Yorkshire-based potash miner Sirius Minerals (LSE: SXX) has been a true stock market darling this year, its share price tripling from 15p to 45p by the end of August. However, lately it appears to have lost its charm, falling 25% in the last month. Where did it all go wrong?

Dig deep

Actually, I’m kidding. It hasn’t gone wrong at all. This is the exactly the kind of dip that I’ve predicted before. Why? Because accessing some of the world’s largest polyhalite reserves beneath the North York Moors national park and building a 23-mile tunnel to a purpose-built export berth in Wilton, Teeside, is a long-term project, and investor attention spans are notoriously short. When firing out these warnings, I suggested that any share price slips in the interim would be the ideal time to buy.

Here’s what I wrote on 1 September: “The news will come in fits and starts. In between, the share price has a habit of sliding as investor attention wanes, and more volatility is likely. If it dips again, that could be your next big opportunity to buy into this highly fertile prospect.

Sirius in the black

Well, Sirius has slipped again and for no good reason, as far as I can see, aside from that aforementioned investor impatience. It has cleared the many planning hurdles that lay in its path, and seen off all the nimbies, wrapping up all of its planning, development and judicial approvals earlier this month. It has the green light to start digging. This landmark lifted its share price, which has subsequently trailed down simply because there has been no further news. Investors have pocketed their profits and drifted away, no doubt to seek instant gratification elsewhere. 

Perhaps investors are worried that Sirius is doing things back to front. It has arranged $2.6bn of stage two financing but has been slower to fund stage one, which is expected to involve a $1.09bn mix of debt and equity. Building major infrastructure products is never easy, especially in the UK, where they typically cost more and take longer than expected.

Po-faced

There’s the danger of dilutions if costs overrun and the company has to raise more funding, which will come at the expense of existing shareholders. Sirius has arranged a string of contracts for its multi-nutrient fertilisers, mostly with Chinese companies, which is encouraging but must be offset against the fact that first polyhalite production could be as far as five years away.

In the meantime, anything could change. Demand for potash could plunge, if supply elsewhere rises, or a better fertiliser is discovered. We’re in the very early stages of what could be a 100-year project and there will be a lot of bumps along the road. This is why it’s better to buy Sirius Minerals at times like now, when investors are bored and the share price is depressed, rather than when it’s riding high on the back of good news. Positive news on stage one financing would give it another boost, but brave investors might want to buy ahead of any announcement. Understand the risks, though.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.