AN interesting read out today from Euro Oz.....Comments Price...

AN interesting read out today from Euro Oz.....

Comments Price Target: $0.80/sh
A maiden resource estimate is due shortly. We believe a 1.0-1.3moz resource @ 3- 3.5 g/t Au is possible: this would be a very good start. Its
key project, Smarts, remains open along strike and at depth and could have an average grade of +4 g/t Au. The stock has more than halved
since Mar’12 due to delays to the maiden resource and disappointing initial Kaburi results. We continue to rate this is as one of the best exploration plays we have seen.
Smarts, a virgin discovery, thus far defi ned over a strike length of 4.5km, looks exceptional; high grade, good widths (+20m), shallow (<120m)with mineralisation open in all directions, indicate multi million ounce potential.
Some of the better drill results include;
• 29m @ 14.27 g/t Au from 26m
• 15m @ 34.5 g/t Au from 48m
• 32m @ 4.3 g/t Au from 242m
• 29m @ 17.8 g/t Au from 58m
The initial resource will be estimated over some 2.0km of the 4.5km strike length thus far defi ned, and has been drilled on 100m x 30m
spacing to a vertical depth of 120m. Our ‘back of the envelope’ resource estimate suggests a potential resource of 0.7-0.8moz @ 3- 3.5 g/t Au.
Scout drilling to the north and south of the resource has also intersected some mineralisation including 20m @ 32 g/t Au.
Preliminary metallurgical testwork has shown the ore is amenable to standard CIL technology with recoveries of +92% on both oxide and
fresh ore samples.
The resource has been delayed from originally 1st Q CY’12 until end of May’12. This was due to a combination of slow assay turnaround and
the proposed TSX listing which was completed in early May’12.
Initial Kaburi results were disappointing after visually encouraging results. A best intercept of 9m @ 9.2 g/t Au from 118m is located on the southern contact of the granitoid. Further drilling is required. Hicks was the initial exploration focus as AZH inherited 17,000m of historic diamond drilling and a non JORC compliant gold resource of290koz @ 2.2 g/t Au. Mineralisation can be traced over a 2km long shear zone with average widths of mineralisation of 10-15m.
AZH has completed an 8,000m drill program to confi rm, infi ll and extend the mineralisation at Hicks. Better results from this program include;
• 30m @ 7.68 g/t Au from 54m
• 17m @ 5.35 g/t Au from 14m
• 29m @ 2.2 g/t Au from 20m
• 87m @ 1.77 g/t Au from 34m
Drilling has been successful in extending the resource along strike and at depth and we believe a target of 300 – 350koz is possible.
The large East Omai project (7,000 sqkm) covering ~110km of prospective strike will be drill tested in CY’12 and whilst under sand cover,
making exploration more challenging, provides a real ‘blue sky’ option.
Guyana is a mining friendly, stable democracy with gold the largest export - predominantly from artisanal miners. Western companies have
operated successfully in Guyana.

Investment Case
The de rating of the gold sector has hit the junior explorers and developers particularly hard. The premium rating that AZH enjoyed as an aggressive gold explorer with an excellent land position has given way to some concern on the maiden resource. Our view is anyway between1.0-1.3moz will be a good initial result; especially if the grade is above +3 g/t Au – demonstrating the potential of a profitable operation.
It should be noted this is only an interim resource andcertainly the boundaries of the resource envelope have yet to be defi ned with scoutdrilling continuing to intersect ore grade results.
We maintain our Speculative Buy on AZH. Any disappointment from the interim resource is already factored in. We continue to believe this
ground position has potential for multi million ounce discoveries.

Analyst ?? Andrew Clayton
Ph: +61 8 9488 1427 E: [email protected]