EurOmax Resources (CVE:EOX) was recently featured in the Caesars Report, an independent equity and market research firm, based on a recent field trip to some of the mineral explorer's assets.
EurOmax is a Canadian company with three core properties in Bulgaria, Serbia and Macedonia, with Caesars having attended a field trip to visit the Trun project in Bulgaria and the Ilovitza copper-gold project in Macedonia.
Ilovitza currently hosts a resource estimate of 3.2 million ounces of gold and 1.6 billion pounds of copper in the inferred categories, but Caesars said it expects this number to increase to 4.5 million ounces of gold and 2.5 billion pounds of copper in a resource update, expected later this quarter.
The project remains open in all directions, mostly east and southeast, "so there is still considerable upside potential to increase the resource base", Caesars said in its note.
"Our main issues with Ilovitza are the low grades and recoveries. The average grade is currently approx. 0.32g/t gold and 0.23%Cu (2008 numbers), with recoveries expected around 60%. However, we feel these recovery rates could (and should) go up, as more metallurgical tests will be concluded.
"The best solution for Ilovitza and EurOmax would be to sell the project to a major mining company after the resource update, or a suitable joint venture partner now that Freeport hasn’t exercised its back-in right," the report noted.
With regards to the Trun project, Caesars visited the Zlata and KD tenements on the southern part of the property, and was "quite optimistic" on these prospects.
"As Zlata is a past-producing mine, regulation and re-opening of the mine should be relatively easy and cheap. Resource estimates on these tenements are expected in Q3," Caesars said.
However, the company also announced in January that it is expecting a downward revision of the resource estimate at the Logo zone, which now has 2.1 million ounces of gold in the inferred category.
"Whilst this is bad news, we are quite con!dent the updated resource estimate would still contain in excess of 1.5M ounces of gold. EurOmax raised $3.8 million the same week as the announcement of this pending revision and Quinton Hennigh came on board as Chief Geologist, so we aren’t nervous about this future revision," the research firm explained.
Chief geologist Quinton Hennigh has more than 20 years of mineral exploration experience, including positions with Newmont Mining Corp, Newcrest Mining, Homestake Mining and Evolving Gold Corp. He is also currently the president and CEO of Novo Resources Corp, and a technical advisor to Gold Canyon and NV Gold Corp.
In addition to Trun and Ilovitza, the company's Breznik property is located around 30 kilometres from Trun, and hosts a high grade resource of around 0.5 million ounces of gold, and 2 million ounces of silver.
Caesars said the most important thing to note about Breznik is that the property is within trucking distance from the Trun project, and that compared to the size of EurOmax's other projects, it would "most likely prefer" to monetize Breznik.
Failing completion of this sale, combining it with Trun may be an option. Despite the fact that both the Trun and Breznik projects were meant to be stand-alone operations, Caesars would consider the properties to be two parts of one district.
"We’d be curious to see the results of a scoping study combining these two parts in one production plan and compare it to the possible standalone scenarios. It would make sense to investigate the possibility of one central mill, where the lower-grade Trun ore could be blended with the higher-grade Breznik ore," it said.
The mineral exploration company's other remaining project, KMC in Serbia, which was not visited by Caesars, has preliminary results that are considered "very encouraging", said the capital markets firm, and it's "very possible" the project is a higher grade version of the Macedonian Ilovitza property.
EurOmax completed a 2,500 metre drill program at KMC, with results still pending. Caesars said KMC "might very well be another bulk tonnage deposit, and could be as big as half a billion tonnes".
The research report concluded: "As EurOmax just raised 3.8M at C$0.22, they currently have around $4M+ in the treasury, giving them an Enterprise Value of approximately $34M, which gives their ounces in the ground a cheap valuation.
"We’d recommend the company to fast-track exploration at Trun, and release NI43-compliant resource estimates on Zlata, Nadejda and Ruy, as well as an updated resource estimate at Logo. We think that with approximately 12,000m of drilling in H1 2012, these 4 tenements could have in excess of 2.5M ounces altogether, which should be the base of a scoping study/PEA to be completed by year’s end."
The equity researcher also said it looks forward to a resource update at Ilovitza, and hopes the next update will be a platform to start negotiations with possible joint venture partners to bring the asset to development stage.
"We believe 2012 will be a transformational year as EurOmax will prove up more ounces, and create a clear strategy with distinguished priorities. If the company really adds more ounces towards our estimated 7.5Moz mark by the end of 2012, the shareprice could be a multiple from where it is now."
EurOmax was changing hands at 24.5 cents Thursday afternoon on the Toronto Stock Exchange, with the stock up 16.7 percent year to date.