Operating in Russia, Eurasia Mining (LSE:EUA) is a mineral exploration company. It primarily mines and produces platinum group metals (PGMs) and gold. However, is also focuses on base metals, including nickel and cobalt. The Eurasia Mining share price is currently trading at 8.5p, in prime penny stock territory. However, I want to first know why shares are currently suspended, so let’s take a closer look.
Trading suspended
Shares in the company were suspended before the market opened this morning.
In the news release, the firm only stated that the suspension was in place “pending an announcement”. Although I never invest based on speculation, there are a few potential reasons for this.
One reason could be a future dual listing on the Moscow Stock Exchange. The firm has been mulling this issue since November and may have now made a decision.
Another possibility is that the suspension is related to a potential purchase. The company announced in October that a potential buyer had completed its due diligence for the purchase of almost all of Eurasia Mining’s assets.
It could also relate to sanctions. While the business has avoided sanctions so far, it is not inconceivable that it may be affected in some way, given that it operates in Russia.
Although I don’t know for sure what the suspension relates to, these three issues have all been ongoing for some time and are factors that could impact a future investment decision.
Financial and reserves update
As it is listed on the AIM 100 index, Eurasia Mining is able to publish financial results with less regularity than bigger companies in the FTSE 100 or FTSE 250.
For the six months to 30 June 2021, sales amounted to £425,000. This was a major increase, year on year, from just £48,000.
Furthermore, cash at the end of this period stood at £16m, having grown from £50,000 the previous year. This improved cash balance is the product of a successful capital raise, demonstrating the confidence many investors have in the prospects of this company.
On the other hand, the loss before tax was £1.4m, about £100,000 greater year on year. I always note, however, that past performance is not necessarily indicative of future performance.
In a February reserves update, the firm stated that it had around 292,000 tonnes of copper and 388,000 tonnes of nickel. Additionally, it had 8 tonnes of gold. In the current climate, where metals are trading a historically high prices, Eurasia Mining could benefit from the sale of parts of these reserves.
Overall, there is still too much uncertainty surrounding the Eurasia Mining share price for me to invest. Until I know the reason for the suspension, I won’t be buying shares in the company. Despite this, I won’t rule out a purchase at a future date. The firm’s improvement in sales and cash balance could send the share price higher over the long term.
