Independent equity research firm First Berlin has initiated coverage on EurOmax Resources (CVE:EOX) with a "buy" rating and $0.45 price target, expecting "positive news" from the company's resource base.
Friday, EurOmax shares closed at $0.22. Over the past three months the stock is up 12 percent.
is a Canadian company focused on gold and copper exploration in the
resource rich region of Bulgaria, Macedonia and Serbia. It is currently
advancing three core properties: Trun in Bulgaria, KMC in Serbia and
Ilovitza in Macedonia.
It has an NI 43-101 compliant resource base in excess of 5 million ounces of gold at 0.90 grams per tonne.
In a research note, First Berlin analyst Simon Scholes said: "We expect newsflow to push EurOmax’s valuation higher this year.
"First, we expect positive news on the resource base with the
publication of updated resource estimates for the Ilovitza and Trun
properties. Second, there is a significant chance that the current
drilling programme at the KMC property will yield a major gold
discovery in submerged porphyry intrusions."
First Berlin said that EurOmax is "very conservatively" valued
relative to its peers which may be the legacy of a 2010 proxy battle
that resulted in a new management team joining the company and a focus
on fewer properties - from around half a dozen properties to the current
The independent research firm said that the company's existing
inferred NI 43-101 compliant gold resources are likely to amount to over
five million ounces, which is "a high figure" for an exploration
company at EurOmax’s stage of development.
In terms of opportunities, the First Berlin analyst said that the
discovery of porphyry-source KMC skarn mineralization "could catapult
EurOmax into a different league".
KMC is a very large copper-gold skarn system. EurOmax’s management
believes that the skarn mineralization is being driven by hydrothermal
activity arising from one or more submerged porphyry intrusions. Data
from autumn 2011 geophysical work carried out at KMC suggests the
presence of seven buried intrusions.
One or more of these intrusions at KMC could be the porphyry source
of the skarn system. In this case, the scale and grade of gold
mineralization would potentially be considerably higher than that
encountered by EurOmax so far, said First Berlin.
First Berlin's Scholes also said that EurOmax has the potential to expand the resource estimate at Trun.
The pre-revision resource estimate of 2.1 million ounces of gold at
Trun from January 2011 is based solely on the Logo target. But there are
10 other targets at Trun - three at the more northerly Big Hill
intrusion and seven at the K2 (Little Hill) intrusion to the south.
EurOmax drilled a further 10,600 metres at Trun in 2011 and is
currently engaged on a further 6,000 metre drilling program, completion
of which is scheduled for the end of May.
These two drilling programs have included Logo and most of the other
targets at both Big Hill and Little Hill. An updated NI 43-101
compliant resource estimate is scheduled for the fourth quarter, First
First Berlin also said that the recent clarification of the ownership
position at KMC and Illovitza has lent additional momentum to their