After years in the dumps, Eurasia Mining (LSE: EUA) started to regain some life towards the end of 2020. But since a peak in December of 45p, we’ve seen a drift downwards again. As I write, the Eurasia Mining share price stands at 20p. Was last year’s false start perhaps an indication of greater things to come?
Eurasia prospects for gold, silver, platinum, and other rare metals that are in big industrial demand. The company is still very much in its early days, and is not producing any sustainable profits yet. Revenue is only up around £1m per year, so there’s very little for investors to go on.
There are really two ways a starting minerals prosector can go. It can raise the cash to develop the assets it unearths, and take it all the way to sustainable revenue and profits. But that’s laden with risk, as anyone who bought shares in Sirius Minerals will surely never forget.
Exploration options
It can take a lot of capital to get a prospecting company to maturity, often needing multiple tranches of cash. And even if the company succeeds, by the time the profits start to flow, the interests of early shareholders can be heavily diluted by all of the new stakeholders coming on board.
Another option, also common with small oil explorers, is to seek an early buyout. And that’s what led to a short-lived bump in the Eurasia Mining share price in May, with the company actively seeking a buyer. As my Motley Fool colleague Zaven Boyrazian has described, Eurasia announced that it was looking at multiple acquisition offers.
The details were sparse, but it sounded like a buyer wanted to acquire pretty much the entirety of Eurasia’s assets. But then, not much happened. We’ve heard about a new joint venture with Rosgeo, combined with a new placing to fund it. And then the company revealed a a new CEO for its Kola subsidiaries, but that’s about it.
Eurasia Mining share price falling back
The lack of further news of any takeover has led to the shares falling back again. So, big question, would I invest in Eurasia now?
On the one hand, I definitely do see potential here. Unlike many companies in early phase exploration, Eurasia is not burning huge amounts of cash. And it has not been profligate on the equity issue front, seemingly keenly aware of the desire to minimise dilution. So yes, I see a more tempting prospect here than similar companies I’ve watched in recent years. And I do feel the EUA share price is probably too low now.
But then again, I’ve seen just too many investments like this go wrong for me to want to go for it. So no, it’s not a stock that would fit my strategy. I’ll keep watching, though, with my fingers crossed for those more prepared then me to take a bit of risk with their investments.