Sirius Minerals plc: what to expect in 2017

As construction begins, expect Sirius Minerals plc (LON:SXX) to continue hitting the headlines in 2017.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Back in December, I reflected on a transformative year for AIM-listed Sirius Minerals (LSE: SXX). In 2016, the company managed to complete a two-year feasibility study, obtain all necessary planning permission and gather the all-important cash needed to begin building its polyhalite mine in North Yorkshire.

Based on a recent update on current activities in and around the site, I think we can expect 2017 to be another hugely busy year from the £750m cap. 

On your marks…

According to Sirius, highway works — focused on improving site access roads — are scheduled to begin on 30 January and end in the first week of April. As far as the actual mine is concerned, an additional drilling rig “to gather more detailed information for the upcoming shaft sinking” is now expected on-site by the end of February. It follows on from the “further geotechnical studies” undertaken since the end of 2016. Sirius also commented that a “significant amount of detailed engineering, design and commercial work”  was in progress and that, in accordance with the company’s plans, the full site preparation phase will commence in the second quarter of this year. So far, so good.

Perhaps the most interesting part of last Thursday’s announcement for shareholders, however, was the company’s declaration that it would release “general development and construction updates” to the market on a quarterly basis. That means three times this year, in the final weeks of March, June and September with a break for Christmas and a further update in week two 2018.

So, if this is when we expect to hear from the company over the next 12 months, what might happen its shares?

On the up?

Now that investors — both existing and prospective — have a better insight into when the company will update the market, sentiment towards Sirius should begin to shift. Although undeniably brief, last week’s news provided investors with the kind of transparency they were craving during in H2 2016. It may even be enough to convince one-time holders, dismayed at the pricing of the open offer conducted last November, to return.

Clearly, considerable moves in the share price whenever a (positive) update on progress is released are likely. Given the complexity of the task ahead of the company, however, there’s always the potential for at least some of these updates to be disappointing. Setbacks are common in this industry and highly probable for a project of this scale, despite the capability and experience of the management team and their confidence in those hired to help build the mine.

Although I fully expect the share price to be substantially higher by the time it comes into operation in five years time (and Sirius has moved away from AIM), some volatility between now and then should be assumed.That’s even more so if, thanks to Trump, Brexit or some other factor, changes in the macro-economic environment motivate some investors to become less risk-tolerant. This is why I continue to regard Sirius as the sort of company built only for patient investors with long investing horizons.

At just above 18p each — the same level they were last June, long before funding for the mine had been secured — I’m optimistic that shares in the company have now reached their nadir. For Sirius, 2017 should mark the end of the beginning. Time to get digging.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Paul Summers owns shares in Sirius Minerals. 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.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »