I last wrote about AIM listed Eurasia Mining (LSE: EUA) in February, when its price was 6.8p. Cut to July and Eurasia’s share price had risen by a whole 153% at the last close. Investing in the platinum metals miner appears to have been superbly rewarding. Its performance would stand out at any time, but particularly now, when many stocks are bruised from the market crash. It also raises the question for investors: is now a good time to invest in EUA?
To answer this question, I think we need to look at both its past and its future potential. First, the past. While returns on investments in EUA in early February look pleasing, the process hasn’t been without some heart-stopping drama. There was no indication to suggest as much at the time, but a little after I wrote about the prospects for the EUA share price, trading in the share was suspended.
Why trading was suspended
A cryptic explanation in a release soon after followed. EUA said trading was suspended “pending clarification of its relationship with CITIC”. CITIC is a Chinese investment bank, whose name had first come up in EUA’s releases in late 2019. At the time, the miner was in talks with the bank to consider “strategic options” for its mining assets.
It made things a bit clearer in April. But even then it only said that it was engaged with the merchant banking arm of the company. This was easy to put together in any case from the initial information it shared. All this while, trading remained suspended.
Unveiling the grand plan
Only at the start of this month did it unveil its plans. On July 1, it announced a “formal sale process” for which it had appointed UBS as the lead advisor. However, there was still no further clarity on its relationship with CITIC. The EUA share price remained suspended at 7.2p, the level it last traded at on February 11.
However, it was only two days ago that it finally revealed what so far had been under wraps. CITIC is now one of the investment bankers for Eurasia Mining along with UBS. EUA is, in other words, now an acquisition candidate. No sooner had it clarified its formalised arrangement with CITIC than EUA stock started trading again on AIM. On July 9, when it started trading, the EUA share price gained by a whole 77.8%, followed by another 35.5% increase the next day.
What’s next for the Eurasia Mining share price
Attractive as it looks right now, this one is clearly for short-term investors and traders. There’s just too much at stake for the long-term investors, in my view. Will it definitely get sold? Might the acquisition give current investors a stake in the acquiring company (if it’s listed)? Will the valuation put the share price at a much higher level than it is now? These are just some of the questions that come to mind. I think there are safer high-growth stocks for the long-term investor to consider instead.
Manika Premsingh has no position in any of the shares mentioned. 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.