Eurasia Mining Plc (LSE:EUA) is an international mining and mineral exploration company listed in the United Kingdom. It owns the West Kytlim platinum group metals and gold mine in the Urals. Recently, the company was granted an additional exploration license at this facility.
So, is the Eurasia Mining share price on the verge of surging upward? And should I be considering this business for my portfolio? Let’s explore.
Key Points
- Eurasia Mining has increased its exploration capacity at West Kytlim platinum group metals and gold mine
- Eurasia Mining share price has shown an outstanding growth of 113% since 2020.
- The mining company is undergoing a high cash burn.
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Looking at past performance
Eurasia Mining shares are currently trading at around 3.0p on the London Stock Exchange. The stock is trading at one of the lowest prices right now.
Eurasia Mining stock displayed stellar performance in the years 2020 and 2021. However, since the year 2022, the stock has reversed its course of action.
From a price of 24.5p at the start of 2022, the stock declined by a whopping 82%. The bearish trend has continued in 2023; to date, the stock has fallen by another 33%. What’s more jaw-dropping is that Eurasia’s mining stock has declined by approximately 93% from its all-time high!
The firm has been engulfed in many challenges, majorly on the macroeconomic levels. Not only the prices of the key metals it produces, like platinum and palladium, have been continuously declining. Western sanctions are also creating problems for regular operations within Russia1.
Another major announcement from the company’s management is the expected sale of the company’s assets within Russia. It is expected to positively impact the Eurasia Mining share price, which is a breath of fresh air in the disastrous situation the company is in.
Looking at the past trend, as an investor, my foremost question is, can the Eurasia Mining share price surge once again?
Can the Eurasia Mining share price rise?
Since Eurasia Mining operates in Russia, it was hugely affected by the Russian-Ukraine conflict. Despite the announcement from company officials that no individual or entity associated with Eurasia Mining had been subject to Western sanctions, the Eurasia Mining Stock continues to suffer2. This does not come as a surprise since the company has interests in gold, copper, and platinum mines in Russia.
For the year-end 2022, Eurasia Mining reported a loss before tax of £7.23 million. (2021: loss before tax of £3,14 million). The single largest item causing this variation is the absence of revenue in 2022. Revenues generated by the mining company have been from the refining of PGM concentrates. And during the year 2022, no sales of mined products occurred.
Nevertheless, the company’s cash balance is promising, with more than £3m and $6.6m on the books. These cash levels are comforting, provided the high rate of cash burn required for a mining company.
Amongst all this, the future of Eurasia Mining seems uncertain.
Challenges along the way
Undoubtedly, the increase in revenue and the additional explorational capacity are good signs for investors. But Eurasia Mining is not free from challenges and risks. The declining Eurasia Mining stock is alarming to investors like me.
Moreover, the rising rumours of palladium further dropping will give a huge blow to the losses the company is generating, in my opinion. Furthermore, the mining company’s high rate of cash burn raises many concerns among investors like me. Even more so, considering this is an unprofitable enterprise.
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Is the Eurasia Mining share a good buy?
Currently, the mined palladium production is limited in South Africa and Russia. Moreover, these countries are facing challenges regarding adding new supplies to meet demand. In such a situation, Eurasia Mining provides exposure to low-risk, ESG-friendly palladium supply.
However, the company is clearly treading difficult waters. Not only internally but also at macroeconomic levels. Therefore, I’m personally steering clear of this stock for now.
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Article sources
- World Bank Blogs. “Precious metal prices pressured by rising interest rates and weaker economic activity“
- Eurasia Mining. “No impact from the new Sanctions“
Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies and assets mentioned in this article are those of the writer and therefore may differ from the opinions of analysts in The Money Cog Premium services.
