Let’s be honest, Eurasia Mining (LSE: EUA) is not the first nor will it be the last London listed company that likes to dilute existing shareholders to the hilt in order to keep the lights on.
The 93 million plus shares they’ve issued today will be used for various ‘initiatives’ including:
- continued liaison with the licensing authorities to secure receipt of the West Kytlim Mining Licence which will enable the Company to commence first platinum production and revenue generation in the near term;
- preparation of the development plan which is submitted to Rosnedra following granting of the mining licence. This includes, inter alia, the scheduling of the different mining blocks and the upgrading of resources to reserves.
- detailed engagement with third parties in respect of the Company’s Monchetundra Platinum Group Metals licence where the Company is considering the potential disposal of part or all of its project interest;
- consideration of new project opportunities, where ongoing due diligence require the commitment of resources by the Company to assess and negotiate commercially beneficial additions to the existing Eurasia Mining operations.
Christian Schaffalitzky, CEO stated:
I acknowledge that the placing, being at a discount to our market price, will be frustrating to existing holders. As a shareholder myself I can align myself with other shareholders in this regard. However, recognising the various forward plans of the business and the initiatives underway, the Board and I felt this was the right decision.
As a Company Eurasia is now well funded for 2015 activities, and it is our primary objective to demonstrate, as far as possible, that this fundraise enables us to deliver real progress for shareholders in the near term
Well I hope that makes current shareholders feel better about themselves.
Today’s shareholder dilution comes on the back of a placing on 6 February in which 3,500,000 shares were conjured up out of thin air.
Commenting at the time Schaffalitzky stated (emphasis mine):
We believe the request for stock rather than cash, at a premium, to be a vote of confidence in the potential of Eurasia Mining and look forward to announcing progress across all our interests, and potentially new opportunities in 2015
I wonder if todays placing of 93 million shares at a discount to the market price is a vote of confidence in the potential of Eurasia mining?
What about the issue of 30 million shares as well as the granting of warrants over an additional 30 million shares on 29 December 2014 to Metal Tiger Plc (LON:MTR) as part of a ‘New Project Collaboration & Investment Agreement’?
With low to no quality of earnings and considering where in the world Eurasian Minng’s operations are based, today’s share price is just too high from a value assessment especially when you consider that a questionable loan is your largest asset:
Note 5 to Eurasia Mining Accounts
This makes a nonsense of the balance sheet and a nonsense of the investment case for Eurasia Mining as a whole.