Without doubt, one of the best jurisdictions to build a mine is the European Union. Not only do countries in the trading bloc boast advanced infrastructure and pro-mining laws, but also the E.U. framework establishes cross-border political stability and heavily promotes foreign direct investment.
Euro Sun Mining is primed and ready to develop Europe’s second largest gold resource – the 10 million ounce Rovina Valley Gold Project, and this exciting opportunity could be about to make investors a great deal of money.
The location of a major gold mining project is critical. A company can be sitting on the biggest metal resource in the world, but it doesn’t mean a thing if local law and civil unrest prevent its development. There’s a reason why high-quality projects are so rare in the world’s most attractive mining jurisdictions – most of them have already been taken. Institutional investors flock to back deposits of mineralization in safe regions, which promote natural resources development, because they know this gives them the best chance of developing a mine. This maximizes their chances of seeing a giant-sized return on investment.
Rovina Valley project
Euro Sun is the 100% owner of the Rovina Valley project in west-central Romania.
From a geological perspective, Romania is hugely prospective. The area where Rovina Valley sits is known as the “Golden Quadrilateral”. It is one of Europe’s largest gold-producing regions, with more than 55 million ounces having been pulled out of the ground since since Roman times.
Despite this, Romania hasn’t made much of a meaningful impact on the global mining investment world because state-owned businesses have dominated the development of its vast resources. Now this is changing.
Since joining the European Union in 2007, Romania’s compliance with the trading bloc’s rules and obligations has fostered a culture of improved governance principals at the state level. Over the years, this has created a friendly and incentive-based economic environment that has encouraged more and more international business. Soaring levels of foreign direct investment continue to propel Romania forward, and the country is currently on track to deliver the second-highest EU country GDP growth in 2020 and 2021. Against this backdrop, the floodgates for foreign investment into the country’s highly attractive mining industry have opened. And the catalyst was none other than Euro Sun Mining. In 2018, this company became the first-ever non-state-owned business to win a mining license from the Romanian government.
Euro Sun was able to succeed where others had failed, by approaching the development of Rovina Valley with a deeply-held commitment to sustainable Environmental, Societal, and Governmental principles:
-No cyanide will be used at Rovina Valley, and dry stack tailings will be used rather than wet tailings to reduce visual impact and water usage.
-The company will re-use existing infrastructure left over by the nearby, historic Barza mine, use renewable power sources, and confirm the absence of archaeological remains.
-Local communities will be engaged throughout Rovina Valley’s development and production to provide hundreds of jobs and remain the need for community resettlement.
Euro Sun has the green light to do everything from exploration to development, production, and commercialization at Rovina Valley.
Looking further forward, the support of the Romanian government opens the doors wide for the firm when it comes to future mining opportunities in Europe’s newest mining investment destination. It’s no surprise that institutional investors are falling over themselves to get exposure to Euro Sun. As recently as May 2020, the company upsized a bought deal public offering from C$12 million to C$20 million in response to extreme demand – it eventually raised C$22.3 million. As a result of this, Euro Sun now counts leading UK fund manager Ruffer as its leading shareholder with a 9% position. With the likes of Franklin Templeton and ASA Gold and Precious Metals also taking large stakes in the raise, close to a third of the company’s share capital now sits in institutional hands.
But it’s not just the firm’s location and permitting progress that has got these individuals excited; it’s also Rovina Valley’s quality.
The project hosts 10.11 million ounces of gold in the highly prized Measured and Indicated resources categories spread across three pits – Colnic, Rovina, and Ciresata. This makes it Europe’s second-largest gold deposit. Meanwhile, Euro Sun has also taken great steps to demonstrate the economic viability of its project. A preliminary economic assessment in 2019 gave the Colnic pit alone a pre-tax net present value of US$228.1 million and an internal rate of return of 15.4% at US$1,325/oz gold. At today’s >US$1,900/oz spot price, this NPV5 increases to more than US$700 million – and that’s not even factoring in the value of the Rovina deposit, which will be developed sequentially.
The Lassonde Curve
One indicator in particular suggests Euro Sun’s share price is about to go on a run much higher – the Lassonde Curve. The Lassonde Curve uses historical data to map out the typical valuation journey that mining projects take throughout their lifecycle – from early stage exploration to full mine development. According to the Lassonde Curve, the recent institutional investment in Euro Sun puts it on track for a massive re-rate as more heavyweight investors buy in throughout Rovina Valley’s construction and production.With Euro Sun on track to complete the remaining feasibility and development needed to become “shovel ready” by next year, its current C$0.47 share price and C$78.6 million market cap present an exciting opportunity.
And as if this was not enough, the company is entering this period at a time when gold stocks of every description are being propelled forward by the highest prices for the precious yellow metal ever seen. Year-to-date, the Euro Sun share price is up by nearly 70%. But with its rooting in a pro-mining European jurisdiction, ground-breaking state support, vast gold resource, and impressive institutional backing, this stock looks set to fly much higher.
Source: valuethemarkets.com
