Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Senior management team appointment
Eurasia Mining PLC, the palladium, platinum, rhodium, iridium and gold producing company, is pleased to announce that it has appointed Mr. Alexei Churakov as a Strategic Advisor to the board of the Company (the "Board"). Mr. Churakov is a former Goldman Sachs and Morgan Stanley senior investment banker specialized in the mining sector. He has been involved in multiple mining cross-border M&A transactions operating from Moscow, London and New York. Alexei brings his extensive experience in mining M&A to the Company, as well as his top level contacts with major international and Russian mining and trading companies operating in the platinum group metals, gold and base metals sectors including Lesego Platinum, Boliden Group, Gold Fields, Glencore International, Sumitomo Corporation, Norilsk Nickel, Polyus Gold, Polymetal International, Ural Mining and Metallurgical Company, Russian Platinum and many others.
In his capacity as an adviser:
· Mr. Churakov has assisted in negotiations with Sinosteel helping structure the EPCF contract to include a $50m subcontract through which Sinosteel provides CJSC Terskaya Mining Company (TGK), a Eurasia's subsidiary developing the Monchetundra project, with the start-up financing. The first payments comprising $26.5m from the $50m subcontract will allow Eurasia to finance its obligations under the EPCF contract with Sinosteel without shareholder dilution and make the Monchetundra project self-financed.
· Mr. Churakov has assisted in developing the West Kytlim phased production increase strategy involving both Eurasia's own team and its contractors. Under his guidance, the team has designed a new and extensive project development programme, with the specific objectives of reaching stable and sustainable growth as measured by mine output alongside reserve and resource upgrade programmes at the West Kytlim Mine. Eurasia has, today, also acquired its own enrichment plant from West Kytlim's operating free cash flow and will continue producing hereafter on an owner operator basis with 100% of mine revenue payable to the Eurasia.
· Mr. Churakov has recently helped arrange detailed due diligence and multi-day visits to both Monchetundra mine and Eurasia's office in Ekaterinburg to study the West Kytlim project by James Nieuwenhuys, CEO and Director of Lesego Platinum, a South African PGM company developing a c 50M ounce project in the Eastern limb of the Bushveld Complex, as part of Lesego Platinum's due diligence of both the Monchetundra and West Kytlim projects. Further details of which are set out below.
· Mainly for his assistance with Lesego Platinum and to ensure Mr. Churakov's motivation without further dilution of Eurasia shareholders, Mr. Dmitry Suschov has transferred 25.472% of the share capital of DELOAN INVESTMENTS LIMITED ("Deloan") (a company beneficially owned and controlled by Mr. Dmitry Suschov) to VENUS GARDEN HOLDINGS LIMITED a company beneficially owned and controlled by Mr. Churakov for a nominal consideration with effect from today. Deloan holds a substantial shareholding in Eurasia.
Christian Schaffalitzky, Chairman at Eurasia, commented: "We are grateful to Mr. Churakov for his contribution to developments at the West Kytlim mine, which as of next season will be operated without contactors, and on arranging the purchase of the enrichment plant. We are also delighted that Mr. Churakov has taken a role as Strategic Advisor to the Company and brings both his extensive mining M&A experience along with his top level contacts with mining companies including South African Lesego Platinum. We are grateful to our long-term Director Mr. Dmitry Suschov for providing a motivation package to Mr. Churakov while at the same time keeping the existing shareholders intact. We are working on further strengthening our Company with both international experts and top mining executives. In addition, acquiring a washplant to commence and continue mining on a 100% of revenue basis is a significant development for the Company. We now have a very well established team at site with the necessary skills and experience to ensure a successful operation through the rest of the 2019 season and to ensure timely commencement of mining in 2020.".
Details on Mr. Churakov's role in Sinosteel deal structuring
Since 2014, Mr. Churakov has advised the board in talks with Sinosteel helping structure the EPCF contract with the $50m subcontract agreement between Sinosteel and Eurasia's subsidiary TGK. The first payments comprising $26.5m under this subcontract will allow Eurasia to fulfil its obligations under the EPCF contract without shareholder dilution and make the Monchetundra project self-financed. As per the originally signed Sinosteel EPCF contract (see RNS date 10 October 2016), one of the conditions precedent to be fulfilled by Eurasia Mining before Sinosteel commences construction works was the upfront payment of 15% of the EPCF contract value by the Company. The structure of Eurasia's contractual relations with Sinosteel fulfils the abovementioned pre-requisite. Another important condition precedent, which is also now fulfilled, is the production license that was successfully received by TGK at the end of last year, as announced on 20 November 2018.
Mr. Churakov's role in West Kytlim phased mine development
Mr. Churakov has advised the board in developing a coherent and comprehensive strategy to achieve sustainable growth at the West Kytlim Mine. Following the successful launch of the industrial production of PGMs (palladium, platinum, iridium and rhodium) and gold in 2018, the team has developed a detailed West Kytlim development programme to convert all C2 class reserves (according to the Russian classification) into C1 class reserves with the aim to allow the Company to become fully prepared for stable production growth from 2020 onwards. The development programme also includes dedicated measures intended at conversion of the considerable P category resources into C2+C1 class reserves - this is expected to further increase the West Kytlim project capitalisation and intrinsic value of the asset.
2019 production summary to date
The above mentioned development programme, as well as the automation and a number of upgrades to the flowsheet at West Kytlim aimed at improving metal recovery, has impacted initial 2019 production volumes. Production commenced in mid-May and production volumes, to date, are standing at a total of c.55kg (c. 1,770 oz) raw platinum.
From the next season Eurasia's own in-house team will manage production at the mine site, having purchased the necessary equipment including the enrichment plant. This major development increases Eurasia's share in top line platinum sales from 30-35% to 100% and the Directors expect to see a concurrent increase in the profit margin at West Kytlim, which the directors believe sits towards the bottom of the global platinum production cost curve. Platinum, palladium, iridium, rhodium and gold prices have seen recent gains - platinum is today trading 21.5% higher than at this point in the production season last year ($950/oz versus $792/oz on 14th Sept 2018, source Kitco.com). Acquiring the enrichment plant from the operating free cash flow ensures a smooth transition to further production next year. Mining is expected to continue until the close of the 2019 season.
Lesego Platinum due diligence and CEO site visits of both Monchetundra and West Kytlim
Mr. Churakov has recently helped to arrange detailed due diligence and multi-day site visits by James Nieuwenhuys, CEO and Director of Lesego Platinum as part of the Lesego Platinum's evaluation of both Monchetundra and West Kytlim projects. Over the past few months Lesego Platinum performed due diligence of Eurasia's assets accompanied by several days of visits of Monchetundra mine and Eurasia's office in Ekaterinburg to study the West Kytlim mine.
Over the course of the site visit, Lesego Platinum studied and evaluated infrastructure availability and logistics access, drill core samples, results of laboratory test works along with other information and raw data, which form the ground for assessment of both Monchetundra and West Kytlim projects to consider, amongst other options, potential partial acquisition of Eurasia's subsidiaries and joint venture opportunities at the sites. Despite the synergies and the motivations of Lesego Platinum, there can be no guarantee that any transaction will occur. Further updates will be provided in due course including the potential of James Nieuwenhuys joining Eurasia's board if these matters progress. This appointment is subject to customary approvals, amongst other things, due diligence on James Nieuwenhuys, contracts and Nomad checks. Further updates will also be provided on this if it progresses.
Lesego Platinum owns, what the Directors' rate as a world class PGM assets located some 300 km North-East of Johannesburg, at the northern end of the Eastern limb of the platinum rich Bushveld Complex. James Nieuwenhuys, its CEO and Director, has significant experience in Russia including 5 years as Chief Operating Officer for Polyus Gold, the largest gold producer in Russia and held Managing Director positions in two of the most active EPC organizations, being Bateman Projects and SNC-Lavalin.
Mr. Churakov's motivation
Mainly for his assistance with Lesego Platinum to ensure Mr. Churakov's motivation and to avoid dilution of the other shareholders of Eurasia, Mr. Dmitry Suschov has agreed to transfer 25.472% of the share capital of Deloan Investments Limited, a company beneficially owned and controlled by Mr. Suschov and holding 275,377,066 shares in the Company (11.07% of issued share capital) to a company beneficially owned and controlled by Mr. Churakov for a nominal consideration. Accordingly Mr Churakov is deemed to have an indirect interest in Eurasia shares through this holding.
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Eurasia Mining PLC
Christian Schaffalitzky / Keith Byrne
Tel: +44 (0)207 932 0418
WH Ireland Limited (Nominated Adviser & Broker)
Katy Mitchell / James Sinclair-Ford
Tel: +44 (0)161 832 2174
First Equity Limited (Joint Broker)
Tel: +44 (0)20 7374 2212
Optiva Securities (Joint Broker)
Christian Dennis Tel: +44 (0) 20 3137 1902