VANCOUVER — London-based Euromax Resources (TSXV: EOX) is on the verge of making history by building the first modern-day mine in Macedonia. The company has tabled a prefeasibility study on its Ilovitza gold–copper porphyry project, located 20 km east of the city of Strumica, and aims to get a mine built and operating within the next three years.
The company’s previous financial study at Ilovitza was a preliminary economic assessment in October 2012, but the deposit has improved since then. Euromax spent the past two years better defining the continuity in Ilovitza’s porphyry mineralization and delineating a higher-grade zone closer to surface that could optimize early stage cash flow from the mine.
Euromax has now calculated Ilovitza’s first-ever reserve, with the deposit hosting 209 million probable tonnes in sulphides that grade 0.34 gram gold per tonne and 0.2% copper for 2.3 million contained oz. gold and 905 million contained lb. copper. Oxides reserves tack on 16.2 million probable tonnes at 0.33 gram gold for 172,000 contained oz.
Measured and indicated sulphide resources total 237 million tonnes of 0.33 gram gold and 0.22% copper, while oxides add 36 million tonnes of 0.33 gram gold.
The Ilovitza porphyry system is located in southeast Macedonia, within a Tertiary belt associated with the Carpathian arc. The intrusive is 1.5 km in diameter and comprises a dacite–granodiorite plug, emplaced along the northeastern border of the Strumica graben.
Mineralization is typical porphyry-style veining, most intense within the potassic zone.
Euromax plans to run a conventional open-pit mine at Ilovitza that would operate at a rate of 10 million tonnes per year. The company notes that with grade continuity in the main mineralized areas, mining can be carried out at a low average strip-ratio of 0.7 to 1.
Ore would run through semi-autogenous grinding and ball mills before being processed by conventional flotation to produce a copper–gold concentrate.
The flotation tailings would be retreated to recover further gold doré on-site. Test work found an 87% recovery rate for gold and 84% for copper.
Euromax has developed a plan for haul roads, workshops, access roads from a national highway, water balance pumping scheme and power infrastructure from a 110 kilovolt supply, 7 km from the proposed plant.
“This is a massively important project for Macedonia, and as one of the few permitted mining projects in Europe, will dramatically enhance the economic profile of the country,” president and CEO Steve Sharpe noted in the release. “The overwhelming local, national and indeed supranational support for the project places us in the enviable position of certainty of development. Our immediate task is for the management team to implement a minimally dilutive financing package to ensure the start of construction in 2016 and first production in 2017.”
Ilovitza would carry an initial capital expenditure of US$502 million and annually produce 95,000 oz. gold and 16,000 tonnes copper. All-in sustaining costs are estimated at US$334 per oz., with copper as a by-product. Processing costs are pegged at US$5.23 per tonne for oxides and US$6.50 per tonne for sulphides.
At a US$1,250 per oz. gold price and US$3 per lb. copper price, the operation would carry a US$675 million pre-tax net present value (NPV) at a 5% discount rate, along with a 18.6% internal rate of return (IRR).
If metal prices improve to US$1,400 per oz. gold and US$3.50 per lb. copper, the mine would feature a US$1-billion NPV and a 25% IRR.
Euromax needs to come up with financing for a feasibility study, design work and mine construction.
The company indicated that confidentiality agreements have been signed with “several potential financial partners,” with several deal structures under consideration, including metal streaming and royalties.
“We are now in an excellent position to build on this as we continue with our full feasibility work, and then the front-end engineering and establishing our owner’s team to fulfill our ambition to build and operate the first major modern mine in Macedonia,” chief operating officer Patrick Forward added.
Euromax shares were up 75% after the Ilovitza prefeasibility study was released, en route to a 28¢ close at press time.
Shares have traded within a 52-week window of 9¢ to 40¢. There are 85.4 million shares outstanding for a $24-million market capitalization.
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