The Eurasia Mining (LSE: EUA) share price has been on a wild ride over the past year. Since the middle of November last year, the stock has traded between 43p and 15p. Overall, shares in the metals and mining company are down by just 0.1% over the past 12 months.
Still, despite this lacklustre performance, since the beginning of January 2020, shares in the company have risen in value by more than 700%. So long-term investors have been well rewarded over the past two years.
The question is, what happens next? As with most early-stage metal and mining companies, Eurasia’s outlook is linked to its development progress.
On this front, the group received a piece of good news today in the form of a mining exploration licence at its flagship West Kytlim project.
Eurasia Mining share price catalyst
The West Kytlim project is in the Urals and producers palladium, platinum, rhodium, iridium and gold. The enterprise first applied for this new mining licence in 2019.
Called the Flanks Licence, the prospect is adjacent to the company’s current mining licence. It’s linked with an exploration licence Eurasia owned via its former joint venture with Anglo American Platinum. As such, the organisation has some understanding of what’s underneath the ground in the region.
The Flanks Licence will help the company increase its resource base and could potentially extend the life of its flagship West Kytlim project.
Eurasia has already opened two new processing facilities at its flagship project this year.
Unfortunately, the group is still loss-making, with a gross loss of £240k reported for the first six months of 2021. After including financing and administrative costs, the overall loss for the period was around £1.5m.
Still, mine revenue increased nine times over the same period in 2020, and the company is pushing ahead with further output growth.
Sale progress
All in all, Eurasia’s fundamentals are improving, and the group is also moving ahead with its sale process. This sales process has had a far more significant impact on the Eurasia Mining share price than the company’s fundamental performance over the past two years.
As such, while the mining company’s underlying performance will impact the stock, I think the market is focusing far more on management’s progress in selling the business.
The company says it has received interest from at least one buyer on this front, which has already completed its due diligence. However, management says it’s discussing potential offers with other buyers, which may produce a better outcome. The granting of the Flanks Licence may even push buyers to make a higher offer.
There is no guarantee any offer for the corporation will emerge as a result of these discussions, of course. There has also been no comment from the company on how much any potential offer could be worth. Therefore, it’s pretty challenging for me to value the business based on this lack of information.
As a result, I think the Eurasia Mining share price will continue to trend sideways until further information is announced. And considering the level of uncertainty surrounding the enterprise, I wouldn’t buy the stock for my portfolio today.
Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
