Mining minnowEurasia Mining(LSE: EUA) is surging today after the company announced that it had beengranted a mining licence for its WestKytlimproject in Russia.
Eurasia jumped by as much as 46% this morning, before the companys shares were suspended and management revealed the good news. The shares have since resumed trading.
The mining licence has been granted toEurasias subsidiary, ZAOKosvinskyKamen, on the basis of first discovery and cover21.5 square kilometres. The rights are for the extraction ofplatinum and gold across the stated area.
All that remains now is for Eurasia, and its subsidiary, to pay a one-off lump-sum payment to the government of 24,000 within 30 days. Assuming the paymentis made on time, the licence should be granted inlate August or early September.
Commenting on the licence approval,Christian Schaffalitzky Managing Director of Eurasia said:
Today is a great day for EurasiaThis approval and receipt of the licence will enable Eurasia to shift from exploration into development and platinum production.
Eurasias next move will be to complete adetailed development plan for WestKytlim, which it must submit to the government afterformal licence documentation is issued. The company has stated that its work on this plan is already in progress.
And Eurasia believes that once all the formalities are out of the way, the company can move from planning to production atWestKytlimrelativelyquickly. Management believes that the initial platinum extraction fromWestKytlimwill be straightforward and will allow the company to generate cash flow to fund the rest of its plans.
However, as with all early-stage miners, cash is a key consideration for Eurasia. At year-end 2014 the company reported a cash balance of 210,160 and has since raised 1.5m through the sale of shares, a cash infusion from peerMetal Tiger, and director loans.
Another key asset
But Eurasia is not a one-trick pony and the company has another key asset in the form of an interest in the Monchetundra platinumlicence on the Kola Peninsula.
Here, Eurasia is working withjointventure partnerAnglo Platinum to assess the potential of the prospects and the company has already received significant interest from third parties.
This gives Eurasia some flexibility. If the company receives an offer for its interest inMonchetundra it could unlock the cash needed to developWestKytlim an option not available to other small-cap miners.
Highly attractive prospect
WestKytlimitself is a highly attractive prospect. Its estimated that the cash cost of production per ounce of platinum is between $400 and $450 per ounce for the prospect, 60% lower than the industry average.
With these favourableeconomics, its highly likely that the company will find a partner to help it develop the prospect.
Nevertheless, as of yet Eurasia has no partner. The companys success is dependent upon its ability to raise the funds needed for the development of WestKytlim.
So, with this being the case, Eurasia is a highly speculative play.
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