Investors have clamoured for Eurasia Mining (LSE: EUA) shares over the last week. In fact, the penny stock was recently the most popular pick among Hargreaves Lansdown clients. That’s right — this AIM-listed resource play was more in demand than FTSE 100 members such as IAG and Lloyds Bank.
All this has helped the Eurasia Mining shares more than double in value since 27 August. That leaves it with a market capitalisation of over £1bn. My Foolish colleague Roland Head noted at the start of the month that investors are keen to get exposure to the Russia-focused miner. This is due to its focus on extracting palladium, platinum, rhodium, and iridium. These should all be in huge demand going forward.
Today however, I’m highlighting another penny stock that could be about to spring violently to life.
Is this penny stock next to pop?
Would-be producer Horizonte Minerals (LSE: HZM) is a share I’ve owned for five long years. Partly due to the electric vehicle revolution, it’s my play on what’s set to be a booming nickel market.
The AIM-listed company owns two Tier-1 projects, Araguaia and Vermelho, in Brazil. Right now, it’s the former that’s really in focus. News of how Aragiua will be financed into production is due by the end of Q3. It could be the catalyst for some serious share price action.
At least that’s what I’m hoping. Mining companies aren’t known for their willingness/ability to stick to deadlines. If there’s a delay, HZM shares could experience some sharp selling pressure as short-term traders head for the exits.
Even if the news arrives, it’s a question as to whether the terms of that financing are beneficial for existing owners like me. They might not be. Covid-19 could also impact construction at Araguaia on top of this.
Horizonte vs EUA
A positive to owning Eurasia Mining shares over Horizonte’s are that the company already has one project in production. Obviously, HZM won’t be ready to deliver the goods for a while yet.
The company’s mergers and acquisitions officer Dmitry Suschova owns a big portion of EUA. That’s another thing I like. This is through a direct holding and a controlling interest in Deloan Investments Limited. This should mean his interests are aligned with those of private investors. By sharp contrast, managerial ownership of Horizonte’s stock leaves a lot to be desired.
Then again, the latter’s shareholder register is hardly shabby. Teck Resources — Canada’s largest diversified miner — owns a little over 12% of the company. London-listed Glencore owns another 5.2% of HZM’s stock. There are worse bedfellows to have!
At £130m, Horizonte’s market-cap also feels far more palatable. For perspective, EUA is now eligible for inclusion in the FTSE 250 index. That’s if it were to list on the main market, of course. Does this make sense? I’m not sure it does. The company barely makes any revenue and generates zero profit. It could also be forced to tap investors for more cash going forward.
I’m keeping my fingers crossed that HZM is able to replicate some of the recent performance seen in Eurasia Mining shares. A near-24% rise in the last month bodes well.
Nevertheless, I’m not getting ahead of myself. As always, I’ll be ensuring that the rest of my portfolio is diversified into other sectors, just in case.
Paul Summers owns shares in Horizonte Minerals. The Motley Fool UK has recommended Hargreaves Lansdown and Lloyds Banking Group. 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.