What’s going on with the Eurasia Mining (EUA) share price?

The Eurasia Mining (EUA) share price fell this month after a sudden surge. But is it on the verge of exploding? Zaven Boyrazian explores.

| 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.

The Eurasia Mining (LSE:EUA) share price exploded this month, almost doubling within the first week. Since then, the stock has cooled off a bit and been on a downward trajectory. However, it’s worth noting that it’s still up more than 30% over the last 12 months.

The recent upward momentum was triggered by an encouraging progress update for the mining company’s Monchetundra project. However, more information has come to light since then, and it could make the entire venture far more lucrative. Let’s take a closer look.

EUA share price potential is rising

Last week, management released its previously announced five-year mining plan for two (West Nittis and Loipishnune) of the nine sites within the Monchetundra project. While having a plan of action is undoubtedly a good step forward, the firm has also made some additional discoveries that could lead to a rapid rise in the EUA share price, in my opinion.

Eurasia has completed a more detailed block-modelling analysis of the two sites, in addition to implementing further open-pit optimisations. As a result, the company now estimates that annual ore production in the first phase of development will actually be 70% higher than what was initially anticipated in the 2017 feasibility study.

What’s more, it has also revised the production profiles of both mines, increasing the ore grades. West Nittis is now predicted to contain 2.6 g/t (grams per tonne) of palladium, while Loipishnune stands at 1.8g/t. These are both significantly ahead of the original average estimate of 1.3g/t. And the updated figures only get larger when including the platinum and gold also detected at both sites.

Combining all this information, Eurasia is on track to produce 128 Koz of palladium and equivalents each year throughout phase one of development. Based on today’s prices, that’s roughly equal to £182m, or £136.1m when adjusting for the firm’s 75% equity stake. Needless to say, these are excellent results. So why didn’t the EUA share price react more positively to the news?

The road ahead

Despite the encouraging progress being made at Monchetundra, it seems many investors are holding their breath. Production at these sites is still a couple of years out. And during that time, other mining businesses are flooding the market with palladium and other battery metals to meet the current demand. It’s entirely possible that the market becomes saturated, resulting in lower metal prices. So, by the time Eurasia Mining enters the picture, the £136.1m prospect could be worth considerably less.

With that in mind, seeing a lacklustre response from investors and is not that surprising.

The Eurasia Mining EUA share price has its risks

The bottom line

A lot of speculation and expectations have built up over the last 18 months surrounding the EUA share price. Over the long term, if the company can deliver, the stock might be in for some explosive growth. But currently, it seems investor patience is starting to wear thin, which could explain why some decided to close their positions after the steep rise earlier this month.

Personally, my opinion remains unchanged. Eurasia Mining looks like it has great potential. But it’s simply too soon for me to invest.

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.

Zaven Boyrazian 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 »