Eurasia Mining (LON:EUA) released news on Friday 20th June that it has entered into an agreement for its wholly owned subsidiary Eurasia Investments Limited ("EIL") to acquire , the remaining 50 percent of Urals Alluvial Platinum Limited ("UAP") which it does not already own. We took the opportunity to put some investor focused questions to MD Christian Schaffalitzky in this exclusive MiningMaven Q&A.
CS: For junior companies, the key role played by a major is to take a project through exploration, ideally to the completion of a feasibility study. It is quite common that for a project that lasts for more than 5 years the strategic imperatives that drove the joint venture changes for some or all of the participants. In this case, the major partner made a decision to withdraw from overseas mineral development projects and this has affected a number of ventures worldwide. At West Kytlim, exploration work has been completed and we are preparing to start mining so the increase in equity is very valuable to the company.
CS: In acquiring 100% of Urals Alluvial Platinum Limited (UAP), the Cyprus holding company, Eurasia ends up transferring UAPs balance sheet to its own. This will have a number of positive effects, in particular the capitalization of the investments made in our Russian PGM projects for the first time. The total expenditure by the joint venture has been substantial since 2003 but the retained asset value reflects those licences still held and being developed. Typically joint ventures work on some form of balance between expenditure and equity but In our case the cessation of funding by Anglo American Platinum over the last six years had not been rebalanced in ownership terms and this is reflected in the de minimis price.
CS: As Eurasia has been the operator of the joint venture and the manager of UAP, nothing will change. Of course the Russian government will be aware of the change in ownership but this does not affect the process of seeking the necessary approvals for mining.
CS: Not at all.
CS: At the moment we are endeavouring to get the Discovery Certificate process completed. Thereafter we will be applying for the production licence. There is no effective time limit on this process but we have prepared the necessary documentation well in advance to minimise delays on our side.