TIDMEUA
RNS Number : 3566M
Eurasia Mining PLC
16 September 2019
Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Senior management team appointment
Eurasia Mining PLC, the palladium, platinum, rhodium, iridium
and gold producing company, is pleased to announce that it has
appointed Mr. Alexei Churakov as a Strategic Advisor to the board
of the Company (the "Board"). Mr. Churakov is a former Goldman
Sachs and Morgan Stanley senior investment banker specialized in
the mining sector. He has been involved in multiple mining
cross-border M&A transactions operating from Moscow, London and
New York. Alexei brings his extensive experience in mining M&A
to the Company, as well as his top level contacts with major
international and Russian mining and trading companies operating in
the platinum group metals, gold and base metals sectors including
Lesego Platinum, Boliden Group, Gold Fields, Glencore
International, Sumitomo Corporation, Norilsk Nickel, Polyus Gold,
Polymetal International, Ural Mining and Metallurgical Company,
Russian Platinum and many others.
Highlights:
In his capacity as an adviser:
-- Mr. Churakov has assisted in negotiations with Sinosteel
helping structure the EPCF contract to include a $50m subcontract
through which Sinosteel provides CJSC Terskaya Mining Company
(TGK), a Eurasia's subsidiary developing the Monchetundra project,
with the start-up financing. The first payments comprising $26.5m
from the $50m subcontract will allow Eurasia to finance its
obligations under the EPCF contract with Sinosteel without
shareholder dilution and make the Monchetundra project
self-financed.
-- Mr. Churakov has assisted in developing the West Kytlim
phased production increase strategy involving both Eurasia's own
team and its contractors. Under his guidance, the team has designed
a new and extensive project development programme, with the
specific objectives of reaching stable and sustainable growth as
measured by mine output alongside reserve and resource upgrade
programmes at the West Kytlim Mine. Eurasia has, today, also
acquired its own enrichment plant from West Kytlim's operating free
cash flow and will continue producing hereafter on an owner
operator basis with 100% of mine revenue payable to the
Eurasia.
-- Mr. Churakov has recently helped arrange detailed due
diligence and multi-day visits to both Monchetundra mine and
Eurasia's office in Ekaterinburg to study the West Kytlim project
by James Nieuwenhuys, CEO and Director of Lesego Platinum, a South
African PGM company developing a c 50M ounce project in the Eastern
limb of the Bushveld Complex, as part of Lesego Platinum's due
diligence of both the Monchetundra and West Kytlim projects.
Further details of which are set out below.
-- Mainly for his assistance with Lesego Platinum and to ensure
Mr. Churakov's motivation without further dilution of Eurasia
shareholders, Mr. Dmitry Suschov has transferred 25.472% of the
share capital of DELOAN INVESTMENTS LIMITED ("Deloan") (a company
beneficially owned and controlled by Mr. Dmitry Suschov) to VENUS
GARDEN HOLDINGS LIMITED a company beneficially owned and controlled
by Mr. Churakov for a nominal consideration with effect from today.
Deloan holds a substantial shareholding in Eurasia.
Christian Schaffalitzky, Chairman at Eurasia, commented: "We are
grateful to Mr. Churakov for his contribution to developments at
the West Kytlim mine, which as of next season will be operated
without contactors, and on arranging the purchase of the enrichment
plant. We are also delighted that Mr. Churakov has taken a role as
Strategic Advisor to the Company and brings both his extensive
mining M&A experience along with his top level contacts with
mining companies including South African Lesego Platinum. We are
grateful to our long-term Director Mr. Dmitry Suschov for providing
a motivation package to Mr. Churakov while at the same time keeping
the existing shareholders intact. We are working on further
strengthening our Company with both international experts and top
mining executives. In addition, acquiring a washplant to commence
and continue mining on a 100% of revenue basis is a significant
development for the Company. We now have a very well established
team at site with the necessary skills and experience to ensure a
successful operation through the rest of the 2019 season and to
ensure timely commencement of mining in 2020.".
Details on Mr. Churakov's role in Sinosteel deal structuring
Since 2014, Mr. Churakov has advised the board in talks with
Sinosteel helping structure the EPCF contract with the $50m
subcontract agreement between Sinosteel and Eurasia's subsidiary
TGK. The first payments comprising $26.5m under this subcontract
will allow Eurasia to fulfil its obligations under the EPCF
contract without shareholder dilution and make the Monchetundra
project self-financed. As per the originally signed Sinosteel EPCF
contract (see RNS date 10 October 2016), one of the conditions
precedent to be fulfilled by Eurasia Mining before Sinosteel
commences construction works was the upfront payment of 15% of the
EPCF contract value by the Company. The structure of Eurasia's
contractual relations with Sinosteel fulfils the abovementioned
pre-requisite. Another important condition precedent, which is also
now fulfilled, is the production license that was successfully
received by TGK at the end of last year, as announced on 20
November 2018.
Mr. Churakov's role in West Kytlim phased mine development
Mr. Churakov has advised the board in developing a coherent and
comprehensive strategy to achieve sustainable growth at the West
Kytlim Mine. Following the successful launch of the industrial
production of PGMs (palladium, platinum, iridium and rhodium) and
gold in 2018, the team has developed a detailed West Kytlim
development programme to convert all C2 class reserves (according
to the Russian classification) into C1 class reserves with the aim
to allow the Company to become fully prepared for stable production
growth from 2020 onwards. The development programme also includes
dedicated measures intended at conversion of the considerable P
category resources into C2+C1 class reserves - this is expected to
further increase the West Kytlim project capitalisation and
intrinsic value of the asset.
2019 production summary to date
The above mentioned development programme, as well as the
automation and a number of upgrades to the flowsheet at West Kytlim
aimed at improving metal recovery, has impacted initial 2019
production volumes. Production commenced in mid-May and production
volumes, to date, are standing at a total of c.55kg (c. 1,770 oz)
raw platinum.
From the next season Eurasia's own in-house team will manage
production at the mine site, having purchased the necessary
equipment including the enrichment plant. This major development
increases Eurasia's share in top line platinum sales from 30-35% to
100% and the Directors expect to see a concurrent increase in the
profit margin at West Kytlim, which the directors believe sits
towards the bottom of the global platinum production cost curve.
Platinum, palladium, iridium, rhodium and gold prices have seen
recent gains - platinum is today trading 21.5% higher than at this
point in the production season last year ($950/oz versus $792/oz on
14(th) Sept 2018, source Kitco.com). Acquiring the enrichment plant
from the operating free cash flow ensures a smooth transition to
further production next year. Mining is expected to continue until
the close of the 2019 season.
Lesego Platinum due diligence and CEO site visits of both
Monchetundra and West Kytlim
Mr. Churakov has recently helped to arrange detailed due
diligence and multi-day site visits by James Nieuwenhuys, CEO and
Director of Lesego Platinum as part of the Lesego Platinum's
evaluation of both Monchetundra and West Kytlim projects. Over the
past few months Lesego Platinum performed due diligence of
Eurasia's assets accompanied by several days of visits of
Monchetundra mine and Eurasia's office in Ekaterinburg to study the
West Kytlim mine.
Over the course of the site visit, Lesego Platinum studied and
evaluated infrastructure availability and logistics access, drill
core samples, results of laboratory test works along with other
information and raw data, which form the ground for assessment of
both Monchetundra and West Kytlim projects to consider, amongst
other options, potential partial acquisition of Eurasia's
subsidiaries and joint venture opportunities at the sites. Despite
the synergies and the motivations of Lesego Platinum, there can be
no guarantee that any transaction will occur. Further updates will
be provided in due course including the potential of James
Nieuwenhuys joining Eurasia's board if these matters progress. This
appointment is subject to customary approvals, amongst other
things, due diligence on James Nieuwenhuys, contracts and Nomad
checks. Further updates will also be provided on this if it
progresses.
Lesego Platinum owns, what the Directors' rate as a world class
PGM assets located some 300 km North-East of Johannesburg, at the
northern end of the Eastern limb of the platinum rich Bushveld
Complex. James Nieuwenhuys, its CEO and Director, has significant
experience in Russia including 5 years as Chief Operating Officer
for Polyus Gold, the largest gold producer in Russia and held
Managing Director positions in two of the most active EPC
organizations, being Bateman Projects and SNC-Lavalin.
Mr. Churakov's motivation
Mainly for his assistance with Lesego Platinum to ensure Mr.
Churakov's motivation and to avoid dilution of the other
shareholders of Eurasia, Mr. Dmitry Suschov has agreed to transfer
25.472% of the share capital of Deloan Investments Limited, a
company beneficially owned and controlled by Mr. Suschov and
holding 275,377,066 shares in the Company (11.07% of issued share
capital) to a company beneficially owned and controlled by Mr.
Churakov for a nominal consideration. Accordingly Mr Churakov is
deemed to have an indirect interest in Eurasia shares through this
holding.
Please see our website, Vimeo channel and Twitter feed for
further updates;
www.eurasiamining.co.uk
https://twitter.com/eurasiamining
https://vimeo.com/user71951711
Enquiries:
Eurasia Mining PLC Tel: +44 (0)207 932 0418
Christian Schaffalitzky / Keith
Byrne
WH Ireland Limited (Nominated Adviser Tel: +44 (0)161 832 2174
& Broker)
Katy Mitchell / James Sinclair-Ford
First Equity Limited (Joint Broker) Tel: +44 (0)20 7374 2212
Jason Robertson
Optiva Securities (Joint Broker)
Christian Dennis
Tel: +44 (0) 20 3137 1902
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCCKNDBOBKDQCD
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