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%.
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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.
