It has been a long haul for investors in Sirius Minerals (LSE: SXX) but resolution finally appears to be in sight.
Sirius is hoping to mine what is probably the highest grain deposit of polyhalite potash identified in the world, buried below the rather beautiful North York Moors National Park.
That has forced it to spend several years digging through some of the toughest planning laws in the world before it can dig in earnest.
Investors will now discover whether permission will be granted on 30 June. Shares will halt trading on that day, and presumably either crash or rocket the day afterwards. Should you take a punt now?
Open Road
Sirius has steadily cleared every hurdle, getting the thumbs up from councillors at Redcar and Cleveland Borough Council last month. Last week, planning officers indicated they were likely to include an “open recommendation” to the Park Authority.
That may look like a strange position to take, but it does leave the Authority free to make what is a big decision without being prejudiced by a planning recommendation. Analysts largely saw it as good news. And so did investors, with the stock up 10% on Friday alone.
Power To The People
This is certainly a big decision, given that Sirius reckons it can mine 13m tonnes of multi-nutrient fertiliser a year, and has already been drawing up 10-year contracts with Chinese distributors.
If it goes ahead, the project could create more than 2,000 jobs and cut the UK’s trade deficit by an astonishing 4%.
It has massive local support, aside from a relatively small number of environmental campaigners, and appears to fit nicely in the new Tory government’s “Northern Powerhouse” strategy.
Potash-tic
If you buy now, you are effectively taking a punt on whether Sirius gets a yea or nay at the end of next month.
Sirius chief executive Chris Fraser is optimistic, saying that the firm has confidence in “the strength of our planning case, the huge levels of support for the application and the many wide-ranging economic benefits that the project will deliver to the local area”.
Of course, a yes vote isn’t the end of it. The mine will still take almost five years to build and also requires a brand new harbour in Bran Sands, Teeside, but again, locals are supportive and avid for jobs in a depressed area.
Only then will the revenues finally begin to flow. So it will be years before Sirius starts unearthing profits for investors.
Sirius is still a gamble, but the odds look increasingly favourable.
