Perspective problems in Euromax Resources in 2011

When Minews last took a look at Euromax Resources at the end of August it was in a complete shambles. The nigger in the woodpile, if that is not a politically incorrect phrase nowadays, appeared to be the finance director Christopher Serin who had been instrumental in chucking John Menzies, chairman and chief executive, off the board. John did not appear to an outsider to have done a bad job and towards the end of 2009 he had put together a merger with Silk Road Resources and then sold a property in China which put C$13.5 million in the Euromax kitty. Earlier this year Mr Serin appointed himself as interim chief executive and then proceeded to have a bitter battle with a major shareholder, Anthony Patriarco, who had been a director from June 2009 to March 2010. Serin accused Patriarco, among other things, of insider trading and thus gained a very bad enemy.

No point in going over the whole saga again with all the ins and outs of dissident majorities being ignored at AGMs as the company is on an even keel again. Serin is out and Mark Gustafson, a leading dissident along with Anthony Patriarco, is chief executive. This happened back in September and the first thing announced by Mark was that the company intended to complete a formal review of all the properties in its portfolio and formalize an appropriate exploration plan that takes into account its available cash resources and any available strategic alternatives. This has now been completed and the priority projects for 2011 are going to be the the Trun gold project in Bulgaria, Karavansalija copper-gold complex in Serbia and Ilovitza porphyry copper-gold project in Macedonia. In addition, the Breznik and Rakitovo gold projects in Bulgaria are also considered to be quality projects that should be advanced towards mining concession status.

What was very encouraging for John Menzies to read was the report from Dr Quinton Hennigh, technical adviser to Euromax Resources which read as follows, “Seldom does one see a collection of potentially world-class projects within a junior exploration company. Euromax has some of the best properties in the Balkans and a superb geologic team to advance them. With the successful start-up of Dundee Precious Metals' operation at Chelopech, people are beginning to recognize that the Balkans region is a good place to operate. Through diligent exploration Euromax is in a great position to deliver more projects that may be developed by partners into mines."

Dr Hennigh then went on to give basic descriptions of each project starting with Trun which covers 136 sq kms in western Bulgaria. The gold mineralization is associated with a series of granite and syenite stocks that intrude a broad anticline of metamorphic rocks and displays striking similarities to the Tintina gold belt of the Yukon and Alaska which hosts the Fort Knox and Dublin Gulch deposits. A resource estimate is underway for the Logo area, the northernmost gold zone identified at Trun and an NI43-101 report is expected in early 2011. Euromax plans to advance the Trun exploration permit towards a mining concession in 2011 by defining in situ resources and conducting preliminary metallurgical testing.

The Karanvansalija project in southern Serbia was acquired under option from Freeport-McMoran back in May 2008. It hosts extensive zones of skarn and siliceous breccia presumed to be associated with buried porphyry centres. Alteration and mineralization are evident throughout an area of approximately 12 square kilometres within the 60 square kilometre exploration concession. Although porphyry mineralization has yet to be encountered by drilling, the styles of mineralisation discovered to date suggest the likelihood of associated porphyry mineralization nearby. At Copper Canyon, a zone of copper-gold skarn measuring 500 metres long, 300 metres wide and 80 to 90 meters thick has been intercepted by drill holes. Results include 113 meters at 0.32% copper and 0.52 g/t gold. Attached to this copper-gold skarn is a gold skarn, where an intersection of 143 metres grading 1.6 g/t gold has been recorded, and there is another one to the north of it. Euromax is planning to undertake geophysical and geochemical surveys in the spring of 2011 to define the skarn better, as well as potential buried porphyry targets for drilling.

Ilovitza is a large Tertiary age porphyry copper-gold system in Macedonia that shows similarities to other porphyry deposits of the Balkans. It has a NI43-101 compliant inferred resource, dated August 7 2008, of 303 million tonnes grading 0.23% copper 0.32 g/t gold and 0.005% molybdenum. Recent geophysical work by the Company has identified the potential for a higher grade core to this large porphyry system. Euromax is presently drilling the last two holes of a programme designed to significantly expand and upgrade the Ilovitza resource. Results are expected in the first quarter of 2011, at which time the company will commission an update of the resource statement.

Mark Gustafson will therefore kick off 2011 with plenty on his plate. He will also be conscious that he has to establish confidence in the new management among investors and this is best done by a newsflow of good results. North Americans will also have to be convinced that the Balkan states, of which some of them will have heard, are not in constant conflict. The last of the wars in the former Yugoslavia took place in Kosovo in 1998-9 and included fighting throughout this period between Serb-dominated security forces and the Albanian Kosovars, and also the 1999 NATO bombing of Yugoslavia. Things have improved massively in the area since then and many Brits now favour eastern Europe for holidays. Thus London should be a priority for promotion of Euromax and he will be greeted warmly as John Menzies, well known here, has given him full backing.

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