Member Since 8 December 2015
Last Seen: 18 Nov '19
Posted on 25 October 2016, 5:52 AM

Sirius minerals Plc , A promising investment

Topics: Analysis
Other Insights on Related Shares: SXX.L

Sirius Minerals is Hold at the current levels. The stock finished trading on the London Stock exchange at 34.6p a share on 24th October, up by 1.48% compared to one day before. Currently the stock has been trading below 50 DMA, but just a tad above 20 DMA and 100 DMA of 37.0p, 33.6p and 29.0p respectively. In terms of technical analysis, the stock has made a slight bullish candlestick pattern called as ‘Hammer’, and the stock has witnessed a positive closing yesterday, so it might head for another breakout as well! Lately, the stock has had support at 30p as it seems stock has bounced back after taking support at 30p. The next resistance levels for the stock would be at 35p and 37p respectively. Any breakout above 37p would ensure the rally back in Sirius Minerals plc and we may see stock touching back to 50p level as well. However, there might be a few hurdles in terms of resistance levels, but in case it breaches resistance of 35p-37p, then even fresh longs can be initiated in the stock with the target of 50p and stop loss of 30p. The company has been seen correcting since August 2016 and has come down from 45p to 30p. However, it seems that the Sirius is in a consolidation mode and is ready to bounce back very soon! I would like to invest traders and investors to keep a close eye at the stock and should not miss the lucrative investment opportunity.

Now let’s throw some light on the development of its Yorkshire polyhalite project. The company’s first half of the year has been focused on moving its Yorkshire polyhalite project closer towards construction.  The project’s business case is expected to generate EBITDA in the range of US$1bn-US$3bn. After the detailed studies, the company has calculated the total project capital funding requirement of US$2.9bn and a stage 1 funding requirement of US$1.09bn. The project has a net present value of $15 bn with the assumption of production levels of 20 Mtpa, rising to US$27 bn upon commencement of production. The project has an unlevered after tax return of 28%.

In May 2016, the company also announced an increase to its polyhalite probable reserve. The reserve increased to 280 million tonnes at an average grade of 88.4%, which is up from the previous level of 250 million tonnes at a grade of 87.4%.

In July 2016, the company has also received government government approval for the Harbour Facilities element of the Project. As a result, all major approvals for the Project have now been granted. In September 2016, the company updated its investors that The Company received a development consent order for the Harbour Facilities on 20 July 2016 and no challenge has subsequently been submitted to the decision during the Judicial Review window. As a result of this, all key planning and development consent approvals for the Company's North Yorkshire polyhalite project have therefore been received and all related judicial review periods have expired without any objections being tabled.  

In the first half of 2016, the company reported consolidated loss of £4.1 million compared to a loss of £4.7 million. Cash resources as on 30th june 2016 were £16.1 million compared to £29.1 million an year ago.

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