Eurasia Mining PLC

Eurasia Mining PLC (LON: EUA) is an FTSE AIM 100 index-listed UK-based mineral exploration company. The Company is focused on the exploration and development of platinum group metals (PGM), gold, and other minerals in Russia.

Investment Rationale – SPECULATIVE BUY at GBX 19.60

• Positive Outlook: The demand outlook for PGM is compelling for both industrial and precious metal uses.
• Rebound in Gold Prices: Gold prices rose above US$1,900 for the first time since June 2021, due to escalating tension in Ukraine with Russian Invasion.
• Growing Platform: EUA has progressed well both operationally and commercially. It reported a near nine-fold increase in mine revenue in H1 FY21, LTIFR remains at zero for the 2021 season, and its three plants are now operational.
• Reserves and Resources Update: On 8 February 2022, EUA updated that Nickel is now the main metal in Eurasia's basket of metals, following the JORC Mineral Resource Estimate. EUA remained committed to prioritizing nickel as the main metal as the Company had formed a separate subsidiary to consolidate operating nickel mines. The subsidiary was named Kola Nickel LLC.
• Technical Indicator: From a technical standpoint, the momentum oscillator 14-day RSI (~39.60) confirms the oversold position, while the price is hovering close to the lower Bollinger Band.

Risk Assessments

• Macroeconomic Risk: The year 2022 is expected to be the year of inflation, Central Bank tightening, and wage pressure. All these factors can hurt the corporate profits and equity markets.
• Financial Risk: EUA is exposed to the financial risks associated with fluctuation in the foreign exchange & interest rates, availability of adequate working capital, and credit defaults.

Financial and Operational Highlights (for the six months periods ended 30 June 2021 as on 30 September 2021)

(Source: Company Website)

• Excellent Revenue Growth: The Company had shown a nearly nine-fold increase in mine revenue compared to the same period last year.
• Net Loss: The Company’s net loss remained negative £1.47 million during the first six months of 2021.

Share Price Chart

 (Data Source: Refinitiv, Analysis by Kalkine Group)

Conclusion

EUA had made accelerated progress on the significant soft rock PGM project as it had obtained the Flanks License at the West Kytlim project. In a nutshell, EUA is in a decent position financially with an excellent portfolio of assets. The stock made a 52-week high and low of GBX 39.90 and GBX 14.13, respectively.

Considering the rising demand for safe-haven assets, robust production volumes, strong balance sheet, revenue jump, and supportive technical stance, we have given a “Speculative Buy” recommendation on Eurasia Mining PLC at the closing market price of GBX 19.60 (as of 17 February 2022).

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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