Azteca Gold Corporation (AZG-TSXV)

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May 1, 2009 Issue

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Azteca Gold May Change Mining Forever

Company Profile:

Azteca Gold is an aggressive gold and silver exploration company. Our focus is to maximize long-term shareholder value by making new high-grade discoveries in past producing districts located in miner-friendly locations such as Idaho, Nevada, Alaska, and Mexico.

Matthew F. Russell

President, CEO, Chairman

Mr. Russell brings to Azteca 15 years of project management experience in the mining sector. Mr. Russell has managed mine feasibility studies, mine plant design, development of a new hydrometallurgical process, coal preparation plant construction, and design and construction of mobile and overland conveyors for the copper and gold heap leach industries. Mr. Russell co-founded Idaho General Mines, Inc. (now called General Moly GMO:AMEX), where he served as EVP Operations and Chief Operating Officer from Q1 2004 until Q3 2006. Mr. Russell was instrumental in Idaho General acquiring the Mount Hope and Hall-Tonopah Molybdenum Properties, and managed the process of achieving an AMEX listing. Mr. Russell received his MBA from Gonzaga University in 1998.


Azteca Gold Corporation
Suite 315, 8921 N. Indian
Trail Road
Spokane, WA USA 99208
Phone: 509-464-0172

Interview conducted by: Lynn Fosse, Senior Editor,, Published – May 1, 2009

Mr. Russell, what is the vision and focus at Azteca Gold?

Mr. Russell: “Azteca Gold’s vision is to create a new approach to exploration, to apply new thinking and hard science to the process of finding highly economic mineral discoveries. Philosophically, we believe the industry is headed towards underground mining of high-grade deposits, and away from the low-grade, large-tonnage projects requiring big capital. Especially if they happen to be open-pit mine designs – there are not too many places left in the world that will have them.


We are a Canadian Venture Exchange company, working primarily in the United States. We are in the exploration stages of a new discovery in Idaho, called the Two Mile Project. Our vision and philosophy are working, as we are discovering some very high-grade minerals. High grade to us means north of 10% of base metals such as zinc, lead and copper along with tens of ounces of silver and/or several grams of gold. We are trying to decide internally if the label ‘ultra high grade’ or just simply ‘hyper-grade’ should apply when the base metals get north of 25%”


CEOCFO: Please tell us about your new vision and what is different about Azteca’s methods.

Mr. Russell: “Our discovery could represent a possible game-changer in the type of deposit mining companies will be looking for exploration-wise in the future, as well as perhaps some evolution in the methods used to find them. We are looking at drilling deep for mother-load source beds, although those are more terms from the past. Similar to oil and natural gas, most of the near surface and easy to find stuff has already been mined.


What is important to note, though, is that as your ore grades go up the depth you find them at becomes less and less of an issue. Contrary to what you might think, building a low volume mine at depths of 8,000 feet or more can be considerably cheaper capital-wise than a high volume open pit. Less capital up front, and much better economics on a per tonne basis if you are mining high enough grades.


However, the relatively flat-lying beds of massive sulfides that are apparent in our discovery should lend themselves very nicely to cheap and efficient high volume mining methods. Thus, flexibility exists to either shoe-horn it into production on the cheap, and then use cash flows to steadily build to higher volumes, or go big right from the start.”


CEOCFO: What made you decide this is the way to do it, and why hasn’t it been done before?

Mr. Russell: “You might rephrase your question to what made you decide to drill such a deep hole? Our discovery hole was also the deepest exploration hole ever drilled from surface in the Silver Valley. Well, the answer is probably that at the time I did not have a geologist on staff to tell me it was too risky. We had done a lot of science on the project by that point that appeared to corroborate the ideas of geologic greats like Oscar Hershey. We had some theories and I thought it worth testing them.


I think the corporate cultures at most mining companies are very conservative, and few corporate geologists want to stick their necks out by suggesting the drilling of a deep and expensive hole even if they had good reason to believe they might hit something.”


CEOCFO: What is the financial picture at the company today?

Mr. Russell: “The financial picture is robust as we have some principals in the company and some investors that are relatively wealthy. The insiders have each put a lot of their own money into the Company over the last two years, and with recent developments will likely continue to do so. In fact, several of the insiders have invested in every single financing Azteca has done. Our picture today is very robust because we have a partner, Silver Royal Apex out of Wallace, Idaho and they will be contributing their 50%. This is our picture now. We would like to get a bit more aggressive which would require raising additional capital. But even at our present pace, we are producing results and organic growth in the company with this discovery at Two Mile in Idaho. We see a very great picture here.”


CEOCFO: What do you like about Idaho; how friendly is the state for mining?

Mr. Russell: “There is a long history in Idaho in mining, starting in the 1880s. Of course, there is still mining today in the Silver Valley district. There is in place very good mining laws in Idaho that allows the freedom to begin a mine on private property. On federal land, you still have to coordinate with the federal government, but we are targeting mainly private land right now in northern Idaho. In addition, there exists a talented workforce that supports mining; you have a citizenry that supports mining. Certainly in the capital, Boise, the legislature supports mining; they come up on a trip each year to see how things are going, and are very supportive.”


CEOCFO: Are you looking to add to your holdings?

Mr. Russell: “We, like every company, are looking to add to our holdings, but right now I think we are in a bit of a plateau.


We have multiple very good properties; we have several properties down in the Sierra Madre trend in Mexico, fully owned. We own outright the Marietta property in Nevada, which is a fairly large land package in a nice old silver district. Then we fully own a very large state ground property up in Alaska called Geroe Creek, which we will explore in the future. But our flagship is our 50% ownership in and operatorship of the new discovery at Two Mile. We are focusing nearly 100% of our efforts on that project at this time.


We are currently looking more to develop organic growth in the company, and feel that we already have a very good property base. We have received some interest from other companies asking us to help them explore their projects with our expertise and methods, and we may consider this approach as well.”


CEOCFO: There are a lot of irons in the fire!

Mr. Russell: “Yes, but not all of the irons are in the fire at any one time. We no longer have any big property payments to make, and the yearly holding costs on the whole portfolio of projects are minimal. Just about all of the capital we raise goes into the ground, to use a phrase. It goes into work that will hopefully produce the kind of results that build value in the Company.”


CEOCFO: Can other people duplicate the method you are using?

Mr. Russell: “As with any good competitive advantage, we enjoy certain barriers to entry. The largest barrier to entry for others to duplicate our methods is the high-cost, high-risk nature of drilling deep holes. Especially if they don’t feel certain of their target. Just too costly to drill such holes in a random manner. Most geologists never get the budget to do so.”


CEOCFO: You are in a good position!

Mr. Russell: “As our initial discovery at Two Mile proves up into a sizeable deposit, we will be in a very good position.”


CEOCFO: What is ahead and what is the timetable?
Mr. Russell: “We have begun resource development, which means proving up the discovered mineralization into reportable resource and reserves. Given the relatively flat-lying and consistent nature of the massive sulfide beds we are targeting, this resource development can be done quite efficiently. We think much of that kind of work can be done in 2009. If things go well, in 2010 we will see feasibility and the beginning of development of that resource toward a production facility. If a big high grade deposit exists down there, we could put it into production much more quickly and with less upfront capital required than is typical with most new mines today.”


CEOCFO: You are moving ahead at a nice pace!

Mr. Russell: “A very nice pace considering the economic climate. Making a new super high grade – wait, let’s call it hyper-grade – discovery in a format where the mining method would be easy and straight forward probably helps the pace a bit. Given the value per tonne of hyper-grade ore, and the fact that thick and consistent ore beds can be easily mined in high volume, this discovery may turn out to have a significant effect on the rest of the industry.”


CEOCFO: What is your two-minute take on the current economic scenario?

Mr. Russell: “Ha! We also happen to be armchair economists over here at Azteca Gold. Whether it is to be deflation or as many predict, hyper-inflation for the foreseeable future, one thing is undeniable: lower metals prices and lack of credit have caused many mineral and energy projects around the world to stall, get shelved, go offline, etc. This will eventually show up as shortages and higher prices. While financial systems may tear themselves apart and currencies devalue against each other and all that is real, the real physical world will go on. Much infrastructure has yet to be built on this planet, and much of what has been built needs replacing soon.


But in the mean-time, while metals prices remain low and supplies of capital and credit tight, grade will be king. Those deposits projecting the most robust economics on a per-tonne basis, and that also do not require multi-billions of dollars to bring into production, will supplant those in worse shape.”


CEOCFO: Final thoughts, what should people reading about Azteca Gold remember most?

Mr. Russell: “How committed management is to making Azteca a success. The insiders have invested in total more than $3 million into the Company since its inception in late 2006. 


To steal a phrase, we rise early, we work late, and we drill massive.”


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“Azteca Gold’s vision is to create a new approach to exploration, to apply new thinking and hard science to the process of finding highly economic mineral discoveries.” - Matthew F. Russell does not purchase or make
recommendation on stocks based on the interviews published.