Member Since 8 December 2015
Last Seen: 18 Nov '19
Posted on 14 April 2017, 6:46 AM

Sirius Minerals Plc, a compelling buy at the current price levels

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

Sirius Minerals Plc. is a compelling ‘Buy’ at the current price levels. In terms of technical analysis, it seems that the stock has already given a breakout and is all set to rise. The stock finished trading on the London Stock exchange on 12th April 2017, at 25p a share, up by 8% compared to previous close. The stock has had risen by over 20% in the past 2 weeks. However, we feel that the rally shall continue and even at the current levels, investors can initiate fresh longs. Currently, the stock has been trading above its 20 day moving average (DMA), 50 DMA and 100 DMA of 19.9p, 18.8p and 19p respectively. Trading above the moving averages is also a bullish sign for the stock. The immediate support and resistance for the stock lies at 20p and 26p respectively. The stock needs to pierce 26p to continue the rally. However, a breakout above 26p could take stock to the new highs of 34p. Hence, Traders shall keep a close watch at the respective levels and accordingly hedge their positions. In terms of charting or technical analysis, it has been making green marubozu candles which also indicates short term to medium term bullishness of the stock. Also it seems the stock would be making ‘Rounding top bottom” pattern, which also confirms the uptrend.

The company announced its FY’16 financial results on 28th March 2016. Let’s throw some light on the highlights of FY’16. The stage one financing got completed by securing funding of ~US$1.2 billion required to begin the construction of the Company's polyhalite project in North Yorkshire.

The stage 2 financing is also being progressed through mandating a group of six financial institutions. As per the latest financial report, there is also an increase of the company’s polyhalite reserve to 280 million tonnes of polyhalite at an average grade of 88.4%.

The company’s cash resources as on 31st December 2016 were £ 665.3 million versus £29.1 million as at 31 December 2015. The increase in cash is primarily because of successful completion of the stage one financing completed in November 2016. However, as a result of the fundraising, the company would now be able to commence significant development work on its polyhalite project in North Yorkshire (the 'Project') with latestcash flow forecasts indicating that the Group has sufficient assets to meet its planned liabilities as they fall due until 2019.

The company reported a net loss of £ 23.0 million in FY’16 compared to a loss of £7.0 million for the nine months period to 31st December 2015.

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