As a subscriber to City Confidential tip sheet, and a recent investor in Sirius, I thought you may all be interested to hear that it’s been tipped in todays edition:-
Readers who are looking for something that is more of a gamble may care to cast an eye over Sirius
Minerals (22p). Although the company, which is quoted on AIM, has interests in North America and
Australia, in reality its main focus is on the development of a potash deposit in North Yorkshire. As most
readers will know, potash is an essential ingredient in fertiliser, and with world demand for foodstuffs
growing all the time as the global population increases, so does the need for fertiliser and the potash
which is a key ingredient.
The group has discovered what it believes to be the world?s largest deposit of polyhalite, a mineral that
contains potash, and it is currently in the process of conducting a detailed study of how to produce this.
The group revealed earlier this week that there is an inferred mineral resource estimate of 2.2bn tonnes of
the mineral, an increase of 70% over the previous estimates. Although there are no guarantees of success
and there is plenty of work to do with regards to both operations and funding, this means the scope for
upside is considerable.
Next month a planning application to mine under the North Yorkshire Moors will be submitted and this is
crucial. Should this application be successful a feasibility study will be completed and this would ultimately
result in a fundraising next year if everything goes to plan. The potential value of the project means that
investors at the current stage could be very well rewarded.
Historic fi nancials are somewhat irrelevant given the fact that it will be at least 2016 before the mine
will be in production. Further funding will be essential to progress to the production stage but existing
shareholders will be keen to ensure they are not unfairly diluted, particularly with Chief Executive Chris
Fraser owning 8.5%. This aligns the goals of management and shareholders and should ensure that
if serious shareholder value is created then those who buy in now will benefi t. We rate the shares as a
SPECULATIVE BUY.
