Eurasia Mining to de-risk platinum project

AIM-listed explorer Eurasia Mining has granted permission to Lemuria Royalties of Canada to conduct due diligence on its platinum mine in Russia in order to reduce risk on development of the project.

Its subsidiary, Terskaya Gornaya Kompaniya granted exclusivity to Lemuria to conduct the due diligence on its Monchetundra platinum group mineralisation project until 15 January 2017, with the Canadian outfit expected to start immediately.

Due diligence was needed so that Lemuria could consider potentially financing some of the project using a royalty structure.

The miner said that a financing structure with Lemuria would put the company in a safer position and would be a natural hedge for the project’s risks, although there was no guarantee that the transaction would proceed.

Managing director Christian Schaffalitzky said: "The royalty structure works by providing capital upfront to advance the development and is repaid from the mine revenue streams. This is another option being considered in seeking the best way forward for Eurasia."

In early November, Eurasia Mining entered into talks with an engineering company to manage the mining operation at the Monchetundra project, and to work for the company as the owner's representative throughout the design and build phase of the Sinosteel engineering procurement construction agreement and thereafter.

A loan of 85% of the estimated project cost was to be covered by a Sinosteel loan facility that will sit on its balance sheet until the project is up and running, with a balance of $26m needed to complete the project.

Shares in Eurasia Mining were up 8.15% to 0.730p at 1055 GMT.