- Eurasia Mining PLC (LON: EUA) shares could be volatile as the market digests varied strategic options for the company
- Eurasia is considering options for the sale of assets.
- Eurasia is also leveraged to any rise in price of the pgms.
Eurasia Mining shares have been volatile as varied operational and strategic events affect the company. There has been, for most the year now, that potential offer from a serious buyer for some or all of the assets. Whether a full offer will arrive or not is one of the unknowns.
Eurasia’s management has been continuing to optimise the company’s prospects. There’s the dual listing on the Moscow exchange being discussed. Given that the company’s assets are all in that jurisdiction that could well be value additive. Even just the increase in liquidity stemming from it could help.
Of perhaps more importance, but something not entirely understood by the market in general, is the potential fragility of ownership of rights or land in Russia. There have been cases where those who thought they owned a mine, or oil well, even the company itself, suddenly found out they did not through some quirk of the law. This makes bolstering such claims important in a way that it perhaps isn’t in other jurisdictions.
With this in mind, the recent agreement with ERDC makes sense. Rights to and ownership of those Arctic and Far East assets is now stronger as a result of that agreement with the economic development body – on the government’s behalf – for that region.
It’s also possible to view Eurasia purely by the markets it operates in, rather than the geography and jurisdiction. That means evaluation of the platinum and palladium markets, perhaps with some influence from indium. There the news is mixed.
The major current uses of platinum and palladium are in catalytic converters for cars. By far the major use and near entirely the drivers of the price of those metals. As we know the EV revolution is upon us and so cars with converters aren’t going to be such a thing in the future. Not if everyone is driving electric vehicles.
On the other hand, there’s no proof, at least not as yet, that it will in fact be battery-powered vehicles that will win the no pollution race. There’s reason to think that perhaps fuel cells will become the technology of choice. For car based fuel cells the pgms (platinum group metals) are the catalyst of choice. It’s even possible that demand from fuel cells will be larger than the loss of demand from the absence of catalytic converters.
The indium market similarly depends upon the use of ITO in touch screens – if the technology changes there then demand will slump. Indium is though only a byproduct metal for Eurasia.
Eurasia Mining faces a number of inflection points. Will that offer properly arrive? What’s the future for the platinum groups metals? What’s the Russian jurisdiction going to be like going forward? It’s possible to think that the valuation model will be volatile given the different factors here.
Should you invest in Eurasia Mining shares?
Eurasia Mining shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are EUA shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies