Mon, 9th Mar 2015 07:00
Eurasia Mining PLC
Mining Licence Update
EURASIA MINING PLC
("Eurasia" or the "Company")
Strategic and Operational update
Eurasia Mining (LON:EUA), the platinum explorer and resource development company operating in Russia, is pleased to provide a strategic and operational update for shareholders in respect of the Company's activities.
- West Kytlim Platinum Mining Licence key verbal approvals received and prudent operational planning well advanced;
- Approaches to acquire, or acquire an interest in, the Company's Monchetundra Licence;
- Work to identify new opportunities well advanced;
- Company proposing to form two new operational divisions, namely Eurasia Exploration and Eurasia Development & Production.
Christian Schaffalitzky, CEO of Eurasia Mining commented "We are pleased to inform and update shareholders on strategic and operational changes to ensure the market is fully aware of the activities being undertaken by the Eurasia team.
We believe significant progress has been achieved recently in respect of existing assets and in the search, evaluation and negotiation of new interests. The proposed strategic restructuring of the business takes account of recent developments and positions the business for the opportunities available to the Company.
For the sake of clarity I would confirm that the content of this news announcement is based on the Director's best knowledge or belief as to the matters referenced therein. Mineral exploration and development is inherently a risk based enterprise and not all events or progress anticipated will transpire and investors should be clear in this regard when considering the information below.
The Board of Eurasia Mining are confident in the measures being taken by the Company to secure value from existing assets and build additional opportunities to further enhance our Investment Proposition."
West Kytlim is a PGM exploration and development interest in the Urals, Russia in which Eurasia has a 75% holding. The Company has submitted and is progressing through a Mining Licence application to allow the Company to undertake alluvial Platinum mining and production from West Kytlim.
As announced to the market on 25 February, Eurasia has now received verbal confirmation of the Department of Defence and Federal Security Service approval of the Company's Mining Licence application. We believe these are key steps and now lead us into the final application stages with Rosnedra now compiling the Mining Licence terms and conditions for review and feedback from the Ministry of Economic Development. Subject to satisfactory completion of this stage our application will then be forwarded to the President's office for the final stage of approval.
We are respectful of due process and the requirement of the local ministries to properly review and consider our application. However we are undertaking prudent work to review, plan and budget for the measures required post Mining Licence to ensure production operations can, weather permitting, be commenced as soon as possible.
We have completed detailed operational plans for West Kytlim development, against which debt financing negotiations can be undertaken. Those operational plans are subject to the specifics of the final Mining Licence, but having a planning structure in place enables us to amend and adapt provisional plans more easily than awaiting the Mining Licence and preparing plans thereafter which could lead to operational delays.
The Eurasia team includes management with a close knowledge of mining finance in-country, and we have confirmed the general availability of debt based mine finance for licenced alluvial operations such as West Kytlim, particularly given the moderate capital expenditure requirements to commence operations. We are now working to finalise the specific sources of prospective finance for our West Kytlim project as a prudent measure in readiness for commencement of operations.
We believe the advance planning we have undertaken will enable the Company to act swiftly on receipt of the Mining Licence, which is in the interests of the Company and importantly, the local authorities in-country who are keen to see commercial operations flourish and the local employees and contractors who will benefit financially from the extensive work opportunities that will be available.
The practicalities of Mining Licence confirmation and refinement of our operational plans at West Kytlim will enable the generation of financial data in respect of estimated revenues and project profitability. This information will enable us to update the market on the financial specifics pertaining to West Kytlim and demonstrate the benefit of all the project preparatory work we have undertaken over a number of years.
As part of this work, we are also preparing to commission an independent assessment and valuation of the West Kytlim project. This report will provide our shareholders and the market a detailed understanding of the project, based on the operational framework provided by the Mining Licence. It will also assist third parties in confirming the Company's technical and financial work completed in preparing West Kytlim for platinum mining.
Overall Eurasia Mining is grateful to our in-country advisors and regulatory authorities for the assistance provided and the recent progression of our Mining Licence application. We are working hard to encourage continuing momentum. Investors can be assured that the hard work of planning and preparation has also been undertaken, so we are operationally ready when the approval to proceed to mining is received.
The Company holds an 80% interest in the Monchetundra PGM project on the Kola Peninsula in Russia. The exploration licence in respect of this property was renewed in late 2013 with a 3 year term expiring in December 2016.
Significant exploration work has been undertaken on the property to date, much of this under Joint Venture with Anglo Platinum with Anglo funding operational activities. That joint venture formally ended in 2014 when Anglo took a strategic decision to focus on their South African PGM operations. As a result Eurasia Mining was able to re-acquire Anglo's interest and retain for the company and shareholders the benefit of the considerable multi-year exploration expenditure on the property.
The work undertaken to date has delivered a considerable quantity of data and extensive PGM and base metal mineralisation has been identified most notably in the West Nittis and Loipishnyun areas of the licence.
A detailed work programme for future activities at Monchetundra has been prepared. However since then Eurasia Mining has received two approaches from third parties who have expressed an interest in acquiring outright, or acquiring an interest in, the Monchetundra licence.
The Company has therefore engaged in commercial negotiations with both parties with a view to considering and negotiating a suitable transaction that is in the interests of all parties, but specifically Eurasia shareholders. This process has recently included site visits to the project and from which positive feedback has been received.
Whilst there can be no certainty that any transaction can be concluded in an acceptable manner, the company is working with the relevant third parties in an attempt to reach an acceptable conclusion, if possible.
The Company has been working for some time on the identification and consideration of new project opportunities. Following the collaboration with Metal Tiger plc announced on 29 December 2014 the review of new project opportunities has accelerated.
At present the Company has numerous project opportunities under review, but is focusing its attention on certain opportunities with near term production possibilities. This focus is in line with the Company's desire to become self-financing through the inclusion of production assets sitting alongside and financing exploration opportunities.
There is no guarantee that these transactions will progress, but if they do further announcements will be made at that time. In all cases we are ensuring that financing and managerial requirements for any new interests are well within our means, and this is assisted in part should Metal Tiger plc agree to participate with Eurasia Mining on equal terms, as is proposed within the collaboration announced on 29 December 2014.
New Business Structure:
Following a review of the existing company and subject to successful progress at West Kytlim and with regard to new acquisition opportunities Eurasia Mining will create two distinct operational areas namely, exploration interests and development to production and/or already producing assets.
Reflecting the need to structure the Company in an efficient and effective manner it is the Board's intention to create two new internal divisions named Eurasia Exploration and Eurasia Development and Production, in which to allocate and manage these exploration and production operations.
We will advise shareholders if and when this structural business change is implemented.
For more information please contact:
Christian Schaffalitzky / Michael de Villiers
Tel: +44 (0) 207 932 0418
Katy Mitchell, WH Ireland Limited
Tel: +44 (0) 161 832 2174