What’s next for the Eurasia Mining share price?

Rupert Hargreaves explains why he thinks the Eurasia Mining share price may continue to struggle until the company receives a final takeover offer.

| 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.

pensive bearded business man sitting on chair looking out of the window

Image source: Getty Images

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.

The Eurasia Mining (LSE: EUA) share price has been on a wild ride over the past year. Since the middle of November last year, the stock has traded between 43p and 15p. Overall, shares in the metals and mining company are down by just 0.1% over the past 12 months. 

Still, despite this lacklustre performance, since the beginning of January 2020, shares in the company have risen in value by more than 700%. So long-term investors have been well rewarded over the past two years. 

The question is, what happens next? As with most early-stage metal and mining companies, Eurasia’s outlook is linked to its development progress.

On this front, the group received a piece of good news today in the form of a mining exploration licence at its flagship West Kytlim project.

Eurasia Mining share price catalyst 

The West Kytlim project is in the Urals and producers palladium, platinum, rhodium, iridium and gold. The enterprise first applied for this new mining licence in 2019. 

Called the Flanks Licence, the prospect is adjacent to the company’s current mining licence. It’s linked with an exploration licence Eurasia owned via its former joint venture with Anglo American Platinum. As such, the organisation has some understanding of what’s underneath the ground in the region. 

The Flanks Licence will help the company increase its resource base and could potentially extend the life of its flagship West Kytlim project. 

Eurasia has already opened two new processing facilities at its flagship project this year.

Unfortunately, the group is still loss-making, with a gross loss of £240k reported for the first six months of 2021. After including financing and administrative costs, the overall loss for the period was around £1.5m.

Still, mine revenue increased nine times over the same period in 2020, and the company is pushing ahead with further output growth. 

Sale progress

All in all, Eurasia’s fundamentals are improving, and the group is also moving ahead with its sale process. This sales process has had a far more significant impact on the Eurasia Mining share price than the company’s fundamental performance over the past two years.

As such, while the mining company’s underlying performance will impact the stock, I think the market is focusing far more on management’s progress in selling the business.

The company says it has received interest from at least one buyer on this front, which has already completed its due diligence. However, management says it’s discussing potential offers with other buyers, which may produce a better outcome. The granting of the Flanks Licence may even push buyers to make a higher offer. 

There is no guarantee any offer for the corporation will emerge as a result of these discussions, of course. There has also been no comment from the company on how much any potential offer could be worth. Therefore, it’s pretty challenging for me to value the business based on this lack of information. 

As a result, I think the Eurasia Mining share price will continue to trend sideways until further information is announced. And considering the level of uncertainty surrounding the enterprise, I wouldn’t buy the stock for my portfolio today. 

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 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.

More on Investing Articles

Investing Articles

I’d buy 4,186 Legal & General shares to aim for £14,616 a year in passive income

A relatively small sum invested in Legal & General shares can be transformed into much bigger passive income over time…

Read more »

Businesswoman calculating finances in an office
Investing Articles

Here’s why the 3i share price is climbing after the company’s latest earnings update

After the firm's latest earnings report, the 3i share price reflects a company going from strength to strength, with the…

Read more »

Investing Articles

£10 a day invested in UK shares could one day create a second income of over £3,000 a month!

Mark David Hartley outlines a strategy he’d use to aim for a second income that gets bigger over time, by…

Read more »

Investing Articles

£20,000 in savings? Here’s how I’d aim to turn that into passive income of £903 a month

Our writer shares one approach to passive income investing, spotlighting a quality FTSE 100 stock he recently added to his…

Read more »

Investing Articles

Great dividend stocks! Here’s the forecast for Associated British Food shares to 2027

Associated British Foods' shares have dropped in value this year. Does this present a dip-buying opportunity for dividend investors to…

Read more »

Investing Articles

Should I sell my FTSE All-Share index fund and buy a S&P 500 tracker instead?

Harvey Jones is wondering whether now is a good time to invest more money in the S&P 500, after a…

Read more »

Investing Articles

Should I buy dirt-cheap BT shares after the recent pullback?

BT shares were on the up but now they're sliding again after the board trimmed full-year guidance. Now Harvey Jones…

Read more »

Investing Articles

Up 28%, can the easyJet share price keep rising?

The easyJet share price has gained altitude over one year but plunged over five. Is now an attractive time for…

Read more »