Over the past three weeks or so, the Eurasia Mining (LSE: EUA) share price has crashed 42%. Despite that, the EUA share price is still 95% higher than it was at the start of the year.
What is going on – and could the latest tumble be an opportunity to add the share to my portfolio?
Lots of hope but limited news
In fact, nothing has been going on. Rather, it is the main focus of recent years that is the issue, namely trying to offload its Russian mining assets.
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The strong movement in the share price might seem to suggest there has been some action on that front. In reality however, the company has not made any substantive announcements this year when it comes to progress in its attempts to sell the assets.
That does not mean it has all been quiet in other areas though. Eurasia did announce last week that it plans a new share placing in an effort to boost its working capital, allowing it to fund the costs of maintaining its listing on the London stock market as well as acquiring a listing on the Kazakhstan stock market.
While that news is interesting – without any income from its mines, Eurasia needs cash to keep running – it does not cast light one way or the other on the big question of whether Eurasia will be able to find a buyer for its Russian assets and if so at what price.
High degree of uncertainty
So why has the price crashed? Partly, it reflects the ongoing wait for substantive news. After all, if Eurasia cannot sell its assets then it will likely keep struggling to monetise them effectively. That reflects the various sanctions currently in place let alone the fact that the mining assets it owns are not currently productive on a commercial scale.
The proposed Kazakh listing may also have scared some investors as they ponder what it could ultimately mean for the London listing.
For now Eurasia has not suggested any plan to delist in London, but the Kazakh listing adds a new layer of complexity for a business that is already dealing with a challenging geopolitical landscape for its business.
I see this as uninvestable for me
Still, the fact that Eurasia has managed to sell millions of pounds worth of new shares underlines that some investors continue to see potential value here. The same holds true of the fact that the EUA share price has almost doubled in just three months.
I can see what buyers are excited about: if Eurasia is able to sell its Russian assets at an attractive price, its current valuation could soar. That would likely boost the share price.
But we have no idea what will happen. Eurasia has been trying to sell the assets for a while already, in a buyer’s market. To date it has not been successful in that effort — and there is a risk that it will not be in future, either.
I continue to see this as speculation more than investment, so will not be buying any Eurasia shares for my portfolio.
