Mexican-focused Azure Minerals Limited (ASX: AZS) (“Azure” or “the Company”) is pleased to announce that it has commenced a 3,500 metre, 23 hole diamond drilling program on its Promontorio Project, located in the state of Chihuahua, Mexico.
Azure plans to undertake this program with a combination of surface and underground diamond drilling.
The Company is also pleased to announce that it has this week received environmental approval from the Mexican Federal Government for the underground drilling, which will involve enlarging the underground work areas and installing electrical, water & ventilation systems.
Promontorio contains a JORC Mineral Resource (Indicated + Inferred) of: 502,000 tonnes @ 4.7% Copper, 2.1 g/t Gold and 99 g/t Silver1

The deposit remains open in all directions and Azure believes that further drilling has the potential to achieve the company’s short-term goal of doubling the existing resource (Exploration Target2). This will provide significant improvement to the already very attractive project economics as defined in the recently released Pre- Feasibility Study (“PFS”) undertaken by Como Engineers.
The PFS demonstrated the robust technical and economic viability of the
Promontorio project, with positive financial results including3:

• Gross revenue = US$195 million

• Free cash = US$54 million

• Cash costs (C1: net of credits) = US$1.16 pound / Copper

• NPV (10%) = US$32 million with IRR = 42%

With a doubling of the Mineral Resource, the project could potentially deliver
(Upside Case)4:

1 Details of the resources classification and estimation methodologies are contained in Azure’s ASX announcement, released on 7th January 2009.

2 The potential quantity and grade of the Exploration Target is conceptual in nature, and there has been insufficient exploration to define the increased Mineral Resource and it is uncertain if further exploration will result in the

determination of an increased Mineral Resource.

3 Using PFS Study Prices of: US$3.42/lb Copper, US$1,612/oz Gold & US$28/oz Silver (at 8 August 2012)

• Gross revenue = US$395 million

• Free cash = US$155 million

• Cash costs (C1: net of credits) = US$1.00 pound / Copper

• NPV (10%) = US$86 million

By way of update, using metal prices as of 3 October 2012 and assuming a doubling of the existing JORC resource, the Promontorio project will generate an impressive

$205 million free cash flow and have a C1 copper cash cost of 75c/lb over a nine year mine life.

The turnaround for assay results is expected to be quick and as such a steady stream of news-flow on the back of an aggressive drilling program can be expected through to the end of the year.

4 The Upside Case uses PFS Study Prices and assumes future exploration success sufficient to double the existing Resource and realise a mining inventory of 1.3Mt at the same metal grades and recoveries as used in the PFS. While realising the potential quantity and grade is conceptual in nature, it includes material that has not yet been discovered or defined and is considered an Exploration Target.

Victoria Thomas

Six Degrees Investor Relations

Ph:+61 3 9645 7567

or visit www.azureminerals.com.au

Competent Person Statement:

Information in this document that relates to Exploration Results and Mineral Resources is based on information compiled by Mr Tony Rovira, who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Rovira is a full-time employee of Azure Minerals Limited. Mr Rovira has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Rovira consents to the inclusion in the documents of the matters based on his information in the form and context in which it appears.