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 – 19/4/2020

Intrinsic Price (GBp)57.71
Value Range Low54.82
Value Range High60.59
Implied MCAP (m)£1,554.53
Implied EV (m)£1,554.26
AIM IndexEUA
Financial YE31-Dec
CurrencyGBP

Business Activity

PGM Mining (Palladium, Platinum, Gold)

Key metrics

Close Price3.45
MCAP (m)£92.9
Net Debt (cash) (m)-£1.0
EV (m)£91.9
52 Wk Hi4.20
52 Wk Lo0.41

Key ratios

(Net Cash) /Shareholder Equity %-1.08%
FX Rate USD/GBP0.77

Extractives Sector Research
AiM Market Index
Analyst Team
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extractives@acfequityresearch.com

Eurasia Mining Plc MA Valuation

Does Monchetundra make EUA a £1bn+ play?

Eurasia Mining (EUA.L) is an AiM-quoted Russian asset PGM producer. The West Kytlim project is revenue generating with production expected to ramp up in 2020 resulting in EUA becoming a de-risked prospect compared to its peers. However, the key asset is the M&A triggering EUA flagship palladium-driven project, Monchetundra, near to production. Could a Monchetundra sale turn a 100m MCAP AiM company into a £1.5bn exit for investors, equating to an approximate 15x rerating on the current price? There are many risks reflected in our conservative 30% risk adjusted WACC for the Monchetundra flanks project (only), lower and delayed production and Pd/Pt ratio. Risk adjusted WACC for Monchetundra Lo + WN is 12%.

75%

Monchetundra mine 2022E pre-tax cash flow $31.7 m

25%

West Kytlim mine 2022E pre-tax cash flow $10.9m. EUA now operates the mine on a 100% revenue basis compared to previous arrangement before 2020 of 30-35% revenue.

EUA operations plan on track

2020-2021E

+1686%

Revenue 2021E US $341m up 1,686% vs. 19m 2020E

+2181%

EBITDA 2021E US $240m up 2,181% vs. 10.7m 2020E

+2733%

Net Income (unadjusted) 2021E US $164m up 2,733% vs. 6m 2020E

+2250%

Net Cash from Operations 2022E US $225m up 2,250% vs. 10m 2020E

Flanks extension success would raise resources to 15Moz; Flanks licence application approved by Russian Defence Ministry; Additional licence potential of 25Moz in 5km perimeter for acquiror;

Open pit mine potential with far lower costs vs. Bushveld complex; Proven M&A management team at EUA.

M&A Play

The company has already stated its intentions to look for strategic options for Monchetundra including a potential sale. Last year EUA appointed former Goldman Sachs and Morgan Stanley senior investment banker Alexei Churakov as strategic adviser. Mr. Churakov has extensive mining merger and acquisition experience and has top level contacts with mining companies. Previously Mr. Churakov had assisted EUA in negotiating the EPC contract with Sinosteel. More recently he has been involved in facilitating due diligence on the Monchetundra project by South-Africa based Lesego Platinum. Mr. Churakov assisted with arranging detailed due diligence and multi-day site visits by Lesego CEO James Nieuwenhuys as part of an evaluation of Monchetundra and West Kytlim. Lesego is considering the potential partial acquisition of Eurasia’s subsidiaries and joint venture opportunities at the sites.

EUA sum of the parts valuation £1.7bn operations contributions – it is all about Monchetundra

+11.2%

Monchetundra Lo + WN

+86.2%

Monchetundra Flanks

+1.92%

NPV West Kytlim

+0.7%

Semensovsky

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;
  • Granting of Monchetundra flanks licence;
  • Successful execution of expansion at West Kytlim;
  • Increase in commodity prices, especially palladium (pd) and platinum (pt);
  • Increase in petrol cars vs. diesel;
  • Increase in uses of palladium through technological innovation;
  • Policy drivers for the adoption of hydrogen and related clean fuel technologies (Pd bound onto Ag can replace Pt as a catalyst due to low price for Ag).

Asset One

NPV Monchetundra Flanks £1.476m

Asset Two

NPV Monchetundra Lo + WN 192m

Asset Three

NPV West Kytlim 33m

Asset Four

NPV Semensovsky 12m

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

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