macquarie research

Azimuth Resources
Resource Grows
Event
? Updated resource of 1.65m oz @ 3.06 g/t for West Omai... Azimuth
Resources announced a 35% increase in its gold resource estimate for the
Smarts and Hicks deposits at its flagship West Omai gold project in Guyana.
The Inferred Mineral Resource estimate at West Omai for the Smarts and
Hicks deposits at a cut-off of 1.0g/t Au is now 1.65m oz grading 3.06g/t Au.
The previously announced Inferred Mineral Resource in May, 2012, at a cut
off of 0.5g/t Au was 1.22m oz grading 3.1g/t Au.
? …Including 1.08m oz @ 4.15g/t at Smarts deposit. The Inferred Mineral
Resource estimate for the higher grade Smarts deposit at a cut-off of 1.0g/t
Au is now 1.08m oz grading 4.15g/t Au. The previously announced Inferred
Mineral Resource in May, 2012, for the Smarts deposit at a cut-off of 0.5g/t
Au was 0.75m oz grading 4.6g/t Au.
Impact
? Making progress slowly but surely. The updated resource is positive for the
project, although in this market, the stock has not reacted. We look for
ongoing developments at West Omai for Azimuth to build on however with
$4.5m in cash at year-end followed by further inflows of $1.5m in the new
year, the company will have to be careful with expenditures.
Earnings and target price revision
? No change.
Price catalyst
? 12-month price target: C$0.60 based on a P/NAV methodology.
? Catalyst: More drill results and further delineation to mineralization at West Omai.
Action and recommendation
? Looking for leadership from the new CEO. We are encouraged by the
progress at the Smarts and Hicks deposits, and remain hopeful that further
discoveries at West Omai can add more value. The recent appointment of
Russell Clark as CEO based in Toronto should help the company get more
attention in the North American market, where trading has been non-existent.
Mr. Clark is a seasoned operator and manager with over 35 years of
experience in the sector.
? We reiterate our Outperform rating and $0.60 target price but caution that
in this market, investors will need to be very patient with junior explorers,
including Azimuth.
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