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Eurasia Mining "steadily securing its future"

With its diverse portfolio of precious metals assets in Russia at various stages of development, Eurasia says it's "steadily securing its future"
gold bars and dollar bills
A major Chinese company is talking big bucks at Montechundra

Eurasia Mining plc (LON:EUA) is a Russia-focussed explorer and developer with exposure to platinum and other metals across a broad portfolio.

The company’s major projects are the Montechundra gold project in the Kola Peninsula north European Russia and the West Kytlim alluvial platinum project situated in the Ural Mountains. 

At Montechundra, a Chinese partner has signed an engineering, procurement and construction contract for a 130,000 ounce plant. 

Meanwhile, at West Kytlim, a Russian joint venture partner has agreed to put up the capital to start and fund an ongoing mining operation that’s scheduled to last for at least 12 years, following a successful first season’s mining in 2016.

Eurasia also has the Semenovsky tailings project in the Republic of Bashkiria, Russia, which consists of 2.9 mln tonnes of mine waste grading over 1 gram per tonne gold.

Big Chinese backing at Montechundra represents a real endorsement

A feasibility study was officially submitted for approvals at the Russian State Commission on Mineral Reserves ("GKZ") on 22nd December 2016. The study envisages the economic extraction of the reserves already identified at two open pit targets on Eurasia's 80% owned Monchetundra licence.

The GKZ met with the company (February) to discuss the reports in more detail and the miner is currently awaiting final approval.

Once the study does get the go-ahead, the next step will be the award of a Discovery Certificate which allows Eurasia to receive the all-important production licence.

In addition, an Engineering Procurement and Construction (EPC) contract is already in place with Sinosteel, a major Chinese state owned group operating primarily in mining, trading, equipment manufacturing and engineering.

The signed EPC Contract has an obligation for Sinosteel to provide US$150m financing, subject to certain conditions, with production to commence on a turn-key basis by Sinosteel.

That’s big money earmarked for what really could turn out to be a significant project and, when announced, really boost Eurasia’s share price.

West Kytlim: an attractive geological setting with a long history of mining

Alluvial Platinum was first discovered in the Ural Mountains in 1824. Since that time the region has yielded in excess of 500 tonnes of platinum mined from a number of placer fields, the largest of which is estimated to have produced more than 240 tonnes.

The fields comprise natural, gravity-driven economic concentrations of platinum formed in stream and river sediments eroded and drained from platinum-bearing hard rock.

Placers of this type are attractive development targets owing to a tendency to high concentrations of platinum and relatively low-tech and low cost mining and processing requirements.

Development work at West Kytlim commenced in the third quarter of 2016 and Eurasia has said that site preparation for the coming mining season is proceeding “at pace”, with several bulldozers and excavators recently delivered to the project.

Exploration drilling at the Bolshaya Sosnovka deposit began at the start of March, with 206 metres (m) completed so far out of the 1,400m planned for 2017 at the Bolshaya and Kluchiki deposits.

Speaking of Kluchiki, a technical design report for the first stage of mining at the deposit has been approved by the authorities and a mining allotment was issued just a couple of weeks ago.

This is for a design volume of 645,000m3 of stripping and 362,000m3 of gravels containing 108kg of raw platinum. These reserves are scheduled for development in 2018.

The plan is for a contractor to share revenue with Eurasia on a 30:70 basis, mining C2 state-approved reserves of 2,283 kilogrammes of platinum.

Further upside at Semenovsky

Internal economic calculations assuming the use of a cyanide leach circuit show gold recoveries greater than 25%. Current estimates put mine life at 8.5 years and annual production at an average of 4,938 ounces of gold and 682,000 ounces of silver per annum.

This would generate total revenues of US$57 million at a projected gold price of US$1,135 per ounce and projected silver price of US$16 per ounce (gold and silver prices as at 20 December 2016). Free cashflow would total US$33m or US$3.8 million per annum.

Eurasia is currently looking at the “optimal route to mining”, whether that be through using project finance or a “risk-free for Eurasia” revenue-sharing structure similar to that in place at West Kytlim.

The company’s exclusivity period – which was due to run out last December – was extended until 31 May 2017 to give Eurasia more time to figure out the best plan of attack.

The company is working in conjunction with partner Metal Tiger (LON:MTR) on this project.

What the boss says

"We are pleased with progress in all three projects which are advancing as planned,” said managing director Christian Schaffalitzky.

“At West Kytlim we have just started the production work for the year. At Monchetundra the project is coming to fruition and we expect the approval of the TEO and the reserves. At Semenovsky, we are seeking a financing structure that would avoid dilution for Eurasia shareholders.

“In the view of the board, we are happy that the company is steadily securing its future and making a platform for further development of Eurasia for our shareholders.”

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