Eurasia Mining, EUA, Shares Up 12% On No News – Why?

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Tim Worstall
Updated: 29 Mar 2022

Key points:

Eurasia Mining (LON: EUR) shares are up 12% this morning as part of the move of the whole London-listed Russian mining sector. For some of the companies in the sector, this is obviously sensible, significant value changes are justified. For others in this same sector, well, perhaps not so much. The difficulty is in knowing how much value to place on that “perhaps” there.

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As we know Eurasia is following an entirely sensible mining policy. Technology does change, so what used to be thought of as mined out resources might become viable again with new exploration or extraction technologies. Russia has a number of old nickel mines that could perhaps be revived. The Eurasia base policy is to address this very issue.

As a basic mining policy this is just fine. The proof will be in the pudding of course but as we’ve said before about Eurasia they do seem to have been doing most of the right things.

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But then come the current unpleasantnesses. There are no direct sanctions upon the company, not the major shareholders. What worries is what might be the reaction within Russia to the sanctions being imposed though. Will there be restrictions on the export of platinum group metals, just as one example? Will the central bank start buying in output at lower than market prices – as it has started to do with gold, offering 5,000 rubles a gramme?

These are unknowns and as we’ve said about Eurasia’s share price until they’re resolved there’s a certain weight hanging on that price.

So what’s driving the 12% rise in the Eurasia price this morning? There is no new news from the company itself so the issue must relate to wider issues. Here there needs to be a certain amount of consideration. For the London listed Russian miners are all up this morning. It’s not obvious that all of them should be either.

The background to this is that Polymetal – a London-listed and Kazakh and Russian-based gold miner – is up 30% on talk that they might split the company. Leaving the Russian assets to face their risks but shareholders clearly still own the Kazakh ones. That’s a rational enough move. But Petropavlovsk still faces the same sanctions risks – no direct ones but awful problems concerning dealing with its own bank, which is sanctioned – as it did and yet that’s up 20%. That looks like the move in Polymetal is causing that in Petropavlovsk which may or may not be sensible. Which brings us to Eurasia – is this move today just the sector being pulled up or is it something relevant to the actual valuation of the company?

Trading positions will have to be determined by views on that – there’s no solid news to tell us that it’s one or the other.

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