El Cobre Project

Veracruz State, Mexico

Copper & Gold

Operator: Azucar Minerals Ltd.

Royalty: NSR: 1.75% NSR

El Cobre is 100% owned by Azucar Minerals Ltd. (TSX-V: AMZ; OTCQX: AXDDF). El Cobre is a copper-gold porphyry target on the east coast of Mexico. The ~7,300 hectare claim block covers copper-gold porphyry mineralization known to exist over a strike length of at least four kilometers.

Location

El Cobre is located 75 kilometers northwest of Veracruz city, a major port city with an international airport. The project is road accessible and located in an area of unparalleled infrastructure, near to a power plant, highways and rail systems. Mexico's only nuclear power plant at Laguna Verde is less than 10 kilometers northeast, and the project is crossed by the electrical power grid.

Geology: Copper-Gold Porphyry

Porphyry mineralization is associated with the exposed portions of diorite stocks which have intruded intermediate volcanic rocks. Mineralogic and fluid inclusion studies show conclusively that the gold and copper-gold porphyry-style mineralization at El Cobre is not deeply eroded and great potential exists at depth. More importantly these studies indicate that the mineralization is genetically uniquely like that of some of the Maricunga district gold-copper porphyry systems in Chile.

Drilling at El Cobre

There are four copper-gold porphyry targets currently known within the El Cobre Project: Villa Rica (Raya Tembrillo), Norte, Encinal, and El Porvenir, defined by distinct Cu-Au soil anomalies, discrete positive magnetic features and a large IP chargeability anomaly. The largest target area is the Villa Rica zone. First pass drilling at the Villa Rica (Raya Tembrillo) target in 2017 intersected a chalcocite dominant enriched copper zone right from surface as well as hypogene mineralisation at depth. At this time the extent and orientation of both the hypogene and enriched mineralisation are not understood. Further drilling in the area is planned.

Limited past RC and diamond drill testing at the Encinal, El Porvenir, and Norte targets has returned wide intercepts of porphyry copper-gold and narrow zones of intermediate sulphidation epithermal gold-silver vein mineralization, with selected intercepts as follows:

El Porvenir Zone: Drilling has demonstrated that the system persists at least to 400 m depth. Significant copper and gold grades were intersected such as 0.16% Cu and 0.39 g/t Au over 290 m in hole DDH04CB1. In addition, hole EC-13-004 intersected 0.23% Cu and 0.36 g/t Au over 106 m, to a depth of 504 m, again indicating potentially significant mineralization at depth. On December 5, 2017, Azucar announced results for holes 040 and 042, the first holes drilled on this target since 2013. Intercepts included 108.00 meters grading 0.88 g/t Au and 0.29% Cu, and 80.00 meters grading 1.11 g/t Au and 0.36% Cu (EC-17-040).

Encinal Zone: Hole CB5 intersected a highly altered breccia pipe containing fragments of stockwork veining and porphyry mineralisation across which 18.28 meters returned 1.42 g/t Au and 0.10% Cu. The breccia pipe occurs in a large alteration zone, IP chargeability high and magnetics low which has not been tested to depth. On June 19, 2017 Azucar announced that a new area of exposed stockwork quartz veining and gold mineralisation had been identified in the Encinal zone. On June 29, 2017 Azucar announced the results of initial drilling on this exposed stockwork (Hole EC-17-025) which returned results including 34.47 meters grading 0.73 g/t Au and 0.20% Cu.

Norte Zone: All five holes drilled in the Norte zone prior to 2016 intersected porphyry-style mineralization. Hole 08-CBCN-022, one of the deepest holes drilled at Norte in 2008, returned values of 0.14% Cu with 0.19 g/t Au over 259 m and 08-CBCN-19 intersected 41.15 meters averaging 0.42 g/t gold and 0.27% copper to the end of the hole at 187.45 meters. Drilling at the Norte zone in 2016 and 2017 has resulted in the highest grade intersections to date at the El Cobre project, including 114.60 meters grading 1.33 g/t Au and 0.48% Cu (Hole EC-17-018, see Azucar Minerals’ press release of April 5, 2017), 80.50 meters grading 1.34 g/t Au and 0.46% Cu (Hole EC-16-012, see Azucar Minerals’ press release of October 24, 2016), 70.45 meters grading 2.32 g/t Au and 0.59% Cu (Hole EC-17-026, see Azucar Minerals’ press release of July 25, 2017), and 534.90 meters grading 0.90 g/t Au and 0.30% Cu (Hole EC-17-029, see Azucar Minerals’ press release of August 15, 2017).

Since the Norte zone discovery, Azucar has been carrying out a systematic drill campaign to define this target.