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If I had put £1,000 into penny share Eurasia Mining (LSE: EUA) 5 years in the past, I might have an funding value over £2,000 now. That’s due to the EUA share value rising 102% in that interval.
That may sound good. And even nice. However in reality, the shares rose as a lot as 3,690% between 5 years in the past and the next 12 months, 2020. So at one level my potential £1,000 funding would have been valued at virtually £38,000.
EUA has clearly captured the creativeness of some traders over the previous few years. Even now, although it’s nicely beneath its former highs, the five-year chart reveals a really optimistic return.
Might the nice occasions return – and ought I to spend money on anticipation?
On the block
Let me begin with my conclusion. I’ve no plans to behave on the EUA share value though it stands at simply a few pence.
The agency describes itself as a “palladium, platinum, rhodium, iridium and gold mining firm”. However within the first half it recorded zero gross sales. That’s as a result of, whereas it owns mining concessions, it’s not at present extracting these treasured metals commercially and promoting them. As an alternative, Eurasia has been attempting to promote its property for a while.
As the corporate defined in its interim outcomes assertion final month, “our technique continues to focus totally on the potential sale of the corporate’s property in Russia”.
The longer that course of drags on, the upper the liquidity threat that arises from the continued upkeep and administrative prices confronted by Eurasia. Simply final month it entered right into a commerce finance facility to offer extra liquidity.
Considering as an investor
That wild trip within the EUA share value over the previous few years – and arguably its present £62m market capitalisation – factors to one thing. There’s, probably, vital worth within the firm’s property.
However having potential worth and unlocking that worth are two various things. Typically they are often very shut collectively. On different events they could be very far aside.
Eurasia has been searching for potential consumers for its property for a while. It could but discover one, however the lack of obvious progress to this point isn’t particularly encouraging. It’s hoping to promote the Russian property in what’s successfully a purchaser’s market. That might have an effect on the possibility of getting a deal and positively may have an effect on the possibility of getting a deal at a extremely engaging value.
Eurasia may but promote its Russian property and, even at a knockdown value, it might realise greater than its present market capitalisation. That might ship the EUA share value upwards. Conceivably, if the value was ok, the penny share may surge. Whether or not it would double once more would depend upon simply how good that value was.
However the dangers concerned (similar to no sale in any respect) are substantial. For now, this feels extra like hypothesis than funding to me, so I’ve no plans to speculate.
