Eurasia Mining plc (AIM: EUA)
("Eurasia" or the "Company")
Extension of Option Agreement
Highlights:
- Eurasia is pleased to announce an update with regard to the option held by Metal Tiger plc (LON:MTR) over the Semenovsky Tailings Project ("STP"). Metal Tiger has requested, and Eurasia has agreed, an extension until 15 March 2016 by contributing a further US$25,000 to work on the STP.
- During the initial period of the option, ongoing work has improved both the understanding and the economics of the STP. In summary, the latest project data demonstrates significantly improved project financials including a 64% increase in Net Present Value to $24m, reflecting improved project economics and a favourable Rouble/US Dollar exchange rate.
Details of the Agreement
As announced on 16 November 2015, Eurasia signed a Heads of Terms ("HOT") with OOO Metallurg Complect, a Russian minerals company, whereby Eurasia has the exclusive right to negotiate to acquire up to 67% in a gold tailings opportunity, the Semenovsky Tailings Project ("STP"). Those negotiations are still ongoing, and there is no guarantee that a transaction will proceed.
It was also announced on 16 November 2015, that Metal Tiger had paid $25,000 to secure an option with Eurasia that affords Metal Tiger the opportunity to elect to participate in the STP on equal terms with Eurasia. The option period, which was for 3 months, expired on 12 February 2016. Eurasia and Metal Tiger have today agreed to extend that option by a further month and Metal Tiger will pay Eurasia a further $25,000 for that interest.
If Metal Tiger exercises its option, it will fund up to $100,000 of exclusivity work programme costs i.e. an additional $50,000 plus the $50,000 option payments already made. The forecast exploration costs of the exclusivity period are $72,000, with the additional $28,000 being a contingency for unforeseen expenses.
Thereafter, if companies confirm they wish to pursue the STP opportunity by the end of the exclusivity period, the project risks and rewards will be shared equally between Eurasia and Metal Tiger. It is anticipated that this will be in the form of a specially formed Joint Venture held through a UK private limited company.
Christian Schaffalitzky, Managing Director said: "We are pleased to continue working on the project with Metal Tiger. We believe the project is capable of providing a good return on investment for both companies. Work will continue on due diligence work to ensure that these robust economics can be sustained and that the permitting of the project proceeds favourably".
Highlights of the STP:
On 9 November 2015 Eurasia Mining signed a Heads of Terms ("HOT") agreement whereby Eurasia has the right to participate in a gold tailings opportunity. The principal highlights in respect of this opportunity are summarised as follows (with comparison to the figures published on 15 November 2015 in brackets):
- HOT agreement signed in respect of the STP, a near term gold production opportunity in Russia;
- HOT provides for a six month period (From 9 November 2015 onwards) of exclusivity enabling technical study completion, sampling, metallurgical testing and general due diligence;
- Latest internal work undertaken by the Company indicates potential total gross revenue of approximately $86m (Nov15: was $57m) over a 10 year mine life (Nov 15: 8.5 year life), with net project total cash inflow of approximately $51m (Nov 15: $29m) or $5.1m per annum (Nov 15: $3.5m per annum);
- The same work by the Company has provisionally estimated that project net present value is c$23m (Nov 15: c.$14m) at a 10% discount rate, project IRR of 82% (Nov 15: 65%) and project payback within 1 year of production start-up, against a total estimated plant construction cost of approximately $5.2m (Nov 15: $5m).
The figures given above are given for guidance only and are subject to updating, correction and verification. The figures will be reviewed and updated when Eurasia has undertaken more detailed work on the site.
Consent for release
EurGeol Christian Schaffalitzky, FIMMM, PGeo, CEng, is a director of the Company. He has reviewed the update and consents to the inclusion of the exploration information in the form and context in which it appears here. He is a Competent Person for the reporting of these results.
Enquiries:
Eurasia Mining Plc
Christian Schaffalitzky/Michael de Villiers
+44 (0)207 932 0418
WH Ireland Limited
Katy Mitchell/Nick Prowting
+44 (0)161 832 2174
Beaufort Securities
Elliot Hance
+44 (0)207 382 8300
Loeb Aron
John Beresford-Peirse
+44 (0)207 628 1128
