. But we also still have several other targets, nickel targets that are right nearby, so which need to be drilled as well. So at some stage when we drill those and if we can have another discovery or we can add in further resources to what we’ve already identified, then we’ll probably be expanding that scoping study to include, to basically study a much larger mining and processing operation.

Stuart: Right. Now we’re in the West Pilbara, so we’re not completely in the middle of nowhere and Karratha’s not too far away. How are you feeling in terms of the infrastructure endowment you’ve got in the neighborhood?

Tony: You couldn’t get any better. So a two-hour plane flight from Perth to Karratha, half an hour’s drive along the main North West Coastal Highway, which runs through the Andover project with roads and tracks throughout that area as well. And then you’ve got a potable water pipeline, a gas pipeline, a high voltage power lines, all of which cross our project area. So from that sort of infrastructure point of view is excellent. The town of Karratha is 35,000 people, and so there’s opportunity for finding workforce participants from there. The Port of Dampier is just a little bit…another 15 minutes down the road. So that’s a commercialized multi-user port. And then on the other direction, you got Port Hedland a couple of hours to the east of us. So from an infrastructure point of view, you could not get a better-located exploration and mining project.

Stuart: All right. So we’ve got a great deposit there merging up. We’ll have our scoping study to get an early sense of how valuable this project is in an area where it’s relatively easy to develop a mine. And you throw in the fact that the commodity price guides are smiling on you at the moment. Nickel’s had a good year. Copper’s not doing too bad and okay, cobalt’s not the commodity du jour but it’s always good to have some cobalt credits in the mix as well. So, the economics are probably working in your favor as well?

Tony: Yes, that’s right. And I think going forward and just in terms of electrification and decarbonization of the world’s economy, is that there’s going to be an increased need and requirement for additional nickel, copper, and cobalt for the batteries and the electrification that we need to undertake. So yes, the price is strong, and hopefully, it will continue to strengthen going forward, which just adds to the prospectivity or the attractiveness of the Andover nickel project.

Stuart: Right. So once you get your scoping study, what’s next after that? Do we still need to drill out Andover a bit further? Or do we just move to our PFS or even a BFS at this stage?

Tony: Well, what’s next after the Andover nickel expiration is the Andover lithium exploration.

Stuart: Now you’re talking Tony. I’m getting excited.

Tony: And because while we were exploring for the nickel side of things, we identified that there were a lot of pegmatites out propping in the Andover project area, and particularly the central and the eastern part of it. And then, so about a year ago, a bit a year and a half ago, we started doing some expiration of those pegmatites to see whether they were prospective for hosting spodumene, which is the preferred lithium mineral. And lo and behold, there’s spodumene everywhere in those outcrops and there’s over 700 individual pegmatites outcropping through the eastern part of the Andover project area. So, the rock chip surface sampling that we did across there has identified a large number of these pegmatites have got high-grade lithium at surface over extensive strike lengths. And we’re talking two, three, four, up to 5% lithium in these outcrops.

It’s incredible. And yet there’d never been a rock broken by a geologist in their history. So we identified that late last year, and we mobilized the rigs in there in March. So we’ve got two diamond rigs drilling full-time there, and we’ve recently mobilized another two RC rigs on there. And so we’ve got four rigs going and it’s just drill, drill, drill at the moment, and I expect that we’ll be having, within the next week or so, we’ll be having the first batch of diamond drill results will be released to the market. And visually what we can see in the drill core is that there’s a significant amount of spodumene in there. So it’s a realistic expectation that we might be able to return some very high lithium grades from this drilling.

Stuart: And you haven’t started on the program. We’re talking 20,000, 40,000 meters expected this year for the lithium side of things, right?

Tony: That’s exactly right. And yeah, so with four drill rigs going at the moment, the RC rigs will be drilling up one hole a day each. The diamond drills are just going 24 hours a day. So we’re actually producing a lot of meters, a lot of samples going off to the lab. And yes, we’ll be doing a 40,000-meter diamond and RC drilling program, which potentially could be finished by August or September of this year. In which case, we would be just rolling on and drilling another one, and putting another program together. There’s pegmatites outcropping through that area. I mean, they’re in a zone that’s over nine kilometers long, up to five kilometers wide north/south. And individual pegmatites, we can trace them along on surface for one and a half, two kilometers, or more at surface.

And if we are drilling these pegmatites successfully and successfully identifying significant quantities of spodumene lithium within them, then this Andover project has the potential to be very, very large.

Stuart: Right. We were joking before we pressed the button that just prior to Cosmos you and Terry were kicking around in Kathleen Valley where Liontown has discovered [inaudible 00:11:27]. So perhaps decades later, this is the consolation prize for you.

Tony: Yeah. I hope it’s not just a consolation prize, but I have high expectations that this thing is gonna be really good, really large, and hopefully as big as what Liontown have found at Kathleen Valley.

Stuart: Right. And obviously, it’s been good in the share price. So the market’s now beginning to regard you as a serious lithium player, and you’ve been rerated in this recent rebound for lithium. So should we think of you as a lithium player or as a nickel player or as both?

Tony: Battery metals player. No, we’ve got…The nickel is really nice and it’s high grade. It’s concentrated into quite a small area. It would be a very nice, potentially modest-sized nickel mining and processing operation. The lithium looks like it could potentially blow the importance of the nickel right out of the water. This lithium project looks to be potentially of world scale. And if that’s the case, then, I’m sorry, nickel, you’re gonna be put on the back burner and the lithium is gonna be front and center.

Stuart: Right. Well, Tony Rovira, well done on everything you and your colleagues have achieved at Azure. And teaming up with a legend like Mark Creasy is generally always a good bet in this game. Keep up the good work and thanks for talking to “Stocks Down Under.”

Tony: Appreciate it. Thanks, Stuart.