Los Chinos (multi commodity; earning 51%)

The Los Chinos property was staked by the Joint Venture as part of the ongoing program of regional exploration, target identification and project acquisition.  The property is located 80 kilometres north of Hermosillo.  Los Chinos has excellent potential to host significant polymetallic base and precious metal mineralisation.

Azure has completed a 12 hole diamond drilling program at Los Chinos, for 1,561m of drilling.  In a very successful result, the program identified extensive zinc-rich polymetallic mineralisation with wide intercepts and high grades, with mineralisation present in all holes.  Silver, lead, gold and copper credits are also present, occasionally in very high grades.

Highlights from the drilling include:

LCH-DD-001	3m @ 1.5% lead, 355g/t silver & 2.4g/t gold from 2m
LCH-DD-003	3m @ 4.2% zinc from 70m
LCH-DD-005	4m @ 2.2% zinc, 236g/t silver, 1.0% copper & 0.7g/t gold from 4m
LCH-DD-007	5m @ 5.6% zinc from 51 metres & 2 m @ 155g/t silver from 61m within a broader zone of 20m @ 1.9% zinc from 47m
LCH-DD-008	4m @ 7.1% zinc from 18m within a broader zone of 13m @ 2.7% zinc from 16m
LCH-DD-009	14m @ 1.5% zinc from 8m within a broader zone of 62.5m @ 0.6% zinc from 5m
LCH-DD-010	22m @ 1.4% zinc from 3m within a broader zone of 41m @ 1.0% zinc from 3m

This is the first ever drilling program at Los Chinos, and the excellent results have given Azure great confidence in the potential of the polymetallic system discovered.  The multiple mineralised horizons present at the property indicate a large mineralisation system with the potential to host significant polymetallic sulphide deposits.

Drilling tested several of the numerous gossan and breccia zones exposed in the north-western part of the Los Chinos property.  These zones represent the near-surface weathered expression of polymetallic sulphide bodies, where mineralisation consisting of base metal sulphides has selectively replaced susceptible horizons within the volcano-sedimentary sequence.  Due to the oxidation and remobilisation of base metals during the weathering process, the deeper intercepts contain higher grades of zinc and lead because of the presence of primary sulphides (sphalerite and galena).

A geophysical survey was carried out over the drilled area utilising the NSAMT technique.  NSAMT (Natural Source Audio-Frequency Magneto-Telluric) is a resistivity technique which can detect relatively weak conductors, in particular zones of sphalerite-rich sulphide mineralisation, to depths of up to 700 metres below surface. 

Modelling and interpretation of the NSAMT data has identified strong anomalies within the mineralised system.  This, in conjunction with detailed assessment of the diamond drilling results, will provide the next generation of drill targets at Los Chinos.  Further drilling is planned for late 2008.

Reconnaissance mapping and surface sampling elsewhere on the Los Chinos property has identified other prospective areas which have returned positive results.  These include:

• A series of limestone hosted skarn occurrences in the central part of Los Chinos where rock samples returned high grade values of zinc (to 8.06%), lead (to 6.16%), silver (to 185g/t), copper (to 1.1%) and molybdenum (to 0.38%).  A program of soil sampling covering this area will begin shortly.

• The La Lorena skarn-hosted tungsten occurrence located in the east of the Los Chinos property.  Rock samples have returned high tungsten grades, ranging up to 0.58%.  Further reconnaissance sampling is planned for this area. 

Elsewhere in the property other mine workings that also exploited replacement style mineralisation within strong zones of alteration remain untested.