Eurasia Mining (EUA) share price is extremely cheap: is it a buy?

By:
on Feb 17, 2023
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  • Eurasia Mining stock has crashed by over 91% from its all-time high.
  • The company is facing significant headwinds as PGMs price tumble.
  • The risk/reward ratio currently favors buyers.

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Eurasia Mining (LON: EUA) share price has been in a strong bearish trend in the past few months as concerns about the company continued. The stock has been oscillating at 4 pence, where it has been in the past few days. This price is the lowest it has been since February 2020 and is about 91% below its all-time high. Its market cap has plunged to about £110 million.

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Concerns about the company remain

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Eurasia Mining is a small-cap company that produces key metals like platinum group metals (PGM) like platinum, palladium, and rhodium. It also mines other metals, including gold, in its operations in Russia. Therefore, the company has been affected by western sanctions and the fact that prices of its key metals has continued falling. 

Eurasia Mining has also diluted its investors. Earlier this month, the company announced that it had issued and allotted 5 million ordinary shares of 0.1 pence each. This happened as the company exercised its options at the strike price of about 4.20 pence each.

Another major development is that Eurasia is considering selling its assets in Russia. It made the announcement following days of speculation after OOO Monchegorskoye., its partner, was granted a license near its operations. Such a sale will be beneficial for the EUA share price.

In all, Eurasia Mining is facing significant challenges on a macro level. Western sanctions make it difficult for the company’s operations. At the same time, prices of the key metals it produces like platinum and palladium have been in a strong downward trend. 

As I wrote earlier today (Friday), technical charts show that palladium could crash below $800 in the next few months. If this happens, Eurasia stock could continue falling in the near term.

Eurasia Mining share price forecast

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Eurasia Mining share price

EUA share price chart by TradingView

The weekly chart shows that the EUA stock price has been in a strong downward trend in the past few months. The sell-off culminated in it dropping below the important support level at 13.91p, the lowest point on August 31 and January 21, 2021. It remains below all moving averages while the lack of momentum has seen the Relative Strength Index (RSI) move sideways. 

Therefore, at this stage, I believe that Eurasia Mining is a speculative buy since most challenges have already been priced in. Since it is thinly traded, a minor piece of news could push it sharply higher. Besides, the cost of shorting it at the current levels is a bit expensive.

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