The Eurasia Mining (LSE:EUA) share price has done well over the past month or so. Since 4 February, it’s up 85%. Understandably, such a significant move is attracting the attention of investors.
Let’s take a look.
What does it do?
The company sells precious metals — predominantly palladium — from its mines in Russia. More precisely, the group wants to sell the output from its mines. But due to sanctions imposed against the country, it’s currently unable to generate any revenue.
As well as owning some sites that are fully commercialised, it also plans to develop others. However, due to the uncertainty surrounding its operations, for the past couple of years its main focus has been trying to sell these assets. As yet, it hasn’t been able to find a buyer.
And until things change, the company looks likely to continue doing very little.
The company seeks to preserve its cash by keeping costs to a minimum. But in the absence of sales, it continues to draw down on its trade finance facility. The amounts lent are secured on the chairman’s shares.
Yet despite the lack of activity, it still has a stock market valuation of close to £200m.
Are things about to change?
The recent share price movement appears to suggest that investors are hopeful things will soon improve. And some of this could be explained by the re-election of President Trump and his moves linked to ending the war in Ukraine.
I think it’s fair to say that Trump is more open to doing business with Putin than his European counterparts. If a permanent ceasefire can be negotiated, I suspect Trump will be inclined to quickly remove Russian sanctions.
Euraisa Mining will then be in a position to sell its metals in America, even if other countries are more reluctant to take its products.
However, this is pure speculation. And this doesn’t feel to me like a sound basis on which to make a sensible investment decision. But the way in which its share price has moved in recent months, suggests there’s plenty of speculators out there.
What’s the company worth?
And that’s another problem. With such a volatile stock price, it’s hard to tell whether its assets are worth more than its current market-cap. At one point, the company was valued at over £1bn, so perhaps they are. However, to be honest, I’ve no idea.
I’m also puzzled as to why the company can’t find any Russian buyers for its metals. According to its accounts, at 27 August 2024, it had stockpiled 239kg of PGM (platinum group metals) concentrate with a value of “not less than” £5m. Apparently, this is being stored in a “secure facility” and discussions have been held with possible buyers. But I’m surprised nobody in the country has a use for them, even at a knock-down price.
Although I’m sure someone will do well if the company’s able to start selling again — or is able to dispose of its assets — at the moment, there are too many ‘unknowns’ for my liking. For this reason, I’m not going to invest.
