CORRECTION: An earlier version of this article stated that EUA’s share price rose alongside the price of platinum; this has been corrected to palladium.
If you, like me, are an investor in Sirius Minerals (LSE: SXX), chances are the wait to see what happens next for the polyhalite miner feels like a long one. There have been no announcements about the fertiliser producer’s future since Anglo American made a formal proposal to buy it out for 5.5p a share in an all-cash deal.
Wait and watch
It’s now up to the miner’s shareholders to decide whether to accept AAL’s offer or not. If SXX management is considering any other alternative financing sources or offers from other companies, we don’t know. And going by its expressed opinion on the AAL offer, it doesn’t look like it either. There’s little left for me as an investor to do now, but watch the events as they unfold.
While I’m waiting, however, there are plenty of other stocks to assess. In fact, in the mining industry itself, there are other options to consider. One of these is AAL itself, and not just because it could acquire SXX.
Another is FTSE 100 Anglo-Australian mine Rio Tinto, which offers a high dividend yield and has seen a healthy rise in share price over the past five years as well.
The promise of precious metals
Yet another option is the metal miner Eurasia Mining (LSE: EUA), whose share price doubled in the last week, coinciding with a sharp increase in the price of palladium during this time. Platinum is EUA’s key revenue source, with palladium, iridium, rhodium, and gold adding marginally to the revenues as well.
So far its revenue comes from the West Kytlim mine in Russia. But it’s developing two other mines in the region as well – Monchetundra and Semenovsky. Of these, Monchetundra has reserves of platinum, gold, nickel, and copper. With even more reserves of platinum waiting to be mined here, the rise in platinum price adds further value to Eurasia Mining. It’s also a positive for the miner that platinum prices are expected to continue rising over time. Its mine in Semenovsky is expected to mine gold and silver. Prices of both precious metals have risen in the recent times too.
Good progress
If EUA’s future looks bright, its present isn’t too bad either. In 2018, its revenues grew almost 14 times from 2017 as its West Kytlim mine ran for its first full season of mining. It also made gross profit during the year. Moreover, it was issued the mining license for the Monchetundra project at the end of 2018. It’s now also expanding exploration to the Monchetundra flanks project, after receiving the go ahead for it in December last year.
Like in the case of Sirius Minerals, it’s always worth remembering that mining projects have a long gestation period. Investing in miners early is an exercise in patience. Unlike SXX though, EUA has proven demand for its products, and has started generating revenue. I’m positive on it.