Arizona Mining calls industry blog’s ‘mini Bre-X’ accusation ‘misleading’

Shares in Arizona Mining Inc. fell as much as 15 per cent in Monday morning trading after a global mining blog compared some of its zinc deposits to the infamous “Bre-X” scandal.

The Vancouver-based company’s shares fell to $2.76 in early Toronto trading before recovering, finishing the day at $3.11, down 20 cents or 6.04 per cent. Its stock has soared by 1,000 per cent this year, from just 29 cents in January, after it reported stellar drilling results showing zinc equivalent grades as high as 23 per cent at its Taylor mine in Arizona.

But an article in the Global Mining Observer on Sunday claimed that the company’s zinc is mixed with too much manganese, which clogs up smelters, to make their minerals viable for sale. It cited an anonymous banker calling Arizona “a mini Bre-X” — a serious allegation considering Bre-X has gone down in history as one of the biggest mining frauds in history.

The company issued a release early Monday calling the article “misleading,” adding that it wrongly infers its Taylor mine, which contains the large zinc volumes, is the same as its manganese deposit.

Arizona cited the findings of a technical report completed in November on the property that said the deposit would produce marketable grades of both zinc and lead.

“Based on our experience to date with the consultants involved in the scoping study and the preliminary economic assessment, the company has heard nothing to indicate that concentrates from the Taylor Deposit would not be saleable,” the company said in a statement.