Key points
- The company has vast reserves of gold, silver and copper
- It is pursuing further platinum ventures in western Russia
- Recent tensions in eastern Europe could have an impact on the firm’s operations
Primarily engaged in the exploration and production of gold and platinum, Eurasia Mining (LSE: EUA) operates mines in Russia. Five years ago, the Eurasia Mining share price was trading at only 0.55p. At the time of writing, it is 10.5p. Over this time therefore, the share price has increased around 1,800%. Over the past year, however, it has declined 61.8%. I want to know if I should add this mining company to my portfolio on a long-term basis. Let’s take a closer look.
The Eurasia Mining share price and metals exposure
Investing in any commodity stocks generally means some degree of exposure to the underlying raw material. In this case, it is a number of precious metals. These include gold, silver, copper and platinum. Indeed, a recent reserves update from the 8 February stated that the firm had 292,714 tonnes of copper reserves. Furthermore, it had 68 and 8 tonnes of silver and gold reserves, respectively.
As a potential shareholder, I view this update quite positively. Silver and copper are critical as more industries move to greener alternatives. Silver is widely used in solar panels and copper is an important component of electric vehicles. Furthermore, any market volatility may be tackled by holding gold, because this is generally seen as a safe haven. Indeed, it may be a good investment in the event of a market crash. It is quite possible that the Eurasia Mining share price will benefit in the future from increased demand for these metals.
The impact of recent news
The business has been engaged in a number of recent ventures. In September 2021, the company raised about $15m. This was primarily to fund a joint venture for an open-pit platinum mine. Furthermore, the firm was granted an additional licence for its mining operation at West Kytlim in western Russia. Indeed, this mine has been lucrative for the business over the past 15 years. Despite this, the firm posted a £1.46m loss for the six months to 30 June 2021.
Since Monday, the Eurasia Mining share price has fallen over 50%. Much of this is down to the rapidly unfolding military situation between Russia and Ukraine. As a company operating in Russia, it is fair to speculate that Eurasia Mining will be caught up in sanctions. So far, this has not been the case. Nonetheless, I would be concerned about the ability of the firm to operate if tensions escalate. I will be watching the situation very closely in the coming days and weeks.
This is a business that could provide me with precious metals exposure. While this can be helpful, the rising tensions in the region are concerning. I will not be adding any shares to my holdings just yet for that reason. But I will be looking for some consistently profitable results in the future and would not rule out a purchase further down the line.
Andrew Woods 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.
