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Euromax Resources Ltd. (TSX:EOX) is a Canadian exploration and development company focused on its flagship Ilovica Gold-Copper Porphyry Project in Macedonia. Based on a positive Feasibility Study, the company has been able to acquire an offtake agreement with a major German-based integrated copper group, and to secure debt-facilities to cover the majority of development and construction costs for the mine.
The Ilovica Project has the support of the Macedonian and German governments as well as the local communities. Euromax Resources management is looking to commence construction in September 2016 with first production anticipated for Q1 2018. The company recently uplisted to the TSX which will open the door for more participation on the part of UK and North American institutional investors.
- Robust feasibility study, low strip ratio of 1:1
- 20+ year mine life with average annual production of 90,000 ounces’ gold and 17,000 tonnes copper
- 10-year full production offtake agreement in place
- Mine construction slated for September 2016; first production expected in Q1 2018
- 90 percent of CAPEX financing arranged through debt-facilities rather than dilution of shares
- Support of Macedonian Government and local communities; European Bank for Reconstruction and Development is a major shareholder
- Ilovica will add over 2% to the Macedonian GDP
- Recently graduated to TSX Main Board
Mining in Macedonia
Steve Sharpe, President and CEO of Euromax Resources, states, “Macedonia is a unique place. Despite its long history, it has a young vibrant economy. As such it welcomes foreign investment. It welcomes investment not at any price, however. We have a very strong relationship with the Ministry of Environment, who wish to partner with us to show how natural resources can be developed in a sustainable manner. That makes Macedonia particularly unique in my view, from an international perspective.”
The Macedonian Government granted Euromax a 30-year exploitation concession for the Ilovica project in July 2012. The project also has the support and cooperation of the surrounding communities adjacent to the Ilovica project. Construction of the mine will bring $500 million of investment to Macedonia and provide 500 jobs with priority given to the local community.
Key Property: Ilovica Gold-Copper Porphyry Project
The Ilovica Gold-Copper Porphyry Project is a development-stage project located 20 kilometers from Strumica, the largest city in the eastern Republic of Macedonia. The surrounding area has excellent infrastructure in place including access to grid power, water, skilled labor as well as an extensive network of paved roads, rail links to the port city of Thessaloniki and smelters in Bulgaria.
Resources and Reserves
Significant upside to the resource occurs down plunge to the east-northeast. Epithermal mineralization and a subtle magnetic response indicate that a second porphyry may occur at depth immediately to the south.
In January 2016 Euromax Resources completed a Feasibility Study demonstrating the robust economics of the project. The study is based on conventional open pit operations (1:1 strip ratio) with flotation processing to produce a copper-gold concentrate and doré production via carbon-in-Leach (CIL) on cleaner-scavenger tailings. Average overall process recoveries are estimated at 83.3 percent gold and 81.3 percent copper for an average annual payable production of 83,000 ounces of gold and 16,000 tonnes of copper over a mine life of 20 years.
Highlights from the report include:
- Pre-tax NPV(5%) of US$513.0 million and post-tax NPV(5%) of US$440.1 million
- Pre-tax IRR of 19.8 percent and post-tax IRR of 17.8 percent
- Initial Capex US$474.3 million including contingency
- World Gold Council defined Adjusted Operating Cash Costs of US$200/oz and All-In Costs of US$372/oz
“As most new and expansion projects around the world are mothballed in response to the recent downturn in commodity prices, we believe that this is an ideal time for building, so as to exploit the supply shortages that will likely occur,” commented Sharpe. “We believe that not only are we well positioned to benefit from any improvement in commodity prices, but with cash operating costs now reduced to the US$200/oz level we are equally well equipped to withstand any sustained weakness in commodity markets, whilst remaining cash flow positive.”
Euromax Resources is aiming to begin construction of the Ilovica mine in September 2016 with first production expected in Q1 2018.
Environmental Impact Assessment Submitted for Approval
In April 2016, Euromax submitted an Environmental Impact Assessment (EIA) to the Ministry of Environment and Physical Planning for approval, as required by the Macedonian authorities for the issuance of a full Exploitation Permit for the Ilovica Project. The EIA is based on the 2016 Feasibility Study project design and detailed environmental and social surveys and baseline studies, which have been conducted since September 2013.
Euromax Resources has an offtake agreement for 100-percent of its copper-gold production from the Ilovica mine for up to 10 years with Aurubis AG, a world-class integrated copper group.
“We are very pleased to have Euromax Resources with its promising Ilovica project as a significant future supplier of copper concentrates to Aurubis and thus, we look forward to a long term and mutually beneficial relationship,” commented Christophe Koenig, Senior Vice-President Supply Chain Management at Aurubis. Aurubis is headquartered in Hamburg, Germany.
Euromax Resources is the recipient of a US$5 million convertible loan from the European Bank for Reconstruction and Development. The company has also completed a private placement of convertible debentures totaling C$5.2 million issued to CC Mining S.A. which is related to Consolidated Contractors Company Group. The loan disbursement and the proceeds from the convertible debentures will be used to fund development of the Ilovica Project.
In June 2016, Euromax announced that the German Government has reaffirmed the project’s principle eligibility for a Project Finance Facility in the amount of US$240 million under the UFK German United Loan Guarantee Scheme. Eligible projects contribute to the supply of critical natural resources to Germany in the form of long-term offtake contracts between the borrower and German offtakers.
Steve Sharpe, President and CEO
Steve Sharpe was previously Senior Vice President, Business Development at European Goldfields Limited from July 2010 until March 2012, where he focused on raising the profile of the company in the European and North American market and developing the optimum financing solution for the advancement of the company’s gold assets. Prior to that, he was Managing director (Structured Finance) at Canaccord Genuity. He has over 25 years of investment banking experience, focused on the mining sector and has held senior management positions at Endeavour Financial, Standard Bank and NM Rothschild & Sons. He is an Honorary Board Member of Macedonia 2025, a group dedicated to enhancing business opportunities and the economic development of Macedonia. Mr. Sharpe holds a BA (Hons) in European Business Studies.
Pat Forward, COO
Pat Forward was previously VP, Projects & Exploration at European Goldfields, where he was responsible for the development of the Skouries and Olympias projects in Greece, and the Certej project in Romania through feasibility work, basic engineering and financing. In addition, Mr. Forward was responsible for European Goldfields’ exploration properties in Romania, Greece and Turkey and the growth and compliance of that company’s resource and reserve base.
In the early 1990s, he managed exploration projects in Europe, Ghana and Venezuela before spending some five years in Burkina Faso managing exploration programs including the discovery of Semafo’s 2.8 million ounce Mana deposit. Forward is also specialized in geological due diligence, resource estimation, the application of GIS systems to exploration projects, deposit evaluation and is a Qualified Person with the respect to NI 43-101 reporting.
Varshan Gokool, CFO
Varshan Gokool was previously VP and Treasurer at European Goldfields, where he was responsible for the sourcing and execution of debt financing for the Hellas Gold and Certej projects, tax structuring, financial modelling, insurance and offtake negotiation. He has had a number of corporate and banking mining roles prior to European Goldfields, including being Treasurer at Katanga Mining Limited, a Vice President in Societe Generale’s Mining Finance team and worked for Ashanti Goldfields as a Risk Manager. Gokool is a graduate of the University of Cape Town with a B.Bus.Sci (Finance), and is a CFA Charterholder.
Martyn Konig, Non-Executive Chairman
Martyn Konig has 30 years’ experience in investment banking and the commodity markets. Until February 2012, he was Executive Chairman and President of European Goldfields Limited. He is a Non-Executive Director of TSX listed New Gold and Chairman of Nyrstar. He has extensive experience in the natural resource sector, which includes senior management responsibility in resource finance and commodity trading operations at various international investment banks. Mr. Konig was a main Board Director of NM Rothschild & Sons for 15 years and held senior positions at Goldman Sachs and UBS. He is a Barrister and Fellow of the Chartered Institute of Bankers.
Tim Morgan-Wynne, Non-Executive Director
Tim Morgan-Wynne was the CFO of European Goldfields until March 2012 and prior to this, he was a Director of the Resources and Energy Group at HSBC Bank. Mr. Morgan-Wynne worked in HSBC’s mining sector corporate finance team from 1997 to 2006, and gained a broad experience of corporate finance and capital markets whilst working on transactions involving companies in the UK, Europe, North America and South Africa. Before HSBC, Mr. Morgan-Wynne worked in the industry as Group Finance Manager for Ashanti Goldfields and Cliff Resources.
Randal Matkaluk, Non-Executive Director
Since June 2014, Randal Matkaluk has been the CFO of Capio Energy, a private company involved in oil and natural gas exploration. Prior to this he was the CFO of Capio Exploration (February 2010 to June 2014) and since August 2007 has been a Director of Triangle Petroleum Corporation, an oil exploration company.
From May 2008 to January 2010, Mr. Matkaluk was the CFO and Corporate Secretary of Vigilant Exploration, a private oil and gas exploration company that was acquired by Tourmaline Oil Corp. Mr. Matkaluk was also the co-founder and CFO of Relentless Energy Corporation, a private oil and gas exploration company, and has served as a Director of Virtutone Networks, a junior technology company. Matkaluk was the CFO of Antrim Energy, a public international oil and gas exploration company listed on the Toronto Stock Exchange. He has also worked for Gopher Oil and Gas Company and Cube Energy Corp. Matkaluk has been a Chartered Accountant since 1983. He received his Bachelors Degree in Commerce in 1980 from the University of Calgary.
Bill Abel, Non-Executive Director
Bill Abel is a mining engineer with more than 40 years of professional experience, specializing in operations, management and project development and implementation. Abel is an independent mining and metals professional consultant and is also EBRD’s nominated director on the board of Lydian International. Previously, he has held a number of senior technical and management positions at several major international mining companies, including, Head of Resource Planning at BHP Billiton Iron Ore, Technical Executive – Special Projects and Group Head of Mining at Anglo American, and General Manager – Mining Projects at ArcelorMittal.
Abel has a Master’s Degree in business administration from the Witwatersrand University School of Business Management and a Bachelor of Science (Hons) degree in mining engineering from the Royal School of Mines, Imperial College in London England. He is a registered professional engineer and a Fellow of the SAIMM.
Raymond Threlkeld, Non-Executive Director
Raymond Threlkeld has over 30 years of mineral industry experience. He is currently the Executive Chairman of Newmarket Gold and a Non-Executive Director of New Gold. From 2009 to 2013, Mr. Threlkeld was the President and CEO of Rainy River Resources. From 2005 to 2009, he was the COO of Silver Bear Resources. From 2006 to 2009, he was the President and Chief Executive Officer of Western Goldfields Inc. From 1996 to 2005, Mr. Threlkeld held various senior management positions in precious metal mine development with Barrick Gold Corporation and Coeur d’Alene Mines Corporation including the development of the Pierina Mine in Peru, the Bulyanhulu Mine in Tanzania and the Veladero Mine in Argentina. He holds a B.Sc. degree in Geology from the University of Nevada.