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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (17432)	4/9/2008 11:04:05 AM
From: LoneClone	Read Replies (1) \| Respond to of 193999

Undiscovered Junior PGM Opportunity Funded by Anglo Platinum By Stephen Clayson 08 Apr 2008 at 02:46 PM GMT-04:00 resourceinvestor.com LONDON (ResourceInvestor.com) -- Eurasia Mining [AIM:EUA] currently has a market capitalisation of less than £5 million (approximately $10 million), yet could be sitting on a future open pit PGM mine at its Volchetundra project in Russia’s Kola Peninsula and is hoping to start trial mining soon at the West Kytlim alluvial PGM project in the Ural region. What’s more, Anglo Platinum [JSE:AMS] has already shown an interest, put its money where its mouth is and begun earning in by funding Eurasia’s costs. Anglo Platinum’s Involvement Anglo Platinum can earn an interest of 40% in Eurasia’s Kola Peninsula projects by funding work to the tune of US$10m, and can earn 50% of the West Kytlim project by completing a feasibility study. Eurasia manages the work programmes and receives a fee for doing so, with Anglo Platinum signing the cheques. West Kytlim West Kytlim is Eurasia’s most advanced asset, with applications for permits to commence trial mining submitted to the relevant Russian authorities. This would produce a small amount of metal which of course would correspond to a small amount of revenue, but more importantly would be intended to prove the viability of mining at West Kytlim and to lead on to bigger things. When will these permits be forthcoming? It is difficult to say, and one suspects that Russian bureaucracy must be allowed to move at its own pace. However, if and when the permits are issued, Eurasia will be one step closer to a potentially quite profitable mining operation with a relatively short lead time to production. Kola Peninsula Projects With West Kytlim essentially on hold until the bureaucrats get their ducks in a row, investors will increasingly be focusing their attention on Eurasia’s Kola projects. In some ways, the Kola Peninsula is a great place to have a mine, given that it has access to an ice free deep water port (Murmansk), decent rail and power infrastructure, a history of mining and a sparse population. Investors would surely rather be in a friendlier jurisdiction, but as ever, the metals are where they are. Eurasia has three Kola projects – Volchetundra, Monchetundra and West Imandra. According to the company, around 6,000 metres of drilling apiece is planned for the first two during 2008, with West Imandra still at the surface reconnaissance stage. Volchetundra is perhaps shaping up best, with Eurasia speaking of ‘the potential for open pit mineable resources’ in its last announcement and combined platinum-palladium grades of up to 14.27g/t (with a 1.25 to 1 platinum to palladium ratio) being reported so far. The company refuses to be drawn on when it hopes to be able to talk resources – however this is clearly the next milestone. Interestingly, comparisons with Barrick Gold’s Federova PGM project some 70 kilometres away are, Eurasia believes, appropriate. Political risk There is no doubt that a ‘Russia discount’ does and should exist for companies such as Eurasia. Security of tenure and regulatory transparency is still lacking in Russia. But the geological potential of the country is hugely attractive. One also has to ask with special regard to PGMs – is Russia that much worse as an investment destination than South Africa has now become? For many people, the answer will be no. Outlook The achievement of an initial resource for one of Eurasia’s Kola projects could prove to be the trigger for something of a rerating; likewise the start of trial mining at West Kytlim. The troubles of South Africa’s mining sector and the effect that situation has had on PGM prices helps Eurasia for obvious reasons, although what would really help would be an improvement in the state of play for foreign investors in Russia. But there have been Russia-focused success stories for Western mining investors, such as those of mid-tier gold producer Peter Hambro Mining [LSE:POG] and Highland Gold [LSE:HGM], and if Eurasia can continue to navigate its way through the unique Russian business environment then it seems to have a chance at becoming the next one.