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the Mining Eurasia (LSE: EUA) The (LSE: EUA) share price has collapsed since this time last year. Immediately after Russia invaded Ukraine, Eurasia stocks fell. They haven’t recovered since. In fact, they’re down 80% over the period. This is unsurprising given that the company has interests in gold, copper and platinum mines in the Urals and the Kola Peninsula in Russia.
All that glitters is not gold
The company is losing money, which can also contribute to a drop in the share price. From its formation in 1996, to 30 June 2022, it has accumulated losses of £30.5m.
Its recent financial performance has been just as bad, despite appearing better on the surface.
The company was profitable in the six months ending in June 2022. But this was due to the appreciation of the Russian ruble against the pound sterling. It reformulated its ruble-denominated cash clauses, resulting in a large one-off gain of £6.1m.
This was partially offset by a loss of £1 million as a result of a revaluation of its stock of platinum concentrate.
If these two items were removed, the loss before tax would be £1.23m.
| Half year numbers (kelvin sterling) | 30.6.21 | 31.12.21 | 30.6.22 |
| sales | 425 | 1,905 | 102 |
| Gross profit or (loss) | (239) | (14) | 66 |
| loss before tax | (1,466) | (1,673) | 3,852 |
Despite recording minimal sales revenue in the first six months of 2022, the company mined 167 kg of PGM concentrate (platinum, iridium, palladium and rhodium) which it decided not to sell. Due to market fluctuations, the managers decide that they can sell the product for more at a later time.
On a positive note, in December last year, Eurasia provided an update on its recent monetary position. He had £4m in the bank – the directors were anxious to confirm – he was being held outside Russia. In addition, there were £5.6 million worth of mined products available for sale. The company has few loan or lease obligations.
Is it time to buy?
To be honest, I’m not sure what I’m doing in Eurasia mining.
She has said that British and European sanctions have not affected her business, but she is still incurring huge losses.
It is looking to sell its Russian interests, but for now, it has no other revenue-generating assets. A new office was set up in Japan, although it did not succeed in securing any business.
The company plans to advance hydrogen and green mining projects in “friendlycountries. But these are still at an early stage, and they are unlikely to generate revenue soon.
It also has a policy of paying out 80% of adjusted net income in dividends. However, the company is not making a profit.
Curiously, on May 16 last year, its shares were suspended from alternative investment market pending “advertisementThe next day, a statement was issued stating that “There are no new material developments to notifyOn May 18, the shares were re-traded!
As a risk averse investor, I am not comfortable buying shares in Eurasia Mining. Of course, this may be wrong. The company’s market capitalization is currently over £100m, so it’s clear that it retains the support of a large number of investors. But I see this as an oddly huge valuation for a small, unprofitable mining company. I don’t think it’s the deal it seems.
