Eurasia Mining shares sank on Thursday as investors reacted to the news the company had made little progress in the disposal of its Russian assets or sales of stockpiles worth £3.5m.

The Company said it has prioritised the sale of its Russian assets, but no binding agreements have yet been reached. Shareholders were seemingly unimpressed with assertions that active discussions continue with counterparties in Hong Kong and Russia.

Eurasia Mining shares were down 28% at the time of writing.

In addition to an update on their asset sale, Eurasia provided an overview of their ongoing operations. The company has enough cash to see them through the first quarter, but there are uncertainties around the funding situation past this.

As of 30th November, the Company had approximately £517,000 in cash reserves, held outside Russia and not exposed to ruble fluctuations.

The Company has sufficient working capital through the first quarter of 2024, without the proposed sale of £3.5 million in unsold concentrate inventory. Discussions around the sale of concentrate stockpile from the West Kytlim mine are ongoing, but have been for some time now.

The West Kytlim mine and infrastructure are being maintained for sale. No production is expected in 2024, as in 2023. The 2022 concentrate stockpile is securely stored off-site, with sales discussions ongoing.

A new license was recently acquired for the promising Travyanaya area, which will be added to assets available for potential sale. No work is planned there in 2024.

The Monchetundra and Nyud projects have no planned reserve updates or expenditures. The Nyud expenditure was written off in 2022 results after the expiration of the Rosgeo Agreement.

Smart Metering Systems shares soared on Thursday after the power metering company received an offer from a US private equity group, KRR, with $528 billion in assets under management.

The latest approach for a UK company by US private equity shows that although domestic UK investors do not want to acknowledge the value in UK stocks, leaving them to languish at historically low multiples, US smart money sees an opportunity and is prepared to back their views with takeover approaches.

Today’s approach by KKR for Smart Metering Systems follows yesterday’s news Ten Entertainment received a cash offer from another US private equity group, Trive Capital Partners.

KKR’s 955p offer for Smart Metering Systems values the company at an enterprise value of £1.4bn and an EV/EBITDA multiple of 20x. The 955p offer represents a 40% premium to the share price as of the close 6th December.

Smart Metering Systems shares were trading 41% higher at 958p at the time of writing on Thursday – above the 955p offer price. This suggests shareholders may reject the offer and await an improved bid. In the upcoming vote, 75% of SMS shareholders are required to vote in favour of the takeover.

Smart Metering Systems’ low-carbon energy infrastructure is a crucial part of the UK government’s net zero plans.

The company was listed in London in 2011 and has consistently grown revenue in line with increasing smart meter installations. Smart Metering Systems also provides electric vehicle charging and has a network of grid-scale battery power storage facilities.

In a release by Smart Metering Systems on Thursday, the company said continuing in a private setting would provide the capital required to capture the opportunity in the energy transition. In other words, Smart Metering Systems and KRR feel funding opportunities as a public company are not conducive to growing a clean energy company.

Tara Davies, Partner and Co-Head of European Infrastructure at KKR, commented on the acquisition:

“SMS has a strong asset base and a clear strategy across different business lines which are critical enablers of the UK’s Net Zero goals, and we share the team’s vision of putting SMS at the heart of the UK’s energy transition.”

“Achieving this growth opportunity requires significant capital of a scale, flexibility and certainty which is best facilitated in the private markets. KKR is a major investor in UK infrastructure and behind the energy transition, and we will bring our expertise and operational resources to bear in supporting SMS to invest at the level required and successfully scale its business over the long-term.”

The FTSE 100 was trading with a positive tone on Wednesday after a solid Asian session helped European stocks open higher, and investors await vital jobs data from the US.

The FTSE 100 was 0.45% higher at the time of writing and is 1.4% higher over the past five trading sessions.

Optimism around interest rates is starting to grow, but one would caution this could quickly unwind on adverse US Non-Farm Payrolls due to be released on Friday.

“The FTSE 100 moved higher on Wednesday as it responded to positive trading in Asia,” said AJ Bell investment director Russ Mould.

“Cooling job vacancy data from the US helped bolster expectations that we are at the pivot point of this rate hiking cycle – though more news on the US labour market through the course of this week will provide a fuller picture.”

Miners have recently been at the forefront of the FTSE 100’s moves. The trend continued on Wednesday after upbeat comments by Rio Tinto’s CEO.

“Miners were in demand as Rio Tinto CEO Jakob Stausholm briefed investors that Chinese steel mills were ‘producing flat out’. This is good news for iron ore producers like Rio, with the patchy recovery in China a big reason why the mining sector has had a difficult time in 2023,” Mould said.

“Rio also announced big spending plans. Along with signs of burgeoning M&A elsewhere in the sector, any excitement felt by investors at the growth potential may be tempered by concerns the industry is losing some of the discipline it has demonstrated in recent years.” 

Rio Tinto gained 1.75%, Anglo American rose 1.7%, and Glencore added 1.45%.

Prudential was the top riser, gaining 3.2%, as the mood around China and Asia improved.

British American Tobacco

British American Tobacco was the top faller after revenue growth came in at the lower end of expectations as the company struggled to contend with lower smoking rates and a transition to vapes and other new categories.

“Despite weak demand from smokers in the important US market it’s managed to eek out a year of revenue growth albeit at the lower end of previous guidance,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

“Meanwhile the rollout of new categories such as vapes, heated tobacco and oral pouches is continuing apace with breakeven now expected in the current period, two years ahead of the original plan.

“Management now sees these products as the cornerstone of the company’s future expecting them to deliver half of group revenues by 2035. But that’s a long way off. Non-combustible products should contribute to the bottom line in 2024 but beyond that the long-term outlook for margins is still unclear.”

British American Tobacco shares were down 7% at the time of writing.

Rio Tinto has issued a progress update on its core mining operations, including Pilbara iron ore and the Oyu Tolgoi copper mine.

The FTSE 100 mining giant said it plans to increase iron ore capacity to 345 to 360 million tonnes at its Pilbara operation and ramp copper production at Oyu Tolgoi to 500kt per year.

The increase in production at Oyu Tolgoi will make it the world’s fourth-largest copper mine.

“The performance at our Pilbara iron ore and Oyu Tolgoi copper operations shows our path towards becoming best operator, and we are focussed on driving continuous improvement across our global portfolio,” said Rio Tinto Chief Executive Jakob Stausholm.

It further plans to make a substantial investment in the Simandou iron ore project in Guinea, allocating approximately $6.2 billion for the development, including the necessary port and railway infrastructure for raw material exports.

Rio Tinto holds the rights for the development of the southern half of the deposit in collaboration with the government of Guinea and a Chinese consortium led by the Aluminium Corp. of China. The group is expected to invest a total of $11.6 billion.

The Simandou Mountains host one of the world’s largest untapped iron ore deposits, challenging the current dominance of the market by exports from Brazil and Australia.

The Winning Consortium Simandou, led by the Winning International Group and the China Hongqiao Group, holds the rights for the development of the northern part, also in collaboration with the government.