Eurasia Mining has doubled in February. Will it crash like Sirius Minerals?

Sirius Minerals (LON: SXX) shares were initially soaring, and now it’s the turn of Eurasia Mining (LON: EUA). Will it end in tears too?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Do you remember when Sirius Minerals (LSE: SXX) shares doubled in value in just a few weeks back in 2016? I do, and I felt very pleased with myself when I bought some a few months later after they’d crashed back down again.

Something similar has just happened to the Eurasia Mining (LSE: EUA) share price. Well, the doubling part, at least. At market close on Monday, the shares had doubled since their end of January price.

Penny shares?

Before I look closer, I want to air one note of caution. People sometimes point to gains like this as examples of the riches you can make from penny shares. After all, even after the big jump, Eurasia shares are still only priced at 6.7p. But you know what? If Eurasia had only one tenth as many shares in existence at 10 times the price (at 67p), I expect the same would have happened.

And the biggest potential loss from a share is exactly the same whatever the price. It’s 100%.

The latest bullishness is not the first in Eurasia’s history, as my colleague Michael Baxter’s words from December show. Just two months ago, Eurasia was on the up, and Michael was asking whether a great buying opportunity had passed. He thought not and suggested the shares were still good value, and it looks like he’s been proven right. But let’s not forget Sirius just yet!

Eurasia boom

The Eurasia boom seems to be all about rising demand for palladium and platinum. Palladium prices have soared by almost 70% over the past 12 months, with a big spike since the start of 2020. And just like gold, investing in precious and rare metals miners can provide better rewards than buying the metals themselves.

Analysts are getting more bullish too, about both palladium and about Eurasia Mining itself. And there are rumours going round that Eurasia insiders have been buying stock too — but, pinch of salt and all that.

Sirius bust

Back to Sirius Minerals and the question of whether Eurasia Mining could go the same way. Well, there is speculative risk with Eurasia, just as there was with Sirius. Eurasia has been burning cash and recording losses, which is one thing EUA and SXX have in common.

But the big risk for Sirius, which turned out bigger than I’d expected, was that it simply did not have the capital in place to get close to being productive. It was sat on a very desirable asset in its potash reserves, and had a long list of customers lined up. 

But there was never going to be any potash production for a number of years, and it needed huge further investment.

Productive

By contrast, Eurasia Mining has been listed on AIM since 1996 and is in production today. It’s churning out palladium, platinum, gold and other rare metals from its Russian assets. And it’s been suggesting it’s close to further platinum group discoveries. 

So no, I don’t see Eurasia as facing anything like the risks of Sirius Minerals. It’s still speculative, but I think there could be more share price rises to come.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft owns shares of Sirius Minerals. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »