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

To: LoneClone who wrote (31360)	1/19/2009 2:26:33 PM
From: LoneClone	Read Replies (1) \| Respond to of 195995

Eurasia Mining’s New Russian Partner Gives It The Flexibility To Get Involved In Gold By Charles Wyatt minesite.com It has long been clear that any company, small or large, operating in Russia has to have a powerful Russian partner, or it will be robbed blind. Peter Hambro Mining showed the way, but there are plenty that thought they knew better. Celtic Resources, Highland Gold and Trans-Siberian Gold have since been taught the error of their ways. In this context it’s interesting to see that little Eurasia Mining has also now taken a Russian partner. Eurasia has been exploring in the Urals and on the Kola Peninsula for several years now mostly in joint venture with Anglo Platinum. As far as local participation was concerned, the old strategy was always to try to keep everything small scale and under the radars of anybody sinister or important. But that changed back in June 2008 when the company announced the appointment of Dmitry Suschov as a non-executive director, following an agreement for Deloan Investments to invest a minimum of £1 million in the company. Dmitry is only 30, but has already had plenty of experience in corporate finance. Not only is he a director of Deloan, but he’s also a director at Daltekhgas, Kiev Oxygen Works and Pivdentekhgas, meaning he has a useful string of Russian and Ukrainian contacts. He and Christian Schaffalitsky, chief executive of Eurasia, have known each other for some time, and have done some deals in the past. This history must explain, in part, how the current deal is holding together. The investment will take place by way of a series of convertible loan notes and warrants agreed at a strike price of 5p per share, a price which compares well with the current price of 1.38p. At the time of the deal the price of platinum was US$2,000 per ounce and the price of Eurasia shares 4.5p. Christian reckons that Dmitry was always happy to pay a modest premium. Nonetheless, in the new pricing environment restructuring will now have to take place to make sense out of the gap between the share price and the strike price - as Eurasia cannot issue more shares at a price below 5p which is its nominal value. As things stand, Eurasia Mining will raise £3 million following conversion of the loan and assuming all warrants are exercised. Deloan will then hold 60 million ordinary shares in Eurasia, representing 29.87 per cent of the enlarged share capital. The driving force of the company at the moment is to get into production as soon as possible, but with the price of platinum around US$950 per ounce this is not getting any easier, and Anglo Platinum has plenty of problems of its own. Fortunately the joint venture budget for 2009 has already been agreed, so that’s at least one weight of Christian’s mind. He’s also clearly relieved to have Dmitry on board, and, from the outside looking in it appears to Minesite altogether possible that this is because Dmitry may well bring other assets into the company as the year progresses. Gold would be the obvious choice. The only mention of gold to date has been in regard to the company’s Baronskoye/Baranchinsky licences in the Central Urals, where encouraging results have been encountered for both gold and platinum group metals. The focus to date has been on the central section of a 1.5 kilometre long surface geochemical anomaly. The work here aimed to define an open-pit resource. The problem, though, is that what was encouraging a year ago when platinum was US$2,000 per ounce is not necessarily so now. What seems most likely is that Dmitry already has his hands on one or two advanced gold projects and these could, in time, be sold to Eurasia for paper, once the equity has been restructured. Christian is not prepared to comment other than to say that 2009 should be a busy year and there should be some interesting announcements. In the meantime Eurasia has been awarded a two-year extension to its 171 square kilometre West Kytlim exploration licence in the Central Urals, where it’s working jointly with Anglo Platinum. A first stage Russian feasibility study has also been approved for an area on the Bolshaya Sosnovka River located in the West Kytlim licence area. A resource and reserve statement has been submitted to the relevant authorities as part of the process for obtaining a comprehensive mining licence. Once all the regulatory requirements have been met – and this process was held up last year due to the introduction of new Russian mining laws – the two partners are effectively ready to start mining. Anglo Platinum is paying for everything including a bankable feasibility study. So all in all, Eurasia looks to be well placed to meet current exigencies. Anglo Platinum is going to be meeting its costs on platinum exploration and development over the next year at least. Eurasia has slashed its own administrative costs to the extent that losses for the first half of the year to end June were squeezed from £495,000 to £350,000. It has a new Russian partner which is investing at least £1 million. And it looks like it may switch focus to gold. Eurasia Mining is now poised for a new life and Christian Schaffalitsky sounds pretty cheerful - a good sign in these times.