#EUA – PGM and the LPPM

** This post will be added to as more of the market is found.

So where do all the millions of ounces that get mined every year end up? Long story short, the automotive sector dominates. But who are the main players, the secondary traders and refiners. Whilst I believe a miner is most likely to buy Eurasia Mining, it is almost a certainty the buyer will be involved in the sector already. So consider this a definitive list of options!

A good place to start is The London Platinum & Palladium Market – with

32 Platinum Refiners

28 Palladium Refiners

15 Full Members

42 Associate Members

45 Affiliates

Now there is some crossover between lists, so the following is a brief summary of who is who.

GermanyC Hafner GmbHGood Delivery
Heraeus Metals Germany GmbHFull
Saxonia Edelmetalle Good Delivery
UKJohnson Matthey Good Delivery
Anglo American PlatinumAssociate
IndiaHindustan Platinum Pvt. Ltd Good Delivery
ItalyChimet SpA Good Delivery
JapanAida Chemical Industries Good Delivery
Asaha Pretec Corp Good Delivery
Furuya Metal Co Good Delivery
Hanwa Company Limited Affiliate
Honda Trading Affiliate
Ishifuku Metal Industry Good Delivery
Materials Eco-Refining Co Good Delivery
Matsuda Sangyo Co Good Delivery
Mitsubishi MaterialsAffiliate
Nihon Material Co Good Delivery
Sumitomo Corporation Associate
Tanaka Kikinzoku Kogyo K.K.Full
Tokuriki Honten Co Good Delivery
Toyota Tsusho Affiliate
KoreaHeesung PM Tech Corp Good Delivery
RussiaJoint Stock Company (Gulidov Krasnoyarsk) Good Delivery
Norilsk Nickelnon member
Prioksky Plant Good Delivery
South AfricaHeraeus South Africa (Pty) Ltd Good Delivery
Impala Platinum Ltd Good Delivery
Rustenburg Platinum Mines Ltd Good Delivery
Sylvania Platinum Limited Affiliate
SwitzerlandArgor-Heraeus SA Good Delivery
Metalor Technologies SAFull
Valcambi SAFull
TaiwanSolar Applied Materials Technology Corp Good Delivery
USABASF (Catalysts Division)Full
Johnson Matthey IncFull
Sabin Metal CorporationAssociate
Heraeus Precious Metals North America LLC Good Delivery
Market MakersGoldman SachsFull
ICBC Standard Bank PLCFull
JP Morgan Chase BankFull
Standard Chartered BankFull
Bank of Nova ScotiaFull
Toronto-Dominion BankFull
need researchAlliance Industries LtdAssociate
Amalgamated Metal Trading Limited Associate
Baird & Co LtdAssociate
Cookson Precious MetalsAssociate
CRI / Criterion Catalyst Company LtdAssociate
Metals Trade Overseas AGAssociate
Mitsubishi Corporation International (Europe) Plc Associate
Mitsui & Co Ltd Associate
Natixis Associate
SCMI LtdAssociate
Sharps PixleyAssociate
Triland Metals LtdAssociate
Umicore AG & Co KGAssociate
UOP CH SarlAssociate
UOP LtdAssociate
Avon Speciality MetalsAffiliate
Colonial Metals Affiliate
Comdaq MetalsAffiliate
DD&Co Limited
Dillon Gage Metals
Eiger Trading Advisors Ltd.
G4S Cash Solutions UK Ltd.
G4S International Logistics (UK) Limited
Gemini Industries Inc.
Gerrards (Precious Metals) Ltd.
GFI Securities Limited
ICAP Securities Limited
Inspectorate International Ltd.
Ivanhoe Mines SA
Loomis International (UK) Ltd
Malca-Amit Commodities Ltd.
Mastermelt Ltd.
Metals Focus Limited
Ospraie Management, LLC
Platinum Group Metals Ltd.
Richmond Commodities Limited
Sojitz Corporation
Techemet Metal Trading LLC
Tharisa Plc
Tokuriki Honten Co. Ltd
Tullett Prebon (Europe) Limited
Western Digital Corporation
Wogen Resources Ltd.
World Platinum Investment Council
Group RevenueCompanyFinancial Info
$69.7bnBASFFrom 2020 Annual Report – EUR 59.1bn. German giant of industry, PGM in Catalysts division with American HQ
$60.6bnToyota Tsusho6.69 trillion yen (2019 annual report). This is the trading division of Toyota.
$48.1bnSumitomoFrom 2019 Annual Reports (2020 due in May). A true giant on the global stage. $12.5bn from metal products and $10bn from mineral resources.
$32.3bnAnglo AmericanFrom 2020 Annual Reports. $8.4bn from PGM mining
$26.4bnHeraeusIn the 2019 financial year, Heraeus generated revenues of €22.4 billion with approximately 14,900 employees in 40 countries. Heraeus is now one of the top 10 family-owned companies in Germany and holds a leading position in its global markets.
$15.5bnNorilsk Nickel2020 Consolidated revenue increased 15% y-o-y to $15.5bn owing to higher prices of palladium and rhodium as well as the scheduled ramp-up of Bystrinsky project; EBITDA decreased 3% y-o-y to $7.7bn.
Largest Palladium miner in world and neighbour to Eurasia site at Monchetundra.
$15.4bnHanwa1.7 trillion Yen (2021 estimates) Hanwa is a trading company with operations spanning non-ferrous metals, metals and alloys, food, petroleum and chemicals, machinery, lumber and many other business sectors. The company has solid positions in all of these businesses.
$13.2bnMitsubishi Materials1.46 trillion yen (2021 estimates), precious metals division, invests in copper mines overseas, urban mining (recycling)
$9.06bnHonda Trading Trading arm of Honda, responsible for over 6% of transactions in PGM each year (from their website)
$7.74bnSibanye StillwaterNet profit of $1.78 billion in 2020, the highest for any year since it was formed in 2013, revenue increased to $7.74 billion from $5.04 billion.
$5.83bnJohnson MattheyFrom 2020 Annual Report, £539m profit, £4.2bn sales (exc precious metals trading)
$1.91bnMatsuda Sangyo MATSUDA SANGYO CO.,LTD. is located in SHINJUKU-KU, TOKYO, Japan and is part of the Steel Service Centers & Other Metal Wholesalers Industry. MATSUDA SANGYO CO.,LTD. has 1,436 total employees across all of its locations and generates $1.91 billion in sales (USD). There are 52 companies in the MATSUDA SANGYO CO.,LTD. corporate family. (DNB report)
$733mSaxonia SAXONIA Holding GmbH has 710 total employees across all of its locations and generates $732.96 million in sales (USD). There are 17 companies in the SAXONIA Holding GmbH corporate family. (DNB report)
$114mSylvania PlatinumFrom 2020 Annual Report, EBIDTA $69.6m
$68mC HafnerC. Hafner GmbH + Co. KG is located in Wimsheim, Baden-Württemberg, Germany and is part of the Primary Metals Manufacturing Industry. C. Hafner GmbH + Co. KG has 198 employees at this location and generates $68.20 million in sales (USD). There are 7 companies in the C. Hafner GmbH + Co. KG corporate family.

Think of it as a handy port of call for background research. Some companies are good enough to list some details on their website, such as Honda Trading involved in over 6% of PGM volume annually. Only an affiliate member so will need to go through the full list to work out how many other major players are hiding in plain view!

from hondatrading website

Finally, the Matthey report is an excellent industry leading annual report. A must read for anyone investing in the PGM sector.

Key highlights (from Matthey report) 

Platinum 2020
  • The platinum market remained in deficit in 2020, with sharply lower supplies, and strong investment demand.
  • Autocatalyst consumption plunged by 22%, with steep falls in European diesel car production.
  • Industrial purchasing was more resilient, especially in China, where petrochemical and glass expansions went ahead.
  • Chinese jewellery demand slumped to a 20-year low, although record gold prices encouraged some retailers to stock more platinum.
  • Japan saw heavy bar purchasing in the first half of 2020, while ETF investment turned strongly positive in the second half.
  • Primary platinum supplies shrank by 20%, due to processing outages and pandemic-related disruption in South Africa.
  • Auto recycling contracted sharply on weak diesel scrap volumes in Europe and processing capacity constraints.
Palladium 2020
  • The palladium market remained in significant deficit, driving the price to all-time highs in early 2020.
  • A plunge in vehicle output was partly offset by higher palladium loadings on gasoline vehicles.
  • Consumption in chemical catalysts remained buoyant, with strong investment in new plants in China.
  • Other industrial demand fell sharply, due to COVID-related disruption and price-driven thrifting.
  • Investment demand remained negative, with further redemption of palladium ETFs.
  • Primary supplies were hit by mine closures and processing outages, while autocatalyst recycling also slowed.
Rhodium 2020
  • The rhodium market moved deeper into deficit as supplies dropped faster than demand.
  • With tighter emissions limits boosting catalyst loadings, auto demand fell by less than 10%.
  • Purchases by glass companies plunged, as high prices stimulated thrifting.
  • Primary supplies contracted sharply due to mine disruption and processing outages in South Africa.
  • The rhodium price surged to an all-time record of $17,000 in December 2020.
Outlook for 2021, all pgm
  • Pgm supply and demand are forecast to bounce back in a V-shaped recovery in 2021.
  • Autocatalyst demand will recover strongly, on higher car output and stricter emissions limits for trucks in China.
  • Industrial consumption will remain robust, with pgm use in chemicals set to reach an all-time high.


#EUA – Valuations update 28.3.21

After the surprise RNS Friday 26.3 after hours, I thought it would be useful to try and make some sense of events and how they fit in with what we already know. I won’t go over ground covered brilliantly by others such as Alta_Traako here. We are witnessing the birth of a new district for PGM mining, at a time when rivals are struggling and historic deficits are scheduled to widen.

I think the best approach is to treat this JV in isolation, but also reflect on how it impacts on existing valuations as it is now impossible to ignore that Eurasia have clearly made a good impression on the Russian State. Anyone looking to buy the company has the extra reassurance that they are buying a ESG focussed, Govt approved entity, with connections at the highest levels. A JV like this is not done overnight and Rosgeo work with the major players globally, it neatly explains why the delays in FSP mattered.

Eurasia are now empire building on Kola Peninsula, making the most of the opportunities presented by Nornickel flooding woes and AISC in lowest quartile globally for production.

I believe you can make the case now for reducing the WACC to 17% at Monchetundra on the basis of the State support shown to the company and the flank approval since last time ACF valued the company. This revises the valuations slightly.

I strongly believe they are doing this to boost the final sale, by wrapping up additional areas around Monchetundra, they are giving a buyer confidence they have the area to themselves. Whether it ends up being Nornickel or a new player in Russia, they are buying a lifetime supply of PGM with 100 years LOM if they wish – or an even bigger mining plan than the 1Moz is on the way…

Valuation Methods

How do you value the option to acquire 75% of 104.6Moz Pt equiv ?

Option 1 – In-situ valuations

Using latest spot pricing of $1180/oz for Platinum (and why did they present resources in Platinum, we want to know what other metals are there – seen some Rhodium mentioned today!), calc as follows :

$1180/oz * 104,600,000 * 75% = $92.5bn approx

What is that worth to EUA though ?

If we are working on minimal information, a ready rule in gold exploration is to use $20/oz for inferred resources, $30/oz for measured and indicated and upwards of $150/oz for proven and probable resources.

So which category does the 104.6Moz fit into? I make the case for it being closer to measured and indicated category, given Rosgeo and Absolute Precision were working the areas just last December (looking back a clue something was happening!)

We can only work off given information though, so I take $20/oz for now :

$20/oz * 104,600,000 * 75% = $1.56bn approx

Two alternative options are to take a percentage of the current In-situ value and apply that to the JV area. Working with known data for Monchetundra reveals at 28p share price we are currently valued at 3.4% in-situ assets. I believe this is currently undervalued and a 5% of In-situ would be an appropriate upper limit for the size of resources at Kola.

3.4% * $1180 * 104,600,000 * 75% = $3.14bn

5% * $1180 * 104,600,000 * 75% = $4.68bn

So as soon as the company progress with the JV and we get details on exploration licencing, I would be happy proposing a value of between $1.5bn-$4.6bn to the JV based on a sensible % of in-situ asset values.

The key for me is that they progress asap on this, especially if the flooded mines in Norilsk are out of action for a year or indefinitely. If potential becomes reality, the numbers get bigger!

Option 2 – EBITDA multiples

Lets fast forward a few years, whoever owns the assets have brought them into production and they are producing min 1Moz a year PGM, using Pt equiv to be pessimistic. With 104.6Moz to play with, a 100yr LOM gives a lot of certainty to the owner, so a 9.5x EBITDA multiple (mining industry average) would be appropriate. I assume the same $350/oz AISC as given by the company for Monchetundra.

($1180 – $350)/oz * 1Moz Pt * 75% = $622.5m a year profit before tax (EBITDA)

However, who is happy with mining for 100 years, better to make the most of your opportunity and scale up further. The following table presents some numbers to choose your favourite from :

So in summary, a fully producing JV, assuming the 75% ownership, would be generating between $622m to $1867m profit a year, valued at between $5.9bn and $17.7bn depending on how much they scale up.

Option 3 – Net Present Value NPV and Free Cash Flow FCF

This is the best option for valuing a mining project, but we need more data to make this accurate! Again, it is speculating a few years down the track about intentions and plans. Are they planning to use the facilities at Monchetundra or build additional ones. As I suspect these 9 areas are all intended to be sold together with MT, I will value it very roughly on the basis it doesn’t need much capex to bring to life, beyond what is planned for MT.

Please note though, without a bigger mining plan, we are only using up 20% of the available resources by 2049, so this will seem pessimistic in comparison to other methods :

Option 3.1 – Mine 19.5Moz by 2049 at 75% owned (25 years production from 2024)

Estimated free cash flow of $14.1bn, net present value $1.8bn, still got 85Moz of Pt equiv left worth tens of $ billions in-situ !

Option 3.2 – Super Turbo Beast Mode – buy out Rosgeo and mine the lot in 25 years

Based on 104.6Moz Pt equiv – estimated free cash flow of $68.7bn, net present value $16.5bn

Based on 50Moz Pd equiv (alternative estimate of resources – guesswork) – estimated FCF of $32.4bn and NPV $8.9bn

Shows why we need a full mining plan to use accurate valuations and details of the resources to be mined. Please note, annual global production means this is unlikely to ever happen but it pleases the uber bulls to see the potential! This also backs up Option 2 valuations based on EBITDA at the upper end.

Tackling the naysayers and doubters

To answer a challenge I’ve seen posted around, EUA haven’t spent $0.5m for 75% of the 104.6Moz, it is an intial payment that grants exclusivity on the 9 areas for 24 months. Anyone claiming this is the worth of all that PGM is not worth listening to!

The relevant part of the RNS makes it clear enough what is going on:

It doesn’t mean the FSP has failed either, nor does it mean it is further delayed. Simply put, it is in full swing until an official RNS is released either confirming a sale or an end to the process. The company are very bullish about prospects when you read the comments made by Chairman and CEO :

Another negative comment has been about the cost of acquiring the licences they need and what valuation will be apportioned to the project. Thankfully, Eurasia have done this before, most recently back in 2018 when MT got a mining licence.

If we allow a little inflation, the £48.8k paid for 20% deposit on the licence scales up to a deposit of £500k for 9 licence areas. So it looks like Eurasia have paid the correct deposit for the options if they were buying in open market. This would mean Eurasia need to find another £2m if the relationship is linear. At this time I am uncertain whether the fee is linked to the area of resources though, in which case it would be slightly more once we know the specific area details.

Given they mentioned cash of $6m, they either have enough or they don’t, I assume if they are proceeding along these lines, either Eurasia or the new owner will reveal such matters at the appropriate time. It is insignificant to the value on offer once licences granted.

Summary of Valuations

If you made it this far, well done!

Since I last calculated things, GBP has strengthened against USD, meaning there are some differences. That said, external events can have a bigger impact on these numbers. If the Nornickel mines are lost for a year or more, then expect Platinum and Palladium to be a lot higher in price soon.

In terms of the Kola JV, I didn’t want to jump straight to fair value once the licences are all granted. I think this is a given, but appreciate it will take some time and money to get there. As you can see though, it will be well worth it!

In terms of a short term valuation, clearly we should be moving up from 28p towards the fair values assigned to the various projects EUA have underway. What happens next is down to the market of course, but for potential alone I wouldn’t be surprised if we reach all time highs in the coming weeks.

The FSP is in full swing, Eurasia are carrying on business and adding value to Monchetundra with this new JV, I can only applaud their strategy and execution to date.

#EUA – Alta_Traako guest post

My good friend Alta has put together his thoughts on the RNS 26.3.21 – Sharing so more can see :

The Rosgeo Agreement allows Eurasia to gain a 75% equity stake in each of the nine new mining assets (the “Additional Assets”). The remaining 25% equity stakes will continue to be held by Rosgeo.
• 75% stake in 9 different assets
• US$0.5 million paid initially for access to all 9 assets.
• Free to choose which, if any, assets we want. No penalty if we withdraw.

Further payments due should EUA progress to development of any assets.

Four key points about further payments

  1. The earn out structure means we do not need to fork out cash that we cannot afford to potentially not profit. Cost is spread out as we develop (i.e. not risky).
  2. the cost we need to pay is capped at 75% of the value that would have been attained if the sites were auctioned. This is crucial as it does NOT mean that it is 75% of the current or future value, but 75% of the auction cost. (i.e. very cheap)
  3. No upfront cost
  4. Rosgeo at “arm’s length”. No interference. Peace for us. Free money for them. Win win.
    The Additional Assets have a total of 104.6 Moz Platinum equivalent resources = $124billion.
    Feasibility study done and reserves approved by state (i.e. no exploration risk). EUA has already invested some US$8.3 million across the Additional Assets so likely know most of it very well through previous campaigns. Will implement EPCF to develop.
    4 pits have already been worked on extensively around our current MT licence so EUA know them well. The ore at these 4 pits are suitable for toll treatment (i.e. using current infrastructure the MT plant to generate immediate cash from at a very low cost low cost). Everything is already in place for this to start ASAP. They are also open pit so usual benefits apply (fast development, less risk, significantly lower costs etc. etc.)
    5 more pits seem to be a mix on open and underground. DD and analyses have done here too but likely not as well-known as the 4 pits that sit beside out current licences. Exact make up not specified. Also, no mention off toll treatment so likely far more expensive to develop and operate that the other 4.
    Key for us and likely the development of these Additional Assets is that this does not affect the FSP. “The Company’s existing mining operations in West Kytlim and Monchetundra will not be affected by the JV”. FSP still underway meaning everything we were waiting on is still coming but with an additional $124billion worth of metal to play with.

Scenarios I see listed from most to least likely (my opinion).

Full sale of MT and WK. We get the sale that we initially expected then have the Additional Assets for future dividends or another sale/ series of sales. This makes share holders happy with the biggest pay off plus more to come. From BOD perspective this keeps all long term/ short term investors and institutions very happy while maintaining their dominant status in the region going forward.

Full sale of MT, WK, and Additional Assets (the one I want but cannot allow myself to think about). Bidders may have wanted access to the whole area. So EUA get that access and sell it on. Would be an amazing buyout but seems like it is too expensive to buy at once (in my mind) and we have a 2- year period to agree to develop and then the earn out structure becomes active. Seems strange to get all of this in place to then sell it on. BOD will do what is best for shareholders though.

Sell MT and JV at WK and Additional Assets. Selling MT gives shareholders the initial dividend but also allows the company to keep some of the proceeds for WK development. The current EPCF mentioned for the Additional Assets obviously cannot be used at WK so we would need to finance tis another way. Selling MT could allow this without getting another part involved in the financing while keeping shareholders happy with a much-deserved dividend.

Sell WK and JV at MT and the Additional Assets. Selling WK brings in cash to help develop MT, Additional assets. No need for WK since the Additional Assets are ready to generate cash flow short and long term. Toll treatment on turn-key basis.

#EUA – Feb 2021 update

An eventful start to the year with 3 significant RNS updates to consider. I’ll discuss each one below but my main thought is that we are now oversold and undervalued. The resources remain as they were. Non-binding bids are only one step away from an offer the Company could put to shareholders. The company has the DFS approval for West Kytlim which pushes things along. Plus with platinum on a rising trend we shouldn’t underestimate the contribution this mine could make to a future owners’ annual profits.

Having researched extensively with many others since 2019 and gathered the opinions of over 1400 members of our Telegram group, including some of the largest private holders of EUA there, the calmness shown this last week speaks volumes. We estimate to be holding well over 10% of all stock between us. Being able to discuss matters calmly and respectfully has been a great help to many. If you want to join we are fully open, just follow the link :


It wouldn’t surprise me if we see some significant buying in the next week, also wouldn’t surprise me if the Company release a significant RNS during February. A February timeline would fit with previous mentions I feel. With holidays out of the way, the progress whilst delayed should not be forgotten about. If I decide to increase my holdings in the coming days I’m sure you will spot the buy! I remain as confident as ever in my predictions and wish every investor well in these difficult times.

14 January 2021 – Eurasia Mining Plc – Update on Formal Sale Process

Eurasia Mining Plc (“Eurasia” or the “Company”), the palladium, platinum, rhodium, iridium and gold producing company, is pleased to provide an update on the Formal Sale Process initiated by the Company under the UK Takeover Code.

Since launching the Formal Sale Process on 1 July 2020, Eurasia and its advisers have engaged with a wide range of parties, and have to date received non-binding offers in respect of both a possible acquisition of the Company as well as other transaction structures.

Progress to date has been slower than expected reflecting the complexity of the process, involving several parties and structures, as well as external factors including COVID-19 related travel restrictions, and more recently delays resulting from western and Russian holiday periods. Notwithstanding these factors, discussions regarding proceeding to binding proposals are continuing. Until a transaction is finally concluded there can be no certainty that a transaction will occur or on what terms.

Further announcements will be made when appropriate.

Main points – multiple expressions of interest are now non-binding offers. Looking to proceed to binding proposals. Note the plural there, they are working towards multiple formal offers. For me a sign of a potential bidding war inside the FSP.

21 January 2021 – Eurasia Mining PLC – West Kytlim DFS Approved

…Christian Schaffalitzky, Executive Chairman commented: “The Directors are pleased with the DFS approval, aimed at production increases, and confirming West Kytlim’s position as the world’s largest operation of this type. After significant capital investment at West Kytlim into the production scale up and into the rehabilitation, the cash position of Eurasia is robust with over $7m, while the Company is pursuing its strategy as previously reported. Further announcements will be made in due course”.

Main points – Great to see DFS approval for WK , allows year round operations for the future owner. Good to see cash position still strong, no need to bolster. The key part – “Company is pursuing its strategy as previously reported.”

28 January 2021 – Eurasia Mining PLC – Share Price Movement & Update

Eurasia Mining plc has noted the adverse movement in the Company’s share price yesterday, following announcement of the trade yesterday for 27,400,000 shares by Alexei Churakov (the “Shares”). Eurasia had received no notification of this trade prior to it being reported by Alexei Churakov himself via RNS on 27 January 2021.

The Company and its professional advisers continue to work on the Formal Sale Process as recently reported via RNS of 14 January 2021. The operations of the Company are ongoing with the DFS for West Kytlim formally approved as announced on 21 January 2021.

The Company has made initial enquiries of Alexei Churakov regarding the sale of the Shares, and he has now notified the Company that:

·    he sold the Shares to cover an urgent and critical cash call,

·    all the Shares were acquired by Veles International (“Veles”), a subsidiary of an investment company Veles Capital,

·    he has no intention to sell his remaining shares and/or options.

The Company is continuing with these enquiries.

The Company notes that the acquisition by Veles evidences interest in Eurasia among institutional shareholders. Veles is a well-established and one of the oldest professional institutional investors in Russia.

Main points – Company didn’t know anything about this in advance. Was reported as a single transaction away from the market, at the share price of the time. He hasn’t sold all the shares he could have done.

Deloan Investments is under the control of Dmitry Suschov so consider those shares locked away. Similarly the options cannot be exercised at this time. Anything else is only speculation at this stage and we should await a further update when the company concludes its enquiries.

Clearly this event rattled the markets and confidence. Wasn’t ideal timing to release in market hours and not give the company chance to respond, so the share price took a hit.

But everything else remains as it was on 21 January. The Company points this out in the RNS to reassure everyone about the strategy they are pursuing.

Are Sibanye lining up to buy EUA?


Feb 2020 – Neal ‘the deal’ Froneman suggests Sibanye’s next deal would be away from South Africa and in battery metals. “We want to play in the international arena. We are probably ex-growth in South African because of our market position in PGMs,” he said. He also spoke to Bloomberg about growing capacity in the US market though, making a $5bn acquisition of a gold producer, so not directly linked at this time to Eurasia.

Worth noting though that in the infamous tweet by Michael Hammond, South Africa was listed a country interested in Eurasia.


May 2020 – conditions outlined for Sibanye making acquisitions in future
Namely cutting debt and returning to dividends for shareholders. So perhaps they aren’t going to be buying anyone in 2020, except…

August 2020 – update on Sibanye H1 results, with impressive profits posted and dividend reinstated for first time since 2016. So the conditions to be met before making an acquisition are in place now. Coped well with Covid restrictions, so expect H2 to be even more profitable as PGM pricing stable.


October 2020 – Sibanye announce new executive appointments. Including Laurent Charbonnier.

“Laurent Charbonnier will be joining the company and assuming the role of EVP Business Development. Laurent has more than 20 years’ experience in investment banking and recently left his role as Managing director and Global Head of Metals & Mining for HSBC, which he occupied for the last eight years.

He was a lead advisor to Sibanye-Stillwater on the acquisitions of Aquarius Platinum, Rustenburg, Stillwater and Lonmin and their related financing (bridge financing, rights issue and bonds).”

A little research on LinkedIn shows Laurent also worked at Credit Suisse and UBS prior to HSBC, being a seasoned professional in the mining investment community and a track record of financing large deals in the PGM sector.

Also in October, Froneman conducts various interviews stating his level of unhappiness with investing in South Africa, talking about battery metals and how he needs to diversify the company to get closer to supply chains and downstream users.



Sibanye under Froneman have shown impressive growth over the years, he isn’t afraid to take risks and has given a clear steer on future direction when you combine these interviews and facts.

They are clearly moving towards an acquisition, whether it is a North American Gold producer, or someone in the battery metals space, or PGM away from South Africa.

With their credit rating improved, finding money to fund an acquisition should be easier too.

Eurasia Mining ticks some boxes for them, especially with Monchetundra on the Kola peninsula. Closer to European markets and large car manufacturers, cheaper cost of extraction.

On the downside, it doesn’t have a lot of gold or as much nickel/copper as other assets.

But the chance to take a crown jewel right on the doorstep of Nornickel, showing Potanin he has a rival, well that might just be the extra ammunition Froneman needs to pull off the PGM deal of the century.

So who will they buy, will it be Eurasia Mining?

Eurasia Mining – Sept 2020 – updated valuations

After the approval of the exploration licence for Monchetundra flanks, it is fair to suggest some of the risk in bringing this project to fruition has reduced. West Kytlim is producing in 2020 so I thought it was worth revisiting my WACC/NPV model to see what may be ahead for investors. To that end, I offer 3 calculations, ranging from a very conservative case, my own considered opinion, then finally a bullish case.

I want to acknowledge the flank approval matters. It is a big step forwards for Eurasia Mining. That said, we don’t have a new resource figure to work with, even though I’m sure the strike area at NKT will see this figure increase. The 48400m of drilling data will no doubt take time to process to modern standards and perhaps lower cut off points. So until the company releases an RNS to confirm a resource figure, I will use the 15Moz.

Previous assumptions I’ve made are that it would cost around $750m to build the bigger mine capable of extracting 1000Koz a year, as indicated in the revised plans issued by Eurasia Mining. I have allowed a 1% increase in Palladium which is pessimistic but allows for the price to fluctuate within these parameters and previously used $2000/Oz as the starting point.

Monchetundra – Conservative Case – 46p per share target

This remains the same as my earlier work, using 30% WACC (Weighted Average Cost of Capital) and $2000/Oz for Palladium yields NPV of $2.1bn and equiv share price of 46p when converted

Monchetundra – GMF78 new prediction – 94p per share price target

Palladium is rising again, emission standards will ensure the next 15-20 years will see rising demand once the massive impact of Covid19 has worked through the system. I feel an average of $2200 is reasonable as a starting point for NPV calculations. I’m reducing the WACC to 20% to reflect progress made, but acknowledging it will take time and effort to build a mine of the scale proposed. (Hopefully by the new owner!)

On this model, we see a Free Cash Flow of $24.2bn generated by 2038, with equivalent Net Present Value of $4278m (there’s that number again!)

Monchetundra – Bullish Case – £2.32 per share price target

Now the flank approval is through, the 30% WACC is perhaps excessive and should be reduced to reflect a step closer to full production. How much to reduce is of course a matter of opinion, but 10% WACC would be as far as I would take this. The results are dramatic though. If we uplift the starting Pd price to $2500 as well, I couldn’t make a case for using higher numbers, so this becomes the upper limit on my calculations.

Monchetundra – work out your own valuation!

Thought it might be handy to have a table covering the possibilities in between my conservative and bullish case. Note it isn’t a linear relationship when assessing NPV for an asset, with WACC having a bigger impact. The cheaper you can bring a project to realisation the more profit lies ahead really.

West Kytlim – 17p share target price

We shouldn’t ignore the potential of WK to add value to a full takeover, it also provides a fall back position should the company not like the size of offers. Actively mining in 2020, with the benefit of the $10m to bolster production, I assign a fair value of 17p to this project now, based on being in production and working towards 1Moz total yield.


Given I have predicted 78p takeover since last November, I could keep saying the likelihood is increasing and leave the figure as it was. However, it is impossible to ignore the flank approval and rising palladium price.

Revised total takeover price of 94p – 111p for the whole company based on current information. Willing to revise should new information come to light. It is clear to see why UBS was engaged, this is going to be one of the biggest deals AIM has ever seen. Simply put, when an offer RNS lands, you will have to hold your shares to benefit as the rerate will be almost instant.

Zak Mir – EUA write up

The Life Of A Chart: Eurasia Mining (EUA)

Interesting read for anyone already invested or considering an investment in Eurasia Mining LON:EUA

Target price of 70p

As I write this mid August, we have news about Monchetundra flanks to look forward to, along with any updates about the bidding process UBS and CITIC are engaged to deliver. So plenty of fundamentals to support the rising channel.

I’ll forgive Zak for being 8p short of my own targets, plenty of time for a new chart as the weeks progress 👍

EUA – Potential Bidders

Whilst many assume Norilsk Nickel (NN) are the overwhelming favourites to purchase Eurasia Mining, other valid options are open and in play.

NN are mentioned in recent EUA RNS, proximity to Monechtundra being an obvious advantage for them. They have all the processing facilities needed just a few km away from the licenced area.

Other firms in the vicinity include Polymetal and Nordgold, they understand the jurisdiction so have to be considered on this basis.

Anglo American have to be considered a strong possibility to make a bid, given the past relationship with Eurasia Mining. Previously they’ve ruled out acquisitions outside South Africa but the recent purchase of Sirius demonstrated a change in approach.

Other global firms such as Glencore who could easily afford a multi-billion offer can be thrown into the mix until such a time as final bidders are revealed.

Chinese influence cannot be ignored on any global asset sale, with the engagement letter with CITIC Merchant an example. Perhaps a state bid via SinoSteel or similar firm.

Many other PGM mining operations exist and would see Monchetundra (MT) and/or West Kytlim (WK) as attractive options to consider purchasing. We should consider South Africa as beset with fundamental issues of power stability, higher than average AISC due to deep underground mining and Covid19 an issue at present with this type of operation. The ratio of Platinum:Palladium at several SA operations is closer to 1, so they would be mining a lot of Platinum to extract a similar quantity of Palladium compared with MT, devaluing one commodity chasing gains on another.

This brings Sibanye Stillwater, Implats, Northam and Lesego to the table of possible bidders. The latter two probably more suited to buying WK as question marks over their ability to afford both MT and WK.

Open Pit mining with AISC around $325/oz makes MT one of the most profitable locations to build a PGM empire. This brings to the table our friends in North America, such as Barrick and Kinross if they wished to consider diversification.

So they would be my top 12 bidders for Eurasia Mining. I don’t expect all 12 to throw in an offer, but it does suggest a potential bidding war until the expert guidance of UBS, ensuring a great outcome for shareholders new and old.

Share price is 19.7p at time of writing, the author holds a fairly large position in the company and has added since suspension ended on 9th July.

Eurasia Mining – what happens next?

As I write this on 5th July, anticipation is clearly building for the coming weeks and months ahead.

So where are we at, what might happen next?

Potential Bidders – reasons to buy

Without naming names, any major PGM mining operation will have taken a look at Monchetundra. With a low AISC of $325/Oz and production cost in roubles, but sales in dollars, it is a very attractive addition to your weaponry compared with equivalent resources in South Africa that have AISC of $700/Oz or more, or North America with AISC $400-$500/Oz. When operational, it will be one of the most profitable mines globally, with soft rock open pit mining offering many advantages over deep pit mining, especially when it comes to Covid19 with segregation of operatives, less power needed and a processing facility already operated by Norilsk a few miles up the road.

It has longevity too, expected local authority approval will see 15Moz available to mine, potential for another 4Moz and then up to 21Moz in the surrounding area. This could sustain a 1000Koz operation for 40 years or so. Enough time to justify a multi billion dollar takeout in 2020.

Two types of Bidder

1. Those who don’t care about the share price – they just want to make an offer for the asset(s) – happy days!

2. Those who care about the share price – the Board will not sanction a large offer for more than 2-3x current share price. The argument being why offer $bn’s when the company is valued at $210m or so.

I’ve seen a lot of discussion about this recently, especially since UBS came on board, presumably on a success fee basis like CITIC and VTB were appointed to examine options. Many people feel we won’t come back to the market, as an offer has already been made. Whilst this is attractive, it could only have come from somebody in the (1) camp – they didn’t care about share price.

Why I want trading to resume

To increase the number of potential bidders! For UBS to work their magic alongside our Board, they need as many companies as possible to be able to bid. If the share price heads to 20p and above, it will enable everyone to justify to themselves why they are bidding. Those interested in buying an asset and those using Market Cap to guide their bids.

Triggers to help Share Price rise

Just appointing UBS will help the share price, it was a clear sign of where things are headed.

Flank Approval – although said to be a formality after MOD and FSB approval, it will remove another doubt and enhance things

Institutional Buying – whether Special Situation funds, wealthy PI’s or Event Driven Global Merger Arbitrage funds, many different entities have now got reasons to invest. With a timeline measured in weeks, the chance of a great return on their investment is looking increasingly likely

Shorts closing – should EUA have been targeted at 4p or 7p, there are many whispers about a few million shares being borrowed. Will need repaying! A small amount in the grand scheme of things but an expensive lesson for anyone caught on the wrong side of the investing fence.

Against this, we will see some selling of shares. I mention this in acknowledgment of the fact some will need to gain access to their cash as a result of circumstances changing since Covid19 came onto the horizon and smashed up 2020. I wish everyone well who has been affected financially, not a nice situation and I hope EUA has made you something along the way.

1-2-3-4 I declare a bidding war

Deserves a mention to close the post, for anyone who hasn’t been involved in a share with a bidding war, just grab some popcorn and enjoy the show. Assumption is that Norilsk Nickel will not allow Monchetundra to fall into a rival’s clutches, but they don’t want to pay more than they need to.

Should we have 5,6, 7 seriously interested parties, they might not have an option. Back in 2007 when LionOre was up for sale, they outbid Xstrata twice. That was a two horse race, yet share price increased significantly for shareholders. More bidders will mean more rounds of bidding. The kind of thing best handled by a global bank with experience in such matters, exactly why UBS was brought on board…

They don’t buy often, but when they do, they make sure they get the asset they want. Hence I will stick by my predictions below, good luck to all invested.