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East Asia Minerals Corporation: Big Potential In A Long-Forgotten Name


  • East Asia Minerals Corporation is on the cusp of producing significant cash flow from the smaller of its two Indonesian properties.
  • The company has seen its fortunes rise and fall on the back of a much larger gold deposit in Indonesia, but the company is undervalued based on the smaller project.
  • The recent stock price increase is warranted as East Asia has de-risked its Sangihe gold project. There is good potential for additional upward price appreciation.
  • Three valuation cases are presented for Low, Base and Upside scenarios.
  • I recommend that the risk-tolerant investor add East Asia Minerals Corporation to their portfolio at current levels.

East Asia Minerals Indonesian PropertiesSource: August 2020 Investor Presentation

Investment Hypothesis:

East Asia Minerals Corporation (OTCPK:EAIAF) has de-risked the Sangihe gold project, one of its two Indonesian properties and currently trades at a significant discount to expected cash flow in the next 12 months. East Asia may retain rights with respect to its second and much larger Indonesian asset, the Miwah gold project. The company's valuation once reached USD$600m based primarily on the Miwah project. East Asia will begin generating meaningful cash flow from its Sangihe project soon and the investor has essentially a free call option on any value derived from the larger Miwah asset.

East Asia Minerals Corporation: A Long-Forgotten Name

When investors think about mining and Indonesia the name that comes to mind is Freeport-McMoRan (FCX) and its massive Grasberg mine. A much less known name is East Asia Minerals Corporation. East Asia has a long and checkered history. In 2010/2011 its valuation soared due to its Miwah gold deposit in Indonesia, which has potential for 10 million+ ounces of gold. Details are not 100% clear, but my understanding is that due to deforestation rules in Indonesia the project was suspended, and the company's prospects and valuation went into significant decline. The company has not paid taxes due on the property for 4+ years and the rights to the claim are complicated and need to be re-secured from the government.

This stock chart depicts the dramatic drop from a market cap of $600m to approximately $28m today.

EAIAF Stock Chart

Source: Stock Quote Fidelity.com

More recently, the stock price has been moving upward on increasing volumes as positive news flow regarding its Sangihe project began to come forward.

3 Month Price Chart

Source: Stock Quote Fidelity.com

In fact, the share price of East Asia has almost doubled in 3 months' time. There is good reason for the price movement which is

This article was written by

Value investor constantly looking for opportunities to compound capital quickly but safely.

Analyst’s Disclosure: I am/we are long EAIAF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Please do your own research before making any investment decision. Opinion expressed is that of the author only.

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Comments (7)

bazooooka profile picture
@Crowd Noise Fundamentals What caused the 2017 spike and do you expect similar again?

What is the effective/tradable float on this name and will warrant overhang suppress the price for awhile?
Crowd Noise Fundamentals profile picture
My understanding is that in 2017 a large investor took a position in East Asia and that buying activity drove the price up. When they exited the price was depressed.

The effective tradable float assuming that Insiders, Pallisades, Sprott, and one other large investor do not sell shares is just under 40% or about 80m shares. Mind you most of that volume is on the TSX.V. The average 90 day volume on US OTC market is about 160k over the last 90 days.

The warrant overhang is a double edged sword. Obviously dilution is bad ,however, a lot of the recent warrant dilution is the result of financing they've received to jump start the Sangihe project. I tried to account for the full dilution above in my capitalization chart above but there is a bit more as the recent financing was increased slightly. The price at the moment seems to reflect some of the concern you are asking about and maybe there is a better entry point possible. Much will be dependent upon final approval of the production and export license as well as the price of gold. The new warrants are priced at $0.25 CDN or ~$0.1875 per share so significantly higher than here before dilution takes place.

These are great questions and certainly reason to be cautious and/or patient with any purchase of East Asia stock. I appreciate the comment and questions.
Is this low risk like $gtx Lol
Buying next week. Huge potential
Crowd Noise Fundamentals profile picture
@nicocrema1977 I believe there is big upside potential and business case is straightforward. There is ,of course , some risk but potential return is very compelling. Good luck and thanks for the comment.
@Crowd Noise Fundamentals is this company low risk like $gtx ? What other low risk bankruptcy plays do you have in mind ?
Crowd Noise Fundamentals profile picture
I didn’t say East Asia is low risk. Laid out the business case and also the risks. In a favorable gold price scenario there is significant cash flow potential relative to the current valuation. It’s is microcap primarily traded on Vancouver stock exchange with a checkered past so there is risk. My view on GTX is that management prioritized all other stakeholders above existing Shareholders.
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