Eurasian Minerals (EMXX) is a company that first caught my attention at the San Francisco Hard Assets Conference this past November. First, I observed the company was being recommended by many of the newsletter writers in attendance at the conference. Second, the company's representatives gave those who stopped by their booth a trillion dollar Zimbabwe currency note. In other words, they made me a trillionaire!
Here's the rundown on the company:
- Eurasian Minerals is a prospecting company -- meaning they go out and find the big opportunities, and then get others to mine them. It's no secret that ore quality is declining and getting good mines is becoming harder to find. For this reason, I think Eurasian Minerals really has the right idea: a firm dedicated to prospecting may be a better value opportunity than a firm in the mining business itself. The prospecting business is largely about early-stage exploration using other people's money, and so I compare it to the venture capital sector of technology industries in that regards.
- Eurasian Minerals recently got listed on the New York Stock Exchange. I'm not a fan of restricting one's self to investing only in US stocks listed on the NYSE -- in fact I think that is a rather poor strategy, commonplace as it may be -- but the fact that it is so widely employed is important to note, because it means those that do not have listings on US exchanges are cutting themselves off from a large supply of potential investor capital. I think Eurasian's recent listing on NYSE will help them secure additional capital in the form of share price appreciation.
- To put things in perspective, Eurasian Minerals currently has a market capitalization of around 140 million. Earnings are still negative, as the firm as an EPS of -0.24. So, we can file this in the "high risk, high reward" category.
- With companies of this size and negative earnings, balance sheet risks are always an especially big concern of mine -- I want to see that they have enough capital to sustain operations while remaining unprofitable for some time. And in this regard, Eurasian Minerals is doing well: the firm has over $44 million in cash and securities.
- The firm has lots of properties in its portfolio, including mines in areas that are not your typical hot spots, like Romania and Haiti. So, there is sufficient jurisdictional diversification.
- An especially important consideration for a firm of this size is who else is involved. Most notable is Newmont (NEM), one of the largest and most successful mining firms, who is a joint venture partner on a number of projects in Eurasian Minerals' portfolio. EMXX also has investment from the supranational institutions like World Bank and from notable private investors like Rick Rule. This interview between EMXX CEO David Cole and Steve Crowley is worth watching and covers some of the investors involved in EMXX.
- Speaking of the the CEO, David Cole, has over two decades of experience in the industry, and comes from Newmont. So, the relationship with Newmont is strong. I like this very much and think it sets the stage for EMXX to find lots of great opportunities and call upon Newmont to do the heavy work of digging it out.
For the reasons listed here, I'm very bullish on Eurasian Minerals. This is a stock that I think has serious potential if we go into a mania in mining stocks. I plan to position myself accordingly.
Disclosure: I will be purchasing EMXX this week.