Eurasia Mining

pgm miners- eurasia mining

Eurasia Mining

Eurasia Mining PLC is an international mineral exploration company, listed on the Alternative Investment Market (AIM), focussed on Russia.

Eurasia’s stated objective is to explore for platinum group metals (PGMs) and gold through self-funded own exploration targets and joint venture partnerships with strategic operators and local partners. Operations are funded from the company’s own equity funds and funded joint venture agreements. Projects are subject to an initial evaluation for viability and once this is established further exploration work is carried out to feasibility study level. It is then the company’s intention to either proceed to develop the project to production or partner the project with a suitable operator.

Value range – 20/5/2021

Intrinsic Price (GBp) 71.26
Value Range Low 67.70
Value Range High 74.83
Implied MCAP (m) £2,084.88
Implied EV (m) £2,084.61
AIM Index EUA
Financial YE 31-Dec
Currency GBP

Business Activity

PGM Mining (Palladium, Platinum, Gold)

Key metrics

Close Price 26.50
MCAP (m) £731.1
Net Debt (cash) (m) -£10.7
EV (m) £720.3
52 Wk Hi 42.50
52 Wk Lo 7.20

Key ratios

(Net Cash) /Shareholder Equity % -1.47%
FX Rate USD/GBP 0.71

Extractives Sector Research
AiM Market Index
Analyst Team
+44 20 7419 7928

extractives@acfequityresearch.com

Eurasia Mining Plc Multiples table

Change at PGM stock Eurasia

Eurasia Mining (EUA.L) is an AiM-quoted Russian Pd dominated PGM miner. In this first post-FSP update valuation we are yet to include the March Rosgeo JV and Rhodium (Rh) production from all but West Kytlim or Iridium (Ir) in EUA projects. Our PGM prices are extremely conservative in this update. We assume Pt 93.5%, Pd 5% and Rh 1.5% production at WK. We assess the Pd auto-catalysis market can support $500 per car vs. $250 per car pre-covid. The largest Pd consumer, China, returned to economic growth in 2Q20. EUA has de-risked its flagship world class Monchetundra asset, the sale of which alone, could be a £2.0bn + exit for investors, an ~3x rerating on the fully diluted close price. We have cut our Monchetundra flanks risk adjusted WACC to 22% vs. 30%. Risk adj. WACCs for Monchetundra Lo + WN 12%, WK 8% vs. 10% prior.

89%

Monchetundra mine 2025E pre-tax cash flow $89m

28.2%

West Kytlim mine 2025E pre-tax cash flow $28.2m. EUA now operates the mine on a 100% revenue basis compared to previous arrangement before 2020 of 30-35% revenue.

EUA operations plan delayed 12 to 24 months due to 7m suspension and Formal Sale Process

2020-2023E

+17,736%

Revenue 2023E £1,962m up 17,736% vs. £11m 2022E

+17,300% 

EBITDA 2023E £1,392m up 17,300% vs. £8m 2022E

+17,613% 

Net Income (unadjusted) 2023E £956.5m up 17,613% vs. £5.4m 2022E

+18,000% 

Net Cash from Operations 2023E £1,314m up 18,000% vs. £7.3m 2022E

Rh production excluded from valuation for all but West Kytlim;

License granted 15 Moz Flanks by Sevzapnedra, reducing flanks risk;

Pd supply constrained;

PGM prices significantly exceed our valuation assumptions.

PGM Market Outlook Remains Strong

The Platinum Group Metals refers to six metals – ruthenium, rhodium, palladium, osmium, iridium, and platinum. Of these, the two most important are palladium and platinum. EUA focuses on the mining of these two metals.

Despite the Covid-19 driven correction (and V-shaped recovery) in Pd prices the underlying upward price drivers remain very largely unabated in a supply deficit market. We believe the Pd supply constraint, and rising demand in what is an inelastic largely non-substitutable good, is further sheltered by its tiny % contribution to overall auto costs. These characteristics of the Pd market leave head room for far higher prices than seen prior to the recent and ongoing pandemic.

EUA sum of the parts valuation £2.1bn operations contributions – it is still all about Monchetundra

(Yet to include Rosgeo JV, Iridium resource from projects or Monchetundra Lo+Wn+Flanks Rhodium resource, PGM price assumptions highly conservative vs. 2021 average and current spot prices)

+6.9% 

Monchetundra Lo + WN

+89.4%

Monchetundra Flanks

+1.92%

NPV West Kytlim

1) Potential resources within the existing company licence and the flanks application of ~15 million oz.

2) Potential resources occurring within 5km of the Monchetundra mining license and areas neighbouring the company’s deposits of ~4 million oz.

3) Potential resources within the wider Monchegorsk district in which the Monchetundra license is located of ~21 million oz.

Eurasia Mining valuation catalysts

  • Sale of Monchetundra mine;
  • Development of Monchetundra flanks licence;
  • Successful installation of additional wash plants at West Kytlim to raise production volumes;
  • Increase in petrol cars vs. diesel;
  • Covid-19 accelerated policy drivers for the adoption of hydrogen and related clean fuel technologies (Pd if bound to Ag can replace Pt as a catalyst – this is competitive due to the relatively low price of Ag);
  • Increase in uses of palladium through technological innovation.

Asset One

NPV Monchetundra Flanks £1.476m

Asset Two

NPV Monchetundra Lo + WN 192m

Asset Three

NPV West Kytlim 33m

Does Monchetundra make EUA a £1bn+ play?

To see the latest Eurasia Mining press releases visit their website.

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