Eurasia Mining has doubled in February. Will it crash like Sirius Minerals?

Sirius Minerals (LON: SXX) shares were initially soaring, and now it’s the turn of Eurasia Mining (LON: EUA). Will it end in tears too?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Do you remember when Sirius Minerals (LSE: SXX) shares doubled in value in just a few weeks back in 2016? I do, and I felt very pleased with myself when I bought some a few months later after they’d crashed back down again.

Something similar has just happened to the Eurasia Mining (LSE: EUA) share price. Well, the doubling part, at least. At market close on Monday, the shares had doubled since their end of January price.

Penny shares?

Before I look closer, I want to air one note of caution. People sometimes point to gains like this as examples of the riches you can make from penny shares. After all, even after the big jump, Eurasia shares are still only priced at 6.7p. But you know what? If Eurasia had only one tenth as many shares in existence at 10 times the price (at 67p), I expect the same would have happened.

And the biggest potential loss from a share is exactly the same whatever the price. It’s 100%.

The latest bullishness is not the first in Eurasia’s history, as my colleague Michael Baxter’s words from December show. Just two months ago, Eurasia was on the up, and Michael was asking whether a great buying opportunity had passed. He thought not and suggested the shares were still good value, and it looks like he’s been proven right. But let’s not forget Sirius just yet!

Eurasia boom

The Eurasia boom seems to be all about rising demand for palladium and platinum. Palladium prices have soared by almost 70% over the past 12 months, with a big spike since the start of 2020. And just like gold, investing in precious and rare metals miners can provide better rewards than buying the metals themselves.

Analysts are getting more bullish too, about both palladium and about Eurasia Mining itself. And there are rumours going round that Eurasia insiders have been buying stock too — but, pinch of salt and all that.

Sirius bust

Back to Sirius Minerals and the question of whether Eurasia Mining could go the same way. Well, there is speculative risk with Eurasia, just as there was with Sirius. Eurasia has been burning cash and recording losses, which is one thing EUA and SXX have in common.

But the big risk for Sirius, which turned out bigger than I’d expected, was that it simply did not have the capital in place to get close to being productive. It was sat on a very desirable asset in its potash reserves, and had a long list of customers lined up. 

But there was never going to be any potash production for a number of years, and it needed huge further investment.

Productive

By contrast, Eurasia Mining has been listed on AIM since 1996 and is in production today. It’s churning out palladium, platinum, gold and other rare metals from its Russian assets. And it’s been suggesting it’s close to further platinum group discoveries. 

So no, I don’t see Eurasia as facing anything like the risks of Sirius Minerals. It’s still speculative, but I think there could be more share price rises to come.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Alan Oscroft owns shares of Sirius Minerals. 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.

More on Investing Articles

Person holding magnifying glass over important document, reading the small print
Investing Articles

Just released: our top 3 small-cap stocks to consider buying in October [PREMIUM PICKS]

Small-cap shares tend to be more volatile than larger companies, so we suggest investors should look to build up a…

Read more »

Investing Articles

How I’d use an empty Stocks and Shares ISA to aim for a £1,000 monthly passive income

Here's how using a Stocks and Shares ISA really could help those of us who plan to invest for an…

Read more »

Investing Articles

This FTSE stock is up 20% and set for its best day ever! Time to buy?

This Fool takes a look at the half-year results from Burberry (LON:BRBY) to see if the struggling FTSE stock might…

Read more »

Investing Articles

This latest FTSE 100 dip could be an unmissable opportunity to pick up cut-price stocks

The FTSE 100 has pulled back with the government’s policy choices creating some negative sentiment. But this gives us a…

Read more »

A young woman sitting on a couch looking at a book in a quiet library space.
Investing Articles

As the WH Smith share price falls 4% on annual results, is it still worth considering?

WH Smith took a hit after this morning’s results left shareholders unimpressed. With the share price down 4%, Mark Hartley…

Read more »

Investing Articles

The Aviva share price just jumped 4.5% but still yields 7.02%! Time to buy?

A positive set of results has put fresh life into the Aviva share price. Harvey Jones says it offers bags…

Read more »

Investing Articles

Can a €500m buyback kickstart the Vodafone share price?

The Vodafone share price has been a loser for investors in recent years, and the dividend has been cut. We…

Read more »

Frustrated young white male looking disconsolate while sat on his sofa holding a beer
Growth Shares

3 mistakes I now avoid when choosing which growth stocks to buy

Jon Smith runs through some of the lessons he's learnt the hard way over the years about what to look…

Read more »