Eurasia (EUA) & Rio Tinto: Should you buy these precious metal stocks?

Highlights 

• Rio Tinto’s net cash generated from operating activities was US$13,661 million for H1 2021, representing an increase of 143% year-on-year compared to US$5,628 million in H1 2020.
• Eurasia’s Rosgeo JV operates nine platinum, palladium, nickel, cobalt and copper open-pit deposits

Long-term investors are particularly lured by the attractive returns offered by precious metal stocks. Mining companies engaged in the exploration, mining and processing activities of platinum, gold, silver, diamond, and palladium belong to this category. Many of these metals and materials are critical for the functioning of the economy and are often deemed safe-haven for investors. High demand boosts prices of these metals and materials during periods of expansion.

(Data source: Refinitiv)

Let us deep dive into two precious metal and mining stocks, and explore their investment potential.

Rio Tinto Plc (LON: RIO)

Rio Tinto is an international mining company involved in exploring, mining, and processing mineral resources such as diamonds, copper, titanium dioxide, aluminium, and lithium. Rio Tinto’s shares are trading at GBX 4,837.00, down by 0.43% at 8:03 AM BST on 24 September 2021. The company’s market cap stands at £60,622.33 million.

Rio Tinto’s Diavik mine produces large, gem-quality diamonds, while the Argyle mine produces small stones for fashion jewellery. The company’s 2021 diamond production guidance is 3.0 to 3.8 M carats.

For H1 2021, Rio Tinto’s net cash generated from operating activities was US$13,661 million, representing an increase of 143% year-on-year compared to US$5,628 million in H1 2020. Its underlying EBITDA registered an increase of 118% year-on-year to US$21.0 billion in H1 2021.

For the half-year ended 30 June 2021, Rio Tinto announced an interim dividend of 270.84 pence per share and a special dividend of 133.26 pence per ordinary share to shareholders.

Eurasia Mining Plc (LON: EUA)

Eurasia Mining is a company engaged in the exploration and mining of minerals. The company’s Rosgeo JV operates nine platinum, palladium, nickel, cobalt and copper open-pit deposits, with feasibility studies approved by the Russian State Committee of Reserves (GKZ). Its West Kytlim operations include platinum group minerals and gold mining operations.

Eurasia Mining’s shares are trading at GBX 23.75, up by 0.64% at 8:21 AM BST on 24 September 2021. The company’s market cap stands at £673.44 million.

Eurasia recorded a pre-tax loss of £3,693,308 for the year ended 31 December 2020 compared to a £796,268 loss in 2019.

In the first year of production, the company’s revised production profile was 3.5 g/t in total of platinum, gold and palladium, and 2.6 g/t of palladium at West Nittis open-pit mine; and 3.1 g/t in total of gold, platinum, and palladium, and 1.8 g/t of palladium at Loipishnune.

Bottomline

Investors keen on diversifying their portfolios can invest in precious metal stocks. Nevertheless, the cyclical nature of the mining industry makes these stocks extremely susceptible to changes in the macroeconomic scenario. Hence, a careful evaluation is warranted, and investors must analyse all parameters before investing in these metal stocks.