Will the Eurasia Mining share price keep climbing?

The Eurasia Mining share price could continue to move higher as the company pushes ahead with its formal sale process and asset development.

| 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.

After trading between 20p and 30p for much of 2021, it now looks as if the Eurasia Mining (LSE: EUA) share price is on the verge of breaking out. A surge in buying this week has pushed the stock above 29p. A further jump in buying could send the shares above 30p. 

If the stock moves above this level, it would be back on the trajectory that’s been in place for the past 12 months. Indeed, since the beginning of April 2020, the Eurasia Mining share price has risen in value by 130%. However, the rally petered out at the beginning of this year. 

The latest catalyst for the stock is an agreement with Russian state-owned company RosGeo to create a new joint venture. The deal will allow Eurasia to gain a 75% equity stake in nine new mining assets. RosGeo will hold the remaining 25%. 

The organisation paid $500,000 in cash for its share in the JV, expanding its portfolio of mining assets in the Kola Peninsula.

Under the terms of the deal, the metals exploration company’s contributions will increase should Eurasia decide to develop the additional assets.

The deal provides Eurasia with exposure to significant assets. The new mining assets have a total of 104.6m ounces of platinum equivalent resources. Russian authorities have already approved these resources.

The outlook for the Eurasia Mining share price

This joint venture is a big deal for Eurasia. It has bolstered the company’s presence in Russia and fostered a connection with RosGeo, the most prominent geological enterprise in the country. That suggests it’s one of the best partners the firm could have in Russia. 

When combined with the group’s existing assets, I think this deal significantly improves Eurasia’s outlook.

The company has also been focusing on its West Kytlim platinum and gold mine in the Urals this year. The project is progressing to plan, and management is optimistic about its prospects. 

Shareholders are also waiting for more information about the sale of the business. This process started last year, and at the end of January, the company noted that work on a potential deal was ongoing. At the beginning of 2021, Eurasia announced it had received several non-binding offers for the business. Unfortunately, the process is moving at a slower pace than management might have liked. 

Of course, there’s no guarantee any solid offer will emerge. What’s more, there’s no guarantee any will exceed the current Eurasia Mining share price. 

Still, I think the new deals will only increase buyer interest. 

Risks ahead

All in all, I think these initiatives could continue to drive the Eurasia Mining share price higher. However, the enterprise faces some significant risks. 

The company is well-funded today, but this may not last. A lack of money is the most common reason why early-stage mining and exploration businesses fail. Eurasia is also, to a certain extent, indebted to Russian authorities. If the authorities decide to shut down its projects, there’s nothing the corporation can do. Further, there’s no guarantee an offer for the firm will ever emerge or that its mining projects will live up to expectations. 

Despite these risks, I’d buy the stock for my portfolio today, considering its growth initiatives and potential buyout.

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.

Rupert Hargreaves unfortunately the outlook for the will hold the remaining 25% faces some significant risks the new deals this process started andhas 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.

More on Investing Articles

Investing Articles

Fools wouldn’t touch these 5 FTSE 350 flops with a bargepole – how come I own 3 of them?

Harvey Jones took a chance on three struggling FTSE 350 stocks in the hope that they'd stage a dramatic recovery.…

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

How I’m trying to make a million from passive income

Invest as much as possible, regularly, and use the passive income to plough back into more shares. Here's how millionaires…

Read more »

Investing Articles

I’d buy 30,434 shares of this UK dividend stock to target £175 a month in passive income

A top insider has spent over £1m buying this 9%-yielding passive income share over the last year. Roland Head explains…

Read more »

Growth Shares

Should I buy Rolls-Royce shares for 2025?

Edward Sheldon’s missed out on the huge gains that Rolls-Royce shares have generated this year. But should he buy the…

Read more »

Investing Articles

30,000 shares in this FTSE 250 REIT could earn me £559 a month in passive income

Real estate investment trusts can be great passive income investments. And Stephen Wright likes one from the FTSE 250 with…

Read more »

Investing Articles

Down 24% and yielding 9.18! Is L&G the best passive income stock on the FTSE?

Harvey Jones is the first to admit that the Legal & General share price has had a poor year. But…

Read more »

Investing Articles

Warren Buffett just bought these 2 stocks!

Warren Buffett just invested $700m in these stocks! What’s the strategy behind them, and should investors think about following in…

Read more »

Investing Articles

£10 a day invested in UK stocks could create a second income of £40,000 a year!

Investing even a small amount of money regularly can generate a substantial second income stream in the long run. Zaven…

Read more »