After selling our shares at C$1.50 in September last year, the share price of Euromax Resources (EOX.V) has dropped approximately 65% to the current share price of C$0.45. We got in touch with the management team to get an update on the company and are pleased with the progress.

The Ilovitza PEA in October was much better than we anticipated. The company outlined a 8Mtpa base case scenario, which has an NPV5% of $252M. The recoveries are also much better than expected. During our site visit at the end of 2011, the recovery rate was anticipated to be around 60% for both gold and copper. Pat Forward – Euromax’s COO – now thinks the recovery rate for gold and copper will be consistently over 83% and 90% (as announced in the PEA) respectively and says ‘this is still conservative’. As there’s also a higher grade zone of approximately 140Mt that will comprise the material taken by a conceptual open pit, the economics improve considerably and our initial assumption of a net recovery of .18% Cu and .18g/t gold are increasing to a net recovery of at least 0.2%Cu and 0.35g/t Au.

At Trun in Bulgaria, the company expects to release an updated NI43-101-compliant resource estimate this quarter. As the permitting process at Trun could easily take a few years, we don’t expect construction work at Trun to start before the Ilovitza project in Macedonia has entered the production phase.

We can also expect a maiden NI43-101-compliant resource estimate at the Serbian KMC-project and it wouldn’t be unreasonable to expect the threshold of the one million gold-equivalent ounces.

Euromax is in great shape after raising C$8M from institutional investors earlier in March. At a share price of C$.45, the enterprise value is approximately C$30M, which is cheap for a company with in excess of 7Moz AuEq in relatively safe countries. The new management team with Steve Sharpe, Varshan Gokool and Pat Forward also brings a wealth of experience as they were involved in European Goldfields, which was bought by Eldorado Gold (ELD.TO; NYSE:EGO) for $2.4B back in 2011.

As these new board members make it very clear to the investment community that Euromax no longer is an exploration play but a development play, we hope 2013 is a turning point for the company and the market will realize the potential of these assets which could very well turn Euromax into European Goldfields II. If the markets continue to fail to understand the story, CEO Steve Sharpe has made it very clear it’s a real possibility to take the company private.

Disclosure: The author holds a long position in EurOmax Resources Ltd. Please see our disclaimer for current positions.

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