23rd Aug 2006 Write Up : http://www.proactiveinvestors.co.uk/articles/article.asp?EKA



Main Web Site : http://www.eurekamining.co.uk

EKA is now a Molybdenum producer in Kazahkstan, and is in the process of bringing the Chelyabinsk Copper/Gold project into production in 2008.

Latest Presentation June 2006 : Presentation Link (10MB PPT file)



Research Report : http://www.fox-davies.com/FDC_Eureka_Report_220605.pdf

26th Jan 2006 Press Commentary : Press Link

About Eureka Mining

Key contact : Mr Kevin Foo Non-Exec Chairman
E-Mail : kevin.foo@eurekamining.co.uk


Eureka Mining Plc is a UK based mining exploration and project development company, focusing on projects in the Former Soviet Union. It is the Companys view that Kazakhstan and other central Asian FSU countries represent an area of significant opportunity. This belief is supported by the quality of the portfolio of assets which Eureka has acquired including;
the Shorskoye molybdenum deposit;
the acquisition of the Chelyabinsk Copper Project; and
the advanced exploration projects of Kentau, Mykubinsk and Central Kazakhstan projects. The Mykubinsk and Central Kazakhstan polymetallic project has assets situated in northern Kazakhstan and the Kentau exploration project has identified several gold and base metal deposits.

Shorskoye Molybdenum Project:

50/50 JV with KazAtomProm, largest Kazakhstan State Mining Company
Production projected for 1st Qtr 2006
Project Finance in place

Chelyabinsk Copper Project

Production planned for 2008
Very large resource base with with 3.57Mt Cu / 4.2Moz Au
First western group into Russian Copper Heartland and consequential opportunities in base metals


Kazakhstan Exploration Projects

At the Dostyk Copper-Gold Projects in Central Kazakhstan, we have reviewed all historical data and identified at least six drill targets, with particular focus on base metal projects. During 2004, we drilled five projects and completed significant field activity on two projects, including the high priority targets Berezky Central, Maiozek, Akkuduk (porphyry style), Ushtagan (epithermal gold), Maikain, Baygustam and Burovoy (VMS). We intend to focus on the most promising of these deposits in 2005/2006.

The Kentau Project in southern Kazakhstan has undergone an extensive data review, with a comprehensive Geographic Information Systems database being created. This has enabled us to plan a focused exploration programme on previously identified targets. Drilling is expected to commence in May 2005 at two of the best targets, using a large Reverse Circulation (RC) rig.

We entered into an option agreement to acquire the Nova Dnieprovka (Nova) Gold Mine in northern Kazakhstan. However, after a thorough assessment and reinterpretation of the project, including the completion of a drilling programme, we decided not to exercise the option and purchase agreement over the Nova project.

Our exploration and assessment teams are continuously reviewing potential projects for Eureka across the FSU and only the very best are selected for further work.
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Some figures to think about (thanks to unionhall)

Current Market cap (@ 1.37) - 36m

Chelyabinsk NPV 508m (@ $1.60 copper and $550 Gold)

Shorskoye - 10m profit p/a @ $20 Moly



Major shareholders
Latest major holder figures are, from 26.6 million shares in issue :

Celtic Resources hold 15.02%
RAB Capital hold 6.19%
Kevin Foo holds 3.43% (Director)
David Bartley holds 3.02% (Director)
Malcom James holds 1.070% (Director)
Andrzej Sliwa holds 0.76% (Director)
JSB holds 0.177% (Director)

Latest News / Links / Research Reports

Reserach Report : http://www.fox-davies.com/FDC_Eureka_Report_220605.pdf

25th April 2006 Moly Update :
http://www.resourceinvestor.com/pebble.asp?relid=19141

2006 Moly Report : http://www.golden-phoenix.com/documents/TheEconomicsofMolybdenum.pdf

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The Company has used an average molybdenum price of US$19/lb throughout the first year and US$12/lb thereafter to calculate cash flows arising from the project.

(*Note : Molybdenum does not trade on the London Metals Exchange or any other publicly traded commodity exchange. Its price is determined solely by supply/demand in the marketplace and supply contracts. In a report dated Oct. 28, 2005, RBC Capital Markets forecast that 2006 and 2007 molybdenum prices would be approximately US$25/lb and US$15/lb, respectively [source: RBC Capital Markets, Global Base Metal Equity and Commodity Report Card, company reports].*)

How will the Moly be processed ? Eureka pulled off a deal with KazAtProm.Eureka has 15-year access to state-owned KazAtomProm's processing facilities, which will allow the company to start producing molybdenum concentrate in February.The processing plant also handles other minerals.The proximity of the plant to the Chinese border, allows for quick, cheap and simple transport links to a major demand area for Moly

Implementation and schedule of Moly production

Utilising the Stepnogorsk processing facility allows Eureka to develop the Shorskoye asset and take advantage of the buoyant molybdenum market, commencing mining in Q3 05 and saleable concentrate by Q1 06. The key project milestones are:

August 2005 - award contracts
August 2005 - first blast and ore to crusher
September 2005 - first ore to Stepnogorsk
October 2005 - first equipment to Stepnogorsk
February 2006 - concentrator commissioning (Stepnogorsk)
February 2006 - Chelyabinsk 100% purchased by Eureka

May 2006 - first production from Stepnogorsk (Skorshoye)

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Molybdenum Information Links

http://www.freemarketnews.com/Analysis/60/3742/2006-02-10.asp?wid=60&nid=3742

http://www.gold-eagle.com/editorials_05/reser092205.html

http://321energy.com/editorials/fross/fross120605.html

http://www.cozine.com/archive/cc2005/01370511.html

At 25$ / lb Moly prices : (Shorskoye Project)

2006 Moly production = 600,000 lbs = 14.7 million dollars sales price
2007 Moly production = 1,200,000 lbs = 29.4 million dollars sales price
2008 Moly production = 1,200,000 lbs = 29.4 million dollars sales price
2009 Moly production = 1,200,000 lbs = 29.4 million dollars sales price
2010 etc etc etc
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Recent Director Buying :

Kevin Foo BUY 5,000 on 21 June 2006 @ 81p
Kevin Foo BUY 18,000 on 21 June 2006 @ 90.3p
Kevin Foo BUY 9,000 on 22 June 2006 @ 92pb>

The new June 2006 presentation goes into plenty of detail (link below, its a 10 MB Powerpoint file).

http://tinyurl.com/klpf8


Also clears up the Major Shareholders, who presently are :

Shares in issue 26.5m Total

Major shareholders

Celtic Resources ----- 14.2%
JP Morgan funds ----- 8.4%
EKA Management ----- 8.3%
Hendersons ----- 3.9%
Rathbones ----- 3.8%
Gartmore ----- 3.5%

A good summary post from a poster at AFN :


novicedave - 21 Jul'06 - 13:11 - 810 of 815


A few of my notes, and my rationale for adding 2.5k shares just now (not yet reported, oddly).

Chelyabinsk, Kentau and Dostyk have had $22.7m spent on mineral exploration between them. Shorskoye, rather than being capitalised as an intangible asset is classed as an investment due to the 50:50 JV structure (EKA do not have a controlling interest so rather than a subsidiary the JV is classed as an associated company); its value (that is, the acquisition and exploration costs for EKAs share of the JV) is reported at $16.9m. The company also has tax losses worth $850,000 which can be considered as an asset. Thus, a simplistic valuation would be $40.45m (or £21.9m, a share price of 83p). This is now my limit buying price, i'll keep adding whenever i have profits from elsewhere up to a limit i have set myself for small punts like EKA.

Dostyk and Kentau, in my opinion, are of virtually no potential value to EKA at the moment, they are 5+ years away from production and so should only be considered as potential for the future (beyond that provided by Shorskoye and Chekyabinsk).

Chelyabinsk, on the other hand, is well progressed as an exploration licence. The economic scoping study (using low metals prices of $1/lb copper and $400/oz gold) suggested an NPV (10%) to Eureka of $257m back in February (so $266m currently), assuming a late 2008 start. I have gone through the numbers and they are conservative enough for me (which is saying something). This valuation would, of course, ignore the remaining risks which will have to be negotiated to get the project to production, as well as the dilution which will be necessary pre-construction (i.e: this summers rights issue). To account for this I assign a risk-discount for each of the remaining components which will lead to production (Bankable resource, due now, 10%; pre-feasibility, now, 10%; BFS, Q107, 25%; Financing and construction contracts, Q207, 30%; Construction, sales contracts and commissioning, Q408, 35%), so for me a fair valuation right now for Chelyabinsk would be $71m.

As for the dilution, the maximum (without an EGM) has been set by the company at 25% of the current issued share capital. This should be plenty to progress to BFS at Chelyabinsk.

Shorskoye was producing first concentrates from commissioning on the second of May this year, leaving only two remaining risks (the completion of commissioning and sales contracts), which I will discount for at 25%. There have been significant changes to the project since the Fox-Davies report last June, so I did a simplistic 3-year 10% NPV valuation myself (assuming moly prices $20 this year, $15 next, $12 next, sub-economic thereafter) which came to $22.1m, giving a fair current valuation of $16.6m.

So, for me, a fair valuation for Eureka at the moment would be $105.6m (£57m). Assuming the dilution is 25% when funds are required later this summer that would give a fair share price of £1.72. Thats a potential reward of 135% over todays buy price, even before the company progresses its projects further!

There is no news in the public domain which would explain the disparity between the share price and a fair valuation, and judging by the volume on which the price has been going down there is no information circulating privately which is causing people to sell. In addition to this the directors hold over 2.5m shares between them and have not sold any (or at least have not informed the market of any sales). Im reasonably confident, therefore, that there is nothing amiss (bar the usual delays as with any miner); with the impending ramp-up of news-flow (pre-FS and JORC for Chelyabinsk, sales agreements and completion of commissioning at Shorskoye are overdue) I consider the current price a good opportunity to open some positions.

NOVICEDave

A good post from AFN :

unionhall - 23 Jul'06 - 09:42 - 816


Shouldn't have any problem negotiating sales contracts....


From Gold World Friday, July 21...
A Hungry China Set to Gobble More Moly
By Steve Christ


BALTIMORE, MD -- China is still hungry. Go figure. After all, this is the same nation that continues to build the city equivalent of a Philadelphia...every single month!

It seems like no matter how much the world markets put on its plate, it is never enough. This fact is never more apparent than in the steel market where the dragon seems to be completely unquenchable.

Recently released Chinese GDP figures only underscore this fact.

On Tuesday the National Bureau of Statistics released a figure that even took some China watchers by surprise. Amazingly, China's second quarter growth had surged at the fastest rate of any quarter in a decade despite official efforts to slow the pace of growth by curbing investment.

On an annualized basis, this equated to a stunning annualized growth rate of 11.3%.

Naturally, this type of growth requires enormous amounts of commodities. And none of these is more important than steel.

Simply put, China needs steel in the same way that its babies need rice. Without it they would simply wither away. I know this because I recently talked to my publisher Brian Hicks, whose wife is Chinese.

He said his 3-year old daughter can eat 3-times the amount of rice than he can.

And to feed Chinese economy it takes lots and lots of steel. All types of steel that you can imagine. Its massive trade surplus couldn't be built or maintained without it. Without steel China would wither.

Because of this it is no secret that China has entered into tens of billions of dollars worth of iron ore contracts to maintain their mills.

This is where Molybdenum comes in. In fact "moly" and steel are joined at the hip.

This is because without Moly the production of certain grades of steel becomes impossible. Used as an alloy in the steel making process it lends both strength and corrosion resistance to the finished product. As such over 2/3 of all moly is used in the production of these steel alloys.

Needless to say these are important qualities. In fact, these types of steel are crucial to water distribution systems, chemical processing systems, automotive parts, construction equipment, gas and oil pipelines and off shore rigs.

In fact without these moly-laden steels offshore drilling would be exceedingly difficult. Not only is high molybdenum steel used as a hardener in drill stems, but an incredible 27% of all off shore rigs are built with stainless steel containing moly.

And in today's world one thing is for sure- we can't get enough of these rigs.

These and other factors have combined to propel moly to new heights. The chart below illustrates this fact as moly prices have soared beginning in Sept 02. Since then, moly increased an incredible 800% in late 05 and has since pulled back to a $26.25/lb for an overall gain of over 500%.


These price levels naturally are the result of supply and demand imbalance in the market.

These imbalances will certain continue well into the future as China continues to gobble up more and more moly.

In fact, recently released figures have projected that China's domestic consumption of molybdenum is set to increase 20% this year as strong demand from steel plants is continuing amid tight domestic moly supplies.

These tight supplies have been further deepened by increased stainless steel production in Japan. Japanese stainless production is up 7.75% year over year. As a result, Japan imported 214mt of roasted molybdenum concentrates and ores from China in May 2006, an increase of 29% year over year.

This is creating tighter and tighter markets. And tight market mean one thing-big profits.

30K sell knocked the price back this morning (might be a SB closing), given director buying at 90.3p and 92p a few weeks ago, a bargain at the moment I think when you can buy at 72p now, maybe even 71p.

News is due in the coming weeks of license granted for Moly exports, and then the firsts sales and shipping contracts for the Molybdenum already produced and being produced.

Pre-Feasability completed :)

http://www.investegate.co.uk/article.aspx?id=200607260958567423G

Ticking up nicely today.

Broker target price was 175p.......lets hope that gets upgraded too soon.

I would guess the seller is clear now, from the positive moves. It cannot have been any institutional selling, as you would not have seen a director buying stock at 90p just 4 weeks ago. Must have been a private investor who needed the cash and had to sell at any price, and why the MM's took them for a ride and crashed the bid price down.

Never mind, its all over now, and with the pre FS done, and Moly news imminent, its still below the 90p price paid by a director 4 weeks ago.... bargain I think :)

From uk-analyst.com - email

.......In a note on the mining sector, UBS upped its commodity price forecasts for copper, nickel, iron ore platinum and molybdenum by an average of 7% in 2006 and 19% in 2007 following revisions to its supply-demand balances. However, UBS lowered its alumina price forecast by 6% and its aluminium forecast by 20%. The broker raised sector earnings forecast by 4% in 2006 and 11% in 2007. The Swiss broker's top picks were Xstrata and Lonmin , but it has "buy" ratings on all the major UK mining groups. Shares in Xstrata added 107p to 2,141p and Lonmin stock added 89p to 2,865p........

380K X trade yesterday, and with the present rises, and again today it would point to the seller being now out, which means we can and should recover quickly from the drop caused by the MM's obliging the seller with a nasty low bid price.

Looking fine, L2 now 2 v 1 @77/81.

No delayed trades so a T at the end of the day perhaps ?

A good read about the possible strong outlook for Molybdenum (which EKA already now produce)

http://www.stockinterview.com/molybdenum-energy.html

Post from AFN :


azalea - 9 Aug'06 - 14:33 - 953 of 966

konil

Following the issues we raised in our posts regarding production, licences and orders, I emailed EKA and have today received the following reply.

We have produced over 200 tons of molybdenum concentrate during the commissioning and "optimized running" phase of the plant. The production licence should be granted in the next week or so.

We have buyers for the concentrate, so once we get the necessary permits we shall sell all our production.

Jonathan Scott-Barrett
CEO
Eureka Mining Plc


By my reading that is explictly good news and very reassuring.

Considering the pending news of first Moly sales/shipment for Eureka the following report on Moly is good news.....especially look for the paragraph starting "......Now as for molybdenum. I wrote about its supply, demand, and............."


http://www.resourceinvestor.com/pebble.asp?relid=22727

Nice write up on ProactiveInvestors (free to register and read) :


http://www.proactiveinvestors.co.uk/articles/article.asp?EKA

Moly price keeps rising, now 28.5 US$. This is excellent news for EKA and well above their year 1 target of 19$ (year 2 being 12$).

If the above 20$ trend continues, and short term a spike back up above 30$ happens, it certainly will be boosting the revenues for Eureka.

I get the feeling the 2 off 50K trades yesterday that were made to appear like a rollover were actually a 100K buy split in two. The spread says this as its too large for a rollover, looks like someone clearing the overhang, with two protected trades.

Now, it looks like its cleared the overhang, and perhaps we can start now moving back on up.

Certainly is starting to move now.

And still going strong.

News is overdue, so there could well be good reason behind the rise :) DYOR !

L2 now 4 v 2 @85/90

No sellers around, thats whats good to see.

And you can still buy cheaper than the director buy at 92p paid by Kevin Foo recently on the 22nd June 06..............so there you go.