The Eurasia Mining share price drops 80% in a year! Time to bag myself a bargain?

At Eurasian Mining (LSE:EUA) share price in Euros since 2014 with annual quotes. Immediately after Russia invaded Ukraine, Eurasia stocks fell. And, he hasn’t recovered since. In fact, they dropped 80% during that time. That’s not surprising since the company has interests in gold, copper and platinum mines in Russia’s Ural Mountains and Kola Peninsula.

All that glitters is not gold

The company is losing money, which may cause the stock price to drop. Since its formation in 1996, up to 30 June 2022, it has made a loss of £30.5m.

And the financial performance ended up being poor, even if it looked better on the surface.

The company made a profit in the six months to June 2022. But this is all due to the appreciation of the Russian ruble against sterling. It restated its ruble-denominated monetary goods, generating a one-off profit of £6.1m.

This was partially offset by a £1m loss on the revaluation of platinum concentrate stock.

If these two items were removed, the pre-tax loss would have been £1.23m.

Although minimal sales revenue was recorded in the first six months of 2022, the company mined 167kg of PGM concentrate (platinum, iridium, palladium and rhodium) which it decided not to sell. Due to the volatility of the market, the director decided to sell more of the product at a later date.

On the plus side, in December last year, Eurasia provided an update on the latest cash position. Has cash in the bank £ 4m which – the directors were keen to stress – held outside Russia. In addition, there is £5.6m of mine product available for sale. And the company has some debt or rent arrears.

Time to buy?

To be honest, I’m not sure what to make of Eurasia Mining.

It has said that the UK and European sanctions have not affected its business, but it remains a heavy loss.

It is looking to sell its Russian interest but, at the moment, it has no other assets generating revenue. A new office has been established in Japan, although it has not been able to secure any business.

The company plans to develop green hydrogen and mining projects in “friendly“country. But this is at an early stage, and it is unlikely to generate revenue soon.

It also has a policy of paying 80% of its adjusted net income in dividends. But the company did not make a profit.

Oddly enough, on May 16 last year, Share has been suspended from Alternative Investment Market pending”announcement“. The next day there was a statement suggesting that there was “there are no material new developments to report“. On May 18th, stock trading starts again!

As a risk-averse investor, I am not interested in buying shares in Eurasia Mining. Of course, this could be wrong. The company now has a market cap of over £100m, so it clearly retains the backing of many investors. But I see this as a very strange valuation for a small unprofitable mining company. I don’t think it’s a bargain it seems.