Eurasia Mining reveals revenues of £2.57m in maiden year of production from West Kytlim (EUA)

On Wednesday, Eurasia Mining (LSe:EUA) released its annual report and accounts revealing revenues jumped to £2.57m in its first year of production from the West Kytlim mine. The majority of sales came from mined platinum with smaller credits of gold, palladium, rhodium, and iridium.

The firm, which is now debt free, generated a gross profit of £293k during the period compared with a loss of £34k in 2017.

The company’s primary focusses are the West Kytlim platinum and gold mine in the Ural Mountains and the 2 million ounces of palladium & platinum equivalent Monchetundra asset on the Kola Peninsula. Last year, output from the West Kytlim mine exceeded expectations with platinum production of 165kg. Last month Eurasia’s chairman, Christian Schaffalitzky told MiningMaven the company is targeting similar production levels in 2019.

Mining at West Kytlim has moved on to the Kluchiki area where forest clearance was undertaken in February. Seasonal preparations, including the mobilisation of machinery, have been in progress ahead of gravel washing, which is due to commence in the middle of May 2019.

Improvements have been made to improve washing efficiency and metal recovery including the addition of a jig to the overflow of the sluice to attempt to capture more of the finer platinum bearing nuggets. Eurasia has renewed its contract for mine development with the directors and operational staff at Techstroy, who underwent a name change to Uralmetmash.

Meanwhile, The company has been developing its larger Monchetundra asset towards production since it was issued a mining permit in November last year. An engineering, procurement, construction (EPC) and financing agreement is in place with Chinese group Sinosteel for the development of the mine.

In the chairman’s statement published with the accounts, Mr Schaffalitzky said:

“At the time of writing production is ramping up for the year to full scale at West Kytlim and the Directors now regard Eurasia as an established mining Company.

The Company's strategy, as outlined since 2015/16 was to develop the West Kytlim Mine to production, and to generate sufficient revenues to allow the Company to pursue development of its further interests, while minimising possible dilution of the shareholder base.

The Company's plans for the project's development with Eurasia's working partners at Sinosteel (one of the largest corporations in China) and the Central Kola Expedition, the key contractor in the region for both Russian and international companies, can now be progressed. The project is a more considerable undertaking than West Kytlim and could be transformational for the Company.”

Author: Stuart Langelaan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.

Eurasia Mining talks operational progress and strong PGM prices after signing major contracts at Monchetundra (EUA)

Eurasia Mining (LSE:EUA) jumped 6.3pc to 0.6p on Tuesday after revealing that it has signed an engineering, procurement, and construction (EPC) contract with a major Chinese firm for its Monchetundra project in Russia.

The company has been developing Monchetundra towards production since being issued a mining permit a c.2Moz gold and PGE deposit in November last year. In Wednesday’s update, the organisation revealed that it has been in discussions with Chinese business Sinosteel around securing an EPC contract and associated mine finance package since receiving the permit.

Sinosteel is a base and enterprise metals enterprise and a major importer of iron ore to China. It has also built chrome and nickel operations in South Africa, China, Indonesia, and Australia.

According to Eurasia, the Sinosteel EPC financing covers 85pc of total $176m contract value for Monchetundra. A $50m sub-contract is specified within the contract and assigned to Eurasia’s 80pc-owned subsidiary TGK, or a chosen sub-contractor, for engineering and pit development works in advance of mining.

Alongside the Sinosteel deal, Eurasia also revealed that it has awarded a detailed project documentation contract for Monchetundra to Central Kola Expedition (CKE). This work must be submitted and approved within a year of receiving a mining permit.

The report will outline further geotechnical, hydrogeological, metallurgical, and resource and reserve base work required as part of the broader mine development plan. These details will then contribute to a more detailed feasibility study of permanent conditions at Monchetundra alongside a revised reserves statement. The latter will be made using the site’s existing, state-approved feasibility study and reserves report.

Eurasia intends to fast track this work, running it in parallel with the mine studies and programmes outlined in the Sinosteel EPC contract.

CKE has already successfully developed the site’s feasibility study and ecology report and has an extensive track record in working with firms such as Norilsk Nickel, B2Gold, and Barrick. Eurasia added that Sinosteel has advised that it is prepared to work in close co-operation with CKE towards beginning the EPC contract and the expected associated financing.

Next steps

Elsewhere in Tuesday’s update, Eurasia said it plans to complete a survey of the land on and adjacent to Monchetundra’s proposed open pits during Spring this year. This information will be used to determine the final location and design of mine infrastructure such as tailings storage facilities, mine wastes dumps, plant locations, and roadworks. Although government agencies have approved provisional positions for the infrastructural elements, Eurasia said a ‘further level of precision is now required for more careful planning’.

Finally, the business said it has also begun evaluating the flanks that surround the deposits at Monchetundra as potential new development licences. Under Russian law, the holder of a mining licence has the right to apply for further ground adjacent to an identified deposit and within 5km of an approved reserve.

With this in mind, TGK - which holds the Monchetundra Mining Permit - can apply uncontested for areas on the 'flanks' of the existing licence that do not contain an approved reserve. It can also apply for areas on the flanks of the permit where a state-approved reserve is already registered, though this can be contested.

In Tuesday’s update, Eurasia said it is aware of numerous deposits adjacent to Monchetundra and is now reviewing them as potential new development licences. Speaking to MiningMaven, the company’s resource and exploration geologist Keith Byrne expanded on this:

‘We are now in the process of a thorough desktop review of all the available literature. It is quite remarkable how much exploration work has already been done in the area, and the volume of occurrences and deposits already identified. Our previous exploration licence straddled the boundary between several mafic and ultra-mafic massifs – PGM’s and sometimes other metals concentrate at the base of, and close to the edges of these massifs, and are a focus of exploration. Of course, where you have several joined at a sort of triple junction - as we have just to the west and southwest of the town of Monchegorsk on Kola Peninsula - then it gets quite exciting and also a little complex.

‘We are in the process of modelling this area now in order to make sensible applications for further exploration ground -we have had communication from the local Nedra on that, and will be identifying which of the areas most suit our corporate strategy. There is certainly the potential to develop several further exploration targets in the immediate vicinity of our two current fully permitted licences, either as standalone mines or as a toll treatment opportunity.’

Against this backdrop of strong operational progress, Byrne added that Eurasia is also enjoying a boost from favourable conditions in its associated metal markets:

‘It is more or less good news in the PGM sector these days, as regards metal prices at least. Of course, we have most direct exposure to Platinum and are now just weeks away from production at West Kytlim, so any positive news regarding platinum prices is most welcome as our sales contract to the Urals Precious metal Refinery is tied to the LME price. We also welcome the recent gains in Rhodium, admittedly a much smaller contribution than platinum, but a contribution none the less. When we started our first full season of mining in May 2018 we did not expect the ‘other PGM’ revenue stream to be very significant – subsequently, as it turned out that the grade in our resource was significantly understated, as often happens in alluvials, the ‘other PGM’ revenue took on a much greater significance. We recover Rhodium and Iridium at West Kytlim, alongside platinum and some gold.

‘Palladium has come off a little from the highs of over $1,600, but most commentators expected this bull run to be choppy, and that it may have some ways to go. It certainly revalues assets like our Monchetundra project, where future mine revenues are led by a high palladium to platinum ratio. We see this style of open pittable project with high palladium content and major contributions from other base metals (in our case nickel and copper, both of which now emerging as important battery metals) as the future of the PGM industry.

Author: Daniel Flynn

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

 

 

Interview: Eurasia chairman Schaffalitzky discusses potential doubling of reserves and increased efficiency at West Kytlim mine (EUA)

In its most recent update regarding its West Kytlim mine, Eurasia Mining (LSE:EUA) announced preparation work is underway ahead of first production. This is likely to commence in April once the seasonal thaw sets in. West Kytlim is located in the prolific platinum-producing region of the Ural Mountains of Russia, and the alluvial process relies heavily on running water. This is obviously problematic when everything is frozen solid. We caught up with Executive Chairman Christian Schaffalitzky to find out more about how Eurasia plans to ramp up its activities in Russia, once winter has loosened its grip.

Eurasia is focused on two main projects, which are at different stages of development. Aside from the West Kytlim mine - which Eurasia brought online in spring 2017 – Eurasia is targeting first production on its Monchetundra license by 2021. Monchetundra is located in the Kola Peninsula in the far Northwest of Russia, and is the largest of Eurasia’s projects. State approved reserves and resources amount to 1.9 million ounces of palladium equivalent, which includes platinum and gold.  Eurasia received the mining license certificate for Monchetundra in December 2018, and can now look to advance the project through construction. In addition, a third smaller project is a gold and silver tailings project at Semenovsky.

West Kytlim Potential

As the stockpiling of ore commences in the chilly Ural Mountains, Eurasia can look back on a successful first full season of production at West Kytlim. 2018 production totalled 165kg of raw platinum, well in excess of the 100kg target.

Eurasia will continue to work with the same team of contractors in 2019. The directors of Techstroy, the contractor who ran the front-end processing of the mine last year, have registered a new company Uralmetmash specifically to focus on the project.

Uralmetmash is in the process of making operational tweaks to further improve extraction efficiency. A hopper to improve loading is to be added, improving the flow of material and the addition of a jig at the end of the process is being considered. Tailings from the alluvial process are being tested and may contain significant fine platinum fractions, which could be extracted in this manner.

Eurasia is now turning its attention to building its available reserves and resources base, to extend the life of the mine and add value to the project. As Christian Schaffalitzky explained to MiningMaven, the reserves are there, they just need rubber-stamping;

“We already have worked on wider areas of the license at an exploration level but when we came to apply for the mining license we could only apply for the areas that we had proved to be reserves and advanced resources. We dropped the rest of the license area because we hadn’t got to the reserves definition stage yet, but we know there’s platinum in those areas, so that’s going to add to the future life of the mine.” 

And the potential reserves are plentiful;

“We’re talking of the potential of certainly doubling the reserve or resource base, but that’s speculation at this stage until we receive official confirmation.” Schaffalitzky adds.

State approved reserves are currently being mined at the Kluchiki area A revised reserves calculation for this area was submitted for approval in October 2018. This will increase the mineable reserves allowing Eurasia to take a decision on adding a second washplant to expand its operations. A larger development program is now being finalized, to upgrade all of the currently identified resources and reserves on the mining license to mineable reserves. This reserves development program will be specifically tailored to suit proposed ore schedules.

Operating in Russia

You might expect operating in Russia could be problematic, but Schaffalitzky tells us this is simply not true.

“We have successfully applied for and have been granted two mining licences on two areas in Russia. We have been operating since 1996 in Russia, exploring and now mining, and at no stage have we had any obstacles relating to the jurisdiction.

The only delaying factor is a bureaucratic one.

We have a certain amount of reserves to mine this year but really want to extend our active reserves further and that required another report to the government, and then the government, in this case at local level, becomes the logjam.” 

Schaffalitzky also told us that he feels the market can underestimate how long bureaucratic processes can take when progressing an asset through to production. This is particularly the case when aspiring to develop larger projects such as Monchetundra.

Monchetundra

In 2016, Eurasia completed a Feasibility study for two open pits at Monchetundra – West Nittis and Loipishnune. This culminated in the granting of a mining license for 2m ounces of palladium-lead mineralisation, including platinum, gold, nickel, and copper.

Having received the official certificate a month ago, Eurasia now looks forward to progressing the project on a number of fronts. Work is starting on an engineering and development plan for the mine. Outline terms for an Engineering Procurement and Construction (EPC) contract have been agreed with Sinosteel, the Chinese state-owned equipment manufacturing and engineering firm. Under the terms of the agreement, Sinosteel would provide finance to the tune of $151m. That’s 85% of the estimated $178m costs required to build the mine.

“Sinosteel will carry that loan on their books until the plant is fully operational. The remaining 15%, roughly $24m, is to be Eurasia’s equity contribution.” says Schaffalitzky.

That’s not pocket change for Eurasia to find, however another factor of the deal may make potential investment in the project even more attractive. There is to be a cash back element from Sinosteel, which will accelerate the return on investment back to Eurasia. Sinosteel will sub-contract Eurasia to do certain proprietary works such as geo-technical work for the mine, road infrastructure and so on. Schaffalitzky says this could equate to $50m less what it costs to do the works, over the total construction period of roughly two years. The mine is expected to take 18-24 months to build and will have the capacity to produce around 120,000 ounces of Palladium-lead mineralisation per annum.

Although there is still much to do to piece together the Monchetundra puzzle, Schaffalitzky highlights the project is perfectly located.

 “The Monchetundra project is within 6km of a town of 50,000 people, there’s power, rail, and main roads. The infrastructure is fantastic, this is really unusual in Russia, for people to be so close to potential work.

There’s even a nickel-copper refinery near the town. It’s not running at full capacity anymore, but there used to be other nickel-copper mines in the district which supplied it, so it’s actually running with spare capacity at the moment.”

Steady progress

With some commodities, notably palladium and gold, starting to show signs of recovery, there is cause for some optimism across the junior resource sector. Palladium has had an incredible run hitting around $1450 an ounce this month. The move, which has coincided with a sharp decline in the platinum price, is likely down to news headlines condemning diesel vehicles in favour of petrol – diesel vehicles require platinum while petrol favour palladium.

Schaffalitzky believes a ‘crunch’ may happen in the platinum supply since many labour-intensive South African mining companies are running at a loss with the platinum spot price so low. Subsequently, it seems likely that platinum will eventually recover, once the widespread headlines become chip-paper.

Regardless of the current cyclic dip in commodity prices, Schaffalitzky told MiningMaven the market should anticipate steady progress over the next 6 months across all of its projects. The company seems on course for a positive start to 2019.

Author: Stuart Langelaan

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.
Catalyst Information Services Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.
MiningMaven.com and Catalyst Information Services Ltd are not responsible for its content or accuracy and do not share the views of the author.  News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance.